Elgi Equipments Limited (ELGIEQUIP) Earnings Call Transcript & Summary

All right. Ladies and gentlemen, very good afternoon, and a very warm welcome to each one of you present here. My name is [ Swati, ] and it's my absolute pleasure to extend a very warm welcome to each one of you to Elgi Investors and Analyst Meet 2026. Ladies and gentlemen, it's really wonderful to see you all here, and we are extremely grateful for all of you to taking out your precious time to join us here today. Ladies and gentlemen, this edition is extremely special and meaningful for us because for the first time, we are hosting the Investor and Analyst Meet outside Coimbatore here in Mumbai. Over the years, many of you have shared that you would welcome an opportunity to engage with Elgi in more accessible location. So here we are with absolute delightfulness to bring this platform closer to you. Ladies and gentlemen, we are extremely thankful and we would want to thank each one of you to support us throughout this journey. Ladies and gentlemen, as we begin, I request each one of you to please kindly give a huge round of applause to yourself. Let's fill this hall with a lot of energy as we begin. So before we start, just a quick announcement and quick note for all the people present here. Please do not record any of the presentations or any subsequent interactive sessions. Please keep your phones on silent and do not record anything. And we would like to ensure that all of you participate and everyone gets a chance to speak. We have thoroughly kept a Q&A session for all of you but that will happen after the presentation. We request you to plan your questions accordingly. All right, ladies and gentlemen. So once again, thank you so much, all of you for your cooperation. And now before we invite our very first speaker on stage, we will play a short video showcasing how the year has progressed for Elgi so far in financial year 2025 to 2026, a year of steady momentum and strategic progress. Can we have the AV, please? [Presentation]

Thank you so much. We hope that gave you a snippet of Elgi's journey this year so far. Ladies and gentlemen, so now I would like to invite our first speaker, Dr. Jairam Varadaraj, Managing Director, to come on stage and take us through Elgi's purpose and refreshed value Elgi's global presence and leadership team, our history and global manufacturing footprint and Elgi's product offerings. So please join us on stage. Can we have a big round of applause for Dr. Jairam.

Good afternoon, ladies and gentlemen. Thank you very much for taking the time out to be with us. As promised, we have brought the show to Mumbai, and I hope I can see that it's very popular because generally, when we do it in Coimbatore, we have 1/4 the number. So it's great to have all of you. As per your request, we're going to speak less in our presentation and give more time for the Q&A. So having said that, I want to move quickly towards what I want to say. You've seen this multiple times. I don't want to say too much. It is just a status of where we are in terms of the size of the organization. Only highlight is this is last year's number. We'll talk about estimate for this year in the subsequent presentations. Our purpose is critical for us. This is what drives us. Our purpose is conscience in action and these 7 values drive our behavior across all our stakeholders. Now earlier, what was in the left-hand side was our values. We have now converted some of them into verb form, and we have also removed some and added a few. And this is really what guides us. Our presence globally, not much of change. We still continue to do business in 120-plus countries, 28 countries where we are directly present in 3 manufacturing locations. On the left-hand side are the subsidiaries that we acquired and continue to run. On the right-hand side are our joint ventures that we have both in the U.S. and in India, and we have a license agreement with D.V.P. for vacuum. Our leadership team on the left-hand side is our corporate team and on the right-hand side is our team driving many of our regions. A little bit of history. 1960, we built. The transformation really happened in 1992. We started changing the direction of the company, '92 to about 2013 is when we built the foundation for the company, 20 years in terms of technology, in terms of experiments with various strategies, manufacturing systems. And in 2013, we said, okay, now we are ready to go and conquer the world. And that's where we started, and that's been the journey since then, various events during that time. And now we are in 2026, and we continue to remain strong, continue to go down the path that we set out for ourselves in the early '90s. Manufacturing is one of our pride of ownership. We have -- we make some of the best compressors in the world. Quality is the best in the world, no doubt about it. Performance is the best in the world. There is no doubt about it. This is something that just didn't happen over time. I mean, suddenly, it took us almost 25 years, and we still continue to invest in that. We do strategic selective backward integration, and this is a reflection of all that we have done, foundry, motor production, our own pressure vessel and some of the machining that we do and the machines that we build for ourselves. Deming was a great milestone for us but Deming is just a milestone. It's not the end. And for us, it is -- we are not happy with where we are. I think there is a lot to be done, a lot more to be done, and we are continuing to drive that in the organization in the fundamental principles of TQM. Product offerings, I think my colleagues will be talking a lot more, but this is just a glimpse of what our application industries are. This is one of the virtues of being in the compressor business. We are not dependent on any one industry. We cut across all. So utility, just like electricity, every factory needs it, and that's the advantage that we have in our business. Various types of compressors for various segments of customers, different, both industrial and portable and construction and mining, small compressors, large compressors, accessories and all kinds of downstream filtration systems. Great products for the railways. The one on the left here is the one that we finally won the tender from Siemens. The supplies have started, is doing exceedingly well. Our accessories. So this is really what I wanted to present, and we'll come back and take your questions. I'll then request my colleague next to come and present.

Thank you so much, Dr. Jai, for perspective on Elgi's purpose, progress and global direction. And now I would request Mr. Anvar Jay Varadaraj, Executive Director, to take us through the region-wise sales performance. Over to you, sir.

Thank you, everyone. It's a pleasure to be here. I appreciate you having us. So I have the honor of taking you through some strong performance for the year and get to represent some of our regional leaders here to share the performance. So starting with ISAME. So ISAME includes India, South Asia, Africa and Middle East. We've done very well this year. We expect to close with a strong set of numbers. And when I look at our core segments, which is the industrial business, construction and mining and railways, we've grown very well. And I think the common thread across these segments is that our teams, especially in sales, have done a fantastic job of identifying new opportunities and converting them at high levels of quality. So just to give you an example, we've run a go-to-market project in our industrial business. And the core of the project was to go out and identify new opportunities and new customers. And why that's so important for our business is that the nature of customer behavior in compressed air is that there is a general tendency to stick with what you have. It is not a productive asset in your factory. And as a result, unless the existing manufacturer has done very badly, the tendency is to rinse and repeat. So the ability for us to identify where these opportunities are and build relationships in advance of a replacement ends up being critical to us converting that customer to Elgi in the future. So knowledge of that customer and visibility ends up being the first challenge. The second challenge is when you do get to the table, what is it that you bring in order to make a compelling value proposition? First one is obviously how we communicate our value across reliability, energy efficiency and service. But the second is bringing actual meaningful technology to the forefront. And this is where tools such as Demand=Match where we're able to provide energy efficiency and reliability without any compromise on either cost or total cost of ownership ends up being an important tool for conversion. So these are just 2 examples of how we've been able to win in the market. And especially as we continue to look to grow the brand, we continue to invest in not just go-to-market initiatives but also continuous technology improvements as well. So the -- so I talked a little bit about our initiatives in India. So going into the Middle East, I wanted to talk a little bit about that because we hear that there's a lot of bullishness about setting up manufacturing, general investment in production. And this is a market that we've been investing in for a long time. In fact, we went through 2 phases in these markets. So taking UAE as an example, we first started off with a channel-only model. And once we realized that the channel-only model could get us to x percentage of growth, we have now pivoted to direct sales. And this is a very important market for us because we've taken a lot of the learnings that we've had from our India go-to-market strategy, both from a talent perspective, people who have helped us succeed in India and also from a process perspective to adopt in this market. So we are very well set up for the opportunities that will come up, especially in the UAE and Saudi. Southeast Asia for us has been a refreshed market for this year. And primarily, we focused on bringing on board new leadership that can help us co-create a new strategy for these key regions. The market is very attractive, upwards of $700 million annually. And we now have the product portfolio, both in terms of the high end of the segment where customers value efficiency and also in the low end of the segment where it's more price driven. So I'm actually quite excited to see what this market will bring forth for us in the next few years. What didn't really work so well for us, partially not in our control. Some of the U.S. tariffs, as my father showed the different segments, they had varying impacts on the different segments. So at a point at which the tariffs were upwards of 50%, customers in segments like textiles weren't necessarily keen on upgrading or investing in new capacity. Now with a little bit more stability expected, we expect to see some investments coming up. But I think this is also another example of how some of the bearishness in industries such as textiles have been offset by other industries that have grown well for us, including semiconductors. So moving on to North America, our second largest market. So just as a brief overview of our North American business. Our North American business is comprised of 4 divisions. First, Elgi Industrial. This is the business that supplies air compressors to independent distributors throughout the country. Second, Elgi Distribution Operations. This business houses the 2 acquisitions that we've made in distribution, Pattons and Michigan Air. Elgi Portable Compressors. This is the business that sources portable air compressors from Rotair to supply for infrastructure-type applications -- infrastructure and rental applications, excuse me in the U.S. And finally, Pattons Medical, the medical air and gas business. Now we've had a very good year in North America, record revenue driven by the Elgi Industrial business and Pattons Medical. In the Elgi Industrial business, we've doubled our sales capacity, basically the number of people who are calling on distributors. And this has effectively helped convert a lot of distributors from competition to our fold. And we continue to have good momentum at the pace at which we're converting distributors. Pattons Medical has been a success story as well. We've been expanding in regions such as California and the Northeast in New York, where we've had relatively lower presence. The portables business has been a challenge, and this is primarily due to the tariffs from Italy. Now the Pattons -- the portables business is structurally not as profitable a business because it doesn't have a large aftermarket component and the overall profitability of that business is lower. So when we had 17% tariffs, that effectively hurt a lot of the profits at North America. Now unlike our industrial business, we had fewer levers to address that during the year but we have kicked off a couple of projects to be able to undertake some transformational measures to improve the profitability in the business. But I think one thing that I'm extremely proud of and a big credit to some of our cross-functional leaders here is that we have significantly improved the operational hygiene of Elgi North America, which means we've been able to bring in a lot of rigor to areas such as inventory management and AR and cash. And also, we've been able to move a lot of the cost for non-revenue activities to India. I expect that we will continue to do so, which means that we will have a lot more investment that we can unlock in revenue-facing positions and activities. Just the last thing that I want to say is that the distribution businesses, this is a bit of a mixed bag. So the distribution business has 2 components. One is the direct sales of equipment and then the service of equipment. The direct sales of equipment was below target. And there's a number of reasons for this. One is we -- our brand being less well known, requires a lot more investment at the top of the funnel, marketing enablers, brand pull and such. And so those investments will take time. We started doing this last year. So I expect to see significant growth at the last quarter of this year and also going into the new year. That's point number one. Point number two, the bright spot is our service business. This is the service of not just Elgi equipment that we've sold but also multi-brand air compressors. This business has been on target, both in terms of revenue and profitability, and we've significantly reduced the cost of running that business. So in the next couple of years, I expect to see transformation across both of these businesses. The success of this business is very important for Elgi North America because ultimately, as we move -- as we saturate the distribution channel more and more, we need to be able to effectively run a direct sales organization. So moving on to Europe. As an overview, Europe comprises of 2 areas for us. First is the Rotair business, which is our manufacturing facility for portable air compressors based in Italy, one of the largest customers is Elgi North America, amongst other large customers in Europe and the Middle East. And second is the Elgi Europe, which is the equivalent of the industrial business in North America. Europe has been a challenge for us. So our core markets include Spain, U.K., France and Italy. Across these markets, we've grown share but all of these markets have very low rates of growth. In fact, some have been de-growing. So which means that only the replacement market is really accessible to us. So as a result, our growth numbers have not really been in line with what our overall expectations were. But we've pivoted quickly. We've restructured that business. We've moved a lot of operational cost out, and we've instead reinvested in more of a direct sales force in some of those key markets. I expect that some of those investments will start to bear fruit in the next couple of quarters. But generally, we've significantly reduced the cost base of the business. And as my dad said, in the next couple of years, I expect to see strong profitability. Rotair, the tariffs have been a challenge. The largest market has become less profitable for them. And like I said, we're working with the Rotair team now to bring about a few transformational initiatives to reduce cost. Next, Australia. Australia is a very stable and profitable market for us. Australia is probably structurally the most profitable market, which means we have the best pricing and margins on the equipment and also on service, given that it's a remote location, that tends to be the case for most categories in Australia. So Australia is made up again of 2 businesses. One is Elgi Australia, which supplies air compressors to channel partners across the country. And here, we've made -- we've done a fantastic job of being able to onboard new distributors, which is a fantastic effort given that you have a fairly limited set of distributors that have been all quite loyal. So the strength and performance of our machines and unbeatable pricing are 2 levers that have really driven that. The second business is our Pulford business, which is the equivalent to Pattons in North America. It's the direct sales and service organization. We've actually restructured the sales organization, and in places like Sydney, they've done a fantastic job of gaining market share. And whereas we still have a ways to go in places like Victoria, Melbourne, where we're starting with a low base and there's a lot of opportunity. The service business does need some improvement. And similar to Pattons, we bring -- we've brought about some technology tools that will automate the service process, which will allow us to spend much more time with customers. Overall, we're pretty confident that we have a good foundation in Australia for us to continue to grow, and the market will continue to stay stable. So this -- I won't spend too much time on this, but this echoes what my father was saying. This is -- this pie chart shows the breakup of our business for the industrial screw air compressor range in India. And I think the key message here is really the diversity of industry that make up our customer base. And in fact, even the largest segment, which is 30% general engineering is probably made up of 5 to 10 industries that are actually quite distinct, such as fabrication and woodworking. So with our channel and direct approach, we have effective access across these different segments, and we have very key strategies that are quite distinct to be able to tackle customer needs across these different segments. Moving on, this is the same pie chart for the oil-free segment, which tends to be less diverse. And when I talk -- and oil-free air, for example, with pharma is absolutely critical, right? It's almost a statutory requirement that for their processes, they need oil-free air. And also when you look at our second biggest segment such as with power plants, you need it for instrumentation. And for applications such as power that also have high volume of air required, oil-free air tends to be more energy-efficient than lubricated compressors. Most of our oil-free portfolio or rather all of our oil-free portfolio goes through our direct channel, which means our salespeople and our service people cater to these customers because there's generally a higher level of sophistication. And this segment has also been included in our go-to-market efforts where we go out and actively try to find new customers. And finally, construction and mining, where we have the least customer diversity. So the biggest segment is construction. So if you ever see a construction site, hopefully, you see an Elgi machine that's attached to a jackhammer that's used for road construction. On the mining application, blue metal quarry is one example where our machines run. And then finally, for water well applications, especially popular down south, where our machines work for rig operators, that are putting in bore wells. Lead time availability and reliability is extremely key for this business. And I think the one thing that we've done a fantastic job of credit to the product management and R&D team is that we've been much better and faster about bringing on product upgrades and new products to ensure that the changing needs of the customers are being addressed. So thank you very much for your time and attention. So I will hand it off back to you to introduce the next person.

