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Thursday, Nov 13, 2003

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No plans to set up unit in US now: Elgi

R.Y. Narayanan

Coimbatore, Nov. 12

THE Indian economy is expected to remain strong for some years unlike in 1997 when, after an early promise, the economy dived, according to Dr Jay Varadaraj, Managing Director, Elgi Equipments Ltd, Coimbatore.

He said this time around the fundamental economic drivers are much stronger and may be for four or five years, the industry may be able to maintain its current uptrend.

Dr Jay Varadaraj said he has no immediate plans to either acquire any unit or establish a greenfield plant in the US to manufacture air compressors.He said whether Elgi exported complete machinery or components to the US or sets up an assembly unit for supply were tactical decisions and were not strategic. It was dependent on how the business evolved.He said the deal with a US-based company for supply of compressors for railways there has come close on the heels of a business contract for supply of industrial compressors to another US company.

He said today the focus was on such products where the company would build machines based on designs of its own or according to the clients' designs with the thrust on the US market. He said it was a large homogenous market and it provided large volume.But the European market, though nominally homogenous, did not function as one, which pushed up the transaction and market entry and development costs. He said he would like to go first where the costs were lower and it was the US market that fits the bill.

He said the company's strength was industrial compressors and it would continue to focus on that. It would be shipping the first lot of industrial compressors to the US company, with which it had earlier signed a contract. The company was only making marginal balancing investment and the capital investment would be around Rs 13 crore during the current fiscal.

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