Elgi Equipments Limited (ELGIEQUIP) Earnings Call Transcript & Summary

Okay. So again, good afternoon. Thank you very much for being here. I know you've had a long day. I hope it was worth the efforts that you put in. We appreciate the time that you've spent looking at what we have, we can talk about it as we go along. So I'll quickly go through an overview of the company, a standard disclaimer so that we are not put a task by SEBI. So we are trying to build a global company. We are getting there. We have 600 distributors out of that, only about 60 roughly are in India. So the balance are all outside the country. 230 employees, out of which close to 400 are outside the country. Then the rest of the statistics are pretty straightforward, nothing -- it's great. So can you just still shut it down with some echo happening? So I want to talk a little bit about why we exist as a company. I mean this is something that's very close to our heart. And we seriously believe that this is good for business as well. Profit is important. It's a very important driver, but I think we exist beyond profit for a purpose, right? And our purpose is called conscience in action. And what does it mean? It basically means that when you touch our stakeholders, our customers, our employees, our distributors, suppliers, investors and society, put yourself on the other side and behave that way and be that way, right? So that's the fundamental tenet of conscience in action. We find increasingly that when we are customers, we have very high expectations. And when we are suppliers, we lower our standards, and that is the hypocrisy , right? The same thing when you're dealing with suppliers, you have a hypocrisy. You deal with distributors, there is a hypocrisy. So we want to get rid of that hypocrisy and become a good company. And the minute we become a good company. I think there is profit at the end of the tunnel, yes? So that's important to us in our brand promise that you've seen in most of our thing is always better. These are our values that we believe the practice of which is going to make us fulfill conscience in action, when we connect with each of our stakeholders. So as we move forward from -- we started it this year, we will see the intensity of it picking up. This will get embedded very strongly in our policies, in our procedure and the behavior of people, right? So far, you can say, so that does it mean that you are not living your value so far? I think, honestly speaking, not fully, right? It was there. But now we want to bring it to the center of the existence. And that is going to be a big game changer. A lot of learning for us, a lot of change that we need to individually go through. But I think at the end of the day, that is good for everyone, yes. We are present globally, and whatever I said we are going to do it globally, and that's going to be the challenge. But I think it will be an interesting challenge to do. So this is something that you already know. Our various subsidiaries and joint venture. The last one is the latest that we have a license agreement for Vacuum. We'll talk a little bit about a Vacuum later on. Our leadership team, we are going through a lot of changes. You will be meeting some of our new leaders. We are investing quite heavily in building competencies to take the company to the next level, right? So what we are talking about is in the last 20 years, I think we built -- we were overly focused on the market, the front end, the sales and a little bit on the back end, right? But I think what we need is fundamental capabilities and platforms on which we'll be able to grow and grow very efficiently and effectively. So to be honest, when we did a review of what we have done over the last 15, 20 years, we did, I think, 6 or 7 acquisitions. We entered multiple markets. I think we could have been a lot more efficient and effective with all this. If we had had solid platforms that we have built, right? For instance, our financial control systems, right? They all exist as country-specific systems. Now, we've got to integrate it. So when we go there, when we go to a new country, a new acquisition, a new -- we are able to put our systems that are on fundamental -- that are fundamentally sound and standardized, right? The same thing with IT, same thing with our digital platforms. So all this is a new pivot for us, right? This is not something that happens that by just saying, okay, we just do it, state it. But this is going to be a transformation that will take us a couple of years. And we are going to make investment, we'll come and talk about that. So a little bit on the history. 1960 is when we were incorporated, we went public in '75. Various license agreements and developments of the product. Really, our transformation started in 2010, '12, that's when we started shifting the focus of the company towards markets outside the country. And of course, a lot of -- when you look back, you forget the rearview mirror because you're looking at the front and driving it. Every once in a while, you pause and you look back and say it's not bad. I mean, we've done some reasonably good things. So -- and this, of course, is very exciting for us, and we'll talk about that as well today. You've seen the facility. We'll continue to invest. You may have been told that we are in the process of shifting our city campus progressively over the last -- next probably 6 years, we will move them into one integrated campus, 2 factories are being set up there. So that will make us even more efficient than what we are today. We have done selective integration backwards. Three things that we have done is a foundry. And I've always said foundry is not a financial play. We didn't do it for cost reduction. We did it for quality. And that was a very critical investment looking back. We did that about 10 years ago. I can't tell you the value that we have derived in our competitiveness in going global by virtue of having our own castings. The same thing we did with motors about 3, 4 years ago. That was not just a quality play. It was also a risk, sourcing risk as well as a cost play. The sourcing risk came from the fact that we were buying Chinese motors, just like our competitors. For the last 15 years, we've been buying them. Quality is better than the Siemens water that we buy in India in terms of defect rates, landed cost is 30% to 50% lower, right? Now where is the risk? The risk was when we opened the motor and we did a ground-up costing based on basic raw material cost, it did not add up. There was something missing, and that mystery was the risk, right? When will that mystery go away and therefore will leave us vulnerable. So we said, if we can use technology to build motors that are far superior than the Chinese machines, both in efficiency as well as quality, but at a lower cost than the Chinese. Then we will see whether we can do it. So we put a team together. We didn't make any investments other than some testing equipment. And we built the first set of motors and they were very good. That gave us the confidence that we can go ahead. Today, that's become another huge strategic pillar for us, a competitive advantage. And we'll present a little bit about the motor plan and what it's going to look like. Pressure vessels we make because of a safety issue, right? We can't afford to have any failures, especially an Indian company and world markets. So we got our Deming. For us, Deming is not the end. It's a journey, right? It's a milestone that we have crossed. We have a long way to go. This is another thing that we are investing into the future. We want to make that philosophy of Deming rather than the letter of Deming, get deeply embedded in the company. That will not only improve purpose, live our purpose but also enhance our profit. There is a huge opportunity for us to improve on all dimensions, and this is going to help us. Product offerings, this is the advantage of the compressor business. Every industry needs compressed air and therefore, compressors. So we don't have any one industry giving -- contributing to more than 2%, 3% of our revenue. So that risk is very, very low. We are agnostic of any one specific industry. So that's the advantage. The behavior of 80% of the customers, the other 20%, which is beginning to become a little bigger in India is on price, but 80% of the customers buy on efficiency. And we are right up there in the world as one of the most efficient compressors, right? So that gives us -- so for us now that's table stakes. Now we are looking at what's next, what's beyond that, right? And we'll talk a little bit about that as well. So a full range of machines for various segments of customers, both on the industrial side and on the portable side. Reciprocating and high-volume machines, accessories, this is another area of strategic that is important. We have introduced dryers in our own brand. We manufacture -- earlier, we've had dryers that were sourced. Now we build our own dryers, and that range has been expanded now on refrigeration dryers. We will get into also desiccant dryer. So that's an area that we will focus on in the future. Railways is a business, India centric. It's not something that is -- you want to jump up and talk about every day in the morning. But it is reasonable business that happens. It's government-centric, so to that extent, it's a risk. But slowly, it is changing with government looking to offload the manufacturing of locomotives to private enterprise. And we won the first order, first locomotive tender that went to Siemens. We won the tender from Siemens. So that's a good thing that is happening and that project is doing exceedingly well. And this could be a segue for us to get into locomotive OEs worldwide. These are some of our accessories that we do. Our ESG is part of our purpose to society. We do a lot of it, and I think this is something that I should be very careful now to talk about. In America, this is not a good thing anymore, right? So we have to sort of when we go and do this in America, we have to close to this, which is unfortunate, but we'll definitely not let it go. We may not be very visible and vocal about it, but we'll definitely not let it go. So this is -- we messed up. We got your feedback last time. We don't have to wait until the next meeting. We could have given you the feedback. All the responses are there. We could have got it in a week's time. So we will do that in -- from this meeting onwards, we'll get your feedback within a week's time, right? So this was the first question, from one new slide that highlights manufacturing advantages. I think I talked a little bit about it, about why castings, why we build our own [indiscernible] machines. You've seen it when you visited our factory. It's -- fundamentally, the idea is use technology to reduce cost, not use cheap Indians to reduce cost, right? In fact, we are going exactly the opposite as part of living our purpose. Nobody wants to be cheap. So if I'm the CEO of the company, and if I don't want to be cheap, then I should make sure my employees are not cheap, right? It's fundamental, right? So how do you build an architect company that is expensive with people but competitive in the front end? And I think that the answer is technology. How can we deploy? And that's what we do in various parts of our backward integration. Tough call on competitive insight versus transparency. So good insight. So thank you for that. Breakup of global Indian screw and product, it's a little competitively sensitive. So excuse us, we will not be providing that. Again, we are presenting some subsectors of the different compressors, we give it to you. We could only the compressor plant. I think this time around, it was organized, right, the assembly lines, not the greatest compared to the other one, but we're getting there. The next plant will be very different. Plan to meet in Mumbai. We actually wanted to do it this time, but we had some logistics issues. But I guarantee you next time we'll be in Mumbai. I'll definitely -- we'll make sure it happens. Make it a single-day event. I think we have done it now. Hopefully, the flights will be like karma for everyone is good and you catch your flights back home. Again, segment splits, vacuum splits, product splits are all competitive. On regions, this is going to be presented here, and thank you for your wishes. So that's really the feedback from last time. We will make sure that this feedback gets to you this time around within a week. So this is a rough split up in India. Globally, we don't capture it because a lot of it is in -- globally is distribution-led and distributors don't share customer information and segments, right? So if you look at it, you don't see any one large industry. And even if you take this pie chart and you take it across years, it will not be consistent, right? So year-on-year, for instance, iron and steel and for instance, cement, cement in 1 year could be as high as 10%, and another year, it will just collapse, right? So it's all about timing. Oil free, this is a little bit more stable because the applications are all very specific. So pharma, food and beverage, power and chemicals, these are the main segments that are big consumers of oil-free machines. Portable, if you look at it, portable is -- this again, it can become very large or it can shrink down to very small. Earlier, we lost our competitiveness. We have gained it fully back, right? So today, we are a dominant player and if the market comes up, we are the preferred choice. This is '24, right? [Presentation]

Okay. So I'll hand it over to Anvar.

