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‘Compressed air’s relevance will be challenged by efficient energy sources’

LN Revathy Coimbatore | Updated on January 09, 2018

Jairam Varadaraj, MD, Elgi Equipments

Air-compressor manufacturers should transition to service-based sales, says Jairam Varadaraj, MD, Elgi Equipments



The application of compressed air goes well beyond the factory floor. It is present in our everyday life in various forms — be it in the way we operate certain objects or complex manufacturing processes.

“While food and water can be stored in one’s body for later use, we cannot do so with air. And air, in many ways, is taken for granted,” says Jairam Varadaraj, Managing Director, Elgi Equipments. Edited excerpts from an interview:

What is compressed air?

It is a friendly form of energy which can be stored safely and used as per the customer’s needs. All air compressors work on the simple principle of using atmospheric air and compressing it to the required volume and pressure to perform a task.

While compressed air is versatile, it is inefficient owing to the amount of energy required to compress a given volume of air.

What is the estimated size of the air-compressor market?

The global air-compressor market is roughly $16 billion, with the US and Europe comprising 30 per cent each, and about 50 per cent from Asia. The Indian market is $600-700 million.

Can you make a comparison of the India market vis-a-vis the global market?

Technologically, there is little difference between India and the Western markets. Customer behaviour varies, though.

While Western customers exhibit more awareness of attributes such as power cost and air quality, in India, the market is driven by price.

Manufacturers are responsible for this distinction as dealers and suppliers in the West engage in a more technical and consultative discussion across multiple purchase attributes, while sales teams in India are more price focussed.

As a manufacturer, what challenges do you foresee in the compressed air business?

Compressed air’s relevance will be challenged by efficient energy sources. A good example is the migration from pneumatic and air-powered tools to electric tools. Electric tools consume less energy, are lighter and more flexible.

To remain relevant, manufacturers must address the lifecycle cost of compressed air.

While product innovation can improve energy efficiency, air quality and reliability, firms must also anticipate changes in customer behaviour.

Every industry talks of product innovation, but you seem to imply that in air-compressor business, one should anticipate changes in customer behaviour. Can you elaborate?

The customer of the future may not be interested in purchasing a machine and employing resources to maintain it through its life. They may instead prefer to pay a monthly fee for compressed air, akin to electricity or water.

To enable this, manufacturers must transition to a service-based sales approach as opposed to products and parts. Firms that are agile to incorporate technology improvements will have a competitive edge.

So, what all should a customer consider before buying an air compressor?

(a). The customer needs to be aware that the compressor’s lifecycle cost includes the initial cost of the machine, energy consumption, spares and maintenance, and the revenue loss from a downed compressor. The largest portion is power cost. Manufacturers of compressors will need to tackle the challenge of continuous improvement in compressor efficiency.

(b). A majority of compressors use oil while generating compressed air and this impacts the environment. Current oil-free compressors are expensive. Manufacturers face the challenge of developing a system that produces oil-free air.

(c). Reliability is often an overlooked attribute. Customers focus on the cost of parts and service in the event of a breakdown, but the larger cost could be from lost production. Customers should assess the product’s track record of reliability and the manufacturer’s ability to restore air in the event of a breakdown.

Going forward, technology offers a solution to minimise the cost of downtime. Machines with data-transmission capabilities are to be rolled out soon.

This will allow engineers to monitor the health parameters of the compressor and help prevent machine failures.

Published on December 15, 2017

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