World Class in Coimbatore

12th December 2022

When squeezing out toothpaste have you ever wondered how it went inside the tube? Compressed air did the trick and it’s quite possible the compressor was manufactured by Coimbatore-based Elgi Equipments. More than two million of its compressors are running in 120 countries.

The story begins with bus driver L R Govindaswamy who, in the pre-Independence era, went on to own a fleet of 300 buses. Post-Independence with nationalization progressively bringing in restrictions, the group decided to exit that business. It had manufacturing capabilities related to automotive services such as tyre retreading, engine repair and bus body building. It had also built an air compressor to inflate bus tyres. The compressor business grew manifold after Elgi Equipments was formed in 1960.

Post-economic reforms in the 1990s, the group decided to focus on just two businesses – manufacturing automotive service equipment and air compressors. "We kept the automotive equipment India-centric and offered it as a one-stop-solution. For the compressor business, we realized we had to really invest as our competitors were MNCs and the Top Two had already entered India. To remain relevant, we had to build technology, manufacturing systems and competency. But the cost was significant and the Indian market, at 3% of the global market, was not big enough," recalls Jairam Varadaraj, MD, Elgi Equipments Limited.

They decided to build a world class company. That journey started in the early part of this century. Elgi Equipments is now the sixth largest in the world. Its next target is to get in the Top Three. "We built our own technology to world class standards, manufacturing capital equipment critical for running factories and selling it under our own brand through our own network in advanced markets such as Europe and America. Today, we can beat the best in the world in product design," says Jairam.

To become globally competitive, Elgi decided it had to know not just the "how", but also the "why?". One can get the "know-how" through a licence from any existing player, but none will disclose the "why", the foundation of the technology at the level of science that is important to build next generation machines. "We had to understand the ‘why’ to master the ‘how’. We partnered with universities all over the world and individual experts, did our own experimentation and failed multiple times. In the process, we learned the ‘why’. When a European brand fails, it is forgiven, whereas an unknown brand with a Made-in-India tag will never be forgiven if it fails. We had to be better than the best," says Jairam.

Quality is key and is practised as religion in the company across all levels. And to ensure all employees are aligned, Elgi made a promise to protect the standard of living of blue-collar workers by transforming the entire method of compensation. It is defined and co-created by the company and the employees as a basket that now contains 390 items including vegetables, haircuts, school fees and uniforms, vacations and spiritual expenses. "Every year, employees go to specified shops in Coimbatore and get the new prices. Salaries are reset based on actual prices and not on wholesale or consumer price index. Every five years, we revisit the basket. Mobile phones, laptops and broadband connections at home have made it to the basket over the last few years. As standards change, we change the basket," says Jairam.