The Hindu Business Line : Elgi willing to consider equity partner to scale up business

Elgi Equipments Ltd (EEL) is willing to consider taking on board an equity partner who will bring more business to the company but is not looking for any technology or financial partner, its Managing Director, Dr Jay Varadaraj, said.

He said EEL is also on an expansion mode and hopes to finalise the site for establishing a new factory near the city in the next financial year.

He told Business Line that his company was not in need of any technology partner and it had adequate technical skills to do business anywhere in the world. It also did not need capital and hence would not look at a pure equity investor looking for an investment opportunity.

He said `we may look at a partner if they are able to scale up our business' and we `may consider' such an option. But for expansion and technology, the company did not need any partner. If the potential investor had the network that could utilise EEL's capability, then why not look at such an option, he asked. Dr Varadaraj said he would look at an investor who was `within the domain of our capabilities', someone who could come in and increase the size of his organisation by giving more business.

He said while he had discussed the idea of business with others, he had never approached anyone for investing in his company since it did not need money. It was difficult to say what percentage of equity he would be willing to give as it depended on how much business the investor would be able to bring, he said.

The EEL MD categorically said, "We are not for sale." He said some of Elgi's competitors, both within India and outside, would love to buy out his company but it was not for sale and said, "We believe we can beat them." He said Elgi has a 35 per cent market share in the industrial compressor business in the country and the market size of this segment was around Rs 800 crore and annually growing at 15-20 per cent.

New factory

Dr Varadaraj said as EEL's supplier base is in Coimbatore, it has decided to locate its new factory close to the city and site selection is in the final stages. He expects the construction work of the new factory will commence in 2007-08.

He did not specify the investment planned in the new unit since capacity addition would be gradual in line with demand growth. The company would focus on its existing technological strength that could be used to produce a variety of products.

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