ElGi Equipments is a name that has become synonymous with air compressors. With its wide array of air compressors, the company has set a scorching pace of growth over the past decade. The rapid inroads the company has made into the European and American markets, satisfying some of the most discerning clientele, is a clear testimony to the company’s commitment to product innovation and top-notch quality.
Dr. Jairam Varadaraj, Managing Director, ElGi Equipments, said: “ELGi as a brand that is over 50+ years, has constantly evolved as a global leader in providing a complete range of compressed air solutions, leaving behind satisfied customers across all industrial verticals. Air compressors are the ‘life source of all industries’ and the need will never diminish. With our best-in-class lifecycle cost driven by low specific power consumption and maintenance cost, we strive to run all manufacturing facilities across the world with ELGi compressors.”
The leading air compressor manufacturer with a broad line of innovative and technologically superior compressed air systems, ELGi has earned worldwide distinction for designing sustainable solutions that help companies achieve their productivity goals and keep the cost of ownership low. ELGi offers a complete range of compressed air solutions from oil-lubricated and oil-free rotary screw compressors, oil-lubricated and oil-free reciprocating compressors and centrifugal compressors, to dryers, filters and downstream accessories. The company’s portfolio of over 400 products has found wide application across industries.
Dr. Jairam Varadaraj recently announced the company’s target to become the global No.2 in air compressors by 2027 through organic and inorganic growth strategy. The company has drawn aggressive plans to become a leading global brand in air compressors by setting up assembly facilities outside of India and also by acquiring companies in key global markets which will help propel future growth and achieve the target of becoming the No.2 global manufacturer of air compressors. To achieve this position, ELGi will have to grow at a CAGR of 28 per cent annually for the next 10 years.
ELGi has earned worldwide distinction for designing sustainable solutions that help companies achieve their productivity goals and keep the cost of ownership low. ELGi offers a complete range of compressed air solutions from oil-lubricated and oil-free rotary screw compressors, oil-lubricated and oil-free reciprocating compressors and centrifugal compressors to dryers, filters and downstream accessories.
The air compressor market is growing steadily year on year. The market size is anticipated to be $20 billion in 2023, with 3.6 per cent CAGR from 2016 to 2023. The company has opted to take the innovation route to be the World No.2 in the global air compressor market by making the products energy efficient, oil free and with an increased uptime reliability. ELGi has always focused on strengthening its attention on indigenous technology, research and development to innovate newer technologies in the air compressor industry.
Dr. Varadaraj further observed: “If you take a closer look at the global list of companies in this business, ELGi is the only one to have a full range of products and that gives us the right to win, not just play. I call this aspiration ‘K2’. As most of you know K2 is the second tallest peak in the world, after the Everest. However, it is considered the most difficult peak to climb. In fact, the ratio between the people who have climbed the Everest and K2 is about 1:10.”
Challenges to surmount
In the same breath Dr. Varadaraj added that it is not going to be an easy ride. “We need to work on developing the technology, quality, access to markets, etc. It will be quite a challenge. The challenge is more for us since we are a relatively unknown brand outside India. Plus, we have this ‘Made in India’ tag. That’s a reality that we cannot wish away. In order for us to compete and achieve our aspiration, we need to be better than the best. Being as good as the rest is not good enough. We have set the ball rolling towards the process of achieving our goal. We want to be the No.2 air compressor manufacturer globally by 2027 with a turnover close to $2 billion,” he noted.
Brand refresh
According to the Managing Director, ELGi has a clear-cut roadmap charted out on how to go about the process. One of the recent steps taken as part of the process is a brand refresh initiative by the company. Going into details about the initiative, Dr. Varadaraj said: “For us a brand is not something that you put out just for visual representation, but it is about the experience that we create for our stakeholders who include our customers, distributors, suppliers, investors, society, etc.”
As part of the brand refresh strategy the company’s name is now represented in black lettering with a red dot over the ‘i’, the last alphabet in ELGi. According to Dr. Varadaraj, black is considered very powerful, while the red dot denotes dynamism, symbolic of the group’s momentum, speed and movement forward.