Hello, everyone. Just wanted to take you through the regions. So our largest region, ISAAME, which includes India, South Asia, Middle East, did very well. So over the past 5 years, a 17% CAGR. In the first bullet, especially in India, we've increased or improved our market share across all of our different product segments. And part of what enabled this is that we've been very good with many of our product launches, getting them on time with some very powerful value propositions that always helps get us new customers. A couple of the specific things that we launched was the Super Premium series. It's a two-stage machine, especially in higher kilowatts, particularly relevant for energy-intensive industries such as textiles. This has helped us produce some news in that segment, some good conversions. And the PG850 portable machine. We're a strong leader in the construction and mining segment with our diesel portable machines. And operationally over the last couple of years, we've become much tighter with being a leader in bringing in new products for that segment. We've had some slowdown in industries such as textiles, which were large customers of ours, but we've been able to mitigate that by gaining growth in other segments and other industries. We've launched a particular -- a specific go-to-market project with a large firm to help us improve share. The goal of that project is to basically go out and identify new customers, customers that are not really considering us. What we found is that when we are at the table for a particular opportunity, the rate at which we win is very high, the challenge is to go out and find new customers. So we're really going through multiple avenues to be able to build that awareness, starting with increased feet on street, significant increase in marketing horsepower, customer engagement and so forth. So I feel very confident about the results that we've had to date, and I think we'll continue the momentum quite well into next year. A couple of things that we need to be wary of. We see a significant in influx of lower-priced Chinese products in the lower kilowatt price-driven sector. Now we have some plans internally to be able to address this with our own product portfolio. We'll probably talk about this a little bit later. And there were some segments from last year that had some seasonal impact that didn't necessarily replicate this year. So for example, the cashew segment. But this is something that we're trying to address in our budgeting. We're trying to be thoughtfully much more conservative about such segments going forward so that we're putting increased emphasis on the businesses where we can control outcomes. North America region, very close to my heart. I spent nearly 5 years there. And we often get this question, what really happened in FY '23 versus FY '24, FY '25? I think there's a couple of things. If you recall, FY '23, we were still sort of enjoying the post-COVID hangover, record prices, record volume increases. If you had capital equipment in stock, you had multiple buyers for one piece of equipment. So it was really an unprecedented buying condition that's likely not to be replicated anytime soon. And one of the things that you will see in FY '23 North America that if you go and look at the compressed air and gas institute volume numbers that are published on a quarterly basis, those numbers were by far the highest during that year. So sort of linked to that, when you've seen that level of consumption in that year, you're likely to see a dip in the overall demand in the market. And that's kind of what's happened. But what's a little bit more nuance for our business is that in North America, we have 5 businesses. We have the industrial business, the portables business, 2 distribution businesses and the medical air and gas business. FY '23 was also the best ever year for the portables business, which the best analogy I can offer for you very similar in its cyclicality to the construction and mining of the water well segment in India, very tough to predict, but very intensive on cash because you need to have the products on site, right? So it's tough to forecast and whatnot. So that business is nearly -- is less than 50% of what it used to be in FY '23. Our leader who runs that business believes were at the bottom of a 3-year cycle, and this is likely going to continue. So when I actually put -- what I actually put results in context, you can kind of see that the businesses where we can actually control outcomes the industrial business, the distribution business and the medical air and gas business, they've actually performed quite well. Now the distribution business, we're still in a recovery phase especially on the service side, the medical air and gas business is doing very well for us. And the industrial business is back to those pre-COVID levels. Going into the new year, I feel very confident that the industrial business will continue to grow. We're investing a lot in expanding our sales capacity across the U.S. As you can imagine, the U.S. is a very large market, but it's also a very homogenous market, which basically means that the same strategy that works in Texas will also work in California, which means that you get a lot of scale for the type investments that you make. So we can very confidently increase our sales capacity, our reach in the market for growth. So feeling quite good about North America going into the next year. Europe, I mean everyone is aware of the concerning macro conditions in Europe, high energy costs, general political uncertainty and many of our focus markets have been in chronic decline for a couple of years now. So Italy, France and so on and so forth. But the fact that we've enjoyed nearly 22% CAGR over the last 5 years is a testament to the quality of our execution. The way in which we are pivoting amidst these conditions is that we are trying to focus resources far more in those countries where we believe there is larger opportunities. So going a little bit deeper in Italy, thinking about the Nordics, the Nordics is doing quite well. And we're also being much more thoughtful about very specifically targeting certain distributors that we want to have conversations with for conversion. And very similar to India, our new products -- new product launches have been received very well. Europe is a very energy-sensitive market. So products like Super Premium and what we expect will stabilize as well will do well. And we've also launched the EQ series, which brings in a lot of the benefits of the EG machines at a much lower price point. So cost-conscious market like Europe is right now, we believe we can grow share there as well. I just want to make one mention of Rotair. A lot of Rotair's fortune is tied to the health of the North America portables market. It accounts for nearly 25% of that business. So this year was quite soft for Rotair because of some of the softness in North American demand. But the team has done a very commendable job of going out and replacing that demand in Europe. Coming to Australia. Australia is a very challenging market. Right now, it's probably -- it is our smallest strategic market, and they also have a lot of challenges with overall decline in manufacturing GDP, which means that most of your growth is going to come from market share capture, right? So what we're really going to focus on going into the new year is to really consolidate the business that we have right now and be very specific about investing in those areas where we believe we can gain some share quickly. So Victoria, for example, and the Melbourne area is one area where we have a fairly low share position. So just doing the basics well will get us some traction. Some of the areas that we need to work on is we have the same sort of pricing challenges in the market because there's a lot of Chinese imports. Service technicians are challenging to find. There's a lot of labor shortage in the technical space. We've actually been able to move a few technicians from India who do great work for us. And as -- when market conditions are high, all the OEMs are competing for the same large value projects. So one of the areas that our leader, Mark, is working on is to improve the quality of our sales team so that we can better compete for those large OEM type orders. So I'll hand it over to Indranil, our CFO, to talk more about the numbers.

Good evening, everyone. This is my first investor presentation today with Elgi and a warm welcome to all of you. I know everybody wants to hear the CFO speaking numbers, and I'll finish my slides at the fastest possible manner. Having said that, we'll talk a little bit of context. I think keeping pace from what Anvar said, YTD December, we grew at about 8% and we are likely to carry on that trajectory for the rest of the year. A little bit of color into this. I think Anvar mentioned about the cyclical nature of our portables business this year, and that has also impacted. And if I were to exclude the impact of this on our operations, our other businesses have actually grown double digit. So that's the color that I will leave with you guys on the thought process. 80% of our revenue growth continues to come from ISAAME. This year, Europe has obviously come back to growth, and ATS also has been delivering year-on-year and strong double-digit growth. If I look at the 5-year trajectory, I think while there have been spikes in the green, but pretty much we've managed to generate a CAGR of 16%. And if I bring this down across business segments, it is pretty much consistent across all the business segments. Most of them have delivered strong double digit growth, which gives a strong pillar of confidence in terms of the foundation of our business. Now if you look at the EBITDA, we are pretty confident to end the year at 15%. I must highlight that this 15% is in spite of us investing in our go-to-market strategies and process transformation initiatives like in finance, HR and IT, which is about 1%. We've also seen the impact of cyclical nature of our business on portables, and there was also impact of Australia. So in spite of that, we've managed to kind of hold on to a 15% trajectory, which is pretty decent. And we feel pretty confident of this number or a similar trajectory continuing in subsequent years. Just to mention that our investments in some of these process transformation initiatives we've done go-to-market, there is still more go-to-market to do. There will be more digital transformation initiatives, more process initiatives. So that's something which will continue. Now as a trajectory like sales, 80% of the profits the last couple of years have come from India. Interestingly, Europe, if you see there has been a strong recovery from loss to reduce loss to breakeven in the current year. And if I see other subsidiaries, I think if I were to exclude the impact of the overall portables business and Australia, we are largely on track. Coming to cash. I think one of the key focus areas for me personally in my first year at Elgi has been to see how we can kind of get back on track in terms of working capital. I'm pretty happy to say that pretty much most of our cash profits have been converted to cash. And if you see the working capital investment is only 5%. We have 25% tax. And if you exclude that, there is a CapEx of INR 78 crores and dividend of INR 63 crores. In the CapEx cycle, if you all remember, we have announced an overall CapEx cycle of INR 250 crores. We've started the spend, but you will start seeing more of the cash flows coming in the next couple of years. So I want to just make sure that that's something which is baked in. And over the last couple of years, you will see that this is a continuous focus in terms of EBITDA getting generated and working capital getting reduced and hence, resulting in cash. Most of this, again, around 70% of the cash is generated in India and balance 20% to 30% outside of India. Thank you. I'll hand it over to my colleague, [ Prem ].

