Shakti Solar Pumps

Shakti Pumps (India) Ltd is a Rs. 300 crores, company, known for manufacturing and exporting world-class energy efficient stainless steel pumps, motors and flow boosters. While pumps were often used in rural areas for irrigation the scarcity or unavailability of electricity posed obvious hindrance in installation and utilization of AC pumps in India. The super star export house decided to launch the solar panel fitted pumps in 2014. The additional cost of solar penal came at about 1.25 lacs per kWh. While the solar pumps saved the fuel cost and had potential to improve crop yield, it required high upfront investment and effective sunlight. With an average energy consumption of pumps at 6-7 kWh in rural areas for irrigation the capital cost of solar penal remained a major hurdle in penetration of such pumps. The cost of electrifying the rural areas- extending grid connection to farmer was high, but with benefits of savings of coal in generation of electricity the management wondered if they could convince government about the larger benefits and seek some support and subsidy. With intense competition in potentially lucrative market Shakti need to articulate an effective strategy to make the product successful. The case discusses various issues and concerns management faced with launch of the solar pumps.