Elgi Equipments Ltd

Elgi Equipments Limited (EEL) was incorporated on 4th March, 1960 as a Private Limited Company, Elgi Equipments was converted into a Public Limited Company in 1975 and came out with a Public Issue of 75,000 shares. It was promoted by L G Balakrishnan, his Bros. and Associates. Presently, the Company is engaged in manufacture, trading of air compressors and providing after sales services. The Company has manufacturing plants in Coimbatore, India. As part of its modernisation plans, the company invested Rs 40 crores in the upgradation and expansion of the manufacturing facilities, especially of compressors. The company was initially manufacturing garage equipment like low-range reciprocating compressors, car-washing machines and hydraulic lifts, with technical know-how from Pumpen Fabrik Urach, Germany. Later, in technical collaboration with Landwehr, Germany, the company started manufacturing lubricating equipment. During 2003-04, the company included three new products namely, Vayu Series Borewell Compressors, 3.5KVA Genset and Electronic Tyre Inflator. In the year 2004-05, the company commissioned its first Four Centrifugal Compressor and Tank Mounted Screw Compressor. The company has obtained the technology for the manufacture of pasteurising plants from Gobel, Germany; screw compressors from Sullair Corporation, the US; bottle-washing machines from Krones, Germany; and automatic vehicle- washing machines from Ceccato, Italy. To strengthen its technologies, the company has tied up with City University, London, and hired consultants to help improve its products and processes. In 1999-2000, a branch office was established in SriLanka to explore the Sri Lankan market. During 2004-05, the company entered the petrol or kerosine engine business through an association with Robinson of Japan via their associates in Sri Lanka. In Aug. 2000, Elgi Equipments has entered into technical collaborations with Hitachi to produce Oil Free Air Compressors in India. It has also tied up with Samsung Techwin Co Ltd, an affiliate of the Samsung group, to bring to India their centrifugal compressor - Turbo Master. To upgrade automotive equipment and also to manufacture Compressors with higher capacities and pressures the company has launched a joint technology upgradation plan with City University UK. During 2002-03 the total capital expenditure incurred were Rs.78.12 million and the captial expenditure were funded by way of internal accruals. In the year 2004, the company has entered into a Collaborative Venture with JP Sauer & Sohn, Germany to envisage the manufacturing of compressor required for Battle ships. The company made an arrangement with Mahindra & Mahindra for supplying the engines for their gensets in 2004-05. During the financial year ended 31 March 2014, Elgi Equipments incurred Capital Expenditure of Rs 917.23 million, of which Rs 584.30 million pertained to plant and machinery through internal accruals. During the year under review, the company's new foundry commenced commercial production. This backward integration was done primarily to improve the quality of the company's products. This has been achieved in significant measure besides the added benefit of having a lower cost source for castings. In spite of uncertain market conditions in the domestic market during the year, the company retained its market share and pushed ahead in some segments. In the international market, the company's new range of products was well received in all markets and able to make a mark in a very short time. This has been particularly observed in the European and American markets. On the other hand, the company faced significant challenges in creating a robust distribution channel in Asian markets. In spite of this, some significant milestones were achieved, the most important being the creation of multiple reference installations for oil free screw compressors. During the year under review, in spite of extreme sluggishness in the automotive sector, Elgi Equipments' subsidiary ATS Elgi Limited sustained its market share throughout the year. During the financial year ended 31 March 2015, Elgi Equipments' manufacturing facility at the new site became fully operational. This has been achieved with little disturbance to regular production and at least cost. Elgi Equipments continued to perform well in the Middle East and African markets, especially with smart growth in industrial compressors. Consequent to Elgi Equipments' decision to restructure its China (Shanghai and Zhejiang) operations by closing down Elgi Compressors Trading (Shanghai) Co Limited and continue to carry on trading operations in Elgi Compressors Zhejiang Limited, the company has written down the value of the investments, advances and receivables relating to Chinese operations to an extent of Rs. 551.76 million, accounting it as an exceptional item to the Statement of Profit and Loss for the financial year ended 31 March 2016.The company's business operations were severely affected in China due to the economic slowdown and hence the company took a decision to restructure the operations in order to minimize losses and approach the market in a focused manner by supplying products that meet the local market requirements. During the year under review, Elgi Equipments acquired Ergo Design Private Limited, an independent industrial design studio. Ergo Design Private Limited caters to the needs of Elgi Equipments to a large extent. The acquisition was done in order that the company has better control over the Intellectual Property rights created by Ergo Design Private Limited using the company's inputs. During the year under review, Elgi Equipments' products continued to be well received by distributors and