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Introduction

Elgi Equipments Limited is an Indian multinational company that was founded in 1960. Headquartered in Coimbatore, India, it manufactures air compressors and automotive equipment. In 2020, its global revenues stood at INR 19.24 billion. The firm's shares are listed on the National Stock exchange (NSE: ELGIEQUIP) and Bombay Stock Exchange (BSE: 522074). Elgi Equipments design, develop, manufacture and service Rotary and Reciprocating types of air compressors.

Under Rotary type, the company designs and develops electric powered and diesel powered screw air compressors. Under electric powered compressors, the company designs and develops oil lubricated and oil free screw air compressors.

Under reciprocating type of air compressors, the company designs and develops oil lubricated and oil free air compressors. Single stage direct drive compressor, single stage belt-driven compressor, two- stage direct drive compressor, single and two stage industrial compressor, and high pressure compressor are manufactured under oil lubricated type of reciprocating air compressor. Single stage direct drive oil free compressor and two stage oil free compressors are manufactured under oil free type reciprocating air compressor.

Its subsidiary company ATS ELGI LIMITED manufactures automotive service equipment such as vehicle washing equipment, lifting equipmen t, body shop equipment, wheel service equipment, lube equipment, mobile service units and pneumatic tools for automotive repair and maintenance

History

1960-1980: Early stages of the air compressor business

In the late 1950s and early 1960s, the sons of the company founder, LR Govindaswamy, decided to move out of the bus transport and related businesses that LR Govindaswamy had started and capitalise on the national movement towards indigenisation. They set up plants to make automotive chains, reclaim rubber, and garage equipment. Among them was LG Varadaraj, who ran a bus body-building business in Karu r, a small town in Tamil Nadu, and had a keen interest in engineering. It was his passion for engineering that drove the brothers towards manufacturing. LG Varadaraj obtained licences to manufacture different European products in their plants in India. And with that, LGV founded Elgi Equipments with a licence to manufacture compressors for Pumpenfabrik Urach GmbH, a German company. Elgi Equipments was born in 1960, with India House, in Coimbatore, Tamil Nadu, as the registered office. Elgi Equipments received the technical know-how to manufacture compressors that were to be sold in India under the brand name, ELGi Uraca. The company imported only the major components and either manufactured the rest of the parts in-house or procured them locally. This move gave rise to a culture of learning and engineering in-house. In the first few years, ELGi continued to make products that were sold under other brand names. In the 1960s, the company got to know of a requirement from the Indian Railways. That opened up compressor manufacturing under its name. The first product that ELGi supplied to the Indian Railways was a small, one-horsepower compressor driven by a battery-operated direct current (DC) motor, and a special department devoted to developing compressors for the railways was established. Over the years, the business from the railways continued to grow and ELGi started manufacturing other products such as air horns and wipers. The other businesses that the company branched into during the 60s were mobile service units for the Indian Army to service vehicles at forwarding posts, service station equipment under the licence of Landwehr, a German company, and pasteurising and bottle washing equipment. On 11 January 1975, ELGi was incorporated as a public limited company, thus beginning a new chapter of growth and development.

1980-1990: Business expansion, complete indigenisation

In the 1980s, Elgi equipments began selling under its brand name. This decade marked the rapid growth of its air compressor business in the domestic and export markets. More specifically, Elgi Equipments  acquired wide acceptance in the USSR. During 1987 and 1988, Elgi Equipments’ exports to the USSR, Sri Lanka, Nepal, Bangladesh, Malaysia, the Middle East, West Germany, Australia, Mauritius, and African countries continued and started to receive enquiries from new overseas markets.. This was also a time when customers were looking for air compressors that could supply high volume of air, something piston compressors were unable to fulfil. Elgi equipments started its efforts to manufacturing screw air compressors in-house. The manufacturing and the assembly of parts of the airend of a screw compressor need high precision, sophisticated equipment, and niche skills. There were only a few manufacturers of screw compressors in the world and even fewer suppliers of the machines used to make airend components. In 1982, Elgi Equipments signed an agreement with Sullair, an American manufacturer, for the know-how of rotary screw air compressors. By 1984, Elgi Equipments began manufacturing screw air compressors. Three years later, the scope of the agreement was expanded to include two-stage high-pressure screw compressors. By 1985, the company celebrated its silver jubilee anniversary with its distribution network covering the entire country and many overseas markets. The 1980s belonged to the screw compressor, with rising demand from both the domestic and export markets. During this time, Elgi Equipments moved towards complete indigenisation of the major components of the compressors. Buoyed by high sales turnover of the screw compressor, the company entered into another collaboration with Sullair for the manufacture of high-pressure compressors. Elgi Equipments launched its fully indigenised two-stage air compressors in 1987. In the next few years, the product range grew to cater to various industrial applications. In the beginning of the 1990s, three key market developments impacted business: the growth of water well drilling across India spurred interest in portable air compressors, the break-up of the USSR led the company to look at other western countries for expansion and the liberalisation of the Indian economy exposed Elgi Equipments, like other players in the country, to foreign competition.

