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Elgi Equipments Ltd (EEL) will launch a new range of compressors by the end of December which will be modern in terms of technology, finish and performance. It will help the company do well in both domestic and global markets.
The automotive business in the country had shown some weakening since December last but for EEL it was an ‘India-centric business' and would not impact its global performance, according to Mr Jairam Varadaraj, Managing Director.
In an interview to Business Line , he said his company had developed in-house, and launched oil-free screw compressors. Globally only four or five companies have this technology which would give EEL ‘tremendous amount of growth'. He said the ‘credibility of the company' to be able to make such products would help it develop tougher markets such as the US and Europe.
But does not the company's dependence on compressors (it derived nearly 80 per cent of the Rs 793-crore revenue in 2011-12 from them) make it vulnerable to market fluctuations? Mr Varadaraj said though the product category was compressors, there were different types of compressors to meet the needs of diverse sectors — from tyre shops to integrated steel plants — insulating EEL from any slowdown in any particular sector.
Mr Varadaraj said the automotive business weakened late last year but this was a ‘very India-centric business', unlike compressor business that was global. But he said the company was a very strong player in this segment and wanted to ‘continue to grow that'. Pointing out that the automobile industry in the country, compared to the GDP and to the size of the population, was very small and hence, the potential for future growth was tremendous, he said the company would continue to ‘ride the wave of automotive growth'.
Answering a question as to how the company would ride the growth when it was a supplier of equipments to dealer service points and not a component supplier to automobile producers, he said when the industry grows they require more dealer outlets and service points. His company supplied equipments needed by them. There was a lag time in the growth of service points but nonetheless, they followed the growth of automobile industry eventually.
Elgi's share price (Re 1 face value) closed at Rs 78.75 on Friday.
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