Elgi Equipments MD Jairam Varadaraj told the MSME Growth Conclave that small is a starting point, not a destination. He urged companies to scale, innovate, and treat governance as an investment.
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Jairam Varadaraj, managing director of Elgi Equipments, delivered a pointed message to India’s small-business owners this week: staying small is a trap, not a strategy.
“Small is a good starting point. It is not a good state,” he said at the 5th MSME Growth Conclave in Coimbatore, organized by businessline. “MSMEs have to stop becoming MSMEs at some point. They’ve got to grow.”
Varadaraj identified the temptation to remain small – easier compliance, full ownership – as a structural drag on Indian industry. He told the audience that entrepreneurs often fear losing control. His counter: “I would rather own 5% of a company worth billions of dollars than 100% of a company worth a few million dollars.”
He also attacked India’s reliance on low-cost manufacturing. “The tyranny of cheap labour should only be a window, not a permanent strategy. We cannot build a country on the back of Indians being cheap.” Businesses should aim for “I-first” products – innovations that solve unstated needs – instead of copying “me-too” designs. He pointed to Apple’s touchscreen phone and the introduction of shampoo sachets in India as examples of products that addressed latent demand.
Governance and compliance, Varadaraj said, are investments. He used his own company as exhibit A. Elgi Equipments trades at about 45 times earnings. That multiple, he said, reflects investor confidence in the published numbers. High standards of governance make it easier to raise capital and scale.
The practical read for investors: Varadaraj’s speech lays out a framework for identifying MSMEs that are likely to break out. The companies that will re-rate are the ones that move beyond survival mode, invest in innovation, and treat compliance as a tool rather than a burden. Elgi’s own valuation shows the market is already rewarding that approach.
India’s ambition of becoming a developed nation, Varadaraj added, will depend not only on higher GDP. It requires building innovative, globally competitive businesses that create value for all stakeholders.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.