Good evening, everyone. Can you hear me? All of you at the back? Okay. So what I will do is I will quickly -- we'll step back a little bit to see how the overall global compressor industry has been doing, where we are in this industry and where we are actually heading towards. So what you see on this slide on the left-hand side is over a long term for around 11 years, how the overall global air compressor industry has been doing. It has been growing at a CAGR of 3.5% and we are around $21 billion in the size, so overall industry size. During the same period, Elgi actually grew around 5.8% CAGR, and we are today at around $390 million. So we have been growing at 1.7x the market. And how do the industry configuration actually looks like? So what you see on this slide is the overall top 10 players, and the rest have been combined bottom one in others. So you see consolidation still happening at the top. The top 2 players constitute around 52% of the market. Then you have the next 3 players, Kaeser, Hitachi Sullair and Fu Singh, which are close to around $1 billion revenue, each of them. Then comes Elgi at #6 in FY '24, the same was as well last year. Then you have the players like Kaeser and Doosan, [indiscernible] and BOGE. So overall industry around $21.3 billion. The top players have more or less remained constant. Hitachi, Sullair has jumped post their merger. And of course, we have also jumped given our faster than market growth by 3 positions to #6 over the time period of last 11 years. If you see how our trajectory has been, we are currently -- this year, we are expected around [ $412 million ]. We went [ $390 million ] last year. This is including automotive component business, ATS as well as Elgi compressor business. We are on track for our $450 million, which we have committed for FY '26, which means 8% CAGR over the period of '24 to '26. Most of it is actually being contributed by India, Rest of the World growing at 7%. And these are the key figures, which also Indranil talked about. We will move to some of the new products that we have come up over the last year and some of which Jay and Anvar also talked about. So first one being the Vacuum business. We had this technology partnership with DVP last year, and then we went into the execution mode. Today, where we are, you will see on the left-hand side, we have actually onboarded a team, 3 people are already onboard for the sales, 2 more expected to be hired this year. Product, we are focusing on rotary vane type vacuum pumps, which represent around 70% of the market by volume. When I say 70%, these are the most dominant vacuum pumps in the market. Go-to-market, we are actually targeting the OEMs, both through direct sales as well as through channel partners, and we are in the process of onboarding channel partners as well. We have already received orders so far of around 55 to 60 pumps since we started commercial business in October. And at the same time, while we are doing this, we are also investing in localization. So we have already started work on this by April. We expect to localize around [ 68% ] of the portfolio by market coverage. And by August this year, we are expected to localize most of it. I think you all have seen this vacuum pump we talked last meeting as well. We have actually -- we are working on 2 types of vacuum pumps with DVP, rotary vane dry as well as lubricated. And in future, we may go on to other technologies as well. Anvar talked about ISAAME facing -- our India business is facing some challenge from a low-cost product imports. So what we call here as Tier 3 Tier 4. So this is our terminology. When we say Tier 4, we actually refer to Tier 1 and Tier 2 as the performance-driven products for those customers who actually value performance the most. Tier 3 is an optimum of performance and price. And Tier 4 is what we see with customers who are really determined by the -- driven by the price of the product. Now this is one segment we have seen growing significantly over the last 3, 4 years, mostly driven by low-cost imports into the country. And today, they actually consist a significant volume of the overall industry size. And so far, we were not playing in this segment. But given that the volume has been increasing, it's inevitable that we also have a presence here. And therefore, with this regard, we have actually conceptualize the product in this segment. We are not yet commercializing it, but it is already conceptualized. And you can see how the transition has happened from EG, which is our Tier 1 to EQ Tier 3 and Tier 4. And while maintaining global standards, having options for variable flow dryer and [ tank-mounted diesel ] options. This product has significantly lower footprint. Its weight is significantly lower and as well as material cost is at 60% of what a Tier 1 would look like. Coming on to the other products that we came up with. So the overall focus this year was really in driving energy efficiency. It was also in expanding our product portfolio as well as integrating backward. The first one which I want to talk about is about oil lubricated screw compressors. Here, we came up with super premium 90 to 160. If you remember, last time, we talked about 90 to 110, we have extended the range now to 160 kilowatt. These are 2-stage I-4 motor-driven premium products. They offer large leading energy efficiency. Actually, the specific power consumption is the best that you can find in the industry. These products are enabled with very advanced controllers, air alert as an IoT -- industrial IoT suite as well as possibility of having integrated heat recovery system. We'll talk about heat recovery system again later in the next few slides. Another product that really is quite popular now especially in markets where energy efficiency is very important is EG 11 to 45 permanent magnet and synchronous motors. These are in-house designed, developed and manufactured motors in the motor plant, which Jay actually referred to in his talk. Moving on to the Tier 2. In EQ Series, we launched high pressure 11 to 45 kilowatt product. This product is actually targeted towards very specific laser cutting application and can operate at 15.5 bars. In the encapsulated series, we try to develop and integrate the product here in India and export from here. So instead of assembling tanks, the compressor and the dryer in the region, we decided to actually assemble it here in India. As a result of which, we are able to compact the footprint, standardized offering as well as have better quality control in the process. And this also gives us significant cost benefits. We also added new features in terms of features. I will focus here on the oil-free side of the portfolio. In oil free, we added outdoor protection kit to 90 to 160 kilowatt product. Now this outdoor protection kit helps you protect against rains, snow, wind, dust and so on. It's a bolt-on design, quite modular and extremely easy to use. We also offered integrated heat recovery system in 92-kilowatt air cooled. Now heat recovery system actually helps you retain 95% of the heat, which is generated in the process of compression and which is quite useful if you are using this heat for heating any, say, process water, preheating water for boilers if you have one in your facility and so on. Therefore, in markets where energy cost is very significant, heat recovery system becomes quite critical in reducing the overall energy cost as well as optimizing the carbon footprint. This year, we also came up with our own refrigerated dryers, both as stand-alone option as well as integrated option. These dryers are made in-house from 20 to 500 CFM. We already have the portfolio, and we will further expand into higher CFMs. They have stainless steel heat exchangers and a very compact footprint. For India, it's already being sold. In the portables, we came up with PG 850-290. Now this is our offering which is available both for construction and mining as well as water well. This is -- this product has dual pressure offerings. It also comes with an electronic engine. And what is more important is, especially in the construction and mining, in coal mines, it can be actually accommodated on an excavator. So it can be excavator mounted, and that's quite convenient for the customers over there. This product also offers extremely efficient drill penetration. Now this is a product we talked about -- Jay talked about during his talk on rail. So this is what we have actually developed for the railway project, which we won last year. This is an underslung screw compressor for rail application. And while we have developed -- we are already shipping this unit to the customer, 5 loco sets local sets have already been supplied, which means around 10 AGTUs. Now AGTUs are air generation and treatment units. It consists of compressor as well as the second dryer, all of which have been made in-house. That's it from my side. I will invite Venu now. Thank you.

Thank you, Prem. Good evening, everyone. My name is Venu Madhav, and I represent product excellence and innovation team at Elgi. My team continuously works on meeting the customers' needs, stated needs and all through regular product development and unstated wants through innovation. So I'll be showcasing one of such innovation, what we believe the result will revolutionize the way in which the compressor is operating in today. And by the way, it is going to meet the unstated want of the customers. I'll set the context with a simple example, what we are very familiar with. Let's say we are in a room and there is an AC, standard AC. The AC will be cuts in and cuts out, depending upon the number of people present in the room and also the ambient changes outside the room. So for the solution, so the AC will be continuously cuts in, cuts off. So it is a reliability issue because of -- it is fluctuating on this. One solution, what we can think of is an inverter AC. But still, it will be changing its capacity, continuously increasing and decreasing to maintain the variations with respect to number of people or the room temperature to ensure the comfort. So the operation is efficient from a variable speed perspective. However, still, it is less reliable. So it leads to some efficiency challenges because it is unstable. Whomever we buy these ACs, whether it is a Daikin or Voltas or whatever it is, this is what it is going to happen. And as a customer, we all believe this is what it is going to happen. So we accept it, though we don't want it. So in the back of our mind, we don't want this unstable operation, but we accepted it. That's called the unstated want, and how do we overcome the unstated want is the one what we are talking. We can relate this similar -- principle similar to the compressor, how it operates in an industry. A compressor is connected to the plant, and the plant has various utilities. And each utility will need air at different points in time, that requirement may be continuously varying. Some utility may be at a breakdown. So what's happening is there is always a gap between what is the compressor is producing, the capacity of the compressor and the demand from the plant. So this gap in the demand will always create supply -- the gap between the supply and demand creates a fluctuation and makes the compressor to operate in, cut in and cut out kind of operations similar to the AC what it is. So there are VFD-driven compressors now. They tend to meet the capacity balance. They try to balance the capacity with respect to demand. However, they are still -- the operation is unstable. Let me explain in the next slide why I'm telling it as an unstable. Let's see how a compressor works with and without VFD in an unstable operation when the variation is -- demand is happening. This is the chart without -- the compressor without VFD. You can see how the pressure fluctuations will be happening. So the compressor will be cut in, cut out, cut in, cut out. So there is a lot of variation in the pressure going to happen on this. Now one thinks that VFD can balance the capacity, it will be very stable. But practically, it is not because VFD, it is changing the motor RPM, it is going to change the current in the system. So some current is changing, fluctuation is there, it impacts the overall -- the current power quality in the plant also. And sometimes, these VFDs will create harmonics, which are very, very trivial -- dangerous for the overall power quality in the system. They need filters to attenuate these harmonics, which are heavily expensive. By the way, the VFD itself is 30% expensive to handle it. So while -- by putting 30% excessive money, we appear there is a balance between demand and capacity, but still the operation is unstable. So any unstable operation is inefficient and ineffective. So we are talking about this unstable. So what it means to a compressor? Let's look here. In a compressor, there are 2 types of parts. Compressor deals with flow, there is a flow-related parts; and compressor, there are kinematic parts. The parts are moving. So when the cuts in and cut in is happening, when there is a huge amount of fluctuation happening, you can see there is a zeroed flow, inconsistent, then there is a maximum flow. So it is highly unstable with respect to flow. The system doesn't understand what to perform, where to perform optimally. So this is always an unstable operation. And look at a kinemetic part, it is an intake valve what I'm showing in the compressor. You can see when the machine is going to cut in and cut out, this is becoming on and off. So in this itself, there are 6 mechanisms. Every mechanism is going to undergo stress and fluctuations that leads to reliability and unstable issues. And as I repeatedly said, an unstable operation will never be efficient and effective. So we need -- there are such 30 plus 20, 50 parts of such parts. So combined, they will impact the efficiency and reliability of the machine. I just want to show you in practical situation how exactly it means. This is a video. What it is showing how a compressor, still I am focusing on the intake valve. [Presentation]

