Coimbatore-based Elgi Equipments Ltd, which manufactures air compressors and automotive equipment, has opened a sales subsidiary in Indonesia. With this move, it hopes to replicate its Indian success in global markets.
The Asean (South-East Asian) region contributes about 10 per cent of EEL’s revenue right now.
Elgi also plans to spend about Rs 30 crore this fiscal as capital expenditure, much of it in India, to expand capacity. This is, however, subject to market conditions improving.
Responding to questions from
Varadaraj feels that EEL opening its own warehouse with sales and service support in Indonesia will enable its distributors to penetrate the market further.
Referring to the importance of international subsidiaries, Varadaraj said the company has 12 international subsidiaries and their cumulative contribution to the company’s revenue is almost 50 per cent.
Elgi, he said, aims to have substantial presence in important global markets. For this to happen, it will need ‘local presence in the form of inventory of products, sales and service support’, besides a distributor network. During the last fiscal, Elgi acquired 100 per cent stake in two overseas companies – Rotair SpA Italy and Pattons Inc, USA.
Elgi had, on a standalone basis, reported total income from operations of Rs 231.40 crore in the Q4 of 2012-13 compared to Rs 220 crore in the same quarter in 2011-12. The Q4 net profit was Rs 21.92 crore (Rs 22.14 crore). For the full year, the total income (less excise duty) grew by three per cent to Rs 816.53 crore (Rs 794.78 crore) and net profit was Rs 71.26 crore (Rs 76.02 crore).
On a consolidated basis, the total income from operations in 2012-13 was Rs 1,144.51 crore (Rs 991.68 crore) and net profit was Rs 60.18 crore (Rs 75.56 crore).
Commenting on the company’s performance, Varadaraj said that the compressor segment had grown five per cent in Q4, mostly because of industrial segments. International business grew 15 per cent driven by the West Asian and Asian markets. He said the focus now is on ‘strengthening distribution, improving sales productivity and getting prepared for the recovery.’
Elgi’s 10,000-tonnee foundry unit, built at a cost of Rs 55 crore, is expected to go onstream by June, he said.
yegya.narayanan@thehindu.co.in