Yes. Thank you so much, Mr. Anvar. Next up, ladies and gentlemen, I would like to invite on stage Mr. Indranil Sen, Chief Financial Officer, to take us through the business performance.

Thank you, Anvar, for taking us through the business segments in detail. Ladies and gentlemen, I hope you're having a good time. I have a few slides. I'll let the numbers do the talking but give you some context of how we have performed this year in spite of various challenges that came during this year. So I think as a start point, we all were faced with tariff as a subject this year. And we kind of successfully navigated that challenge through quick actions in terms of our ability to pass on some price increases to the market. We were also quite sharp in terms of our ability to accelerate our cost reduction programs on -- both on the development side and also on the indirect overhead expense side. And that's how we kind of navigated that challenge. So the combination of all these segments has -- will result in about 11% growth for us in this fiscal. I think the parts are clearly articulated. ISAME is still continues to be our main revenue bearer but what is more important and pleasing to see is North America. I think North America, if you would have seen in Anvar slide, we have now gone back to our FY '23 levels. FY '24, we had a hiccup due to our ERP implementation. It took us a year to kind of consolidate back, and I'm happy to report we are back to the levels that we were in FY '23, which also has given us -- and also it's been backed by some of the processes that Anvar talked about. There have been -- the processes have been more stable now. So hence, we are able to get some solid results. Industrials, medical and portable, all 3 segments kind of fired this year. Distribution operations remains an area of focus, but we are quite confident that we have a road map in place for us to turn that around in next year. Europe as a market, I think, was constrained by the economic -- macroeconomic condition, also by virtue of tariff. Indirectly, a lot of Europe exports to U.S. in our Rotair business got impacted because of tariff. And hence, the growth that you see is quite minimum. It's more breakeven performance. Australia also, I think the industrial business grew well. The distribution business is where we still have some work to do. And Australia also had some good onetime opportunities in the last fiscal. So current year, those fiscals are not there. ATS, similar to ISAME has been registering strong double-digit growth every year. So combined, as a group, we've got an 11% growth. There is an impact of exchange but about a couple of basis points of exchanges also helped us boost this results. So adjusting for exchange, our growth would have been about 9%. This is a slide, which talks about the mix of performance of India and the foreign subsidiaries. Broadly in the last 3 years, the mix has remained same, which essentially is a good sign, which means in spite of the fact that India is growing, the foreign subsidiaries continue to hold forth and the fact that this year, North America had a major turnaround, coupled with their sales numbers has helped us continue to retain this mix. This also generates -- as a result of the fact that we've generated more cash in our overseas subsidiaries, helped us pay down some of our loans. And with the help of better working capital management, we also kind of reduced our working capital levels. Profitability-wise, I think this is a question that we keep getting all the time, and we keep getting asked questions on how is our cost structure, what are we investing? And there's a lot of question around our employee cost and other fixed costs. I think at an overall landscape this year, we had tariff. There was an impact of tariff, which we were able to navigate. We were also benefited by obviously some opening inventory sitting in our subsidiaries. So net of that, there was an impact. Then we also had a scenario in the third and fourth quarter where we are seeing the cost of base material cost going up. There is a significant amount of cost increase that's something, which is coming on, and we are trying to pass on some of those price increases. We've also talked about in the past that we will be investing about 1% to 1.5% of our top line into initiatives, initiatives which are go-to-market in nature, initiative which will boost our support function capability, our IT infrastructure. So that is something which is also baked in. So in spite of all of that, I think I'm happy to report that we've been maintaining a constant profit trajectory for the last 3 years. And I think directionally, it should continue like this for another year or 2 and post which I think we will start seeing a margin expansion on the bottom line. Another interesting thing if you see at the bottom of the pyramid is Europe. I think we have been talking about Europe as a separate component. We have been reporting Europe as breakeven for the last couple of years now, which means the combination of cost restructuring that we have done has actually helped us make Europe breakeven. North America is actually profitable. If you take out the impact of tariff, North America has registered profits this year, which is a very pleasing information for us because that gives us a lot more opportunity to reinvest that profit back into go-to-market initiatives in the U.S. My last slide is on cash. Again, the last couple of years, very strong focus on working capital. Our EBITDA to cash conversion is post 90% before tax. Net working capital, we have not added working capital. We are -- in spite of growing our top line by 11%, we have been maintaining our working capital at similar levels, testimony of the fact that we have managed to do good work in AR. Still some work to do in inventory but we are hopeful that we will continue this trajectory. Interestingly, we have also seen that in spite of CapEx, our CapEx cycle has now started to come into play, MK2, part -- Phase 1 of MK2 is almost close to getting done and Phase 2 is now kicking off. And we will also start seeing a similar trajectory of CapEx in the subsequent years. So that's my last slide. Thank you, ladies and gentlemen. Over to you.

Thank you, sir. Next up, ladies and gentlemen, I would like to request Mr. Premendra, Chief Strategy Officer, to take us through the strategic business plan, including new products and features. Over to you, sir.

