Elgi Equipments to shut Chinese subsidiary on poor show

These factors prompted the company to wind up its China subsidiary, the company told the stock exchanges, without divulging further details.

India’s leading air compressor maker Elgi Equipments has decided to wind up its Chinese subsidiary called Elgi Equipments Zhejiang due to poor performance.

The board of directors, through a circular resolution, has decided that the Chinese subsidiary has not been performing to expected levels for a few years now. Elgi Equipments Zhejiang’s business operations, already affected due to the general economic downturn in China, face severe disruptions after the pandemic.

These factors prompted the company to wind up its China subsidiary, the company told the stock exchanges, without divulging further details.

Elgi Equipments Zhejiang has been in the business of import, warehousing, sales and servicing of compressor products. A liquidation committee will be formed to execute necessary decisions in that regard. The process is likely to start shortly, the company said.

The Coimbatore-based company had restructured its China operations in 2015 to minimise the losses after economic slowdown in the dragon land. Elgi Equipments Zhejiang planned to approach the market in a focused manner by supplying products that meet the local market requirements.

Accordingly, the Chinese subsidiary had adopted measures like optimisation of manpower, surrendering of manufacturing licence, moving to a smaller location and focusing purely on import, warehousing, selling and servicing of compressor products.

The company has also decided to wind up Elgi Compressors Shanghai Trading, which was promoted to engage in trading activities since Elgi Equipments Zhejiang possessed only a manufacturing licence.