A pump maker in the motor town
K. Gopal set up C.R.I. Pumps in Coimbatore in 1961, in a city where farmers had wanted electric pumps for their wells since the Pykara power station opened in the 1930s. The company grew into one of India’s established makers of submersible and surface pumps for homes and farms.
A thousand models and a foundry
By 2020 it made more than 1,000 pump varieties, over 400 of them rated for energy efficiency, including pumps made entirely of stainless steel. It runs its own foundry of more than 12,000 tonnes a year, uses local feeder units for jobs like stamping steel laminations, and sells through about 4,500 dealers and 29 of its own outlets. Exports were about a fifth of revenue.
Big sales, thin margin
In 2018-19 C.R.I. earned revenue of about ₹2,029 crore and a profit after tax of about ₹59 crore: 2.9 paise on each rupee. The reasons are in its cost sheet. Stainless steel and copper make up about half of manufacturing cost, and their prices swing; competition keeps selling prices tight; and stock with dealers ties up a lot of working capital.
That is the pump trade in one line: when copper rises faster than you can raise prices, the margin is what gives.
When copper rises faster than you can raise prices, the margin is what gives.
Points for a finance reader
- Track metal prices like a cost centre. When half your cost is copper and steel, a price-change clause or quick repricing protects margin.
- Own the step that controls quality. An in-house foundry gives control over castings, the heart of a pump.
- Count the cost of dealer stock. A wide dealer network sells more and also locks up working capital.