Air compressor manufacturer Elgi Equipments has decided to cut its dependence on the Indian market and focus more on five global markets including the US, Europe, Thailand, Australia and Indonesia.
Air compressor manufacturer Elgi Equipments has decided to cut its dependence on the Indian market and focus more on five global markets including the US, Europe, Thailand, Australia and Indonesia, as the company eyes the No 2 slot in the $15-billion per annum air compressor industry.
“India only holds 5% of the global potential and we need to step up our presence in the global markets to see ourselves becoming one of the top players in this business, which is growing at 3% annually. Though we export to a number of countries, we have decided to focus on these five markets, which alone hold substantial market for us to become the No 2 player by 2027,” said Jairam Varadaraj, managing director, Elgi Equipments.
The company was recently awarded the Deming Prize for excellence in TQM, Varadaraj said.
Speaking to the FE, he said, “We have been making inroads into these five markets with our Rs. Made-in-India’ branded products. While we could succeed to some extent amid competition, we need to go a long way in establishing ourselves being the best air compressor manufacturer in the world. Its a tough challenge for us to establish ourselves a known brand in these markets from an unknown one…”
“Our dependence on the Indian market has come down from a peak of 80% to our overall sales a few years ago to 50% now. We would like to see the same is coming down further to 20% in the next few years while we continue to do business in India.”
Varadaraj said, “Our strategy is to target specific markets with specific products. We have in April introduced oil-free screw compressor in Germany. This particular segment/product alone holds $3-billion potential in the $15-billion air compressor market. We have received orders from a US client. We need to chase more such clients.”
The US, considered to be the largest market for the company with 20% share, is growing at 3%. Europe, with 15% share, is also growing at 3%. Australia, Indonesia and Thailand which together holds 15% of the global market potential are also going through growth phase. Hence, Elgi has decided to step up its focus more on these markets with specific products, he added.
Varadaraj said: “Since we have become the high quality manufacturer, we only look at acquiring distributors in the global markets to gain market access. We may acquire a well established distributor and our minimum acquisition cost would be above $10 million and we have funds to do so.”
The company can raise a minimum of Rs. 500 crore as and when needed from the markets given its low debt, he said.