Elgi Equipments Limited: history, ownership, mission, how it works & makes money

A Brief History of Elgi Equipments Limited

Elgi Equipments Limited, founded in 1960, is an Indian company headquartered in Coimbatore, Tamil Nadu. The company initially focused on manufacturing air compressors and has since expanded its product line to include a variety of industrial and automotive equipment.

In 1982, Elgi ventured into the international market by establishing its first overseas subsidiary in the Middle East. By the early 1990s, it had built a significant presence in more than 100 countries.

The company made a pivotal move in 1995 by launching the ELGi brand of air compressors, marking a significant milestone in its branding strategy. This launch contributed to a consistent increase in market share.

Elgi Equipments went public in 2008, listing its shares on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) under the symbol ELGIEQUIP. The Initial Public Offering (IPO) saw a robust response, raising approximately ₹1.2 billion.

In 2012, the company reported consolidated revenue of ₹8.2 billion with a net profit of ₹724 million, indicating a strong financial position.

Elgi further diversified its offerings by entering the automotive service equipment segment in 2014, providing advanced products like tire changers and wheel alignment machines.

By 2019, Elgi Equipments achieved an annual revenue of over ₹20 billion, showcasing a CAGR of approximately 12% over the preceding five years. The company also reported a net profit margin of 8.9%.

In the fiscal year 2021-2022, Elgi Equipments recorded a revenue growth of 18% year-on-year, reaching ₹23.5 billion. The net profit stood at ₹2.1 billion, a substantial increase compared to the previous year.

Elgi Equipments focuses on sustainability and innovation, investing over 5% of its revenue in research and development annually. The company’s commitment to environmental sustainability is evident in its manufacturing process and product design.

Below is a comprehensive table summarizing significant financial data over the years for Elgi Equipments Limited:

As of 2023, Elgi Equipments has continued to strengthen its global footprint with numerous acquisitions and joint ventures, enhancing its capabilities to serve distinct market requirements. The company remains a leader in air compressor manufacturing, focusing on innovation and customer satisfaction.

The company holds various certifications, including ISO 9001, ISO 14001, and ISO 45001, ensuring compliance with international standards in quality management and environmental practices.

A Who Owns Elgi Equipments Limited

Elgi Equipments Limited, a major player in the air compressor industry headquartered in Coimbatore, India, has a diverse ownership structure. As of the latest available data in October 2023, the ownership distribution among various stakeholders is as follows:

The promoter group, which includes individuals like Mr. M. A. S. S. Chocko and Mr. M. A. Subramanian, has a significant stake in the company, totaling approximately 62.05% of the company's shares. This concentration of ownership enables the promoters to play a pivotal role in strategic decision-making and the overall direction of the company.

Foreign Institutional Investors (FIIs) have shown considerable interest, holding about 21.60% of the shares. This level of foreign investment reflects confidence in Elgi Equipments' growth potential in both domestic and international markets.

Domestic Institutional Investors (DIIs) own 9.25% of the company, indicating strong local institutional support. This can be attributed to Elgi's consistent financial performance and innovative product offerings, which make it a lucrative investment opportunity.

In the public domain, approximately 7.10% of shares are held by retail and other small investors. This segment often reacts to market trends, news, and the company's quarterly performance, contributing to the stock's volatility but also to its liquidity.

As of the fiscal year 2022-2023, Elgi Equipments reported a revenue of approximately ₹2,210 crores, an increase from ₹1,903 crores in the previous year. This growth, coupled with an operating profit margin of about 12.45%, showcases the company’s operational efficiency and effective management.

Furthermore, the company’s earnings per share (EPS) stood at ₹8.75, reflecting a robust performance relative to industry peers. With a market capitalization of around ₹9,000 crores as of October 2023, Elgi Equipments represents a substantial player in the industrial equipment sector.

The stock has demonstrated resilience, trading in the range of ₹370 to ₹420 over the past twelve months, indicating a relatively stable investor sentiment despite market fluctuations.

Elgi Equipments Limited Mission Statement

Elgi Equipments Limited, a prominent player in the air compressor industry, is driven by its mission to provide high-quality, innovative air solutions that promote sustainable industrial development. The company focuses on delivering reliable and efficient products while maintaining a commitment to customer satisfaction and environmental stewardship.

As per their latest annual report, Elgi Equipments aims to achieve a market-leading position in the air compressor segment by harnessing advanced technology and research. The company states that its mission is to create value for customers through world-class quality and innovative engineering solutions that help industries enhance productivity and efficiency.

In line with their mission, Elgi Equipments reported an increase in their R&D investments from INR 44 crores in 2021 to INR 70 crores in 2023, reflecting a commitment to innovation and development of new technologies. The company's focus on sustainable practices is evident through their wide range of energy-efficient products designed to minimize environmental impact.

The mission statement emphasizes Elgi Equipments' dedication to creating a company culture that thrives on integrity, teamwork, and community engagement. Their goal is to establish long-term relationships with customers by providing sustainable solutions that meet industry needs efficiently.