Thank you, Indranil. And first of all, thanks to all of you for joining us today. We'll start with where Elgi is with reference to the global air compressor industry, and then we'll talk about how we have delivered with respect to our strategic business plan. So what you see here on the left-hand side is the overall global air compressor industry. In FY '26, it's expected to be around $23 billion, and market is growing at 3.5% CAGR. On the same years, Elgi, its operating revenue has been growing at 6% CAGR. We closed last year at $415 million and expect it to close somewhere close to $440 million this year. Now these numbers that you see, $415 million and $440 million are actually adjusted for exchange rates, so they are not at constant exchange rates. So what does this growth mean for us? This is the slide where you see the top 10 players in the industrial compressor industry. Atlas Copco is the leading player. And together with Ingersoll Rand, they occupy nearly half of the market, slightly more than half of the market. We are at #6, though we have been growing at one of the fastest growth rates in the industry at nearly 5.8% to 6% CAGR over a long-term horizon from FY '13 to FY '25. So this is really the long-term growth rate that we are seeing ourselves. Elgi is currently positioned as #6 as per FY '25 results. So just to recap, what was the strategic business plan we set for ourselves 5 years back, that is in FY '21, for FY '26. So we'll just go through what we had set for ourselves. And next slide, we will see with respect to what we have set for ourselves where we are today. So in terms of revenue, in FY '21, we set a target for ourselves at USD 450 million, and we had considered a growth rate of 10% CAGR. This also means that we had included -- we had considered a profitability, so EBITDA margin of 16% and return on capital of 30%. So this is what 5 years back, we set as a goal. Now versus this goal where we are today, so we see against USD 450 million at a constant exchange rate, we would be around USD 487 million. So we have surpassed the target. But at a floating exchange rate, we are close to USD 440 million in FY '26. In terms of EBITDA margin, against a target of 16%, we'll close at 15%. And in terms of return on capital employed, against a target of 30%, we'll close at 35%. So then it's also time for us to set the targets for the next 5 years. So what do we actually do from here on until FY '31? We believe where we are today and the strong foundation we have and the last several years, we have been growing at 11% CAGR. For us to grow at 11.3% CAGR is quite realistic, and therefore, $750 million is a target that we are setting for FY '26 -- FY '31, I'm sorry. This $750 million would be at 18% of EBITDA margin and around 35% of return on capital employed. So Next, what I will talk about is on the product. So last year, we had a phenomenal year in terms of new innovations coming out from Elgi as well as the new product and features that we actually rolled out and launched. My colleague, Venu will talk about the innovation. I will talk about the new products that were launched in the last years. And this is just a snapshot, not the whole complete set of the products that we worked on. So last year, I would have talked about our flagship EG Series super premium product, and we introduced 90 and 110 kilowatt last year. We have, in this year, completed the whole range from 75 kilowatt to 250 kilowatt. These are 2-stage air ends, the best on energy efficiency, and they are also having best-in-class controllers as well as they're embedded with IoT controllers. On the smaller kilowatt, we have extended our PMSM range. So permanent magnet motor range Earlier, we had it from 11 to 45. We have now extended to 55 and plan to extend further going forward. So what we have also done is on the smaller encap series, which are our encapsulated air ends products. Usually, what customers would do, and this is a very popular product for U.S., Europe and so on. Usually, what customers would do is they would buy tank, they would buy the compressor and they would buy a dryer, and they would assemble that in the region. So in order to maximize the value, both for our channel partners as well as for the end customers, we started to assemble all of this in India itself. And we found great value actually that we created and a great pull for this product in the region. So this is where actually we went back, did further integration, started assembling this what we call CTD packages, compressor, tank and dryer packages and sent to regions. Parallelly, we have also worked on various market expansion initiatives because, for instance, we are not there in Germany today. We need to comply with certain regulations. So we are working on that. We need to comply with certain regulations for the Canadian market. We have it for the certain range of products but not a full, so we are working on that. So this continues as business as usual for us. In the oil-free series, we launched our air cooled 200 to 250-kilowatt model. Again, extremely good on overall energy efficiency as well as having a very reduced footprint, all of these products with advanced Neuron controllers and embedded IoT devices. In the accessories, last time I talked about refrigerated dryers that we are planning to do in-house, and we had launched a few products by then. Now we have completed the whole range of dryers from 20 CFM to 500 CFM, which is where most of the volume for Elgi sits in today. In markets like India, Europe and Australia, this product is already launched. In the U.S., we'll be launching in April this year. In addition to dryers, we have also launched our own piping, so Elgi branded aluminum piping solutions for our channel partners because several of our channel partners anyway are actually into the piping business, and we see there's a huge opportunity for this business in India and even overseas at some point in time. And Jai talked about the Siemens project where we are actually working on the compressor that -- this is the [indiscernible] compressor that we're working for vac tank. So this product is already developed, tested, already being supplied to the client and already in usage. So great work done again by our overall product and R&D team on getting this product into the market. So this was the last from my side. I would invite next Venu to come over and talk about product development.

Thank you so much, sir. Next up, ladies and gentlemen, I request Dr. Venu Madhav to -- Executive President, Product Excellence and Innovation to take us through Elgi's latest technologies and innovation. Over to you, sir.

Good afternoon, everyone. Thank you, Prem, and thank you all for being with us today. My name is Venu Madhav, and I'll be taking you through the new technologies, what is happening at Elgi. So last year, I talked about stabilizer, and this was talked more about what is -- and that gives the value and providing stable operation and also efficiency. Later, we branded that with a brand name Demand=Match, in line with what exactly do in the application. So it's generally the background for this, just to recap, every compressor produces constant air flow, whereas the demand is fluctuating, the Demand=Match system automatically adjusts itself to the demand and produces what is air required. So this product was launched into the market across all the kilowatt ranges, and it was well received. And we also applied for an international patent, which is published now and we'll be having the rights for developing on that. So this is the new one. And this going forward, we'll be launching from coming March across all the globe in growth in Europe and American product ranges. So we believe this will take us to the good market share and also provide value to the customers on this. And the second one, the energy ESG and also on the net zero emissions, they are not talking anymore. They are becoming mandatory. They need very important for this. So we have developed all our products. So heat recovery systems are always used to be there. They used to be part of either external or adaptable systems but now we have developed all our products with internal heat recovery systems as standard. So these products, we can recover heat up to 90% of the energy what is available in the shaft power because a lot of energy will get -- will be in the form of heat. It compressor only 10% to 15% in the air. The remaining air is recovered as heat with these units. And the super-premium series, Prem talked about it. We have the range now from 75 kilowatt to 250 kilowatt. The advantage, the innovation, what it is, it is with 2-stage air end but what is special here is generally, if anybody uses a 2-stage air end, the unload power when the compressor goes to unload, it used to be significantly high. So this -- we have a unique technology here. The unload power will be almost same as a single-stage unit, whereas when it is operating full, it will be as high as 12% to 14% efficient compared to the existing machine. So this product makes us undisputed #1 position, both in terms of life cycle cost and also energy efficiency. And the last one, again, Prem talked on this. These are the refrigerant dryers what we have developed for the global market. We launched this product first in India and then in Europe, and now they have been launched for U.S. region also. And this range from 20 to 500 CFM covers more than 90% of the volume, what it is required in the compressor market. So these are the new technologies, what we have developed. A lot of innovations are happening. We'll come back to you at the right time to talk about this. That's all from my side. Thank you.

Thank you so much, sir. All right, ladies and gentlemen, now I'll request Mr. Nitesh Jain, Chief Human Resource Officer, to take us through Elgi's continued focus on building talent across functions and regions and creating a supportive work environment. Over to you, sir.

Hi. Good afternoon, everyone. So I'll be talking what do we do for our people. And to start with, how are we really building capabilities for the firm to take care of future talent needs, right? So we continue to invest in looking at capabilities and hiring talent across functions across the globe. But not only we believe in hiring laterals, right? So it's also equally important to induct talent from colleges, B schools, engineering colleges as somebody to get in whom we can nurture and develop in the organization. So we are running a very robust talent program, campus program. As well as it's also equally important to really focus on the development of our people, our existing employees. So running a very strong talent framework to really work with people, ensuring that all the critical roles are identified, there is a well-chartered succession plans for key roles identified and really working with the people who are identified as potential successors for those key roles, right? So these are the various ways in which we are really focusing on capability building and building talent to support the future aspirations and growth of the organization. Now it's really equally important that once we have hired and keeping the people, how are we really taking care of people? How we are really giving a very engaging environment so that they can flourish and continue to invest in the organization's success journey. So we are really focusing on the well-being of our employees, right? That's really, really very important for us. Now just to give you an example, what does that mean? So as an organization in India, we give a block closure to our employees, right? So twice in a year, the company shuts, right? And every employee can take a leave, spend time with their families and with their kids, go out, travel, explore. Now why it is important? It's important for us to take care of the well-being of our employees. So there are various such sort of initiatives which we are driving, which probably are unique things in our context as an industry. This year also, we have really focused on our performance management system, the way we are looking at what does performance mean for us as an organization. Now with a very clear focus that performance system should not be treated just like a clear linkage with a reward and that's it, right? So what beyond that? So we are focusing performance management as a tool as an enabler for continuous development. More than a linkage to reward, I think there is an opportunity given to an employee during the year, any point in time, engage with their managers any number of time and really talk about their performance, about the concern about their career, right? So that's essentially the fulcrum on which we have sort of reimagined the performance system for our employees. Now while all -- doing all these things is really, really important that how are we leveraging tech. So obviously, working and a global HRIS system to make the overall offering to our employees, which is more efficient and also helping our employees to become more productive and the ease with which they can work in the organization. Now one of the things which Jai also talked about was about our purpose and values. Now most of the companies have values, right? Almost all of the companies we know of have value system. Now it was really important for us to really not only have a set of values, but how do we ensure that people live this value on a day-to-day. It should become a way of life. Now in an organization setup, what happens is the behavior of an employee is governed by the guidelines, the policies, what we make in our organization. Now how do we ensure that our values are really embedded in the policy itself so that all of us as an employee naturally follow that in our day-to-day work life. Just to give you an example, right? One of our value is trust our stakeholders. Now employees are one of our stakeholders. Now saying that we trust our employees is one thing, how do we ensure that we really do that? So for example, right, if somebody has to do a business travel, the employee can just go ahead and travel. There is no approval needed. If an employee has to go and leave, just apply for -- just go ahead and apply, there is no approval needed, right? It just goes as an FYI to the manager. I mean these are small ways of really saying to our employees that you know what, we trust you. We trust your judgment, right? So this is the way where we are really looking at all the policies, processes in our organization and seeing that how does they fit in with our set of values to really make it as a way of life for everyone. Now while we are doing all these things, how we are envisaging the future is we are really looking to have a sort of a Elgi experience for our employees across the globe wherever they are joining, wherever they are present, so that they experience the organization in a seamless manner, similar manner. And that's what we are visualizing for future. And I hope the things, which we are doing will take us there very soon, yes. Thank you and hand it over to you.

