ELGi looks at diversified automotive biz for growth

29 May 2024

Chennai: ELGi Equipments is focusing on new verticals in its automotive business including supplying servicing and testing equipment for electric vehicle service centres and workshops as well as getting into vehicle scrappage and vehicle testing equipment, said company MD Jairam Varadaraj.

“Since the pandemic, our auto business (supplying servicing equipment to dealerships and workshops) has grown 15%,” he said.

“We are also partnering with EV OEMs for development programmes to make equipment to suit the needs of their vehicles,” he added. The EV business currently contributes just 1% to 1.5% to the overall revenue but “it can double and triple very quickly as EV business scales up,” he said. The vehicle scrappage sector is the “third” for the company which, added Varadaraj, is a “huge opportunity”. The company has started its first centre and is in talks with OEMs for more. The fourth is the test centre for pollution and safety of vehicles. “We’re already supplying equipment and this is a huge opportunity for us,” he added.

Apart from the automotive business, the company is also lining up Rs 255 crore capex to consolidate and expand its spare parts and other businesses. “We will start a project in FY25 and it will end in FY26 which will involve expanding our spare parts warehouse in the campus,” he said. “This will help us double revenue from spare parts from the current Rs 250 crore to Rs 300 crore to around Rs 600 crore,” he said. The spare parts warehouse is part of a larger strategy to move all operations in Coimbatore city to its new campus. “This is a 3 year to 5 year plan,” he added. The company reported standalone Q4 PAT at Rs 92.6 crore compared to Rs 80.6 crore in the year-ago period. The standalone PAT for the year was just over Rs 322 crore compared to Rs 272.5 crore in 2022-23. The standalone sales for the FY was Rs 1,843 crore.