So see the actuator, how it is moving. It will go with such number of fluctuations. So just to sum up, there will always be a demand, capacity variations. Compressor will try to operate in majority of the cases in an unstable mode, leads to efficiency and reliability issues. VFD appears to balance the gap between the capacity and demand, but it is expensive, but it will bring additional failure modes what it is. So this is -- and whomever we buy the compressor, whether it is from Elgi or any competitor also, this is what it is. In the customer's mind, this is accepted, but he want's to see better solution for this. So we engineered a solution, which is -- the innovative stabilizer, with the way in which the system eliminates the instability while maintaining cost and also without incorporating any new failure modes. So let me explain how does it work? So the principle of stabilizer, the principle is very simple. First thing is recirculate and recover. Recirculate the excess capacity within the system and recover the energy, all possible losses and recover this energy, okay? So this is the principle what we are doing. So the principle appears very simple, recirculate and recover. The technique and control are novel here. That's what the value what it can come to this. Maybe I'll take you through a little bit mechanism of how this actually works, a bit technical. In any compression process, primarily a rotation will happen. Prime mover is going to rotate, so it is going to rotate 360 degrees per revolution. First thing, what happens is the volume will increase. When the volume will increase, suction will happen, compressor starts sucking air into the system. And when the suction is happening, the zone is not stable in pressure. There will be a lot of fluctuations. Before starting compression, there is a stabilization zone required. So we have a zone called stabilization. Once there is a stabilization, volume starts decreasing, pressure starts increasing, so pressure will increase. Then after reaching the desired pressure, delivery will happen at constant pressure. So this is how the actual compression process will happen. There are 4 zones: suction, stabilization, compression and delivery. Now our principle is recirculate and recover, okay? What are the opportunities for us to recirculate in this principle? So the first thing is the suction and stabilization, there is a -- for us to recirculate, take the air back, we need a pressure difference. So this is the first zone we have a pressure difference exists. Very minor increase in pressure will happen from atmosphere to here. So very less amount of work will be done on the air. But identifying the zone, and we can able to connect it back to section, we can circulate, recirculate around 30% of the air without losing any energy into this. So this is the first principle what we are doing. And the next, which zone we can do, there is -- this is high-pressure zone. But unfortunately, this is an unstable pressure. Pressure keeps rising. We cannot maintain the capacity by any means. So this is not the zone for us to take there. So what is next? Next thing, what is available to us is the separator tank, where we have a constant pressure, we can take the air back into the suction. But by the time air reaches here, we can also think that almost work is done on the air. So there could be a possible loss. So when we are taking the air back on which work is done, there is a loss. How do we recover it? Again, identifying a position there. What we have done is we'll take the air back to suction, we'll raise the suction pressure. So what happens, the net pressure ratio, compressor previously working from 1 to 7 bar, now it will work from 2 to 7 bar. So the net pressure ratio comes down. So the power required to compress the air, the 100% of the air will come down. But we are recovering, let's say, 30% of the air. We lose the air only on that 30%. So the gain is more, the loss is reasonably less. Still, there could be some inefficiency, but it will get balanced. So this are the two zones what we have identified. This ensures the complete balance from the plant. Even from 0 to 100% variation, we could be able to balance the capacity of the air. So on a layout perspective, this is how it looks. These are not the exact positions. One progressive valve, a continuous valve will be there in the air inside and one another valve will be there from air and to -- suction to the tank side. They will operate and balance. They together will operate and balance and ensure the capacity and demand balance between them. And if we look into the compressor, the first one, you can see there is a motor, compressor and controller. This machine will be going into on-off control. And with the stabilizer system, there is a new logic built into it. This is very intelligent logic to ensure -- trigger these two valves in line with the overall capacity balance. So this is all happening within the internal circulation and ensures the balance of the compressor -- plant demand. Now this is what we expect. So this is the system with compressor. Pressure -- a lot of fluctuations are there. VFD, still it brings electrical fluctuations, whereas stabilizer system will ensure a stable operation in terms of pressure and in terms of motion of the motor and other systems, okay? So this is what we anticipated. And we did all the internal tests, we ensured these results are there. Now, is this really true in an actual environment? We have put so many machines in the field. And I'd like to share you. This is one site. And you can see without stabilizer -- these are the number of fluctuations per hour. This machine used to fluctuate even 62 numbers -- 62 times in an hour. Every minute it is going cut in and cut out. This is the site. And in that site, when we put -- when we just added stabilizer system, the fluctuations came down to zero. So this ensures the machine is stable. So we talked about efficiency also, correct, what it is. So it is not from our side, our calculation. This is what customer said. So he is very happy with the way in which this machine is operated from stable and other things. And he is telling he could be able to save INR 386,000. It is almost equal to the material cost of the compressor. And this saving will replace or practically, we can get -- the complete machine will be paid back in 2 years. And the stabilizer system, if somebody adopts, it will be paid in a couple of months' time. It won't take more time for that. So we are confident the way in which this is working and the stableness what it can bring without adding additional failures and cost. So let's see. Practically, we saw how the unstable operation. Now we can see how the stable will operate. [Presentation]

So now we are seeing the unstable operation. Now we will active our system. You can see this escape. So in the Save notification package, we'll just go back and then switch off that, this will go into unstable mode again. So it clearly indicates the system will ensure the stability under various operating conditions. It's big reservoir to be a [indiscernible] will take a couple of seconds to do that. So that's what it is. And we can see the stabilizer system enhances efficiency and reliability, and it revolutionizes the compressor the way in which it operates. What customer is thinking, it makes him satisfied, delighted with this. This innovation delivers significant value, and it positively contributes to environment also. So this is patented because we did a patent search across the globe, and it is patented and the rights are with us. And we are working on to commercialize it progressively soon. Thank you. Now I'll request Gaurav to present on this.

Hi, everyone. Good evening. I've joined the company 6 months back. Delighted to talk to all of you. After a super simple presentation from Venu, I'm not going to be talking about the neural network. So I'm going to be talking about something very simple in terms of how we are going to be looking at the digital road map for this organization. We've sort of invested and looked at the future road map for investment into our digital capabilities. But having said that, we've done two things. We've broadly looked at aligning it very tightly with our overall business preference and priorities. And secondly, we've been very mindful in terms of how we are going to go about it. While the investments will be made and there are clear prioritizations that are being made in terms of where we invest, when we invest and then what do we expect out of those investments. Clearly, what we are looking at is some of the achievements that have already been made in the past, how can we expand, build on it. Secondly, we are also looking at stabilizing some of the instabilities that we had in our core application structures. And you can see that some of them are actually driving our growth and helping us support our future growth ambitions. Some of them will be more focused around the productivity. We are looking at a fundamental change in our operating model. We are looking at creating our global technology platforms. We're creating our global digital channels. And hence, through that, we will be able to increase the overall speed of deployment, scale our applications as well as the digital capabilities across the globe, not only just here in HO and in India, but also across all the subsidiaries. And that would give us that level of confidence to meet the business priorities and the agendas that Indranil and Dr. Jay talked about along with Anvar. We've also been focused on how we improve our risk and compliance. There are some capabilities that we are also building for future. We've been investing in past, and we will continue to invest some of the exciting capabilities for future. Everybody is talking about AI, everybody is talking about data. The investments will start towards that as well. But as I said, our priorities are threefold: stabilize the core, digitize our functions and then build the capabilities for future in terms of the digital business models. That's how we are intending to progress. More to come in this space, first few steps, but very excited to be here. Thank you. Can I ask Nitesh to come?