Thank you so much, Mr. Nitesh. Ladies and gentlemen, next up, I would like to invite Mr. Gaurav Gupta, Chief Information and Digital Officer, to present Elgi's global IT and digital transformation road map.

Good afternoon, everyone. Very happy to be in front of you. I'm going to be walking you through the information technology and digital agenda that Elgi is embarking upon. Pretty excited to present that and pretty exciting agenda in itself as well. So just so bringing the context back, we talked about a number of leaders moving their functions forward in terms of standardization, transformation in terms of innovation. And underpinning that, over a period of time, we've invested into our technologies, our digital agenda, our talent, which basically ensures that we are able to drive the throughput of the organization, deliver that value to the business, which is required. So if we can look at the overall digital and IT agenda. It's basically a 3-step process that we've sort of unveiled our strategy on. Dr. Jai talked about and Indranil talked about the challenges we had in our ERP system a couple of years back. So it was only sort of natural for us to ensure that our first step in the overall digital journey where we've started investing pretty extensively since last year is to ensure that our core is integrated, globalized and secured. And I'll talk more about the core as such but basically, we're looking at embedding our standardized global processes and leveraging the tools to sort of ensure that we bring that level of transformation rapidly across all the regions and drive that behavior and process adherence towards it. The second part of it is more towards once we've started digitizing most of our functions, we'll start collecting the digital footprint, which will be in terms of the data. And that's when the enterprise becomes an intelligent enterprise as soon as we start looking at that data in an intelligent way. And that's for -- and that's where in the Stage 2, we will start building our data platforms, building the AI engines, looking at analytics, which is more predictive than diagnostic and so on and so forth. And obviously, once the enterprise is standardized, integrated, it's intelligent, that's when we look at our digital business models as well. So that's the sort of 3-step journey that we've sort of laid out for ourselves. We've sort of completed a large part of the Stage 1 in this year, where we've laid out our sales platform. As we speak, it's getting rolled out in North America. We've done India. We have done a part of it in Australia. We've got our global employee platform, Nitesh talked about as well. We've got warehouse automation going on. Our product and innovation platform is getting completely revamped. Finance transformation, a large part of the progress that we've had in terms of driving our controls and rigor. We're overlaying that on our financial tools and controls automation that we are progressing upon. So a fair bit of work happening in terms of really standardizing our core processes and rapidly sort of driving them global. Obviously, underpinning all of that is our cyber strategy. As we create more digital footprint, we need to be more aware, and we need to invest in our cyber capabilities as well. And the IT operating model, we wanted to be absolutely sure is something which is global, which is agile, which is able to support multiple regions with a very sort of dependable partner ecosystem that we've envisaged ourselves. And the partner ecosystem is also built on the guardrails of strategic partnership with a global footprint so that we are able to leverage the capabilities across the globe. That's pretty much what the Stage 1 progress has been this year. It's helped us to sort of, as I said, rapidly transform across the globe at a scale and a speed that we would want to face the dynamics in the business environment today. That's pretty much what is the update from the IT and digital side. I'll hand it back to you now. Thank you.

Thank you so much, Mr. Gaurav. Ladies and gentlemen, next up, I'll request Mr. Ramesh Ponnuswami, Executive President, Operations and EBS, to take us through development across.

Good afternoon, ladies and gentlemen. A pleasure to present to you about our manufacturing operations, progress that we've made with our ESG goals and also some of the social impact initiatives that we have been doing in our company. Around 2019, we started making motors in-house. There were various reasons and drivers behind that. But at that point in time, we were importing about 75% to 80% of our motors. So when we last updated this forum in 2024, we were still importing around 33% of our motors. Today, I'm happy to share with you that, that has now dropped down significantly to 5%. And this 5% is largely stranger items. And these too, we are looking to bring in-house in the near future. So our range -- sorry, can you hear me better now? How is it now? Okay. Sorry about that. So basically, our range has also been increasing. We started out making induction motors. Now the product range and the kilowatt range has expanded from about 2.2 kilowatts to about 160 kilowatts now, different efficiency standards, different countries we're able to serve different frequencies. And now we are very heavily into a permanent magnet motors also. And all these have been developed by our own in-house R&D team and the efficiency levels are the best in the world. We have also benefited from significant reduction in lead times. So we can now -- we were used to getting 3 to 6 months lead times from various sources overseas. Now we could turn a motor order around in 3 days. That's how fast we can do it. So you can imagine what it has done to our inventory levels, our responsiveness, apart from the quality and the reliability aspects of our designs. We've recently commissioned our vacuum lines as well. We started off by importing fully built products. Now we have our line ready. It was launched last month. We spoke to you last time about taking a 3-phased approach to bringing in the entire range. We now -- I'm happy to share with you, we now have completed the 3 phases, and we have the full range of rotary vane pumps. We have now started off our program to bring in claw pumps as well. And the first stage, we expect to cover about 20% of the market opportunity. Our global service center, part of the MK2 project that Indranil spoke about. This is the first phase of our global service center, which essentially is the part support for the entire world. We have a brand-new facility coming up. It's state-of-the-art, highly automated, and it is something that we look forward to being as one of our proudest achievements in terms of CapEx and how we've built facilities and created them. So this is on track. We expect to go live in the second half of April. Moving on to ESG initiatives. We have taken several initiatives across different dimensions, primarily around people, product and processes. We have about 15 goals that we have taken, and I'm happy to share that as of December, we are on track or ahead of target on 13 of them, and we are behind plan in 2 of them, and we hope to catch up on those as well very soon. Moving on to social impact initiatives. Last year, I spoke to you about Project Stellar, which we have been running in Elgi School. It was actually launched last year. We have had a fantastic learning experience and also been able to successfully bring in 22 students from very economically challenged backgrounds but who are brilliant students who would have otherwise not had opportunities to really showcase their full potential. So we started off with an extensive outreach program. We managed to get more than 1,000 expressions of interest, which converted to about more than close to 500 applications. This is for students who are going into the 6th standard, and we can only test for intelligence meaningfully once they finish the 5th standard. So we have had an entrance test. And along with the entrance test, we ran a battery of other evaluations in our school. Once they have gone through that, we made a short list of about 76 students, and we did some further evaluations and went and verified whether they're really deserving, are they really economically underprivileged, et cetera. Finally, 24 of them met the cut. And while our goal was getting 25 in the first year, so we offered 24 and 2 of them dropped out. So we have 22 students studying now, 9 of them girls and 13 of them boys. And typically, the average family income mother, father, all put together is about INR 2 lakhs to INR 3 lakhs a year. So that is the status. Now our next plan is to build a residential facility. So the intent is to have the entire school converted to only supporting students of -- from this background. We expect in steady state, let's say, 8 to 10 years from now, about 900 students will be provided education, fully free of cost. It will be fully residential. The residential facility is now -- the designs are being finalized, and we expect that will be up and ready in 2 years' time. Along with that, there's several other things. Our goal is to make every student the best student and be able to get offers from the top colleges in India. That's our only measure of success. To be able to do that, we need to enable entire ecosystem right from teaching, the facilities, all of that. So it's a fairly extensive program we're working on. I'm pleased to share that this has been the progress, and we've started the outreach for this year, and we're expecting 50 students for this academic year to join us. Moving on to the sporting arena that Elgi supports. We spoke about the Olympic Gold Quest, the movement that was started by Geet Sethi and Prakash Padukone to support promising athletes to provide them high-end training, exposure, nutrition, all of that. And the only goal is to win as many gold medals for India as possible. So I'm pleased to share that our partnership continues with OGQ. And at the moment, we have an MOU taking us through to the 2028 L.A. Olympics. And as of now, you can see on the screen, the number of medals that have been won by athletes, almost 85% of the medals in the Olympics, the athletes who won the medals are all from OGQ. Maaya is a youngster from Coimbatore, our hometown. She's been a rising star in the world of tennis. She is ranked #1 in India under-18 in the juniors. And she also reached an all-time high ranking of 34 worldwide in the ITF. She is right now training in the Rafael Nadal Academy in Spain. And her goal is, of course, to win a medal for us in the Olympics coming up in 2028. The Coimbatore Marathon is something that's close to our hearts. We've been very closely associated with this event since the launch in 2013. Last year, 1,725-plus Elgi employees and family members participated in the event across different categories. This event is to support the Coimbatore Cancer Foundation. All proceeds go to the foundation for their activities and Elgi continues its association with this event. So thank you.

Thank you so much, sir. All right. Ladies and gentlemen, this is the end of the presentation. We will move on to Q&A. But before that, I'd like to thank all our speakers, our leaders, our presenters to -- for thoroughly telling us how far we have come, where we stand today and where do we expect us to go in future. So thank you so much, all our leaders, all our presenters. And ladies and gentlemen, now we will move on to the Q&A session. But before that, there's a scan code right here. I request each one of you to please scan this code and give your valuable feedback to us. It will help us strengthen our future investor interactions. We'll take 30 seconds to do this, requesting everyone to kindly scan the code.

So we will move towards the Q&A session. And just one request anyone who is asking the question, I request you to please introduce yourself, say your name and your organization's name before your question and keep your question little to the point and short. All right, ladies and gentleman, let's start the Q&A session. And for that, I request Dr. Jai to kindly join us on stage.

You can hear me, right?

Yes.

Okay. So thank you again, my colleagues for presenting. Now we are open for questions. Anything that you -- please one person here.

Amit Anwani from PL Capital. So first question is on the next 5-year plan, which you elaborated from $440 million will be targeting $750 million. We can see a good amount of shift towards the Indian markets. I think there was 13% CAGR, which we are targeting versus 10% in the previous year block. And so just wanted to understand the -- and also the 200 bps margin expansion, which we are building in for next 5 years. I wanted to understand whether this will be the base growth in India or the new product launches or the service contribution? What is the shift which is leading us for kind of 13-plus percent growth in India?