1990-2020: Business consolidation, technology leadership

This resolution, taken in 1994, encapsulates the changes that the company was planning to undertake: Considering the threat of international competition on Indian soil and the improved export scenario, Elgi equipments decided that its interests would be served if it globalises operations in a phased manner. Plans included the expansion of capacity, increased attention to high value-added products, and a higher level of standardisation. Recognising the significance of infrastructural facilities, Elgi Equipments planned manpower training, with a focus on research and development, to meet the challenges of global competition. In 1992, Jairam Varadaraj, LG Varadaraj's younger son, joined the company's board as the Deputy Managing Director. During this time, products were redesigned and standardised to reduce variety, improve productivity while cutting costs of production and enhancing their aesthetic value. After a review of its entire product range, Elgi Equipments decided to remove certain products from the portfolio such as pasteurising equipment and bottle washers. Elgi Equipments sold businesses related to the manufacturing of wipers and horns, and drip irrigation systems to its sister company, Elgi Ultra. The company retained automotive equipment and compressors in its product range. In 2007, the company transferred its automotive equipment business to a separate company, a wholly-owned subsidiary called ATS ELGI.

Products and Technology

Elgi Equipments entered into technology collaborations with Hitachi of Japan to manufacture and sell oil free air compressors, Samsung Techwin of South Korea for the purchase and selling of centrifugal compressors under the trade name 'Turbo Master', and entered in to a joint venture with J.P Sauer & Sohn of Germany for the manufacture of high-pressure air compressors for the navy and the shipping industry. Elgi Equipments continuously invested in research and development, focusing on designing and developing every part of an air compressor. Instead of being a buyer and producer of designs, the company started to work towards owning the technology that it makes and sells. Rotors and Profiles: An airend profile is a highly sophisticated component that is patented by a company and used in compressors of different makes and determines how well a compressor performs. In 1998, Elgi Equipments entered into an association with City University, London, to train its engineers in this technology. As a result of this association, the company developed its own 'N' profile airends. The new airends were called Axis. Oil Free Screw Compressors and Centrifugal Compressors: The Technology Development team perfected the Axis airends and applied the knowledge gained to build its oil free and centrifugal range of air compressors.

Vibration Analysis: Elgi Equipments collaborated with the Institute of Sound and Vibration Research, the University of Southampton, and Purdue University, a leader in vibration studies, to carry out vibration analysis of its compressors. Sound and vibration analysis has become a well-established part of product development at Elgi Equipments.

Reciprocating Compressors: The Technology Development team started developing reciprocating compressors that have applications in the PET container blowing industry and for starting large engines such as those of ships and battle tanks.

Over the past 25 years of investment, Elgi Equipments has gained the know-why of compressors by partnering with universities, investing in research programmes, and embarking on large experimental projects. Elgi Equipments is one of the five companies in the world with the capability to design and manufacture oil free airends and the entire oil free product range. The company developed rotor profile called η -V

Manufacturing Ramp-up

In order to push the envelope on quality and efficiency, Elgi Equipments internalised the knowledge and production of certain key parts. This involves making specific choices for backward integration. In order to sustain quality and efficiency, while at the same time be cost-competitive, there is a need for strategic backward integration. Elgi Equipments considered backward integration to manufacture proprietary pressure vessels, castings, motors, and key production machines. With this, Elgi Equipments gained high agility, and better control over the quality, efficiency, cost of its products and inventory.

Machine Building Division: The Company established a machine-building division in 2008 to develop in-house complex machines critical for high precision manufacturing. Elgi Equipments has custom designed and built its rotor milling machines with low vibration, resulting in tighter milled rotors. The in-house built rotor grinding machines carry out profile grinding and rotor finishing with close tolerances

Captive Foundry: Elgi Equipments has set up a furan foundry in 2013 to gain quality at every stage of production. The ISO-9001 and PED certified foundry has an installed capacity of 9,000 metric tons of grey and S.G. cast irons per annum.