So my name is Nitesh, and I lead the HR for the firm. Very warm welcome to all of you and happy to present before you. So I think I'll be presenting just one slide. And basically, it's all about how we are thinking and really making how we manage talent as a way of life for us, right? Now you all have seen there are various new leaders presenting here, right? And that's the intention, that next time, the new set of leaders should be nurtured and come from within the organization rather than for us to go out and hire from, right? So with that intent, it's -- we started this journey roughly around 2.5, 3 years back, right? And intensive work was done in terms of really reaching out to employees, leadership to understand what are the competencies which are required for us as leaders and employees to be successful in this organization and hence, a complete competency framework, leadership competency framework were designed. Each and every employee in India was trained around that. And also a development center, we did a development center. So competency model states that, "Okay, this is what is expected." Now to really understand each one of us, where are we from that ideal state, right? So that exercise was done. We hired an external partner, who helped us in this gap analysis. And we almost covered around roughly around 250-odd employees in this, right, starting from mid to sort of senior management, right? Now this entire work was done, which led to basically a few things. This analysis gave us the potential basically, right? Because leadership behavior is all about potential, how anyone can behave and work in an unchartered territory and can adapt and deliver results. So this gave us the potential assessment score. We already have the performance score of an individual working with us. And using that data, we really worked on the 9-box classification from employees. Simple tool, but just a talent segmentation exercise for us to really understand how does the talent landscape for the firm looks like. Out of this entire development center, there were a lot of learnings for us We realized that there are a couple of capability issues which we can really go blanket out in the organization as a capability and impart trainings through some workshop and some design methodology for all our employees. So a couple of things which we identified was how do we really emphasize on managerial capability, right? Fundamental of really looking at the talent landscape, how do we make our managers more effective. Second thing was how really we imbibe that each one of us working in the firm, irrespective of the department function, we are really thinking business. Do we have that bent of mind? So these couple of things were identified, where we went all out in terms of how do we ensure all the employees are covered through these sort of programs and capability development. Since we have done the development center for each and every employees, almost 250-odd employees, there's an individual development plan for each one of us, who went through the development centers. Now many often, we have seen that IDPs are created. And during the time, you never know what happens to that. Is there any rigor, our needle moving, not moving? So what we said that we have set up a process, which we have termed as development sprint. Now this process enable us that every year, twice a year at a certain time, each employee come and present to a development council about the progress made on their IDPs, is there any challenges, concern. Along with the managers, this dialogue happens. The idea is really to enable, how can we enable any support from leadership, everything can be given. And the dialogue really is to see that whether the needle is shifting or not. Now this is from the employee lens. Now from a role lens, right, we also really looked at "Which are my key roles, which I cannot afford to be vacant," are really important or of strategic importance for the firm. We looked at also that "Who are my people internally, who can be on the succession chart for these key roles?" Now this is one thing that I -- as an organization, we said, "Okay, individual A can be targeted for this role." Now the next question is, is individual A really wanting to get in that role? So there is an aspiration -- career aspiration link of that individual. So with the dialogue. We dialogued with almost all the people who have been identified as successors and are on our succession chart to really understand and close the loop with them. Are they really aspiring how we are thinking? And basis that, there is a succession development plan. Now this is where the rubber hits the road, which we say as part of a lot of talent management exercise that certain individual will be ready for a certain role in x number of years. Now we went back and said, "Okay, if we require 4 years, what exactly this 4 years will look like for that individual for the targeted role?" Because until unless we have that clear signed-off process, we can meet 2 years down the line, the status remains the same. So we did this exercise. We are in a process of making this also a review mechanism to really enabling that things really move as per the plan. And at the end of the day, all these things will culminate in talent review discussions, where as a leadership for the firm, we sit and take stock of the talent agenda, various initiatives, what results they are -- whether we are reaping the results or not, any supports are required, any course correction. See, the idea is to really make talent as a way of life. The way we discuss numbers, we need to discuss and dialogue and have a conversation around talent. So that's the intent. And this year, we have largely covered all employees in India and ATS as a unit and [ Elgi ] as a unit. I think we are in a process of rolling this out to our -- across the locations globally. And next financial year, I think that's the target of really covering all our employees within this framework. Thank you.

Good evening to all. I'm Bheemsingh, Director of Operations. I think you're all excited with today's presentations, particularly the innovative presentation like our stabilizer and Tier 4 compressors. And I'm also equally excited to present two pivotal initiatives we have launched this year. One is, as Dr. JV mentioned, the Elgi motor expansion. This is actually a multifaceted development. It's not just capacity expansion. It is -- it includes the cutting-edge technology and a number of variants, products and also the capacity expansion. There are three dimensions to that. This PMSM motor, we added to our product profile, and in addition to already-proven induction motor technology, and we are expanding to now 160 kilowatt. At present, we are 2.2 kilowatt to 45 kilowatt. Now we are expanding to full range. And as I mentioned, this number of variants increase will help the customers for the evolving need of the customers. And as Dr. Jairam mentioned in his speech, this development will insulate our company from all the supply chain risks due to any geopolitical issues as we are witnessing now. And apart from that, there will be a steep reduction of inventory and steep reduction of lead time and make our operations more agile and responsive, right? And second is this MK2. MK2 is Mission K2. And our aspiration is CK2, one of the top 3 players in the world in the compressor field. And this mission is to help to reach the K2 -- CK2. And again, Dr. JV mentioned about it. This is not just investment in creating a world-class manufacturing facilities, it is also our commitment to sustainability. So as you can see, 38% space is allotted for green [ build ] development. It is a very green plant. And overall, as Dr. JV mentioned, the entire phase, we are going to invest around INR 590 crores. INR 696 crores for 5 years, next 5 years, and we are going to build 743,000 square feet, right? And the Phase 1, we are going to build 280,000 square feet with the investment of INR 2,547 million. This is the first phase. This is the layout, GSC layout. This is a global support center layout. And this is a building, and this is a layout. This is a U-shaped layout for better efficiency and effectiveness. And this completely automated plant with the [ case-certain ] robot, conveyor and AGVs with a less number of people inside. And this is a portable business, portable plant, a [ DP SAG ] plant. And this is, again, closed-loop plant for maximum efficiency and effectiveness. Overall, GSC, 147,000 square feet, we are going to build with the investment of INR 1,440 million and portable building with 131,000 square feet with the investment of INR 1,107 [ million ]. And here, again, the focus is on the automation and productivity improvement. Close to 50% productivity improvement we are expecting in this plant also. That's all from my side. I invite Ramesh.

Thank you, Bheem. Good afternoon, ladies and gentlemen. I'm Ramesh. I look after our company's purpose. I champion the purpose, business systems, ESG and a significant part of the ESG is CSR. So I'll take you through. I know you've held together very well for the last 90 slides. I have a few more to go, and hopefully, I'll be quick. So to start with, let me talk about CSR. Bulk of our profits or rather the share of the profits that go into our CSR activity is invested in education. The Elgi School is about 35 years old now. It's in a brand-new campus. It's about 4 years old. Next time, if you are in Coimbatore, if you have some time, about an hour to spare, please let me know. I'd be more than happy to take you to our school and show you around and see what we are up to there. There's some exciting stuff that we are doing. As part of our school, there's about 1,332 students studying right now. It's a CBSE school from pre KG to 12 standard English medium. And we have a fantastic track record in terms of academic performance. For the last few years, we've had a 100% pass rate in both board exams, the 10th and the 12th, with an average score of about 85%. We want to take it to the next level, that is something that I will talk to you about. Giving back to society by developing good citizens through holistic education at low cost. We are running the school not with a profit motive, but doing good and doing very good in terms of our academic output. So we already have about 100 students, whom we are supporting through scholarships, it's fee-free. And I'm also pleased to share that there's about 14 children who are from an orphanage nearby, whom we support. One of the girls who has passed out of 12th standard last year came from the orphanage. Her journey was from LKG to 12 standard. She was the topper in the district. She is -- that's part of the trigger for us to go -- a segue for us and for me to talk about the project that we are up to. This is Project [ Seller ], very exciting project for us. This is a future journey for our school, we want to focus on bringing to our school, identifying natively brilliant but underprivileged children, financially not able to afford quality education. They are in government schools, corporation schools right now, probably in Tamil medium. We want to identify them, bring them to our school, put them through a holistic program focused on academic excellence but also creating good citizens out of them, all-rounders, whether it's music, sports, whatever. We want to give them those kind of pathway, and we will screen them from at 6th standard, 5th pass. That's the only time that -- the earliest that we can catch them and screen them and test for intelligence. So we are starting this year in June with our first batch. We've already identified 1,000 potential students, and we have applications from at least half of them. We have our entrance test in the 16th of March. The process is well underway. We're confident we'll get at least 25 students in the first batch. And the only measure of success for us that we've set ourselves is every student who is passing out through this program will get admitted or offers of admission from the top schools in India, whichever program they choose. It need not be engineering or medicine, the typical programs that you hear, but it can be arts, it can be finance, it can be IPS, IAS or law, whichever, right? So we will support them through career guidance, counseling and various competitive exam preparation facility also. So it's 100% free education. We are going to build a residential facility. We've already started the planning process. In 2 to 3 years' time, it will be 100% residential, completely free. This is the easy part, finding the students and bringing them. How do you deliver the excellence in terms of the delivery of the curriculum, the quality of the teachers is absolutely critical. So investing a lot in the back end of the school as well. So 15:1 student teacher ratio. Right now, we have about 30 kids in a class. We will drop it down to about 25 to maximize impact and contact. So it's a very exciting journey. 10 years from now, steady state, our school will only be from 6th standard to 12th standard. We are progressively shutting down up to 5th standard. The entire school will only be these stellar students. So we expect about 900 students, all studying free, all academically excellent. So our aspiration is to be the best school, full stop. So the next CSR activity that involved in not just in school, we are supporting health care, various cancer organizations, cancer research and foundations that we support, pediatric and adult cancers as well. But the other exciting thing I want to share with you is our support for the Olympic Gold Quest. Now this is an organization that was started by [ Geet Sethi ] and Prakash Padukone in 2001. The main aim is to increase the number of medals, and hopefully, most of them gold medals; at the Olympics from India. So in the recently concluded -- just to give you a flavor, in the recently concluded Paris Summer Olympics, there were 6 medals that India won. One of them was for hockey, as most of us know; 5 were individual metals. 4 of them were supported by OGQ. The paralympians did much better. India got 27 medals, if I'm right, and 25 of them were supported by OGQ. Out of that, there were 6 gold medals and 5 of them were from OGQ. So that's the sort of credibility, fantastic world-class training, infrastructure support for promising athletes. So they cast them young. And through the journey, they harness their potential. So we are very excited and now we've made a multiyear commitment up to the next Olympic Games going out to L.A. in 3, 3.5 years' time. So this is about OGQ. The other exciting thing is our aspiration is CK2, that is Conquer K2, the second tallest mountain and the most toughest one to climb. [ Kamya ] is a young mountaineer. She is 16 years old when she came on our radar. She is the youngest Indian to climb Mount Everest, the second youngest girl in the world to Mount Everest -- to climb Mount Everest and the youngest in the world in any gender to climb 7 peaks in 7 continents. So she completed that feat earlier in the year. So absolutely fantastic talent, we are very proud of supporting her. So these are the kind of causes that we try and do our best to support, causes that are aligned with our purpose and have very high impact. So moving on to what we are doing internally, we ran the sixth edition of Watch Your Finish Line challenge. So there's about 1,000-plus people participating, our employees and our distributor partners, all of them, it's a 1-week intensive fitness challenge that ran in December. So we had a very good response and participation for that. Elgi has been supporting the Coimbatore Marathon since the last 12 years, all editions. The first edition was in 2013. Elgi this -- the entire proceeds go to the Cancer Foundation in Coimbatore. And we've had about, over the years, record participation. We are in the top 3 in terms of attendance. Usually, we are #1 or #2. So this year, we had about 1,700-plus employees and their families participating in the marathon. So this is the second largest event in Tamil Nadu. Outside of Chennai, it's the largest. So a roundup of key events during the year. A few of them you've heard from other speakers. One of the key things I want to share with you is for the very first time, we are increasingly global. As Jay said, we have about 400 employees outside. So we had our global leadership meet this year in -- or last year rather, in October in Coimbatore. So where we -- it's over a 2-day period, we discussed, deliberated our strategic plans, the how part of making it happen, various other discussions. There's about 70 of us across different hierarchies from various geographies. And we intend to make this an annual affair. We will continue to organize this. And as Prem was talking about and -- this product is a very exciting product that we launched in the bauma CONEXPO. Bauma is an international exhibition originating in Germany. They had a presence in India as well. State of the Future Art is our showcase event where 15th December every year, we will have a Technology Day. It's a very multipronged in terms of participation. We have academia, industry specialists, experts from various fields coming and talking to our team, presentations on technology and other innovations that we do within Elgi. So this is something that we have had for about 7 years in a row now. Apart from this, our employees are involved in various community activities, various activities that drive overall engagement within the business. So with that, I'd like to wrap up the flow of the presentations. Now I think it's the next part, which is an open-forum Q&A. Jay?