So I will let Prem kind of add to whatever I've said, whatever I'm going to say, it's a combination of share of growth, share of market share growth, share of new products, share of new segments in existing products as well as new geographies. So it's a combination of all of these. So I don't want to get into each -- what is the contribution of each. We have built it up. We have a detailed buildup of which is going to contribute to what. What we need to understand is in the dynamic of this business, right, any growth comes from a combination of both equipment and aftermarket. Now every time you sell equipment, you have at least a 10-year aftermarket sales number, right? And there is a geometric growth, right? It's not -- so as you add an installed base, that's where the growth really comes from, right? So quite a bit of our future growth, a larger percentage. I'm not saying they contribute a big number but a larger percentage of the future revenue will come from aftermarket. It's natural, right? Now once that happens, it answers your second question of where the margins are going to come from, right? We've been a little conservative because even now without the various strategic initiatives that we have implemented, which has taken away close to 1.5%. So even now, we would have been at 16.5%. Now these initiatives are not going to continue into the future, right? So we have -- starting point is not 15%. The starting point is actually 16.5%. So 16.5% to 18%, which I think is a reasonable thing if you're able to hit that top line, right? As far as ROCE is concerned, we're not too worried and we're quite healthy.

All right. So lastly, on the U.S. business, what are we building in terms of growth for next 5 years in our strategies for U.S. Earlier, we used to also highlight that the go-to-market strategy was something, which is very critical, and there were a few states, which were slowing down for us. So as a long-term strategy, what is the expectations in U.S. for you?

U.S., like I said, it's a large market as is Europe, right? Now in both these continents, we have established a very strong presence, right? So Elgi as a brand is known to the entire distributor fraternity, the fraternity in both these regions, right? Now the biggest challenge for us is to get into the distributors, right? Because this is a distribution-led business. So far, our strategy has been get more distributors. They own the relationship with end customers, and therefore, we will gain share of the market. Now what has happened is that strategy has -- is beginning to plateau for a couple of reasons. One, out of the universe of distributors that are available, a certain percentage of distributors are exclusive to the large brands, right? Those distributors are not going to switch. They won't switch because 70%, 80% of the distributors' profit comes from aftermarket, right? And they don't want to risk giving up a brand and that aftermarket. So you're really playing in the balance who are multi-brand distributors. And we are trying to get access into that segment of distributors and then gain a higher share of their wallet, right? That's been the strategy. Now I'm saying that strategy is plateauing out. What I mean is it will continue to have this 10%, 11% growth. But if you really want to shift the number to a much higher level of growth, we need to come up with a different strategy, right, in addition to pursuing what we are, which is what we are really working on right now, right? It's too premature to talk about specifically what they are. But what got us here is not going to take us there, right? It will take us to some point of that but we need something more.

Sir, I just request you to please stand up. We'll be able to capture a nicer access from here.

So this is Parag Thakkar from Fort Capital. First of all, I would like to congratulate your entire team, fantastic presentation. And I would say that do more such events in Mumbai. That will be great for us to have easy access to you. So just to take on from the last question only. What we saw in the presentation is that India contributes 47% of the revenue and 82% of the EBITDA, right? So now how it will happen that the global business will also start contributing more to EBITDA. And if I understand correctly, the 28% of stand-alone sales is coming from aftermarket right now, while consolidated number is far lesser. So is it the needle mover that aftermarket sales in outside India will also increase meaningfully, which will provide a lever to margins?

It's a fair question. The future profitability has got multiple levers, right? Now the regions that we are operating in besides India are very expensive regions to operate in, right? People there and the overheads there are significantly higher than the equivalent costs in India, right, which means then for those regions to start contributing profitably to the same level as India, the top line required is far higher, right? So as we grow our top line there, we are not going to have a proportionate increase in our overhead. So that will be one lever of contribution. The second is what you just said. Our aftermarket is a significant contributor. This is reason why we are in this business is because of the aftermarket, right? It is not for the -- I mean, selling of equipment is almost close to charity, right? So it's the aftermarket that gives us the profit. So there will be growth in the aftermarket because the installed base is pretty large in India, we get a very healthy percentage of aftermarket to our revenue. As we start building our installed base in Europe, you will start seeing that coming in. So these are the 2 levers that are going to grow. But please, let's not forget, that in the stand-alone, there is a profit that belongs to the global because of the transfer price, right? So that's also sitting there. So it's not like what you see as profitability of the non-India is what it is. It's much more than that.

And sir, last question from my side. Once this tariff drama is settled, hopefully, say, at closer to 18% from 50%, do you expect the user base -- the installed base in U.S. to improve substantially so that after 2, 3 years, it will start giving us aftermarket profits also.

So this business is not a price elastic business where you say I drop 20%, then my sales grows 20%. It doesn't work that way, right? So yes, in our current situation, if the tariff stabilizes at 18%, we have a significant margin in our favor because we have already managed that 50%, right? So how do we retain this 32%? Do we give some away to gain the share? These are all tactical moves. We can't say for sure that A plus B is going to be equal to C. It's not possible. But it's a good problem to have that you have some margin to work with, right, to gain your market share.

Sir, just wanted to understand your Demand=Match that product strategy. Like when we look at Atlas Copco has VSD, Kaeser has SFC. So is it like because they had that kind of a differentiated product that we were forced to come out with a solution? Or is that the other way around?

No. This is -- so if you look at this VSD and all these are just brand names. They're not unique. We also have a compressor called, which starts with V, right, which is variable speed drive, that's available with all manufacturers. Now across the world, it varies but across the world, on average, 30% of the customers buy machines with variable speed drive, right? 70% buy fixed speed right? Now the difference between the 2 is, one, the variable frequency drive cost 30% more. Capital cost upfront is 30% more. But it has the potential to save on energy but there is no guarantee how much it's going to save. It depends on your operating cycle. Each factory will have a different operating cycle. That's the reality, whether it is an Atlas Copco's variable speed drive or an Elgi's variable speed drive, that VSD that you're talking about. Demand=Match is for the fixed speed. The fixed speed machines today have, like what Venu said, fixed flow, always variable, right? So what happens is there is a huge amount of inefficiency and if the customer wants to save it, they have to spend 30% more, right, buy a variable frequency drive. What this technology does is varies the flow to the customer without a VFD, right? So this is an electromechanical system, not an electronic system, which delivers that value. Now what it does, so far, we introduced this machine in October. All our machines in India supplied from October onwards are Demand=Match systems. It's now standard on our machines. It's not an option. We didn't expect that the customer will pay for it. We thought maybe they won't pay, because typically, what we find is Indian customers don't pay a premium for Indian products, right? They will pay a premium for foreign products, right? So we said, okay, we'll go. We will make the system work. So all our machines have gone in. We have actually improved our price realization because Indian customer is actually paying a premium for an Indian product, right? December results that you saw, we've got higher sales, higher profitability. Part of it is from demand, right? So of all the supplies that have been made, 100 machines have been installed. That means commissioned. We have sold much more. But typically, it takes 2 to 3 months for commissioning to happen, right? The customer savings has been anywhere between 6% to 17%. This is the kind of savings that the customer. So we are on a very strong wicket to keep growing that share of the market. The fixed speed, that 70% that I talked about, right? Machines have already gone to Europe. They've gone to Australia, they've gone to the U.S., right? So validation will get completed. And by the middle of next financial year, all supplies to those markets will also be Demand=Match as standard, right? So we'll have to wait and see how much of the market share needle we are going to move with this technology.

And sir, Kaeser's SFC, they also have air-end profiling.

Sorry?

Kaeser. They have this SFC where they do air-end profiling, which is more or less similar to what we...

SFC, are you aware of SFC? What S-F-C? You never heard of SFC, what...

They have air-end profiling.

Air-end profiling.

That's similar to what we do, right?

Similar to?

Like you can control the flow.

No but that's a variable frequency drive. Not the system Demand=Match, nobody has in the world. We are the only ones that have it. We have a patent on it. What Prem -- we'll check what that is, but Kaeser does not have anything that controls the air flow on a fixed speed machine.

Okay. And sir, coming -- broadly, when we see the macro large growth drivers in the electronics space is going to be data centers, semiconductors. And so even in your breakup, there was no mention. So is -- what will be the percentage that currently you are supplying to these markets. Will...

Anvar had presented in that we had presented 6% of our business semiconductor. But let -- we should be very careful about this. These are fashionable trends, right? Today, there is semiconductor. Tomorrow, there is steel. Day after, it will be cement. The idea is not to say that we will put everything there, right? Our ability to play across all industry, right? That's the key. Now what happens is we have different challenges. If it is an Indian company investing in their own technology in their own process, the chances of them buying us is very high, yes. But if there's a multinational company that comes in, in a lot of instances, they are prescribed by their parent factory, right? So it becomes a bit more of a challenge, right? So it's that, that we need to focus on, not industry. Each year, there will be a difference. So right now, steel is investing, yes. Cement is not, yes. So...

Before we move on to the next question...

Actually, it is like a VSD of Atlas Copco where they use a variable frequency motor. Here, they will do Kaeser Sigma Frequency. It is not similar to the Demand=Match what we are having. It's a variable speed drive machine.

Thank you so much sir, for adding that. Before we move on to the next question, just announce your name and your organization name before you ask the question also request everyone to please scan the QR code and give your feedback. We have still not received many feedbacks. In the meanwhile, the question is happening, you all can do that, request everyone to kindly do it. Thank you.

This is Harshit Patel from Equirus Securities. Sir, firstly, on centrifugal compressors, I believe we were doing some field trials for our own machines and not in the JV with the Korean player. So what is the update on that? And I think one of our large competitors, they have a lion's share of this high-end market. Any plans we'll be able to take them on in the next few years in this space?

So centrifugal is one product category, just like vacuum, blowers, accessories, is all part of our journey to play in the full suite of products. Now having said that, do we have the technology to build centrifugals? Absolutely, right? We've already built 2 frames and they're running in the field. Now the question in our mind is, you can't boil the ocean, right? You've got to pick your priorities, work on that priorities. Centrifugal market out of that $20 billion is about $2 billion, yes. Vacuum is much bigger, yes. Accessories is even bigger, right? So as we go through the journey, it's about not worrying about what others do, really focusing on what you have to do in terms of the choices that you make, right? So in this journey from $450 million or $440 million to $750 million, definitely centrifugal is there, right? But I don't want to say how much is there, right? But it's there.