Air Compressor Plant: In 2014, the company invested in a greenfield 100-acre facility on the outskirts of Coimbatore to manufacture key compressor parts. The Global Support Centre built within this facility supplies genuine parts across the globe. The Warehouse Management System (WMS) integrated with an ERP system and the Automated Conveyor System (ACS) pick up the right parts, and quickly supply with fault traceability features.

Motor Plant: Elgi Equipments recently invested in a motor manufacturing plant to design and develop motors for air compressors that meet IEC and NEMA standards.

Design Thinking: Elgi Equipments acquired Ergo Design in 2015. This industrial design house focuses on the form, fit, and finish of products

Sustainability and Community Development

Elgi Matriculation School: In 1989, the company established Elgi Matriculation Higher Secondary School in Vellalore, Coimbatore, India. This school offers affordable quality education to children from low-income families in Coimbatore and free-of-cost education to children living in orphanages. The school aims to give back to society by developing good citizens through holistic quality education at subsidised costs.

ELGi Vocational Training School: As the skilled senior workmen retire, Elgi Equipments wanted new batches of young workforce to replace them. Hence, the company invested to build a talent pipeline through its Vocational Training School with a customised curriculum. This initiative delivers a ready to deploy workforce to the shop-floor. Underprivileged students who have completed their high school education are selected to undergo a screening process before being inducted into the institute. For three years, they receive training in technical skills, basic engineering, and advanced production technology. The institute is spread over an area of 18,000 sq ft and houses multimedia classrooms and labs for training in machining, welding, and electrical work. Students also have access to sports and well-being facilities.

Transformational initiatives across People and Process

Elgi Equipments earned its technological and business successes in the past couple of decades with the agility and resilience of its employees and the improvements brought into processes focused on building product quality.

ELGi Business System (EBS): In 2008, the company established its Total Quality Management (TQM) system, the ELGi Business System (EBS) to break down the goals for each department and define the strategies to be adopted for achieving those goals. The introduction of this systems brought about functional excellence across the organisation. Elgi Equipments adopted a management philosophy to build vertical excellence in each operating function and customer-centric horizontal excellence across the business, operations, and support functions. The company believes in endeavouring to accomplish ordinary tasks in an extraordinary manner and turning extraordinary ambitions into ordinary tasks. TQM significantly enabled this vision and helped to establish a strong emphasis on customer-centricity and human resource development initiatives. Today, Elgi Equipments is the first global, industrial air compressor manufacturer to win the prestigious Deming Award in over 60 years which is a milestone in its journey.

Project Caterpillar: Elgi Equipments invested in improving the skills of its workers which added value to the products manufactured. In 2008, the company launched several training interventions under Project Caterpillar. This program was aimed to enhance the technical knowledge of the workers, empower them to manage their work by themselves, develop multiple skills in them, and provide them opportunities to perform well, earn more and take on broader and higher responsibilities. The operators who underwent the training programme are grouped into self-managed teams (SMTs), empowered to manage their daily work. The performance of each SMT and operator is measured, which determines the performance pay they earn on top of their fixed pay, which was introduced in April 2011.The Company stood as the pioneer in the region to practise the philosophy of profit sharing.

Global Expansion: In 2005, the company laid out its strategy titled Horizon 2015, setting the aspiration to become a significant global player in the compressed air industry. This called for a systematic entry into key global markets. The strategy was carefully crafted to enter "India like" markets first. By 2009, the company had established a direct presence in many important ”India like" markets such as China, South East Asia, Middle East, and Africa. This market expansion was organic, and revenues from the international business started growing. In 2013, the company reviewed its progress and saw a massive global opportunity. This led Elgi equipments to set a lofty aspiration for itself and devise new growth plans. After a reassessment of the business performance across geographies in recent years, the company has put in place different strategies for different markets. The company entered some of the mature markets in the west through acquisitions. This helped the company gain from the existing brand presence of the acquired companies in those markets while expanding the reach of its products. Elgi Equipments acquired Rotair in Italy in 2012, Pulford and Advanced Air in Australia in 2018, and Pattons Inc. and Michigan Air Solutions in the USA in 2012 and 2019, respectively. With these acquisitions, Elgi equipments entered North America and Europe, which were untapped territories for the company. Today, the strategic focus markets for ELGi are India, Australia, Europe, and North America. The company is directly present in over 20 countries across the world with a manufacturing presence on three continents and over two million Elgi air compressors running in over 120 countries.