So are you going to tell me? Okay.

So there's already a question.

Can you hear me at the back? I don't think the mic is working. Okay fine, whatever. So just a second, we are about 20 minutes behind, right? So we have to wrap up at 6:10 because a lot of people are taking their flights. So we'll keep it to about 40 minutes of questions. There are people online who wants -- who may want questions. If they need to ask, let them raise their hands and then you will -- and they will ask the question. So Ravi?

Very good growth over the past few years that you had done in spite of the challenging times that have been there. And not only that, the kind of innovation and engineering work that you have done is very credible. My first question is with respect to some of the new products that you have launched like vacuum pumps and stabilizers. Need more detail about them. For instance, vacuum pumps, if you can give more details about the application, market size, who are the players who are already there? How fast we can cover this market within the country? What is the kind of profitability? Or what are the theoretical number of units that can be sold and practically, how -- what percentage of it can be covered? And something similar, if you can extrapolate it for the stabilizers also. So how big is that market? And what is the market -- potential market size over, say, medium term, that's 3 to 5 years or something of that sort?

So, vacuum is going to be India-centric play for the next few years, right? Globally, the vacuum market is about $3 billion, roughly, $5 billion, right, globally. But in India, it's about INR 400 crores. $400.

$150 million to $200 million.

Okay. $120 million, but it's the full vacuum, right? So if you look at our presence, we are starting -- in terms of competition, you have all the compressor players, pretty much all, at least the major ones playing in the vacuum space, right? So it's pretty competitive. You also have a long tail just like the compressor business with a lot of unorganized players playing in it. But there is an opportunity for a well-established -- I mean, well -- good quality products with good strong customer engagement to start with, right? If we remain with only the technology and products that we have with DVP, then there is no future, right? So what we are doing is that's the arrowhead with which we will enter the market. But we are already looking at investing or investing into technologies that are going to be disruptive, just like the stabilizer is for the compressor business. So how long is this play? Globally, I would say, by the time we reach something which is a reasonable share of the global market is about 15 years. I would not take anything less than that. In terms of being a reasonable player in India, I think in another 5 to 6 years, we should be able to get at least 10% of the Indian market, right? So it's a long play. We are not looking at a short-term play. Because that's an significantly far away adjacency to compressors, unlike dryers or filters, which are very close adjacencies to the compressor where the velocity of our presence or market share will be far higher, right? So that's on the vacuum. On the stabilizer, this is not a product. This is a technology that goes into all compressors, right? Now approximately, on average, 30% of the compressors in the world buy with variable frequency drives, right? 70% would like to have variable frequency drive, but they can't afford it. They don't want to spend that money, right? That's really our target, to start with. Eventually, even that 30% will be ours, right? If you look at that 70%, if a variable frequency drive costs [ INR 100 ], this system will cost 1/6 of that, right? That's really the comparison, right? Literally, nothing. What does the customer get? The customer gets a return of this additional investment in a matter of a couple of months, yes? so that's the value proposition that we present to the customer, right? And this can be retrofitted in the market as well for our machines, there are 2 versions. You saw 2 valves in the presentation. Both the valves together is the heavy or the premium version of the stabilizer. If you have only 1 valve, then it's a light version. The light version can be retrofitted in all compressors, even competitors' machines. The heavy version can be retrofitted only in our machines, right? And that too, you need to change the element. So the opportunity is huge, right? The technology is stable. There is no risk. If a variable frequency drive malfunctions, the compressor is down. If there is a problem with this system, compressor still works, right? So there's absolutely no risk, right? Not that we think it's going to go down, but there's no risk. The biggest challenge for us is customers asking, does Atlas Copco have it? Now that's the problem, right? Because we are an unknown brand with an Indian label, right? There is always a -- that prejudice that we are incapable of building the best for the first time. We need to get over that hump, right? That's really our marketing challenge that we are going to be working on as far as the stabilizer is concerned.

A continuing question to that stabilizer. We might be having the number of compressors, which are installed, at least from an India perspective, I'm just talking, we might be having a number of stabilizers -- sorry, the compressors which are -- installed base of compressors which are there in the country. Any target as to this percentage of the installed base, we would like to convert in these many years, something like that?

We don't -- we haven't worked out the target yet, Ravi, right? But like I said, the whole strategy -- the whole thinking is how do we take this to the market. This cannot be taken to the market like a compressor, right? We -- the approach to it will be very, very different. And that's what is getting architected even as we speak.

Got it. And from an international perspective, I mean, we have substantial presence across various geographies, including U.S. And in Australia, recently, you had mentioned that there is a lot of Chinese dumping, which is going on there. Given the fact that U.S. itself is a lot of this Trump-related tariffs, et cetera, are going on, where increasingly, there is a fear that Chinese products might find their route to other geographies in a form of dumping or something of that sort. Is that concern -- does that concern you? And does...

Absolutely. There is a concern. But the strategy to go to government to ask for protection is an impotent strategy. right? It's not sustainable. For the simple reason, geopolitical bilateral relationships can completely overshadow change. Any change that you get, tomorrow, there is a big hug and kissing by the 2 Prime Ministers of China and India, your protection is gone, right? So the real challenge is for a company is to say, how can you take this used technology and come up with a product, a business that can respond to challenge rather than protection as a means, as a response to the challenge. So we know the market is building. That's why we -- Prem presented the Tier 4 product. The Tier 4 product does exist today. It exists in our R&D center. We have already made it. We put it out there in the field, and it is running, and it's running very well. We are just a little bit off from the cost. Like you said, the cost is 40% lower, right? So we are in the right track. Next year, we will start seeing that product getting introduced, but it's not a product challenge alone, right? These 6,000 or 7,000 machines that are being brought in from China, maybe 10%, we know where they are. The balance, we don't even know, right? So the challenge is not just the product, but also discover where the product -- where the customers are, right? Just like Anvar said, our go-to-market is discovering customers. The minute we are in front of the customer, we win. Our win rates are very high. but how to get in front of the customer, right? That's the challenge.

Last question is, there has been a fair bit of consolidation in the industry at a global level over the past 5, 6 years. So Gardner Denver and Ingersoll Rand and Hitachi Sullair. How do you read this? Is it a positive, negative, neutral event for -- from Elgi perspective?