Sure. Sir, secondly, on the -- our own motors production, you showed some statistics as to how much we are using in terms of our own motors. However, those statistics were shown as a percentage of our screw compressors. Why is that? Is the salience not that great when it comes to reciprocal compressors?

No, it's not -- that is not the case. We have 2 types of reciprocating compressors, the belt-driven compressors and the direct drive compressors. 100% of our direct drive compressors are motors made by us, right? As we move, the focus is on high value first and then go to the lower value, right? So we will complete all of this, and we will work on the full range, not only compressor motors but also our fan motors, right, not ceiling fans but the compressor cooling fans.

Understood. Sir, just lastly, on our backward integration, we already do our pressure vessels, now motors, we do air ends. Is there anything left for us to capture that we can do on our own? Or would it require maybe substantially much more volumes and maybe we should refrain from doing that?

If there is a backward integration by which we can sell more compressors, we will take that also, right? But unfortunately, we don't. But the idea of this -- each of these as a -- there is a strategic reason, right? This is not about trying to take away a supplier's profit. That's not the intent. If that was the intent, there is a lot more that we buy from suppliers that we can take over, right? Now if you look at pressure vessel, this is a safety critical equipment piece. If we supply this and if a tank fails, bursts, there could be catastrophic incidents, right? We can't afford that. You can't -- if an air end fails, it's one level of failure. If a tank fails, it's completely different. So we can't afford to have that. So we control that as a safety critical equipment -- I mean, piece. Castings are quality critical, right? We cannot afford to have castings that leak or fail because we buy castings, we put it into very expensive machines for machining, right? And after machining, we discover that it has failed, it's a huge loss, right? That's the reason why we got into foundry. Motors, we were buying motors from China, last 15, 20 years, as do our competitors, right? Now if you take a Chinese motor and you strip it, there is no rocket science in a motor. There is copper, there is steel, there is casting and there is bearing, nothing else. These are all metal commodities with international prices. Now when we looked at it, the pricing from China had no relevance to that cost. It was even lower than metal commodity prices. Now we can ignore it and say, as long as they give it to us cheap, we are happy, we continue to buy. But this is like a drug. You get addicted to that low cost. And at some point, the supplier will pull the rug. Now when that happens, a multinational company has the ability to pass that price on. We will not. So that risk is what we managed with making our own motors. Today, our motors perform far better than the best at a lower cost. And this is not because we are employing cheap Indians. It is because we've picked the right technology to make it. So that's -- I can't think of anything more that we need to integrate backwards but we need to keep our options open. There's person at the back. Yes.

I am Sudharsan Seenivasan from Prime Investor PMS. So my question is on your installed base, sir. So currently, we are having the overseas installed base is 1/5 of the domestic base, if my memory serves right. So in the next 5 years, how do you see this mix improving, whether it is going to be 2/5 of the domestic base or 3/5 of the domestic base? How do you see this mix improving?

I don't know where you got your memory. I never would talk about that, right? So this is very critical information because we don't want anyone to know what is our actual number of machines, right? Now having said that, the percentage with which we are increasing the installed base in Europe and U.S. is far higher than the percentage at which we are increasing in India, right? Now when the percentage of increase is more, the percentage of contribution of aftermarket will also be more, right? So I would like to leave it at that broad definition. As we continue to sell more machines in -- outside the country, that percentage is going to go up and that aftermarket percentage will go up. There's somebody..

Mihir Manohar from Trust Mutual Fund. Sir, 3 new products we talked about.

Sorry.

Three new products. Three new technologies we talked about. So largely, I mean, how does it increase our addressable area or application areas?

Which are the 3 products that you're referring to?

Yes. So it was the -- I mean, the dryers, which were there, plus on the refrigeration side, I mean, the inverted duty part of the piece. So the 3 new techs that we talked about. The stabilizer, heat recovery systems and the indigenized dryer part.

One was the dryer.

Yes. One was the dryer. The second was on the heat recovery side and third was on the stabilizer side.

Stabilizer.

Yes. So how does it increase our application areas? And what role does it play in our 2030 target broadly to understand that?

Dryers is -- we are already selling dryers. We were buying it from others. So it only improves our margin and the quality of the product and our ability to sell our dryers all over the world. So for instance, the dryers that we sell in India earlier, we were buying from a local company. The dryers -- we are selling in Europe and America, we are buying from a European company. Now we will have -- and the dryers that we were selling in Australia, we are buying from an Italian company. Now all the dryers will be made by us here in India and supplied everywhere. So yes, there will be a synergistic increase in revenue because we have a much more competitive, far better performance product, right? It's difficult to say how much will my market share go up, right? Definitely, my margin will go up for the same level of sales. Demand=Match, I just explained to you, we are increasing our number, we are increasing our prices. Our price realization is going up. Still early days but I'm very confident that it's going to help us grow our share of the market by virtue of the value that we give to the customer. What that third point?

Heat recovery part...

HR, heat recovery. Heat recovery is very specialized, right? It's not across all applications, right? It's only customers who need process heat in their operations, then it makes sense to use this to recover the heat and use it in their process. So it's a very specialized application.

Sure. Just one question on the refrigeration compression side. I mean, industry data, industry talks indicate that, that particular segment is doing well. So your take on this segment, I mean, would you like to explore this?

Refrigeration...

Refrigeration compression, yes.

No, no, no. We don't do refrigeration compression at all, right? We do only air compression, right? This is refrigeration dryers that dries compressed air. So we don't go into refrigeration compression. Air conditioning and refrigeration, we don't do.

I'm [ Divyang Kapadia ] one of the Individual Shareholders. I've been an investor in your company since 2001. And I think more than two zeros have been added to my investment, which I made. So I'm very happy with your company. But at the moment, if I look at when you are saying you'll grow another -- for next five years, only at 11% in a huge market, which is available to you, I think your market share internationally has been less than 5%. So what you are growing is not even taking the growth of the market. So when you are not even taking the growth of the market, you are taking a small fraction of the growth of the market, then I think aiming for 11% to me looks less. Just review it. That is my request to you. Second thing is that now there is going to be -- in next 5 years period when you talk of, there is going to be India, EU FTA. So today, I don't know what is the duty you pay when you sell to Europe. So is that duty going to change? Or is it giving you more competitive advantage? I think Australia already the duty is 0. I don't know whether it applies to our product or not. But does it help you because Australia also, our growth is only 3%. Maybe there are some for the year reasons for that. But I thought growth also, you can perhaps review again and see if you can jump start.

Yes. Now we certainly don't want to grow less. If there's an opportunity, we will do it, right? Now to come to your point, India market for compressors is growing at around 4%. We'll be growing at 11%, which means that we are gaining share, right? The European market is actually flat, and we are planning to grow 10%, which means we are gaining share. The American market is expected to grow at 1.5%, and we are growing at around 12%, right? So again, we will expect to grow share. Australian market has actually gone down. The numbers have gone down because we have the actual number of compressors that are sold. And we are growing there, which means our share of the market is growing. Now can we grow more? Can we gain share faster? We are working on different strategies. Like I said, our current strategy has taken us with a certain velocity to where we are today. Now we continue down that path, we will get a certain trajectory, right? But to flip it even more sharper up, we need a different strategy, right? We are working on it. We are exploring what we can do, right? What we do know is when we are in front of the customer, we win disproportionately, right? We need to get in front of the customer more often. This is our challenge. You look at a multinational customer wants to buy a compressor, the default choice is either go to Atlas Copco or Ingersoll Rand, right? Default choice, right? So they get a certain pull in the market, yes. Our business, we have to push, right? So it's easier to suck liquid through a straw than to blow bubbles into the water, correct? The same thing. Atlas Copco and Ingersoll Rand, they're able to suck customers in. We need to push in, right? So -- but that's our reality. We can't cry about it but we need a different strategy, right? So that's what we are working on.

Sir, my suggestion would be because if you -- the way you mentioned that all the markets, which you are today working, like U.S.A., Australia, Europe, they are either not growing or growing at bare minimum 1%, 2%, 3%. And in that, you are trying to do 10%, 11%, which is a very good job. I'm not criticizing that. You need -- but overall, when you gave us the chart, the overall compressor market is growing at something like 3%, 3.5% worldwide. That means there are enough markets like India, which are growing at maybe 10%, 15%, 20%. They may not be as big as U.S. or Europe but maybe there is Brazil there, maybe there is Japan there. Maybe there is some African countries which are doing very well because in Nigeria, that one fellow is putting a lot of big refineries and all that.

That's a customer of ours.

Very good. I'm happy. So like that, there will be certain places in the world where there are markets, which are growing at maybe 10%, 15%, 20%, maybe a small base but maybe again, may not be that competitive also because some of these markets like Africa and all that or some of the Latin American markets, all multinationals may not be wanting to go. Maybe CIS is a market. Maybe Russia is a market. I don't know. You need to check all that.

Sure. Thank you.

Two questions. Sir, one was on the aftermarket thing that you mentioned, right? When we look at broad markets where, obviously, we work through distributors and all of that more, the dynamics of aftermarket, is it very different, say, versus in India in terms of the aftermarket revenue per compressor or something like that and even in terms of profitability? And the second -- I'll...

Yes, yes, go ahead.

My second question is in terms of growth. If we look at some of the leading players that you had shown, they are growing at around 2.5%, 3% at that base outside India. Whereas if we look at our 3 years from, say, '23 to '26, I think we are not at that 3% if we exclude the India, ISAME, if we exclude just Europe, North America, we would be lower than 3% at a significantly lower base than the industry leaders. So then we are basically at a lower base, not losing market share to leaders. So how do we see that? And what is changing going forward?

So to answer your first question, the aftermarket loyalty outside of India is higher. In India, there is a tendency to, not all, a bigger percentage of customers tend to go for spurious parts. Whereas in Europe and America, the loyalty to stay with genuine parts is a little bit higher. So to that extent, the stability of -- or the surety of the aftermarket business is more, right? So that's one. Profitability, I would say, roughly the same, aftermarket profitability. Coming to your question about the growth of the leading players, their growth is coming from aftermarket because their installed base is huge. And from that installed base, every year, they keep growing. We don't have that base, installed base to have that repetitive growth, right? So our growth is coming from -- bulk of it is coming from increasing the installed base, right? So if you look at our growth even outside the country, considering the growth of the markets there and our growth in those markets, adjusted for the currency, we are still higher than them. The question really is how much more can we do? I mean, how much faster can we do? That's the challenge.

