Celebrating its 70th anniversary, the Faridabad-headquartered Elofic Industries has reemphasised its focus to aggressively concentrate on its core business – filters.
As it looks for more avenues to grow, the company is considering acquisition of filter manufacturers elsewhere globally and expanding manufacturing capacity to meet the emerging demand.
Formed in 1951, the company now caters to almost all the vehicle makers in India and a few abroad. Besides, it is a significant player in the Indian aftermarket and also in few markets beyond boundaries.
The Beginning
Immediately after the partition of India and Pakistan in 1947, MS Sahni – the late father of current Chairman & Managing Director, MB Sahni and Vice Chairman & Joint Managing Director, KD Sahni – at the age of 20, decided to make oil filters.
The advent of diesel vehicles in India, beginning with Tata Mercedes, saw the growth in demand for diesel fuel filters as replacement parts. This offered a good opportunity for the founder of Elofic, who subsequently expanded his oil filters for cars as well.
The first manufacturing unit with five people was set up in Delhi’s Sadar Bazaar. Today, about 1,200 people work for Elofic, which has six state-of-the-art manufacturing facilities in Faridabad (Haryana), Nalagarh (Himachal Pradesh) and Hosur (Tamil Nadu) in India.
It is one of the few companies in the filter industry with complete backward integration – from manufacturing child and plastic parts to sheet metal, paper induction, and string manufacturing.
It is by far India’s largest filter manufacturing company producing a complete range of filters (for OE supply and aftermarket) and lubricants for the aftermarket. The company makes oil filters, air filters, fuel filters, hydraulic filters, coolants, lubricants, and grease.
On the continuous growth and success of the company, MB Sahni told Mobility Outlook, “We manufacture around 500 filters per minute. We never compromise on the quality of our products as we shop around the world to procure the best possible equipment and materials.”
Though the company forayed into manufacturing lubricants for the aftermarket, it is not looking at this segment for its future growth. KD Sahni said, “We have had a change of strategy, perhaps after our realisation since the past few years. We are not aggressively pursuing the lubes business, and continue to focus on our core competencies that we garnered in making filters.”
Are the opportunities sizeable?
KD Sahni said the filters market is a big ocean both from the point of view of exports and domestic market. “We see a very strong surge in demand in exports. Despite the pandemic induced lockdown, we registered 20% growth over the previous year. The share of revenue from exports has grown from 30% to 38%. Therefore, we see opportunities everywhere, and within filtration, we see much scope for introducing newer technologies and new products for international and domestic markets. These filters will be with new media and manufactured by totally new processes. We see an evolution, and we are working on several technologies and products,” he said.
After foraying into manufacturing HEPA filters in 2017 for industrial and domestic applications, the company has expanded in adjacent areas. Recently, it launched Clean Air Towers for office and home applications.
“Manned by a highly skilled workforce, qualified design engineers combined with innovative and prolific R&D capabilities, the company has gained worldwide recognition and advancement. The sophisticated infrastructure and up-to-date processes helped Elofic move swiftly and grow successfully,” MB Sahni added.
Currently, around 70% of Elofic’s lubricants are synthetic/semi-synthetic, while the rest is mineral-based – primarily meant for tractors. The company recently introduced diesel exhaust fluid – Aqueous Urea Solution – for the aftermarket.
Overseas expansion on the cards
With exports going good, is the company keen on setting up a facility overseas? KD Sahni answered in the negative. “Not really, as we do have the cost advantages in India. At the same time, we are open to acquiring filter manufacturing companies for the purpose of growth. It will be for filters that are different from what we are making,” he said.
Enhancing capacity to manage demand
As the company has reached overall capacity utilisation of more than 85%, it is now setting-up additional lines to increase capacity at its plant in Hosur at an investment of INR 30 crore. “It is only here that we have space to put additional lines. We have to increase capacity as many of our customers have indicated growth volumes in the coming years. So, to cater to that and to be prepared, we are setting up additional capacity in Hosur. This initiative will increase the overall capacity by 20-25%,” he said.
At present, the company has a cumulative filter manufacturing capacity of 62.5 million units annually in 250+ varieties.
However, the additional capacity may not be sufficient in the long run, and therefore, the company has kept a blueprint ready to set up a Greenfield facility. The new facility will probably come up in Gujarat. “We have been looking at Gujarat for some time. Once things get better, we will again start looking for land in the State,” said KD Sahni.
A couple of years ago the company received its first international award from Kawasaki Engines in the US. Sahni said there is no difference in the expectations, needs and demands of global and domestic customers. More than quality expectations, the challenge is to supply on a just-in-time basis and Elofic banks on its warehouse in Milwaukee.
“For more than seven years, we have been consistently getting 100% delivery and quality rating from Kawasaki, which in itself is a big award. These kinds of accolades are not only from one customer but also from all the four large customers in the US, including Briggs and Stratton, Kohler Engines and Generac. We were affected by shipping disruption and container shortage, but we were fortunate enough to manage enough inventories at our warehouse. The customers were understanding enough to adjust their schedules accordingly. So, one has to work in very close collaboration with them,” he said.
Sahni signed off by saying that the company aims to celebrate its 75th anniversary by registering revenues of INR 600 crore, up almost three times from its current base of INR 285 crore.