ELGi Equipments Ltd, a leading manufacturer of air compressors, has entered into a technical licensing agreement with Italy-based DVP Vacuum Technology SpA, a family-owned company that has been in the vacuum business since 1973, to assemble, manufacture, and sell vacuum products.

It will be a separate vertical and the entry into the vacuum product segment is part of the company’s long-term growth strategy, under which it has identified a $20-21 billion global business opportunity, which will be served through multiple products such as compressors, vacuum products, aftermarket accessories etc.

“So far, we have been working primarily on compressors. Now, we feel we have got some level of traction globally in compressors for us to allocate some of the resources towards getting into the vacuum products, incubate that business in India, and then expand globally. Strategically speaking, from manufacturing, technology, and customer points of view, there are a lot of synergies between compressors and vacuum,” Jairam Varadaraj, Managing Director, ELGi Equipments Ltd told businessline.

Over the last 10-15 years, the company has established its compressor business in some of the largest geographies that constitute close to 65-70 per cent of the global opportunity for compressors. It has started to witness good traction in the business. “As we will grow compressor business in these locations, vacuum product space is the next largest opportunity where we are investing. It will be a separate vertical,” he added.

As part of the collaboration with the Italian company, ELGi will invest in engineering resources to absorb the DVP technology and localise them for the Indian market. Vacuum products will be produced out of its unit in Coimbatore.

“There will be an investment into an assembly line. We will also invest in a sales and service organisation. All these will happen over the next couple of years. In terms of investment value, we are unable to disclose it now as we are working on it,” said Varadaraj.

Over the past few years, the global vacuum pump market has been recording good growth, and the size of the market is estimated at $6-7 billion in 2024.

The Coimbatore-headquartered company reported a consolidated revenue of ₹823 crore in Q3 of this fiscal, up from ₹772 crore a year ago. Its net profit stood at ₹84 crore (₹80 crore). Compressors account for 92 per cent of the revenue, while the rest is accounted for by the automotive business. EEL derives around 50 per cent of its revenue from the domestic market and the rest from the overseas market.

The ₹3,041-crore ELGi is one of the largest manufacturers of compressors in India with an estimated market share of over 20 per cent. Its overseas footprint includes subsidiaries in Europe, US, Brazil, UAE, Australia and Indonesia.