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Aug 18, 2009

Pump set price may go up !!


Pump set makers, facing a sudden surge in demand due to poor monsoon, may hike prices to offset the rising costs of copper and steel. They usually offer 2-3% discounts as demand would be quite low during the monsoon season. “Since July-September is off-season for us we extend discounts across all categories. But as copper and steel prices have gone up we are increasing prices,” says G Rajendran, managing director of CRI Pumps. Copper futures hit an 11-month high last Friday on MCX and stood at Rs 310.25 a kg. Copper is a key raw material used for winding in the pump set’s motor. Steel prices have also moved up marginally.


CRI has increased prices by a minimum of 5% last week and other may soon follow suit. “We would have to increase prices by at least 5%,” says Jayakumar Ramdass, president, Southern India Engineering Manufacturers’ Association. “Nobody even thought about it (price hike) last month. We may have to take a relook at our prices now,” says V Krishnakumar, president, Indian Pump Manufacturers’ Association.

With discounts no longer available and a price hike in the offing, farmers may end up paying 7-8% more than normal for pump sets in a weak monsoon season. But that isn’t denting sales with replacement purchase in some categories going up by 20-30%. “There is a gap between demand and supply,” says Rajendran. The industry, which sees a 20% drop in sales during the season, is registering around 15% growth now, he says. Though the organised pump set industry is expected to post a double digit growth on the back of a weak monsoon, industry players are not exactly happy. “Business has peaked, but it is not a good sign. It would result in a disaster next year,” says Krishnakumar.

While farmers would start buying high-end pumps in right earnest to get more water, it would leave them with little money for the next season. High head pumps that can draw water from greater depths are in demand, say industry officials. Agricultural pump sets, accounting for about 60% of the Rs 3,500-crore market for organised pump sets, witnessed around 6% growth last year.

The pump makers in Coimbatore cater to about 45% of the demand for farm pump sets in the country.

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