When 2 compressor companies come together, it's always good for the rest, because they will try to rationalize their entire network and all that. So there will be networks that open up for them, right? But if consolidation happens with forward integration where they start buying distributors, then there is a shrinkage, because globally, this is a distribution-led business, at least for companies like us, yes. So that could [indiscernible] put a challenge in terms of when they start going forward, right? So it's all part of the game. It's still enough room to play.

First, an extension to the vacuum pumps question. Given our clear capabilities, why not say a screw pump or even a progressive cavity pump because Ingersoll Rand acquired a Coimbatore company, Hydro Prokav. What was the thinking behind entering vaccum pump?

Ingersoll Rand acquisition of the Coimbatore company was not a vacuum.

But PC pump, yes.

It's a pump because Ingersoll Rand also has a pump business. We are not in that pump business. We're not going to get into the pump business, right? We have already developed a screw vacuum. So that's what I said. We are already investing in products that will be disruptive. -- in the vacuum space. So yes.

Got it. And second, again, on Ingersoll Rand, just a basic question. Their margins are like 2x of where we are. I understand they are heavy on centrifugal, we are heavy on screw. But if you could explain to us why there's such a huge margin differential between us and IR?

At EBITDA level.

Yes, EBITDA level.

So there is a big margin difference, EBITDA level difference between us and all the big companies, right? And the EBITDA in this compressor business comes from making the installed base for the aftermarket. That's the biggest source of your profit. It's not from the sale of equipment, right? So when you look at an Atlas Copco and Ingersoll Rand, their installed base is huge, yes? So if you really look at Elgi's profitability over the last 10 years, we have made that shift, right? And that shift has come from the increased installed base. Yes. So our challenge is to keep increasing our installed base, gain -- keep gaining market share, right? The minute you gain market share, then the aftermarket feeds you with profit, right? Because selling an equipment is a thankless business, right? And the only reason we are in this business because of the aftermarket, right? How do you get more and more of your equipment coming to you, right, for parts, right? That's the challenge. Getting more machines in and making sure as much as 100% comes back to us, right? So if you look at -- dissect the profitability, just to give you an example, the profit margin on equipment, by and large, whether it's us or Atlas Copco at a gross margin level will probably be 20%, 25%, right? The gross margin and parts will be anywhere between 60% to 80%, right? So you go and take Atlas Copco's numbers and do the math, and you will roughly know where it's coming from.

So it's just down to the spares mix and not with the product differential, like they are heavy on centrifugal, we are heavy on screw.

The product mix doesn't significantly alter profitability, right? It does a little bit, but not significant.

Got it. And on gaining market share, this C2K -- CK2 is a huge jump. We are at 1.8%. It looks like you are targeting IRs at 18%. That's a 10x.

We'll get to a number if we get 10% of the market.

10% of the market share.

So our growth really is 5x. We need to grow.

5x in the next 10 years?

Yes.

Vipin Goel from Mirabilis Investments. First of all, thanks for putting up such an elaborate presentation. Sir, I had a question on -- I mean, just going back 2, 3 years, specifically to U.S. market. And so there was a period where inflation happened and then supplier customers sort of kind of started looking for alternatives wherein we stepped in and gained some market share. So I understand that a large part of this was, again, the cyclical portable business, which to my understanding is about 15% of the U.S. business, if I'm not wrong. So how has ex-portables, how has that business moved? And how much of those market share gain that happened during that time, how much of that has been sustained? So has that moved back? And if it has, then what have been the reasons?

Okay. So I'll try to answer the question to the best that I've understood, right? So if you keep the portable business out and you look at FY '23 -- sorry, FY '24, right, we lost share in all the businesses because of our ERP, right? Inability to deliver rather than losing customers, right? In FY '24 -- sorry, in FY '25, this year, we have -- on the industrial side, we have more than made up. We have recovered all that, and we are growing. And our growth rate in that business is back to what we were at the COVID. Yes, now I can't give you specific numbers because it's too sensitive. Medical again, had a problem in FY '24. In '25, they've come back and their order backlogs have been at record levels, right? We have never seen this kind of order backlogs, right? Our biggest challenge is our distribution business and that too on the service side, right? It is the whole process, the software parts going, service technician being allocated. That whole algorithm is where our challenge is. We are progressively getting over it, right? So the coming year will be positive for us there as well. Yes.

So to summarize, basically, there were some distributorship gains. There were some market share gain, but that kind of couldn't be sustained because of ERP implementations?

'23 was an all-time record, FY '23. Then we lost in '24. We gained it back in '25.

And a follow-up on this is, given this backdrop, somewhere in the slide, I saw 7% growth for the ROW. ROW, Rest of the world. That's what we are projecting at least for '26. So what's the long-term sustainable growth that you see for U.S. market, specifically given it's the largest piece within ROW?

The way we are looking at the U.S. market, we should be -- a middle double-digit growth is possible, right? Because our share of the market is so small and the market is so big. It's not just grunt work in the market, but it's these kinds of technology plays that we are going to do. Stabilizer is only one, right? There are some extremely interesting other stuff that's in the pipeline, right? So we progressively keep bringing these into the market, right? That's what is going to give us that. It's not just going there, dumping your price and going and finding distributors just to like a willy-nilly Amazon model. You just put it out there and see what sticks. No, it's about being very deliberate and saying this is the value proposition we are going to bring to customers and through that gain share, right? Because that's the only way you're going to grain sales and profits. Otherwise, it's just going to be sales.

Post FY '26, I mean, again, if you're doing double-digit growth in U.S. and including other markets, Europe...

That's our plan. That's our expectation.

Amit Anwani from PL Capital. First question, again on stabilizers. As you said, the product, I think, is already ready. Any market sizing we have done with respect to how finally we should be reaching to the customer? You talked about 2 versions, the light version and the heavy version, and light version can be fitted on all the brands. So are we going to reach through the distributors? Any market sizing, any costing? Like will it cost INR 1 lakh, INR 2 lakh for retrofit? And what kind of number of machines we are targeting, let's say, next 1, 2 years to fit the stabilizers?

So again, the stabilizer is not a product. It's a technology, right? Ultimately, what we will sell is a compressor, right, which has the technology built into it, right? Now how does stabilizer -- how will stabilizer help us is it's going to help us by improving our 2 levels, help us with our win ratios when we are in front of the customer because we are presenting a unique value proposition that the competitors cannot give, right? That's one. How is that going to get played out? It's tough to say. It's like saying I've come up with a compressor, which is 10% more efficient, right? Can I put a number in terms of how much share I'm going to gain? Difficult to say. But I know that I will gain more, right? That's one part of it. The other part of the thing is retrofitting that's more our -- we are not competing with anyone in that thing. We are competing with the customer's wallet. Now how compelling can we make that, right? There, the question is not -- is a question between cost and pricing, right? So cost is literally very low, right? Then it's a question of pricing. Now how do we price to get the system -- do you want to price it in such a way you want to be greedy and make money in day 1? Or do we want to price it in such a way that you want to gain some share in the market and then price yourself better later tomorrow. This is a strategy that we are working on, right? But the benefit we have is cost is not a factor, right? The cost is not a factor in this pricing. It is a strategy that's going to be the factor.

So second question on -- during the factory visits, we definitely saw moving to aluminum motors for cost efficiency, in-house grinding machines for better lead times. Any target in mind with respect to the cost savings because of all these initiatives and investments which you have been talking about, let's say, over the next 2, 3 years? Is there a scope that we can improve only because of these things, maybe 200, 300 bps or something like that?

I can't give you a consolidated number, right? But just to give you an example, 30% of a compressor is the air end roughly, yes. Out of that 30%, let's say, 90% is the rotor. In that 90%, another 90% is the cost of the machine tool, right? So if you look at it, the cost of the machine tool comes to around 18 -- 16% to 18% of the cost of the compressor. Now if I'm able to reduce that by 1/5, right, then I have 3% gain. I mean this is nominal math, right? But how is it going to get tied in when you do [ $450 million ] and that too, you remove the aftermarket, it's very difficult to put a number. But you know strategically, you're in the right direction because when you do it at an individual asset level, it makes a lot of sense.

Last, if I can. What is constraining us to getting into gas compression or refrigeration compression despite we got into pumps, which you said is far adjacency to...

No, no, no. Vacuum.

Vacuum, sorry, vacuum, vacuum. So is there a constraint? What is strategy -- what is our strategy of not getting into gas compression, refrigeration compression, commercial compression? Any thoughts on that, yes?

Just a distraction. That's all. We know how to build those products, right? Can we build a gas compressor? Yes. Can we build a refrigeration compressor? Yes. But it's a completely different customer, different set of sales, different value proposition, different set of competitors. It's all a distraction. When you have 20-odd billion here, why waste your time. So I give it [indiscernible].

Sir, 2 questions. One, again, on this technology of this thing stabilizer. Is there any way we can assess that with the newer technology, does the repair and maintenance of the compressor go down because that is going to be a significant share in the future? And second, we had a couple of innovations, if you look in the last 5 to 7 years. One was where we were trying to disrupt the oil-flooded compressor market with the oil-free by bringing the cost down and offer it at almost similar cost and now with the stabilizer technology. Is there some thought where we need to be aggressive in doing this and gaining more installed market share base or some thought process on that? Because given that oil-free was a significant step.