Elgi Equipments also emphasizes the importance of exceeding customer expectations. Their customer-centric approach aims at enhancing operational efficiency through reliable and advanced air compressor solutions, ultimately contributing to the productivity of various sectors, including manufacturing, automotive, and healthcare.

The company's commitment to sustainability is further demonstrated through its initiatives in reducing energy consumption. Elgi’s products are designed to save energy, with efficiency ratings often exceeding 90%, which aligns with global standards for sustainability in the industrial sector.

In the competitive landscape, Elgi Equipments has positioned itself as a leader, with a diversified product range that includes rotary screw compressors, reciprocating compressors, and portable air compressors. Their mission reflects a continuous drive for innovation, supported by significant investments in technology and customer support.

With a vision to be the world's most preferred air compressor manufacturer, Elgi Equipments is actively expanding its global footprint. Their operations span over 100 countries with a strong network of distributors and factories, ensuring that they are well-equipped to meet the growing demands of the market.

In summary, Elgi Equipments Limited's mission statement encapsulates their dedication to quality, innovation, and sustainability, positioning them strongly in the air compressor industry while also contributing positively to society and the environment.

How Elgi Equipments Limited Works

Elgi Equipments Limited is a prominent player in the air compressor manufacturing industry, specializing in a wide range of compressed air solutions. Founded in 1960, the company has established its footprint across various sectors including manufacturing, automotive, and food processing.

As of the financial year ending March 31, 2023, Elgi reported a consolidated revenue of ₹1,214.76 crore, marking a growth of 28% compared to the previous year. The net profit for the same period stood at ₹102.47 crore, which represents a significant increase from ₹76.78 crore in FY 2022.

Elgi operates through two primary segments: Industrial Air Compressors and Service & Maintenance.

• Industrial Air Compressors: This segment contributes the majority of the revenue, accounting for approximately 85% of total sales. The product range includes reciprocating and rotary screw compressors.
• Service & Maintenance: This segment supports the installed base and generates recurring revenue, contributing around 15% of total sales.

Elgi has a robust operational framework that includes in-house manufacturing capabilities. The company has six manufacturing plants located in India and a subsidiary in the USA. This strategic base allows them to leverage local and global markets effectively.

The company has embraced technology and innovation, investing approximately 6% of its revenue into research and development annually. This investment has led to enhanced product efficiency and sustainability classifications across their product lines.

Elgi's international presence is significant, with exports constituting around 40% of the company's total revenue. They operate across more than 100 countries, further diversifying their market risks.

In terms of stock performance, Elgi Equipments Limited has delivered strong returns to shareholders. As of July 2023, the stock price was approximately ₹450, reflecting a growth of about 35% year-to-date. The company's market capitalization stood at around ₹18,000 crore.

Elgi has also committed to sustainability, with an aim to reduce energy consumption across its product line by 20% by the year 2025, aligning with global sustainability practices.

The management has outlined future strategies focusing on product innovation and expanding its global footprint, particularly in emerging markets, to sustain growth momentum. Elgi Equipments continues to enhance its manufacturing capabilities and distribution networks to cater to diverse industrial needs efficiently.

How Elgi Equipments Limited Makes Money

Elgi Equipments Limited, a prominent player in the air compressor industry, generates revenue through its diverse range of products and services. The company focuses on manufacturing and selling air compressors, as well as providing associated equipment and services globally.

Revenue Breakdown by Segment

Elgi Equipments categorizes its revenue streams into multiple segments. Below is a table illustrating the revenue distribution across key product lines for the financial year 2022-2023.

Geographic Revenue Sources

The company also derives income from various geographic markets, enhancing its international presence. The following table provides details regarding revenue contributions by region.

Cost Structure

Elgi's profitability is supported not just by its revenue but also by its cost management. The company's cost of goods sold (COGS) for FY 2022-2023 was reported at ₹1,197 crores, leading to a gross profit margin of approximately 22%.

Recent Financial Performance

For the fiscal year ending March 2023, Elgi Equipments reported a rise in net sales amounting to ₹1,925 crores, representing a year-on-year growth of 10%. The net profit stood at ₹234 crores, leading to a net profit margin of 12%.

Research and Development Investments

Continuous innovation is crucial for Elgi Equipments. In FY 2022-2023, the company allocated around ₹58 crores, which accounts for approximately 3% of total revenue, towards research and development to enhance product efficiency and sustainability.

Market Trends and Competitive Position

According to industry reports, the global air compressor market is projected to grow at a CAGR of 4.1% from 2023 to 2030. Elgi Equipments maintains a competitive advantage through its product offerings, including energy-efficient and oil-free air compressors, serving various industries such as manufacturing, automotive, and food processing.

Conclusion

By leveraging its extensive product range, global presence, and commitment to innovation, Elgi Equipments Limited effectively generates revenue and maintains its position in the air compressor market.