‘Climate Change Is A Real Challenge’

Grundfos, the world’s leading pump manufacturer, is focused on providing clean drinking water through use of energy-efficient and sustainable technology. Its group president & CEO, Mads Nipper,  talked to BW Businessworld’s Paramita Chatterjee about the company’s plans to expand operations in the country as well as about the importance of water, a limited resource, and how its smart use could make a difference to sustainable development, among other things.

Edited excerpts:

Tell us about Grundfos’ operations globally? How do you expect to contribute to sustainable development?
We are a truly global company. We have sales companies in 56 countries and even more sales offices. That gives us an ideal approach to all major and important markets. We are globally present, in the way of 15 production facilities. The bulk of our production is in Europe, Asia and North America. It is my belief that Grundfos can contribute to sustainable development in a number of ways. First, we are in the business of water. Water is the basis of sustainable development of societies and we can bring drinking water to remote areas and metropolises alike. We can remove and treat waste water everywhere and aid smart irrigation — just to mention a few areas. We can do this in a resource-efficient manner. Water is a limited resource, so handling it smartly can make a big difference to the sustainable development of the world. And in times, when climate change is a real challenge, being able to do so while reducing energy consumption is immensely important. We also work to promote sound and sustainable values, always aiming at creating and promoting solutions and partnerships which benefit both businesses as well as our surroundings.

What are your key areas and what are the new segments you plan to enter? Also, tell us about the pump industry globally.
The pump industry globally is a bit of a mixed bag, really. There are a few big, international companies covering large parts of the combined world market — both in terms of broad and varied product portfolios and in terms of global presence. One of these is Grundfos. But there are also several small, local producers, who operate out of single shops. We have a large and varied range of products and we can make a difference to customers in many different business segments.

Currently, we are prioritising our core business segments, which include solutions for commercial and domestic buildings for industry, water utilities and original equipment manufacturer (OEM) customers, like large boiler producers. We always have an eye on market tendencies, but we believe that it is crucial to keep priorities clear and perform well in our core areas before venturing into new ones.

The euro zone seems to be in the throes of a slowdown at the moment. What do you think of the Indian market and its growth rate?
We have been present in India for quite some years now. And needless to say, India’s scale will, by default, hold a huge potential. India is projected for a robust growth and this, of course, makes it relevant to stay updated on developments in India as well as in other potentially growing markets.

The Modi government has recently completed two years. What do you think of its Make in India initiative and the ease of doing business?
Overall, there is definitely a willingness to undertake reforms and that in itself is a positive approach. India is a huge and complex country to get into for a European company and there are certain things that can make it challenging. We have established our presence in India with our headquarter in Chennai and we have had a positive relationship with the local authorities.

Of your total revenues globally, how much does India contribute? What is your vision for 2025? How would you compare the Indian market with that of China?
Currently, India’s contribution is small. We see a huge potential in the Indian market with rising living standards and improving infrastructure. India is slated to become the fourth-largest market in the world for centrifugal pumps by 2025. We have a long-term business strategy whereby we will be a significant player but not necessarily the biggest. We have a clear goal for growth and profitability, which we want to achieve. The Chinese market is six times the size of the Indian market. Therefore, the potential in China is higher than in India. It is the number one country for centrifugal pumps. In terms of buyer behaviour, population and needs, the two countries are similar. At the moment, we are focused on our journey towards 2020, which is our current strategy-period. We are gaining good traction and we will remain focused on becoming more profitable, winning more market share and maintaining the role of an innovator in our industry.

With traditional forms of energy like thermal power being polluting, the world is in quest of green energy, with focus on wind and solar power. How do you see green energy playing a role in future?
Well in a number of ways, really! Returning to a previous point, climate change is happening. Among other things, due to carbon emission, something which a higher usage of renew able energy sources would remedy. In another concrete way, the use of renewable energy sources makes it possible to supply, for instance, water to remote areas, where there is no regular or uniform access to power. This provides new opportunities in remote, rural areas — both relating to business and people here. Also, a heightened use of renewable energy will help us preserve the world’s limited resources.

With a water crisis looming over the next few years, recycling water is key to future growth, through initiatives like recycling sewage water and rain water harvesting. How will Grundfos address the issue?
We have a number of solutions which are already in play as to rainwater harvesting, rainwater reuse and decentralised water treatment. As with all our products and solutions, we aim to be at the forefront of technological development and we follow the movements of the various businesses.

We were introduced to the concept of smart cities in Denmark. India has also launched a mega initiative to build 100 smart cities. What measures do cities need to take to become smart cities and what would be your advice?
To make smart cities a reality in India, the key focus needs to be on improving overall infrastructure, connectivity and environment. Critical aspects would include using sustainable and renewable energy, intelligent management of water, energy and waste. I would strongly recommend looking at how cities world over have become smart and sustainable. India would then need to customise these best practices to create its own version of smart cities. The first step in this endeavour, however, is to change the mindsets of the citizens. The infrastructural solutions being installed and integrated into the smart city need to be intelligent, reliable, energy efficient and connected, with the ability to be holistically managed. These cities also need to be planned in terms of disaster management — be it flood control, water management during drought, etc. The ultimate objective of a smart city should be to enable ease of living and a good environment for its citizens, a city that can grow in a sustainable manner without a negative impact on the environment and which can also thrive economically.

Global warming is an issue today. What are your views on it and what role will Grundfos play with its initiatives globally?
Climate change is happening. As a consequence, so is global warming. Therefore, we will continue to have resource and energy efficiency high on our agenda when developing new products and solutions and refining known ones. We have a number of solutions for this.

What can India learn from Denmark, where the concern over climate change is high?
I think you should always be careful when comparing two different countries with different starting points in terms of geography, size and so on. Denmark has historically done well. Danish politicians and the political system have also for years been good at considering the environment when doing legislation, something that I think has spurred on sustainable Danish businesses and organisations alike. Denmark has over the years learnt from its history to be more sustainable. This was a critical need for us, to be able to succeed and become independent in terms of energy, as well as to guard ourselves against disasters. For example, Copenhagen witnessed flooding in 2011, which made us sit back and review how we managed flood control in our cities.

We now have 20 per cent of our energy production coming from renewable sources and we aim to be at 100 per cent by 2050. We have also put in place taxes to control various polluting aspects. Access to clean drinking water is something we take seriously in Denmark. Energy efficient and sustainable products are given high priority. We have some best practices in place and continue to look at new avenues for improvement.

paramita@businessworld.in