Coimbatore-based global air compressor maker Elgi Equipments is all set to go live with a new large global fulfilment centre by the middle of September this year. The centre will be located near the company’s Air Centre Plant (ACP) on the outskirts of Coimbatore, and will handle manufactured as well as bought-out parts for breakdown and consumable requirements from global customers.
The nearly 3-lakh sq ft facility is expected to operate with only around 14 people indicating extensive automation levels.
“It is a fully automated order fulfillment warehouse for the whole world,” Dr. Jairam Varadaraj, the Managing Director of Elgi Equipments, said in an interaction with businessline on Monday. We are in process of consolidating our production facilities into a single campus in Coimbatore, and we are progressively investing into that particular campus, he added.
Speaking of the company’s Q1 performance, the executive said it points to a strong domestic and global demand environment.
The air compressor maker’s Q1FY27 performance of 23 per cent revenue growth and EBITDA growth of 28 per cent points to sustained creation of manufacturing capacity in India and worldwide, said Varadaraj.
“There is still a strong appetite for investment,” he said, pointing to the company’s current enquiry levels and quotations. “The fact that there is aftermarket [demand] means factories are running as well,” Varadaraj said.
Of the 23 per cent growth, 16 per cent came from business expansion and 7 percentage points from currency effects. Varadaraj expects Elgi to bring in “low-double-digit top-line growth” for the remaining quarters, lower than Q1 growth of 23 per cent, because of the weak base in the year-ago quarter.
Without divulging specifics, he said that the company’s R&D team has several technologies under validation that could offer “game-changing” value propositions to customers.
Europe remains challenging; North America strong
The company grew its India business by nearly 28 per cent in Q1FY27, while North America grew about 34 per cent. Elgi continues to face weak manufacturing conditions in Europe.
Anvar Jay Varadaraj, Chief Operating Officer, Elgi Equipments, said within Europe, Elgi is now starting to go more direct to market and a bulk of the reorganisation costs incurred by the company in Q1 (around Rs 7 crore as per its financial statements) have been for the European market. “We are also looking at newer markets such as Eastern Europe and Germany,” he said.
Demand Match gains traction
As for its recent product ‘Demand Match’ that adjusts compressor delivery to real-time plant requirements and helps in energy savings, Jay Varadaraj says it has seen good customer enquiries and order conversions. “We are in the process of launching in the various global markets,” he added.
Commodity costs pressure
Varadaraj said a strong volume growth helped Elgi offset pressure from higher commodity costs in Q1.
“We made some price corrections, but the actual increase was higher than what we had estimated,” Varadaraj said, noting that Elgi has since implemented further price increases and expects to see the benefit towards the end of the second and third quarter.
The company is bringing outsourced equipment/material costs in-house and using R&D-led product redesign to reduce material costs. It is also looking to move certain global support functions currently outside India into India. It has already made progress in moving finance, HR and such support functions to India, and the next phase could cover business-enabling functions too.