Shahid Akhter, editor, ETHealthworld spoke to Jairam Varadaraj, Managing Director of ELGI Equipments, Coimbatore, to understand the trends and challenges in the use of compressed air in healthcare industry. Edited excerpts:
What are the challenges in oil free air in healthcare?
Oil free air is more expensive than oil lubricated air. The equipment is more expensive and the running cost in terms of energy is also very expensive. It also runs into hundreds and thousands of crores for customers in these segments that use oil free air. So, the challenge for the industry is – how do you bring the cost down and how do you take the efficiency up of these compressors that produce these oil free compressed air.
What is the value proposition of ELGI in oil free air in healthcare?
ELGI was stated in 1960. It was a very India- centric business. Since 1994, ELGI has been on a journey to build a global business out of its compressed air vertical. Towards this aspiration, we have built a lot of technologies to drive certain specific value propositions to the customers. Now, why is it important for ELGI to be significantly better? We are an unknown brand in a global context. Our aspiration is global and we have carried a ‘Made in India’ label, which till now has not gained the respectability in the global market, which will come in the future. So, to counter this, we had to have a compelling value proposition which is far superior to the established players. Now, when we go back to drawing board and look at what are the dimensions of the value propositions that are compelling for a customer.
The first one is energy cost – the cost of running a compressor during its life cycle, which is anywhere between 10 – 12 years. In our estimate, the energy cost constitutes close to 85-90 % of the life cycle cost of a compressor, whereas the upfront cost is only about 5-10%. So, our focus has been to build highly energy efficient compressors, the best in the world.
So, we can say quite unequivocally that we produce the most efficient compressors in the world. The second aspect of it is- if you look at oil in a compressor. Today, if you take all the compressors working in the world, they throw out 2 million litres of oil per year into the atmosphere. Now, we feel that that’s not the right thing. In a world that’s getting dirtier and becoming warmer, we believe we have to build technology and that will be compelling for the customer as well. The third is – all this had to be done without increasing the upfront cost for the customer. So, we were building this technology and today, there is a clear differentiation between ELGI and its competitors on efficiency, on oil carry over and the cost. Still, 90% of the compressors are lubricated compressors in the world. The unique value proposition that ELGI is working on for the future is to bridge and break this barrier between lubricated and oil free compressors where we believe the future of all compressors coming out of the ELGI’s stable will be oil-free at extremely reasonable prices and very high efficiency. This is really what we look at as the future of the company.
What is your take on ELGI in the medical air market?
Compressed air is used in the production of many of the healthcare industry’s products and also the delivery of healthcare to patients. Now, if you look at pharmaceutical products or stents or equipments where compressed air is used in the production of these products and then you have medical air that is used in the hospitals for treatment of patients. Now, typically the history of compressed air has been – the production and initial designs were all lubricated air – the air contained traces of oil. That was a problem and that was treated by using a series of filters to clean the air. But the trend has been to shift towards more and more of oil free air, where the contamination, which is the number one enemy of healthcare industry, is completely eliminated.
Where is ELGI in the medical air market in terms of oil free air for healthcare?
About 6 years ago, we acquired a company in the US that produced very high quality of medical air products which includes the compressors, vacuum systems, pipelines and the control elements that are used in hospitals to deliver high quality of air and gas to patients in the hospitals. Now we are number 2 in the US in this business. We have been exploring the opportunity for this in India. Indian healthcare industry is really ramping up its quality. They are investing a lot of equipment and money into building the standards of the hospitals. We are now actually in the middle of tracking environment and understanding whether there is a viability for us to produce these products in India and bring the cost down and therefore, serve the medical air requirement of the Indian healthcare business.