Demand for compressors is a function of industrial growth and capacity expansion, says Dr Jairam Varadaraj.
What is your analysis of the global air compressor market? What are the key trends driving the market growth?
Demand for compressors is a function of industrial growth and capacity expansion. Industrial growth will necessitate upgrades to existing compressors (due to high maintenance costs or better efficiencies with newer technologies) at one level and sustained industrial growth will result in capacity expansion that will generate demand for compressors. In most of the developed markets, a larger portion of the demand is from upgrades while in developing markets a larger portion comes from capacity expansion.
Which are the key regions where ELGi is focussed on besides India?
Besides India, we are focussing on Europe, US, Australia, Indonesia and Thailand.
Tell us about ELGi's overall manufacturing capacities and capabilities.
ELGi's manufacturing capabilities are architected to augment the value proposition to customers. We judiciously integrate backwards to enable this. Our backward integration into the foundry and pressure vessel production is to significantly enhance the quality of our products. Our investment into our own motor production is to enhance the energy efficiency of our compressors.
ELGi's goal is to be the No. 2 player in the global air compressor market by 2027. What is your strategy for achieving this?
On the market facing dimension of strategy (where to play) the focus is on specific product/market segments and go deep into specific countries. Rather than try to "boil the ocean" across all countries for all products and operate at a very veneer level. So, for the initial phase, we are focusing on India, Europe, US, Australia, Indonesia and Thailand.
On the value proposition dimension of strategy (how to win), we are focusing on innovation centred around energy efficiency and oil-free and quality to be the best in the world.
Which are the key industry sectors that are driving the growth for you?
There are no specific industries that contribute disproportionately to our growth. In any given year, different industries exhibit different growth and thus the opportunity for us. In any case, even in the best of years for any specific industry, the contribution of such an industry to our revenue is not significant enough to single out.
What role do you see innovation playing in this growth strategy?
Innovation is a central pillar to our strategy, as explained in the previous points.
Last year, ELGi acquired F.R. Pulford & Son Pty Limited along with its wholly owned subsidiary Advanced Air Compressors Pty Ltd, in Australia. How are you leveraging on this acquisition?
Like I have mentioned, Australia is a strategic market for ELGi. While it may not be as large as the European or US market, the market demands high performance (across products and services) and correspondingly rewards companies that deliver this. With our high-performance products, the acquisition of Pulfords has given us an opportunity to substantially improve the service and support engagement with customers. We are investing in people and processes to further enhance this capability and value to the customer.
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