With the Sofima aftermarket brand notching double-digit growth in India, Italian filtration systems supplier targets 10 percent market share by FY2022. Along with a plant in Bahadurgarh, Haryana, it is diversifying into CNG filters to derisk itself from reducing diesel filter demand.
The company, which specialises in fuel filters (primarily diesel), air filters and oil filters for passenger vehicles and commercial vehicles under its UFI (OEM) and Sofima (aftermarket) brands, has two other plants — in Bawal (Haryana) and Belgaum (Karnataka). While the 8-million units per annum capacity Bawal plant supplies to Maruti Suzuki, Hyundai Motor India, Tata Motors, Daimler and Ashok Leyland as well as the aftermarket, the Belgaum unit (1.5 million units) caters specifically to exports to the European market with made-in-India parts reaching carmakers of the likes of General Motors, Fiat and Porsche.
UFI Filters’ aftermarket presence under its Sofima brand stands at 7 percent in the organised aftermarket in India. Its bullishness on India stems from the double-digit growth it has been registering in its aftermarket business since 202016 and led to it setting up a brand-new plant solely for the aftermarket.
The new plant, under Sofima Filters India, will now augment existing capacity and enhance its ability to cater to growing demand in the aftermarket. The Bahadurgarh plant, spread over 4,500 square metres, sees an investment of Rs 10 crore in equipment and construction. It will produce 6 million units over two shifts and can reach up to 8 million units on a three-shift basis, employing up to 300 people. The aim is to strengthen UFI's hold on the aftermarket to 10 percent by FY2022.
New plant to make air filters for Maruti and Tata models
The new plant will produce air filter elements for passenger cars from Maruti Suzuki and Tata Motors as well as cabin air filter cartridges for models such as the Maruti Dzire, which will be retailed in the aftermarket. While production will commence in November in a single-shift operation with two assembly lines, the company will scale up to two shifts by the first quarter of FY2021. Initially, around 250,000 cabin filters and 300,000 air filters will be produced every month. While major production is intended for local consumption, the company will gradually start exporting to neighbouring markets by the start of next fiscal.
According to Luca Betti, director, Group Aftermarket Business Unit, UFI Filters, "This is a big milestone for us as we set up our first ever aftermarket-specific plant anywhere in the world. Our customers have a growing demand for reliable products and we are glad that we can cater to such needs with our focus on technology and quality."
"We have been recording double-digit growth YoY since 2015 in our aftermarket business globally and thus have been focusing more on this segment," he added. The Group's aftermarket revenues stood at 100 million euros (Rs 782 crore) last year and it expects to continue growing at the same pace over the next five years as well.
While it projects Rs 50 crore in revenue from its domestic aftermarket business in FY2020, the target is to double the number to Rs 100 crore by FY2024. Its current distribution network includes 160 dealers across the country. * According to Hridesh Sharma, CEO, UFI Filters India, "Since the past five years, we have been focusing a lot on the aftermarket space. Unlike smaller players, our intent is to provide the highest standards of quality."
BS VI impact drives shift to CNG filters for UFI's key client
With UFI Filters India being a key player in diesel fuel filtration technology and Maruti Suzuki accounting for a chunk of its supplies (OEM and OES), the company has already been impacted by the slowdown — volumes are down 30 percent. And with the country's leading carmaker having confirmed plans to stop making diesel-engined cars from April 2020, the company is taking rearguard action.
As a result, while UFI will see a lot of its production capacity at the Bawal plant lying unutilised, it is also working to diversify itself into new areas such as getting into supplying CNG filters to Maruti Suzuki, for which it has submitted its design proposals and is expecting RFQs.
Also, with diesel still continuing to remain a key propulsion technology in the CV space, "the biggest bet for a filtration player right now is the heavy-duty segment," said Sharma.
Through its technical centre located at its corporate office in Aerocity, Gurgaon, UFI Filters India is also conducting continuous research. It has developed innovative solutions for BS VI fuel filtration, and also aims to diversify into thermal management systems for battery cooling in EVs. The company aims to place itself into such a position that as and when EV technology improves and there is also a spurt in the sale of electrified vehicles, it will be able to scale up and cater to the market demand with ease.
UFI India's simulation centre sees 32 engineers conducting design and simulation work on various new projects for India and for supporting the Group's European operations as well. Some of the innovations UFI has in its stride are urethane air filters, which are highly flexible in their shape and design, and multi-tube filters. Nonetheless, while the Italian filter major remains bullish on growth in India, much depends how the industry comes out of the slowdown.
(This article was first featured in the November 1, 2019 issue of Autocar Professional)