As part of the IFERA series on “Family Businesses in Times of Crisis”, we are pleased to share with you the interview of Rania Labaki, Associate Professor and Director of the EDHEC Family Business Centre, with Kanishka Arumugam, co-CEO of EKKI Pumps, Deccan Pumps Pvt Ltd, and second generation member of EKKI Group. With a humble start four decades ago, a few members of the Arumugam family, themselves agriculturists, manufactured Agri pumps that virtually boosted the green revolution in India. Today, the family business stands as one of India’s leading providers of advanced pump and water technologies for agricultural, building services, industrial and public utilities markets, and has a global presence in more than 20 countries.
The COVID-19 pandemic had a ripple effect on the world economies and societies. How has the family business been particularly impacted ?
When the government imposed the lock-down last March, people in India were clearly not prepared for the scale of the shutdown. Many of them do not live close to their workplace and could not move back to their hometowns given the short notice. They mostly rely on daily or weekly wages for their living, which went missing overnight, creating subsistence issues. Although our factories had to shut down, our primary focus was our employees for whom we particularly care. We provided accommodation and food while continuing to pay salaries.
As part of the culture and the specificity of the healthcare system in India, people tend to save money for difficult times, making them withstand for a little while. The government lifted the lock-down in April with restrictions as the survival of the population and economy was at stake. Our factories started to operate again while taking all necessary safety measures. Still, activities were impacted due to disruptions in the supply chain, but we had a sound bottom line with a debt-free balance sheet. Our conservative financing strategy allowed us to deal with the situation more serenely.
On the family side, my parents moved back to our family farm. Interestingly, I was happy to see my father finally taking his first break since he started the business in 1981.
How did these changes translate into initiatives or strategies?
This crisis allowed us to engage in new strategic directions, to accelerate the implementation of existing ones and to optimize our organizational structure.
First, we took the last few months to think and pivot further our business model towards a sustainable water technology company.
Fresh water is the basis of life on our planet, a basic human right, a critical factor in the health of our global environment, and a vital part of the business operations in a wide range of industries. But this resource is fragile and prone to crises. According to the United Nations, 4 billion people—more than half of the world’s population—suffer from water scarcity every year. The diversity of freshwater species has declined more than 80% since 1970. And in 2018, businesses worldwide reported $38.5 billion in financial losses related to water scarcity or pollution. In India, we have significant water pollution issues and around 10% of electricity is used to run pumps. This pandemic crisis emanates from environmental issues. All this contributed to awake our consciousness for planet earth. The future is more than ever related to sustainable companies.
At EKKI we want to provide sustainable pumps and water technologies to address the critical challenge ‘clean water for all’. We launched the project EKKI iQtech within our R&D department prior to the crisis. Now we are looking for additional alternatives that can be sustainable products and solutions.
Second, we are engaging in a reflection about our organizational structure. Due to the pandemic, our salespeople could not travel as before, so we are looking for new ways to improve our sales processes, communication as well as the way we think work, by leveraging digitalization. This lock-down experience showed us that some business functions such as finance and HR can be efficiently managed from home. Another consideration is to revisit the cost structure and make sure to do more with less by hiring the best talents. This opens-up opportunities for women who are a pool of talent which is still under-explored in India and who are seeking more flexible work arrangements to balance work and family life.
Third, in line with the digitalization of our business and consideration of new business models, we are now considering a diversification strategy, an opportunity driven by the Covid19 crisis. In fact, the current situation is the occasion to evaluate other business opportunities rather than putting all our eggs in one basket, so we are looking at new business opportunities and strategic partnerships. We recently had a successful joint venture with another family business in Germany, the global wastewater leader HOMA. Our search is focused on like-minded business partnerships with a long-term orientation.
Family businesses are known for their values of social responsibility, acting as ambassadors of the territories in which they are rooted. How did these manifest themselves in your country?
Our family business is more than a pump and water technology company. We are a strong socially responsible company. Our social initiatives are led by my mother and father through our two foundations and include employee well fare, care for the elderly, education for the youth, and rural uplifting activities. These became even more important in the crisis. We applied strict measures and best practices to protect the elderly in our homes. Our CSR considerations are also echoed at the business levels, in providing sustainable pumping solutions. EKKI works on the UN Sustainable Development Goals (SDG) number 6 (clean water and sanitation) and number 13 (climate action).
The past months gave your family business a good opportunity to stop and reflect. How is it possible to leverage this crisis as an opportunity and prepare for the post-crisis phase, in line with medium or long-term challenges the family business will be facing?
Crisis helps build resilience in terms of mindset, so we prepare for the worst. We had three major crises in the past. These were not related to pandemics but to ownership and business issues including the death of two co-founders, the company labor strikes in the 90’s and a spin-off in 2013. Still, they all taught us some useful lessons and showed us that we can grow out of them. Today EKKI has reinvented itself and is stronger than ever before. Again, while the Covid-19 Crisis has not affected the company financially, it has helped us pursue our growth aspirations by thinking on a deeper level about building more sustainable water solutions for the world, engaging in diversification and digitalization, and managing our risks by diversifying our portfolio. EKKI Group has a unique model of successful international collaborations with technology leaders and global distributors that we would like to pursue. Our hope is to extend our international presence in line with our mission to become “a globally developed company from a developing country” with the most efficient, innovative and sustainable techniques.
In the end, I am optimistic about India as it represents a market with 1.3 billion people and incredible potential. Everything happens for a reason. Five years down the line, perhaps we will look back and admit that some good things came out of this crisis such as more sustainable products and solutions for the world. By embracing sustainability, EKKI envisions a realistic opportunity to positively impact the environment using its technology and building a future-proof business model. For us, sustainability is a mindset, a way to do business.