Elgi sets eyes on 2027 to emerge as 2nd largest player in air compressor biz

Being conferred the 2019 Deming Prize for Total Quality Management (TQM) is a time-bound recognition and not the end. It is a continuation of Elgi’s journey towards becoming the second largest manufacturer of air compressors in the world, said the company’s Managing Director Jairam Varadaraj.

Dedicating the award to team Elgi, Varadaraj said, “the path to success is pretty straight on paper. But realising it requires a secret sauce, and TQM is our secret sauce,” sharing details of how it began in 2008 and started gaining momentum from 2014.

Phased journey

The company has envisioned its emergence as the second leading player in this space by 2027, with a revenue target at $1.6 billion. It is now in the seventh position.

Asserting that the achievement of this goal would not be possible in one giant leap, Varadaraj said: “We have cut our journey into multiple phases. There are various products that encompass the air compressor spectrum and various markets, too. In the phase we are in now, India is a strategic market for us to protect and grow our product range, followed by the US, Europe, Australia, Indonesia and Thailand — for rotary screw compressors.”

Elgi is strategically focussed on these six markets and believes that acquisition of distributors (not companies) would give greater access to end customers. While the company’s revenue in India has dropped, its market share hasn’t, as it has done well in certain verticals, such as the oil-free screw compressor.

Stating that the product (Elgi’s oil-free compressor) could serve $3 billion out of the total estimated $15 billion market, he said “coming from an unknown brand with a Made in India label, it could take a while to be absorbed in the market. But that’s the challenge anyway.”

With India, In India

Though founded in 1960, the Coimbatore-headquartered air compressor manufacturing major started preparing for the change only in 1994.

Varadaraj stated proudly that brand Elgi is about building a “multinational company – with India, in India”.

He recalled how in the early days of this journey the company copied the laptop/ computer tagline “Intel Inside” by acquiring smaller companies in Italy and France, retaining the outer frame (as Rotair/ Belair and selling it as a local brand) while keeping Elgi at the heart of the machine.

“This did not augur well with customers and it was hurting us to sell it as a local brand of the respective country. So we decided to sell as brand Elgi from India and allow the product to speak for itself. It has started to pay. It will take time. We will do things right and consistently, but we are not in App-based business for things to go viral,” he added.