Air-compressor major Elgi aims to become number 2 in global market

Our Bureau Chennai | Updated on January 12, 2018 Published on June 07, 2017

Jairam Varadaraj, MD, Elgi Equipments   -  Bijoy Ghosh

Growth plans entail an investment of ₹5,000 crore over the next 10 years

Elgi Equipments Ltd has announced ambitious medium and long term growth plans spanning 5-10 years to achieve $1-billion revenues which will put the company in the second position globally in the air compressor business.

Coimbatore-based $230-million air compressor major is the eighth largest player in the $15-billion global air compressor market. It has built strong foundations in terms of technology, quality and access to markets to boost its presence globally.

Except the top two,$5.5 billion Atlas Copco and $1.8 billion Ingersoll Rand, none of the other big players are as strong on fundamentals. “We have the full range of compressor products and that gives us the right to play aggressively,” said Jairam Varadaraj, Managing Director, Elgi Equipments, unveiling company’s new brand identity here.

Elgi’s growth plans entail an investment of ₹5,000 crore over the next 10 years. It plans to pump in ₹1,000-1,200 crore in the next three years mostly in building back-end infrastructure in order to achieve ₹1-billion revenues in the next five years. However, it will seek to maintain a debt equity ratio 1:1.

While it is betting big on its strong fundamentals, its aspirational journey will primarily be driven acquisitions. Elgi has been recording a CAGR of 14.3 per cent in the past eight years against the industry growth rate of 2.5-3 per cent. “From the current level to reach our aspirational targets, we need to grow at a CAGR of about 28 per cent. This will not come organically. A big part of that growth, say about 70 per cent, will come through acquired businesses,” he said.

Since Europe and US are expected to be major markets , its acquisitions will also happen in those two geographies. It has identified over two dozen companies, mostly for scale and customer access, in the two regions.

The company is also gearing to launch Internet of Things-enabled compressors as a a standard feature in its products, while most of its competitors offer the same as an option, said Varadaraj.

Published on June 07, 2017

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