So just one follow-up. When we go through distributors, do they have a share -- do they take away some share of profit from the aftermarket? Because you said for them also aftermarket is a very big source of profits.

They do service. In Europe and Americas, the service, the labor cost, labor charge on the customer is the highest source of profit, not sale of spare parts.

And is our model of aftermarket going to be different versus some of the top leaders outside India?

So the top leaders are increasingly going direct on service. They are bypassing distributors. They want to get that labor part of service to themselves. That's not our model. Our model is we partner with distributors. We sell them spare parts, earn our profit. They sell spare parts to the customer and render the labor service to them, and they earn their profit. Yes.

And what would be, if I can last one, split between labor and spare parts in aftermarket?

I have no idea. Prem, do you have?

50/50.

About 50-50 maybe. We are guessing here because we don't run a distribution business. So we don't do service. Yes..

[ Dhiral ] from PhillipCapital. So to achieve the $750 million mark of revenue by FY '31, so what will be the incremental CapEx required to achieve that mark? And secondly, on the aftermarket side, so currently, what is the percentage of revenue that we are achieving from the aftermarket? And going ahead, as we are banking more on the aftermarket segment to drive the incremental growth, what could be the contribution in the coming next 4 to 5 years, sir?

So our CapEx is -- there are 2 types, right? One is the incremental CapEx that we need for the growth, the capacity. And the second is the breakthrough CapEx that will be required once you run out of space in your campus, right? Now we have already announced that we are going to be spending between INR 500 crores to INR 600 crores for moving our current campus to our new campus. That's really that breakthrough kind of investment that we need to do. Otherwise, we don't have space. I mean, building, we don't like buildings but we don't have a choice. We need buildings, right? Every year, our CapEx required for incremental growth will be well within our depreciation. We don't see it exceeding our depreciation for our incremental capacity. And we always invest 1 year in advance, right? So it's not going to be a big cash that is going to be demanded.

And sir, aftermarket revenue?

Aftermarket revenue, Prem, do you know what is the aftermarket revenue in $750 million. Today, it's 28% in India and maybe about 12% or 13% outside and...

It could be Somewhere between 20% and 25%, but [indiscernible].

Yes, about 20% combined. About 20% is our revenue -- 20% of our revenue.

[indiscernible]

Currently, it's about 12% to 15% outside, depending on which country, it will probably go to 20%. We haven't got the real numbers, general direction.

This is Eshwar from iThought PMS. So regarding Europe, we have done a lot of lateral hires from the President, Mr. Chris, to a lot of area salespeople as well. And Europe is like a very diversified market with each market having a different customer preference, different price points. So how are we addressing that concerns of the customer since we would have a smaller portfolio compared to our global competitors. So how are we getting in front of the customer and winning the orders with them?

There is nothing short of our portfolio. Zero, right? If you take rotary screw compressors and piston compressors, we have as much, if not more, than the leading competitors. So there is no portfolio deficiency. We don't have centrifugal. We don't play in that market, right? As far as Europe is concerned, even though there are different countries, the demand pattern or the requirements of the market are pretty homogenous, right, except for localized certification that is required, which is not a performance issue. It is more a process certification like pressure vessels, for instance. Otherwise, there is no issue.

So of the EUR 3.3 billion market -- Europe compressor market, how much can we envisage to capture in the next, let's say, 4 or 5 year.

It's not EUR 3.3 billion. It is about close to EUR 2.4 billion. Okay. Our share, I don't know what we got, 2%.

I mean, in the markets, we are between -- varies between 2% and 6%.

Yes. So you want to use the mic...

So our share in Europe would be 2%, but in markets where we play, it would be between 4% and 6%. We don't play in all the markets.

Sir, and our cost structures in the European market, it was built on higher revenue. So how can we expect the cost structure to move in the next 2 or 3 years?

That's why we've cut our cost structure down, right? So that we are trimming the cost down to the level of revenue that we are hitting, correct? Now we need to build a new strategy. The current strategy is not going to give us the revenue that we had earlier planned, right? So for the new strategy, this is the structure -- I mean, for the current strategy, this cost structure is good enough. That's what we are trimming it down to, right? The next round of growth is going to come from a new strategy, which has to be first tested, proven and then rolled out.

Kamlesh from Asian Markets. Sir, the vacuum business is a new piece in our overall business. Just wanted to check about their margin profile and ROI profile. Does it match our existing business? Or what is the 3 or 5 years road map for that?

So the vacuum that we are playing in, by and large, except the very specialized vacuum that goes into semiconductors, which we are not playing in. Generally, vacuum, the equipment value is significantly lower than a compressor, right? But the aftermarket percentages of revenue is very similar to compressors, right? So both these businesses derive their profit from aftermarket. But vacuum also has -- in addition, has a higher percentage of profit on equipment compared to compressors, but on a smaller base. That's the pattern of the 2.

And in this growth, how much of the growth is embedded from this vertical? And are we going global for this business?

Five-year phase, no.

It's only India business.

Only India and conservative number.

Are we having any growth plans for the future for global markets?

Absolutely. Absolutely.

How big would that be, sir, market-wise?

So the total vacuum market, correct me, Prem, is about $3 billion.

Yes, slightly more than that.

Yes. $3 billion globally. We don't have a percentage aspiration yet, right? What we are working on is the same as in compressors. We can't go with a me-too product and then say we are cheaper, so buy, right? What we are working on is a fundamentally new technology even in vacuum, right? Now once we are able to demonstrate that, right, there could be a significant presence globally. But with the current thing for this period, we are not looking at it. But these are opportunities that could come.

Sir, a couple of questions. First, in this 5-year plan, have we envisaged any inorganic growth? Or this is purely organic growth?

Very little inorganic, very, very little inorganic.

And that would be, again, largely on the front end like distribution? Or are we probably looking at...

Looking at 2 types of opportunities. One is product expansion, right, within the sphere of compressors. And the other is customer access, right? These are the only 2. We don't want to put any big plan in it unless we have clear visibility that this is available, right? Unlike organic growth, which you control, inorganic, you don't fully control. So we have not put a big number here.

Okay. Okay. And coming back to Europe, sir, now probably you mentioned that Europe is -- market is generally flat but probably a lot of energy-intensive industries over there are probably curtailing and shutting down. So probably -- do you see a situation where probably it becomes challenging overall market declining and for us in that market to grow? And probably also, do you see consolidation over some of the compressor players over there? How should we see your strategy going forward?

So Europe consolidation has happened over many years. I don't know. The next would be for the #1 and the #4 to come together, which is never going to happen, right? So I don't see any further consolidation in Europe happened. Your thesis is valid for Atlas Copco, right? But not for us. We are nothing. I mean, when you take a EUR 4 billion market, how much ever they shut down their factories, there's still an opportunity, right? We just need to find a way to get in front of the customer because the minute we get in front of the customer, 2 out of 3 times we win. So -- and that's a ratio that we see everywhere in the world. How do you get in front of the customer more often? That's really the challenge, yes.

Sir, so -- but on other side, now we are probably curtailing our manpower. So for us to then have more face-to-face with customers, how do...

Yes, we are reducing back-end overheads, [ Manish. ] We are not removing the customer-facing revenue-generating roles. We are only taking out overheads at the back.

Sure. Okay. And on our new CapEx plan for shifting a facility from our city campus to the new campus. So how do you see that happening? What will be our annual CapEx? So INR 500 crores to INR 600 crores, what you intend to spend? How do we spend this every...

Over the next 4 to 5 years.

Four to 5 years. And we'll completely shift entire operations to or we'll...

Bulk of it. You will still need -- suddenly, there will be centrifugal will come, right? Something else will come. These new products, we can't afford to put buildings, right? They're too small to put that kind of investment, right? So this factory in the city may be part of it, not all of it, could be a staging area to get the business up to a certain size and then move it to the main campus.

Yes, sure. And in this process where we are probably going to incur both capital investment and our operation cost also probably go up. So our aspiration of 18% margin is factoring this incremental cost?

What operating cost, I won't...

So digitally if you probably move to a larger operation, then you will...

We'll actually cut cost. Because today, we operate out of 4 factories and there's logistics going back and forth. All those efficiencies will actually bring our cost down. Security will come down. Housekeeping will come down. Canteen will come down. Logistics will come down. So we'll become actually more efficient.

Okay. And sir, on margins outlook going forward, like there are a couple of things, which you had highlighted in the con call in terms of -- one is that you start getting benefit of U.S. tariff cuts from quarter 2 FY '27. That was number one. Number two, in terms of your more efficient motors, which will be used, which in turn will again drive your cost down. So this 1.5%, what we are spending for go-to-market strategy, do you think that it probably quarter 2, quarter 3, it gets nullified with this benefits what we get going forward, again, also with growth in the revenues.

So this 1.5% is not go-to-market. It is go-to-market, digital transformation, finance transformation, setting up shared services in the country to bring cost down outside. It's a combination of multiple things, right? Now the cost reduction that we have been able to achieve significantly, which is helping us now and it's showing up in current P&L is only on the U.S., only on the U.S. sale. The India sale, Europe sale and Australia sale, the cost has already been baked in because motors for these markets have already been included in our P&L, right? So that 1.5% on global sale is not going to come from motor cost reduction only in the sale to the U.S. It's not possible, right?

No, I was thinking from a combination, like you probably have increased prices and you have cut your cost for -- especially for U.S. sales. So one is that. Second -- so it was a combination of 2 or 3 things.

So 1.5% on consolidated sale is close to $4 million, right? Now the sale that we make from India to the U.S., right, will fetch that whatever that -- will not give us $4 million benefit because of that 50%, right? That -- 30% sorry, the difference of 50% and 18%. Yes.

Salil Desai from Marcellus Investment Managers. Sir, on R&D and innovation, right, what are your priorities in these next 5 years? Or if you can tell us big principles on why or what products do you like to work on plug gaps? And second, related to that is, is being in Coimbatore a challenge to scaling R&D innovation?

Being in Coimbatore?

Is there a kind of constraint? And if so, then what do you do to mitigate then?