So. Yes, the idea of the stabilizer is like the inverters, I mean, 10 years ago, you didn't have inverter in your AC, correct? Now nobody buys an AC without an inverter. A big share of the ACs, whether it's a split AC or package ACs, they come with an inverter, you choose an inverter. So we believe that -- now today, the inverter is too expensive in a compressor, right? 30% of the value of a fixed speed machine, right? Now that means 70% of the customers don't buy it. Now we can go to that 70% and say, here is something, right, which is 1/6, let's say, 5%, right, of the value, fixed speed machine, right? There is a huge value proposition, right? Now how do we get there is the challenge, right? That's a good problem to have. So we need to figure that out. Now why are we -- your other question was the...

Maintenance part.

Yes the -- that's going to be huge. But the point is we can't prove it now. We can give -- when a machine goes up and down, up and down, up and down, up and down, all the systems are shaking. It's like when you're driving a car, you drive -- let's assume you're driving on a highway, constant speed with absolutely no disruptions, the life of your car goes up 100x as opposed to in the city, you're constantly shifting gears, shifting gears, right? Just imagine, the car runs at constant speed in the highway and in the city, but it gives you different speeds. That's the stabilizer, right? The machine will continue to run at the same speed. Now the advantage of that is there are no pulses. There are no shocks to the system. Our theoretical calculation shows there could be a 10x improvement in the life of the parts, yes. But we don't want to wait 10 years to test and prove that. So we'll get in, we'll use theory to explain to the customer. Over a period of time, they will experience it.

Will it be like a killing a golden goose with no spare parts [ in the world ]?

Spare parts will be the same. In fact, we can come up with spare parts that are lower cost right, but better profit. That's possible. Yes, sorry, [indiscernible].

Does that mean it's an air end replacement actually?

For the light, for the competition, there's no -- we won't touch their air end, we won't do anything. Sorry, he's got a question.

[indiscernible] overall [indiscernible] as we speak through the higher end.

First of all, it's not true that we sell below 55. No. No Our share in the higher kilowatt, we are #2 in the market, right? So we are not a small compressor company, as I suppose to most people believe, right? Our distribution across kilowatt is comparable to the industry standard, right? So that's not an issue at all. In our distribution operations in the U.S. and Australia, we do. But we don't do it strategically as a business in the company, right?

A couple of questions. Firstly, on the Siemens order, you mentioned that you've supplied 10 units in FY '25. So is it a fixed order or it is a variable demand-led order?

So they have got a tender from the government for x number of locomotives that is scheduled to be supplied, right? As long as the government sticks to that buying schedule, we will then have that same schedule, right? So the supply is for how many compressors in the thousands? Yes. So about 2,400 units over a 12-year period. But the maintenance and service and all that goes to 35 years.

So we are on track for 200 units this year?

Provided the government buys 200 in FY '26 from Siemens and then yes.

Okay. And sir, second question is on the cost. In the last 5 years, when we entered Europe, we are 17% employee cost to revenue in FY '18. Now it is close to 20%, 21%. So do you think that this percentage to sales has peaked out because you mentioned that we are significantly in the market today. So how do you see the cost in Europe and U.S. panning out over the next few years?

The cost -- people cost as a percentage of sales has to keep coming down, right? But when you go into the market, there is a certain common minimum that you need to invest in, right? So the percentage starts off being very high. And over a period of time, it starts going down, right? Partly by our own lessons that we learn in the market of what roles have to be taken out and what roles we need to fill, we learn in the market, partly also because of the top line going up.

So it has peaked in terms of percentage [indiscernible] in FY'25.

Yes in terms of -- Yes, in FY'25.

Okay. And one last question. Service, you mentioned that we are at par with any other players in India, service and spares revenue?

In India, we are probably a little lower than the -- maybe Atlas but I think we would be better than Ingersoll Rand.

And that figure would be how much in FY '25?

Aftermarket would be about 28%, roughly.

Okay. And globally, what would that level be? Would it be in single digit today?

It's not single digit. It's a small double digit, right? And that's really where the potential is for us to improve our profitability. Somebody -- sorry, can we take one -- sorry, go ahead. Can you unmute yourself and ask the question. I don't know your name, but your initials are YV.

Yes, sir. Can you hear me now, sir?

Yes, I can.

Yes sir. So my name is Yash Verma. Sir, I have a couple of questions. My first question is on the aftermarket opportunity. When you talked about that it is a very milking opportunity, I just want to understand if a product worth x rupees is supplied, how much value comes back in form of an aftermarket if customers sticks with you over the life of the product?

Okay. I'll give you a rough thumb rule. I think we have spoken about this in the past. So if every $1 of equipment sales gives you $2 of profit over 10 years, yes. So you can do the math. So if you look at our EBITDA being 16%, if it is $2, then your revenue is too divided by $0.16, right? You bring it to your nominal level, you will know what the revenue is, roughly.

Understood, sir. Very well understood. And the second question is on the factory shift, what we are trying to do where we are moving our facilities from cities to the one concentrated location. Will it add any incremental capacity or the benefit of that factory shift will only be available or expressed in the margins?

It will increase our capacity. But unfortunately, buildings are not -- they don't produce money immediately. Machines do, right? But buildings are liabilities that we need to invest in, because once you reach a certain size and the building is not big enough, you need another building, right? So part of the investment is a little nonproductive in a sense, but part of it is going to give you increased capacity.

And will it be possible to quantify how much capacity expansion we can happen from this INR 700 crores of CapEx?

The GSC is going to -- what is up -- how much -- how many x are we going to do more in GSC? No if it is 100 now, there was a number in our presentation, some x multiple. I think it was 2x. 3x, Yes. Is it 3x on 1 on our global support center. And I think in our portables thing, 1.5x.

Understood. And sir, my final question was on the pricing of the products. How has our pricing moved in respect to premium and discount versus our competition in key geographies like India, U.S., Europe for like-to-like products?

We haven't increased our prices in the last 3 years. We did a big increase just the year after COVID because there were a lot of distortions in commodity pricing. Since then, we have held it firm, right? So that's an opportunity we will look at in the future, right? So I need to now go here because we are running out of time also.

I'll just keep it quick. In your internal meetings or town hall discussion, so at this stage of Elgi's evolution, so what do you tell your team where we are punching below our potential across functions?

What do I tell them?

What do you tell your team where we are punching below our true potential of Elgi?

Our ability to get in front of the customer, that is our biggest weakness, right? We need to be in front of the customer more. And how do we figure that out, right? That's really the problem. Can we make great machines? Yes. Can we produce in volumes? Yes. Can we ship them to where it is required? Yes. So that means we -- is our pricing good? Yes. Is our quality good? Outstanding. You just need to get in front of the customer, right? So how do you do that, right? That's our challenge. And that's the challenge we're working on across the world, yes.

Second question, last question. So last 4, 5 years, we invested in all the senior management talent. I think 5 years back, I know you took all the pain of walking through the entire presentation. That has changed.

You must have seen the reflection in the back of the back a [ moment ago ].

So in this case, I'm asking like how they save your bandwidth today. On a day-to-day business, what excites you the most right now? So...

Yes, when you fill -- when your open capacity gets filled up. So there's nothing like, oh, now we've got a team. So now do you have time? No, it just seems to get filled.

I'm asking 5 years back, this could have been one of the bottleneck for you, right? Identifying the next set of people would have been a bigger bottleneck. I remember we're discussing the same. So with that problem, at least is put to rest. I know it's evolving, it's a day-today job.

Your ambition becomes more. And therefore, it fills up more, right? So -- last question, Indranil.

Yes. My name is Rahul Gajare from Haitong. My question is in 2 parts. One, in your motor development, you talked about moving from IE3, IE4 for European market. Now I saw IE7 also. I want to know whether you have already developed that capability?

Of IE7?

Yes.

Yes. All our permanent motors that are now running in the field. See, first of all, the standards organization has defined only up to IE5. Nothing exists beyond IE5. We call it IE7 when we draw the line of where we are on our efficiency, we think it will be roughly IE7, right? So IE7 is our internal thing. We are far ahead of IE5, which is the maximum today. And we have developed. Our permanent magnet motors are at that standard of efficiency.

Now taking this to the next level, you've done foundry that was for captive. You've got into motors that is for captive. You've taken one step and you've done CNC machines, some good machines. All of this is for captive. Now this business has been growing at low single -- low double digits for a very long time. And obviously, you have ambitions to become the #3 player. Do you see Elgi with capability proven in some of these areas to become your other growth vehicles? Obviously, that's going to take bandwidth, but can you envisage that?

At the moment, no. To be very honest with you, no. It is -- we believe that the minute we build the motor business as a stand-alone business, it will be a huge distraction, right? We need to create -- it looks -- product is not the only thing that does business, right? The minute you go into it, the customer engagement, customer service, all the accounting, administration, the warranty, completely different, right? So this is not a distraction that we need, right? And the motor business, if you go and start selling, not very profitable compared to the compressor business. So, if you pay, let's say, a 6x multiple to a distributor, right, on EBITDA, without that, you're not going to buy them. It's not the most cost-efficient, capital-efficient investment to get in front of the customer. We have done it 3 times in the past because we couldn't find organic independent distributors, right? We will continue to look at it, but our first preference is to go with established independent distributors. And the more and more we bring technology like this, the more the doors will open for us, and we'll get sucked into their business. No. When they acquire, they kind of diluted. So the owner is retired in Florida, right? He's having a good time, right? So they're not there. Thank you very much. Again, thank you all for coming and for your insightful questions. It's always a pleasure. Like we said, we'll send the feedback. Please fill out the feedback form that helps us. We'll make sure that the response to the feedback comes within a week's time from now. And we promise you the next one will be in Mumbai. Thank you. Thank you very much.