ELGi Equipments, the leading air compressor manufacturer with a broad line of innovative and technologically superior compressed air systems, has been working on many fronts at a time. The company focuses on building energy saving compressors that give ‘quicker return’ on customer investments and works on to narrow the differences between oil lubricated and oil-free compressors. The company believes that IoT will play ‘multiple roles’ in the air compressor industry and become an integral part of its strategy to improve the value proposition. Last year it acquired F R Pulford & Son Pty Limited along with its wholly-owned subsidiary Advanced Air Compressors Pty Ltd, known as Pulford Air and Gas, to expand its footprint in Australia. The company continues to focus on India, USA, Europe, Australia, Indonesia and Thailand, while major investment will be on acquiring distributors. In an interview with Sharad Matade of AutoParts Asia, Dr Jairam Varadaraj, Managing Director of ELGi Equipment, said the company is planning to build a global construction, mining and drilling- related compressor business. Edited excerpts:
Q: What are those core areas of the automotive industry where ELGi’s air compressors are used?
Varadaraj: Compressed air is used across most of the processes in the auto industry, from engine manufacture to assembling the vehicles, painting and cleaning. Pneumatic tools help create auto parts and power the machines that lift, position, transport, and fasten the vehicle’s components. Metal forming machines use compressed air to turn sheets of metal into critical vehicle components.
Robots and factory workers using pneumatic fastening tools work with compressed air to assemble vehicle components. After vehicle assembly, dry oil-free air is used for cleaning and painting.
Auto Garages and body shops use oil-free compressed air to operate their spray guns. Choosing the right size and type of compressor is critical for these applications.
Q: Which are the models/range of ELGi’s compressors that are widely used in the automotive industry?
Varadaraj: ELGi’s EG Series, EN Series (Electric Lubricated Screw Air Compressors) and OF Series (Electric Oil Free Screw Air Compressors) are widely used in the automotive industry as they are highly energy efficient and come with low life cycle cost with reliability built on every component. These energy saving compressors provide quicker return on customer investments.
Q: What are the growing demands of customers of the automotive industry from air compressor manufacturers?
Varadaraj: Customers in the developed markets are highly demanding. They don’t look at just the acquisition cost of the product but also the life cycle cost which involves energy, lower downtime through quality and service. We focus on building the most efficient compressors which converts to lower energy cost to customers. We also focus on delivering the lowest downtime through relentless focus on quality and highly responsive service.
Q: Could you explain the ELGi Product Development Process (EPDP) and how does it help the company from design to manufacturing process?
Varadaraj: The EPDP process is a gate-based process that involves cross functional teams working on clearly defined deliverables. It starts with a precise definition of the customer’s requirements through a structured process for capturing the voice of the customer. This is then converted into a design that takes into account the defined deliverables as well as service and quality issues in the previous models. We use an in-house process called ‘Characterisation’ to ensure that lessons from past defects are actively considered in design. Then prototypes are assembled and subjected to both in-house and field testing. Finally, pilot lots are manufactured in the actual assembly lines and further tested in the field before releasing the product for regular sale. Such a structured process enables the company to effectively convert a customer’s requirement into a reliable product.
Q: How do you see the future of oil-free air compressors? Which markets will have better demand for them? How do you want to enter those markets?
Varadaraj: The future of oil-free compressors as seen through the lens of the present technologies is limited to specialised applications like pharmaceuticals, food processing and textiles. These specialised applications pay a penalty on two counts – the oil-free are less efficient and more expensive to buy and maintain than oil lubricated compressors.
To widen the use of oil-free compressors, we have launched oil-free air-compressors. We have disrupted the traditional norm that oil-free compressors are less efficient and more expensive to buy and maintain. Our AB (Always Better) Series of oil-free compressors are more efficient than conventional oil-free compressors (almost close to oil lubricated compressors) and substantially more attractive financially to buy and maintain. We will continue to push the envelope on the AB Series so that we eventually merge the current distinction between oil lubricated and oil-free compressors.
Q: You have an ambitious plan to be a leading player in the segment by 2027. Considering product range and other capabilities, what advantages does ELGi have over its competitors and what are the other strategies to achieve the target?
Varadaraj: On the market facing dimension of strategy (where to play?) the focus is on specific product or market segments and go deep into specific countries. Rather than try to ‘boil the ocean’ across all countries for all products, we would like to operate at a very veneer level. So, for the initial phase, we are focusing on India, Europe, USA, Australia, Indonesia and Thailand. On the value proposition dimension of strategy (how to win?) we are focusing on innovation centred around energy efficiency and oil-free and quality to be the best in the world. We believe that delivering strongly and reliably on these value propositions, will set us apart from competitors.
Q: What is the role of IoT in the air compressor industry?
Varadaraj: IoT in the air compressor industry could potentially play multiple roles. Starting at the basic level of providing real-time reports it can go all the way to predicting failures. Current technology has been deployed more at the basic level.
Our IoT system is called Air~Alert and it is based on an affordable and reliable gateway, a robust data platform that can handle big data and a strong analytics engine that can help predict failures. We have installed more than 500 units in the field as pilot installations. We have collected large amounts of data and we are working on predictive analytics.
We are progressively improving the algorithms to increase the percentage of failures that can be predicted. We foresee a significant future for Air~Alert and see it as an integral part of our strategy to improve the value proposition to the customer of lower energy costs and lower downtime.
Q: According to you, what are the reasons for not using air compressors efficiently in all sectors?
Varadaraj: Compressed air as a source of energy is an inefficient form of energy. As a consequence, many applications that can be done with alternative sources of energy, have moved away. An example of this is the move to electric tools instead of pneumatic tools in many assembly applications. However, there are many applications in which there are no alternative sources of energy. Compressed air, unlike electricity, is always generated on site. While electricity is supplied from the electricity company which invoices the customer based on actual consumption, the cost of compressed air is not fully consolidated into a bill. As a consequence the cost associated with compressed air is not fully measured and managed. This results in a sub-optimal configuration and use of compressors resulting in excessive costs.
Q: What are the new markets you are exploring; the company also plans to re-engineer its products and introduce in China, what is the status?
Varadaraj: We have not fully resourced our plans to engineer solutions for cost sensitive markets like China. We will be doing this when we have fully exhausted the opportunities in the focus markets.
Q: Apart from energy efficiency and low ownership cost, safety and robustness of the machines are also important. How do you take care of these?
Varadaraj: Compliance to stringent safety standards is an integral part of the design. We comply with all the international safety standards, and we have internal standards for safety that go beyond the stipulated ones.
Robustness is derived from defining reliability standards of the design life of each individual part. We use advanced statistical methods to ensure that the promised design life is delivered consistently in the parts used in our machines.
Q: What are your expansion plans in the near-term?
Varadaraj: India seems to be going through challenging times. With political uncertainty and the attendant tentative economic sentiments, there seems to be a ‘wait and watch’ attitude among customers. We have to see how things pan out from June.
Investment by the Government in road, rail, ports and dams has created a trickle-down demand for our products serving the construction industry. We are looking at building a global construction/mining/drilling-related compressor business.
Globally, our traction continues to be strong. Even with slowing down of industrial activity in some of the strategic markets, since our market share is so low, there is still head room to grow.
Our major investment, if any, would be in the form of acquisition of distributors. This is not something we control fully as it takes two organisations to agree to come together. Besides this, our focus would be building the talent required to execute our strategy.