Referring to the brand’s proposition ‘Always Better’, Dr. Varadaraj observed:” For us better means better than the best. This is a very strong collateral for us going forward. The shift from the brand proposition of ‘Uptime’ to ‘Always Better’ means that we have moved from a customer promise that was rooted in service. ‘Uptime’ meant ensuring that our customers business is always up and running. ‘Always Better’ however can apply to products, to innovation, our new approach to the market, and it could also apply to our service. It is a dynamic phrase. ‘Always Better’ means that we are trying to become better in every aspect.”
Going into details about the logic behind the refresh of the logo and the red ‘Better Band’ that has been created as part of the brand refresh strategy Dr. Varadaraj explained: “The band has a connect with the company’s name. Now our company’s name is a stylized version of ‘L’ and ‘G’. While ‘L’ stands for the village from where our family came from, ‘G’ stands for my grandfather’s name. If you look at the syllables, ‘G’ is the stronger syllable of the two and ‘G’ is also my grandfather’s name. Therefore, in this band, which is all about the ‘G’ we have inverted the alphabet and created the band. So, you see there is a connection between the company’s name and the band.”
The company intends to pursue a growth strategy involving both organic and inorganic routes. Elaborating on the same, Dr. Varadaraj said that about 70 per cent of the company’s growth would come through acquisitions, while the rest would be organic, in its journey towards attaining its aspirational goal. ELGi Equipments is looking at a total investment of Rs. 5,000 crores towards achieving this target.
IOT-enabled machines
ELGi will be launching its IOT-enabled machines as standard this year. The company has entered into a tie-up with Vodafone for launching its sim-card based IOT. Pointing out how the system is different from others Dr. Varadaraj stated: “Every machine is prone to failure. And no failure is sudden. There are always subtle signals which emanate from the machine, which point to certain issues. The goal with our system is to predict the failure. Ultimately for us it is being able to raise the uptime by predicting failure.”
The company intends to achieve a turnover of close to $1 billion in the next five years. “We need to do a lot of preparatory work, in terms of gaining access to certain markets, ensuring we gain the confidence of customers there, building up our reference list, etc. When we look at the size of the air compressors market, I feel that we are still a very small player. There is a huge headroom for growth. If you look at our compressor business, about 30% is America, 30% is Europe and the rest 40% Middle East and Asia. Out of this 40%, again approximately 60% of our business comes from China. Now China is a completely different market. We need to follow a completely different strategy there,” Dr. Varadaraj explained, reiterating the potential available and the company’s road map to achieve its goals.
R&D initiatives
Throwing light on ELGi’s R&D initiatives, Dr. Varadaj remarked that around 20 per cent of its white-collar employees are working in the company’s R&D division. “Our total of R&D, as a percentage of sales is 3%. However, since we are an Indian company and the people who are working for us in the R&D are not obviously as expensive as their European counterparts. If I normalize for that, the actual percentage outgo is close to 10%. In a given year we are working on about 150 projects. In a given year we also launch around 30-40 new products,” he added.
When asked to elaborate on ELGi’s working with a third-party rating agency in the US, Dr. Varadaraj said: “If you look at the lifecycle cost of a compressor, the actual cost of the compressor is only about 15%. About 75% of the lifecycle cost is energy and our fundamental technology driver is to say that we will be the best in energy. One way to claim this would be through a catalogue. However, catalogues do have a credibility issue. There is an organization called the Compressor Air and Gas Institute in the US, which is an independent body of all compressor manufacturers. Any manufacturers of compressors can be tested in their laboratory. They will then declare what is known as the ‘specific power’ of a compressor. Our machines have already started testing, and this year we hope to publish the results. Currently, I can confidently tell you that in our fixed speed machines range, 70% of our models are better than the best when it comes to helping reduce energy costs. We expect the figure to touch 90% in another year and a half.”