With the Indian automotive industry on the threshold of rebounding after a low-key performance over the past couple of years, auto parts maker Elofic Industries is stepping on the gas in terms of expansion plans.
The company has set an ambitious target of crossing a topline of Rs 500 crore in the next couple of years from the existing level of Rs 220 crore.
The strategy to drive this growth will be by entering various other segments in the filtration market where Elofic currently supplies oil, air, hydraulic and fuel filters mainly for the passenger car and commercial vehicle market.
Now the supplier is spreading its wings by entering the two-wheeler market, as well as the off-highway and construction equipment segments, according to KD Sahni, joint managing director. “In two-wheelers, we have finalised orders with Suzuki for whom supplies have already started; Yamaha’s is in the final stages of negotiation besides which we are working on new projects for Royal Enfield and are in discussions with other manufacturers as well for their new models.”
The Faridabad company had forayed into the lubricant business a few years ago which is also picking up and showing signs of good growth.
Going forward, the focus will be on growing the filtration and lubricant business further and in line with this trend, Elofic is scouting for a suitable acquisition in Europe to grow its customer base overseas as well as its product portfolio.
It is in the initial stages of talks with prospective companies in the filtration business. This will also enable Elofic to grow horizontally in terms of higher revenue generation. It already has a subsidiary in the US where it is a single-source supplier of filters and also warehouses the product there.
Locally it is expanding its manufacturing footprint further – the company already has three units in Faridabad, and one each in Nalagarh (Himachal Pradesh), Hosur (Tamil Nadu), with a sixth facility on the cards. With Gujarat developing as the next automotive hub in the country, Elofic is in the final stages of land acquisition in the state near Mehsana district close to Ahmedabad where Maruti Suzuki is setting up shop.
The company is acquiring 40 acres of land and will be investing Rs 120 crore mainly through internal accruals and bank borrowings for setting up two units both for its filtration and lubricants business over the next three years. From here it will supply to several customers – Maruti Suzuki, Tata Motors, Ford India and General Motors – which are setting up their manufacturing bases in the state. Close proximity to the Mundra Port will be an added incentive.
“We intend to export from there filtration products to OEMs and other filter manufacturers in Europe, USA, Australia, New Zealand and the Far East,” says Sahni. Lubricants will also be exported for the aftermarket. The company already has a lubricant-blended unit in Faridabad, which will later be shifted to Gujarat. These products currently cater to the local aftermarket in the country.
Construction of the Gujarat plant will kick off this year and is slated to have a production capacity of 72 million units in five years. Initially though, operations will start with 24 million units per annum. Cumulatively the other five plants account for 66 million units annually. Hero MotoCorp and Honda Motorcycle & Scooter India, which are setting up their factories in Gujarat, are also being targeted as potential clients.
With so much expansion on the radar, the forecast for 2015-16 is to touch a topline of Rs 350 crore.
Elofic is one of the lead sponsors of the ACMA Automechanika New Delhi 2015 show (Pragati Maidan, February 26-March 1) and Sahni says ideally, the Auto Expo and auto parts shows should be held every alternate year like in Germany to tap the maximum potential of the exhibitions while maintaining the focus on auto parts.
The company will be displaying its latest product portfolio at the ACMA Automechanika at Hall No. 10, Booth No. B18.