Has the slowdown in the Indian spinning sector impacted Elgi Electric?
In spite of the slowdown, we are doing well, registering an average growth of 15-20% every year. This we have achieved through aggressive marketing, customers goodwill and with the launch of new, innovative products. We launched our Bobbin Transport Systems five years ago. The market for this is picking up now, as the industry opts for higher levels of automation. This helped us in our high growth levels, and also in maintaining our market share. Today more than 20 lakh spindles are equipped with ELGI Bobbin Transport systems all over the world. Coupled with this is our reputation of offering proven and quality technologies. We are market leaders in our segments, and enjoy a strong brand image among our customers which include the leading players in the spinning sector.
What new is in the pipeline?
Currently we have a range of products such as Over Head Traveling Cleaner, Yarn Conditioning Machine, Metal & Fire Protection Systems and Bobbin Transport Systems. Right now, we are consolidating the market for our Bobbin Transport Systems. We are also developing some new products, which should be ready by the third quarter of 2016. The first trials will of course be at our own mill at Super Spinning.
Do you develop the products in-house or are these in technical collaboration with other Indian or foreign partners?
We always had technical collaborations with world leaders in the various segments that we operate in. Our past collaborators include Festo, Jacobi-Germany, Welker-Germany and ARGUS-USA collaboration is still continuing. Normally we have a three-five years agreement during which the technology is transferred for a fee. We then continue to import the critical parts and indigenise the production process. The management philosophy is to continue with the tie-up only if there is the possibility of continuous technological upgradation. Usually, for an upgrade, the collaborator will demand an additional technology transfer fee, which will result in our product becoming very expensive in a price sensitive market. In such cases, we would then have our in-house R&D team for upgrading technology. We have more than 100,000 sqft manufacturing set-up, a staff strength of over 100. We are thus well-equipped to expand further when needed.
How do you combat infringement of IPR?
This is a real menace, especially in the southern India market. There are many small time payers, who copy our machines use cheap and inferior quality raw materials and sell at extremely low prices. To take legal recourse to prevent copies takes too much time and money.
The company that has copied our products will eventually shut down the company due to quality or ethical issues, and restart in some other name. It is difficult to go after these small players, so the best way is to educate the customers on such cheap inferior products which can spoil the end product – the yarn quality; and maintain our market share using CRM (Customer Relationship Management). We realize that there will always exist a market for cheap and inferior products, but that is not where we are positioned. Our market is mainly the organised sector and the professionally run mills who look for products which can add value. These mills always invest in a good product, to achieve high efficiency and quality levels. And they will all opt for ELGI products.
Any more collaborations that you are working towards?
Of course! We know that the only way to grow is by introducing new products and upgraded technologies to cater to the changing market demands. We have the resources for this. We will identify the right product, go to the right company to get the best technology. To give an instance, earlier ring frames came with 1200 spindles, today this has gone up to 1824 spindles, and the number could well double in the years to come. So, this has resulted in the demand for overhead blowers to come down but the quality and performance requirement has gone up. Faced with this market situation, we will have to look for a new product or an upgraded technology for even better performance of the overhead blower, as an overhead blower can severely impact the performance of the ring frame.
Would you say technical collaborations are the best strategy for the Indian textile engineering industry?
This is our management philosophy. To give you a short history, Elgi Electric was started by our ex-chairman to support the spinning sector. He was a person who was an avid traveler, he would visit mills in various parts of the globe, and when he saw any product which improves the quality of yarn or efficiency of spinning machinery he wanted to use that product in his mill too. But these were very expensive and not affordable. He realised that these auxiliaries were much needed to improve the efficiency of the spinning industry in India. And that is when he set up Elgi Electric, to buy the latest technology meant for the spinning sector, and offer that technology at an affordable price to Indian spinning mills. Till some years ago, only the best of mills invested in overhead blower systems and yarn conditioning machine, and they advertised that their yarns were made in mills equipped with such systems. Today, almost every mill realises that such products are mandatory for quality and efficient production. Even today, profit is not the sole motive of our company.
What are your expectations from the `Make In India' campaign?
We certainly welcome the Make In India campaign. For the Indian textile machinery and auxiliaries industry the government needs to put in place certain conditions. The spinning industry is the recipient of huge subsidies from the government, and invests heavily in foreign machines and systems, even if equally good Indian brands are locally available. There needs to be some restrictions on imports and strict advise to mills to buy locally those products that are easily available in the country, meet right quality standards and match the performance parameters of the imported product. I believe this will also help the Indian textile engineering industry to invest in upgrading its technology and could result in foreign tie-ups and collaborations.