customers in international markets especially in USA, Europe and the Middle East. The high cost of operations in the company's French operations combined with the country's restrictive labour practices made it clear that profitability of Elgi Equipments' wholly owned subsidiary in France Belair SAS is a challenge. The company took a hard decision to handover Belair SAS to the French judicial system for legal redressal. The company had acquired Belair SAS in February 2010 and since then has invested over Euro 6.8 Million to build the business. During the financial year ended 31 March 2017, consequent to Elgi Equipments' decision to restructure its China operations, Elgi Compressors (Zhejiang) Limited has de-registered its manufacturing license. The company had promoted and invested in Elgi Compressors (Shanghai) Co. Ltd (ECS) as a trading entity, based on local advice at that time that the manufacturing entity, namely Elgi Equipments (Zhejiang) Limited could not carry on trading activities. The company had re-examined the matter in the eve of restructuring China operations on the basis of legal advice, it was confirmed that Elgi Equipments (Zhejiang) Limited could itself engage in trading activities. Therefore, as part of the restructuring process, the Board of Directors thought it prudent to wind down ECS. In pursuance thereof, select employees of ECS numbering six personnel were transferred to Elgi Equipments (Zhejiang) Limited. Other employees of ECS were let go after following legal procedures. Formalities have been completed at the EXIM office and ECS cannot engage in trading activities now. A clearance is pending from the tax bureau but this does not preclude ECS from proceeding with further action for further winding up. ECS will now apply for filing with the Statutory Authority (Minhang BOC) along with necessary particulars as soon as possible to start the winding-up process officially. Belair SAS, France, previously the wholly owned subsidiary of Elgi Equipments was handed over to the French Judicial System for legal redressal on 26 April 2016, considering the cost structure and business operations which was challenging for the company for some time. Attempts on finding solution to the problems were not successful. A situation arose where Belair was unable to even meet the routine financial commitments to run its business operations smoothly. Belair was also unable to service its debts to the company. Therefore, it was decided to seek protective action before appropriate Commercial Court in Annecy, France. The Court appointed an administrator on 28 April 2016. Belair is no longer under the control of Elgi Equipments and is under legal redress as per the French laws. By a judgement and order dated 1 June 2016 and subject to the conditions mentioned therein, the Commercial Court of Annecey ordered assignment of Belair's AIRBEL business to AIRMAX HOLDING and pronounced the judicial liquidation of SAS Belair. During the year under review, Elgi Equipments incorporated a Limited Liability Partnership in the name of Industrial Air Solutions LLP. Elgi Equipments is a partner with Mr. Rajeev Sharma, an ex-employee of the company who holds equal shares along with the company. The LLP will be a model distribution entity to handle Sales and Service of Elgi Compressors for the areas of Coimbatore and Tiruppur by showcasing some of the best business practices to help build a strong brand and improve market share in these areas. During the financial year ended 31 March 2018, Elgi Equipments continued to gain share in North America where its machines are fast gaining reputation for reliability and energy efficiency. For leveraging information technology, various digital and automation initiatives were implemented during the year in collaboration with the business functions. The company was one of the early adopters of ERP (Enterprise Resource Planning) system and during the year the company successfully completed implementation of upgrade to Infor, LN ERP Software. During the year 2019-20, Company acquired Michigan Air Solutions, LLC, an independent compressor distributor in the USA and Company's European expansion plan gained full traction. During the year 2019-20, ELGi Sauer's Engineering Support Team Coimbatore (ESTC) was established to provide exclusive engineering support to the parent Company, Sauer-Germany, and its global subsidiaries. It is fully operational now. ELGi Sauer also commenced construction of a new factory in the outskirts of Coimbatore. In FY 2021, the Company launched ELGi's oil-free AB series screw technology throughout Europe thereby helping their customers in the total cost of ownership, improved reliability, and a reduction of their environmental impact. During the year 2021, the Company acquired F. R. Pulford & Son Pty Ltd, an independent distributor, (Pulford Air & Gas), a Sydney based distribution company for industrial Compressors and air products. During FY 2022, Company invested in Michigan Air Solutions (MAS), distribution business by setting up a new location for Detroit operations. It grew sales at Pattons, distribution business covering North Carolina, South Carolina, Georgia, Virginia, and Alabama. It invested in leadership, sales, and service talent with improving business' structural profitability for expanding sales and market share. During 2022-23, Elgi Compressors Vietnam LLC, a wholly owned subsidiary of the Company was incorporated. CS Industrial Services LLC, USA, a joint venture company was formed by Elgi Compressors USA Inc., a wholly owned subsidiary of the Company. In FY' 23, the Company launched Digital Innovation DOJO - ELGi's digital transformation strategy based on the premise of Experiment, Start Small & Scale Fast'. Read More