Elgi Equipments charts mid-term plan to achieve $400 m revenue by FY26

G Balachandar Chennai | Updated on March 03, 2021

Jairam Varadaraj, Managing Director, Elgi Equipments   -  The Hindu

Bets in growing international business

Elgi Equipments Ltd, a leading global air compressor manufacturer, is in the process of rolling out its strategic business plan (SBP) with a revenue target of $400 million to be achieved in the next five years, up from about $258 million in FY20.

The Coimbatore-based company is revising its strategy to come out with mid-term growth plans. The company had earlier set a target to become world's second largest air compressor player by 2027 with a revenue of $1.6 billion.

“Our plan to hit $1.6 billion cannot be done in 2027.We are recalibrating it and told our shareholders that we will come back with revised plan for $1.6-billion target year. But more importantly, we are putting the mid-term goals based on our presence, competitiveness and products and service. We plan to achieve $400 million revenue by 2025-26 and international markets are expected to contribute 55-60 per cent to this,” Jairam Varadaraj, Managing Director, Elgi Equipments, told BusinessLine.

The SBP will focus on setting goals on profitability and returns, besides revenue. The company is targeting an EBITDA of 16 per cent (up from 11 per cent now) and ROCE of 30 per cent along with $400-million revenue target.

The EBITDA growth is primarily due to the leverage the company will get in the topline on the back of more international business share and higher after-market revenue, he said.

The company plans to leverage the investment made in several global markets such as North America, Europe and Australia even as it continues to maintain strong position in the Indian market.

Strategic markets

In the last 10 years, Elgi has spent a lot of money and time incubating these strategic markets and has a strong presence there. “Today, we are a lot more mature organisation with strong presence and validated experience to prove that we are not experimenting anymore in our key markets. We have crossed that unstable period of market entry. Now we are in stable period and it is about converting each of these strategic markets into more and more like our presence in India,” he added.

All its strategic markets are now performing like the Indian market as sales are improving month-on-month. For example, installations in the US continue to grow as Elgi has more than 500 machines now in the region.

Varadaraj pointed out that the company exhibited strong resilience during the Covid-19 period. “By virtue of our global presence, we were able to mitigate the situation and we are one of those companies that didn’t fire any one and cut the salary of staff. These are some of sweeter flavour for winning customers and fundamental to the culture and growth of a global organisation,” he added.

Published on March 03, 2021

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