Okay. Our -- see, there is product development and then there is technology development, 2 different things, right? On product development, it's about taking the technologies that we develop and incorporating it into our products in terms of revisions that happen. So in a sense, they are more operational rollout of our calendar-based product upgrades, right? So that's really what we do. In terms of technology development, our focus is what can we do to disrupt the value that we can give to the customer compared to competition. So if you look at Demand=Match, it came from that thinking. How do you disrupt, right? Now similar to that, we have some ideas in the pipeline. Obviously, I don't want to say what they are, right? Not all of them will succeed but we need to make that investment. We have to try it out. We have to fail, right? But the whole intent is when you're sitting in front of the customer, you're an unknown brand with a made in India label. You need something that will be disruptively different, which will make the customer stand up and listen, right? What brand of cell phone do you have? Apple. So I'm a Bangladeshi company that is present -- making a pitch to you to buy a cell phone. And I have all the features of Apple. I have all the thing, it looks very similar. It does everything, and it's about 20% cheaper. Will you buy it? That's the challenge we face. But if I'm able to come to you and say, you don't need a phone man, you can just speak and everything, your button, everything will just speak. You don't need a phone is very disruptive, right? So in a sense, that's what we are looking at, right? So from a BlackBerry with buttons to a cell phone with touchscreen was disruptive, right? What's that disruption for us in compressors, right? And how can we deliver that?

And in Coimbatore, how do you kind of...

Coimbatore Point is not a problem. Not for R&D, no.

Second question is you mentioned that Deming is a milestone that you crossed, right? So what more milestones do we look forward to maybe next 5 years?

Deming somebody blessed us, correct? Saying, oh, you're good fellows, you've done well. But if you stop there, then you regress, correct? So that's why I meant it's a milestone. You need to go continue to push with that philosophy that how do you keep improving the organization on a continuous basis, right?

What I meant was, is there room for you to kind of keep optimizing manufacturing operations or is there a ceiling there?

Absolutely. Tons of it. Yes. Tons of it.

I'm Deep Master from One Up Financial. I just wanted to touch again on the GTM strategy. As you said, just getting in front of the customer. So if you can maybe elaborate a little bit more on how you plan to do that? Sorry if it's a bit of a repetition but just trying to understand that a bit better.

Crazy idea would be if somebody came and gave us $1 million, we will sponsor IPL, right? And then we say we make the best compressors in the world. And India should buy the best of the world, right, which is in India, right? Now if we can get that message across, right, and get customers to get excited about that thing, then yes, like I said but we have to push. We are not pulled yes. So obviously, we don't have $100 million, and we're not going to get it unless we go and do a start-up compressor company somewhere, maybe we'll get. But -- so what's the alternate for us, right? How do we imagine a strategy by which we are able to create that pull and we are in front of the customer more often, right? It's a journey of discovery.

So have you -- are you satisfied with all the product gaps? Or have you -- like where are you in that journey?

I think am I sleeping well on product range? Yes. I'm not losing sleep there. But the idea is the biggest challenge is get in front of the customer, right?

In the past, I think we bought distribution in the U.S. and that did not go well. So that's why I'm just trying to think through it.

So the distribution acquisition strategically is the right thing. But what was wrong is we are a manufacturing company. We are not a distribution company. A manufacturing company cannot run a distribution company because it doesn't know. Even in India, we don't run a distribution business, right? So it's a matter of learning that, right, and putting the process very different from manufacturing. So once we get that, we should be fine.

[ Yash ] here from White Oak Capital. Sir, the first question is, if we look at our SBP '26, what we have just announced and compare it to SBP '22, which was announced earlier, the outside India growth expectation here is 10% but earlier, it was 13%. so what explains the difference considering all the investments what we have made over the last 4 years? Why the expectation of growth outside India should be lower than what we had last 4 years? And second is, you said India market is growing at 4% but we are growing at 12%. If you can just help us understand who are we taking market shares from? And also if you can give some more detail why this India market is just growing at 4%, why not higher than this 4%?

To answer your first question, why have we [indiscernible] down our growth percentage outside India for the next 5 years? The reason [indiscernible] we've learned something in the last 5 years, right? And like I said, our current strategy [indiscernible] gave us a certain set of results, right? Now can you hear me?

Yes.

Gave us a certain set of results, which were suboptimal compared to our aspiration, right? It would not be prudent to ignore it and continue to say we will do this 13%. What we have discovered is the inertia of getting in front of the customer is very high, yes. The strategy that we followed to aspire for 13%, 14% growth outside the country was only good enough for around 10%. So we are saying continue down that path. This is not the end of the world. It doesn't mean we go to sleep here, correct? We need to -- like I said, we need to discover a different strategy, which will help us put us in front of the customer more often across the world, right? We don't know what that strategy is. We are discovering it, right? Now we won't take 5 years to discover it but that's not embedded in this plan, right? That's point number one. Point number two is we are saying 4% growth India, 12% growth Elgi. Like I explained to you, growth of a company comes from aftermarket. And when your installed base is very large in a country, your growth is not linked to the growth in sale of [ compressor ]. So in India we have a very large installed base, right? That's going to give us a growth. So even though the market for equipment grows at 4%, we have to grow higher because of our installed base, right?

So can you give us an idea of our equipment growth versus the industry equipment growth? Like are we gaining market share as far as the equipment is concerned?

We're gaining market share, but it's not 4% and 12%, okay? I don't want to say what it is, right? But it's not 4% and 12%, right? The 12% is also driven by aftermarket growth, yes.

And can you just give us an understanding, sir, why 4% growth for this...

So that India -- India should actually be -- if you look at the Chinese market growth in the last 20 years, the growth in compressors was high double digit, right? Because that's the kind of investment that China put into the economy. I don't know why we don't do it. That's not my -- I can't answer that question. Yes.

Understood. And sir, if you can just give us a clarity on your aftermarket margins. Let us say, you said product margins are lower, aftermarket margins are higher, if not the exact numbers but just the difference between the product margins and the aftermarket margins.

If I'm -- eventually, I'm guessing here. If we make 10% in equipment, we'll probably make 60% in aftermarket. That doesn't mean I'm saying we make 10% in equipment. We don't. But if we do, then the ratio is 1:6.

And on the aftermarket side, what percentage of the compressors sold in India we have penetration as far as the aftermarket is concerned? Do we have strong penetration or there is still...

In India?

In India.

There is still room. Like I said, in India, it's -- the loyalty to genuine parts is lower. So there is definitely opportunity for us to improve it, right? But it doesn't come that easily. It's a very large market.

Sir, what does the name Elgi [indiscernible]. How the name came?

Elgi? L and G are my grandfather's initials. E and I is to make it look a little stylish.

Sir, I have one question. On the product side, if you could highlight in terms of oil-free, oil-filled portable, recip, what composition of growth you're looking in terms of products for the next 4 to 5 years?

Is somebody here?

Yes. So in terms of products for next 5 years growth strategy, the change in composition, any high-growth products and low-growth products you will be looking at.

Prem, do you want to take that question? Is there a disproportionate growth coming from a specific product? The only thing I can think of is lubricated screw.

Yes. In addition to that, also accessories as a product line for us, like dryers we talked about. So a higher penetration of that in our installed base.

So lubricated screw is a focused product. So that contributes a big part of the growth. Accessories like what Prem has said and aftermarket because that's a natural extension of installed base. The rest of it, portable compressors, water well, railway, they're all business as usual, nothing significant.

[indiscernible] and oilfield and portable?

I don't want to give that information. It will be too competitive.

Sir, what is the breakup between oil-free and oil compressors.

Who is speaking? Sorry, yes.

Oil-free, which goes into pharma and other segments and with-oil compressors. What is the breakup of that in our...

I don't want to give.

Sir, just following up on the previous point that you made, why -- if you can just give some insight that if China, if you're seeing double-digit growth versus 4% in India, like what is it? Is it some organized versus unorganized thing? Are there some sectors or segments where it's not used in India? Like according to you, what -- or what can lead to that growth, say, in India, what happened in China?

Massive economic growth [Audio Gap] India pales in comparison to what China did over the last [indiscernible].

So this is lower than even like GDP growth. 4% growth is lower than...

GDP is a bit of a misnomer because you can have consumption-led GDP or investment-led GDP, correct? So you go and reduce GST rates, suddenly, your consumption goes up, and that improves your GST. That doesn't mean factories are being set up, right? So I think you need to look at index of industrial production. That's a little better than GDP. And that -- if you look at what China had and what India had, it is a day and night difference.

Sir, regarding the Demand=Match, the stabilizer product, it's good that we are getting like very good feedback from our customer. And commercially speaking, how much in percentage terms can it increase our realization per product? And would we be looking to export that product to the U.S., EU market? And we've also introduced a lot of compressors in the higher kilowatt segment this year. So would it be helpful to us in gaining market share?

So Demand=Match, like I said, has increased our price realization. I don't want to say how much percentage. That's too is sensitive an information. That's point number one. Point number two is large kilowatt machines we have already always had. What we have introduced is a new upgrade on the large kilowatt machines. It's not new in that sense, right? It's a 2-stage machine instead of a single-stage machine. So it's an upgrade of an existing machine. So yes, all these introductions, the idea is to increase the value proposition to the customer and therefore, increase our market share, right? Yes, sure.

And could we retrofit that Demand=Match product into our existing....

We can. We can, but it's not -- it's quite expensive. We'll do it later, not now.

Okay. The retrofitting process is expensive, you're saying, sir.

Because the whole air end has to be changed, right?

You were talking about the compressor that you were making to compete with the cheap Chinese machines. And that, I think, was at least 20%, 25% of the current Indian market that is being catered to by that machine. So where are we in launching that product? And if that product actually you do say matches the Chinese machines, could we introduce this into more geographies? And are we planning that in our FY '30 estimates, like other markets besides India?

The product is going through validation even as we speak. The launch plan in India is second -- end of second quarter of this year, right? So that's really the plan. Now can we sell this all over the world? Absolutely. Have we taken it in the plan? Very small. Very small in relation to the possibility, right? Okay. I think -- what's a closing time? Done? So thank you very much for fascinating questions, very interesting, and thank you for that interaction. Appreciate it. Thank you very much.

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