The global acquisitions Kirloskar Brothers made and the manufacturing footprint expansion that the company carried out in the last decade in key markets are now paying off. KBL has protected itself from tariff risks and controls, with manufacturing footprints in the US, Europe, ASEAN and Africa. A combination of a local manufacturing base in these countries and its manufacturing base in India has helped KBL remain competitive and gain momentum.
Alok Kirloskar, managing director, Kirloskar Brothers International, said they had to establish manufacturing facilities in those markets to gain a real competitive advantage.
“Local value addition has always been important, and customers value that,” he said. “We are seeing a resurgence in manufacturing across the US across several sectors, including automotive, steel and, in a very significant way, semiconductors. Many companies are investing heavily in the US, and that is also driving demand for our industrial products and process packages,” Kirloskar said.
Kirloskar manufacture certain products locally and combines them with products made in India to offer customers a complete package. This approach has helped us gain access to international markets, he said. Rama Kirloskar, joint managing director of Kirloskar Brothers, said larger companies are now facing challenges that KBL already dealt with, back in the early 2000s. They were now benefiting from all those investments, she said. KBL does not import anything and manufactures everything in-house with its own foundries, in-house design team and well-developed local supply chain, Rama Kirloskar said.
Local manufacturing in these markets enables them to comply with domestic content requirements while maintaining a competitive cost structure by sourcing some products and components from India. The final assembly and packaging are done locally in the US. “As a result, the final package has more than 60% US content, meeting local content requirements without compromising competitiveness, while keeping costs under control,” Kirloskar said.
Kirloskar’s US business has been growing rapidly and has maintained a strong growth trajectory every year. In the last quarter, it grew by 24%. They have a manufacturing plant in Atlanta and expanded through the acquisition of SyncroFlow in the US. It started with fire and HVAC pumps, then added data centre solutions to the portfolio. Data centres account for about 25% of its business, Kirloskar said.
“The key is balancing the cost of adding value locally against what the customer is willing to pay for that value. That model has helped us grow the business while maintaining margins of between 9% and 11%, which is relatively high for most Western pump companies,” Kirloskar said. It has 25 distributors in the US, of which 16 are exclusive to Kirloskar, highly unusual in the American market.
The international segment accounts for around 38% of their business. Apart from the US presence, Kirloskar is the UK’s largest pump company, with a large manufacturing facility and an extensive service network, working with leading utilities. It has a manufacturing base in the Netherlands and South Africa. The UAE, Egypt and Thailand have assembly, warehousing, testing and services operations.
“Each of our overseas companies is now profitable, growing with a good mix of products and services. Together we are debt-free and in a net cash position on the balance sheet which exceeds the total investment in those companies.” Alok Kirloskar said.