?New emission norms are certain to bring in changes in filtration requirements as tolerance levels are becoming finer, hence better contamination control is required for protection of engine components especially in air and fuel filtration,? says Manjit Prabhakar, Managing Director, Filtration Effects. Sharing his views with Equipment India, Manjit elucidates on market trends. Excerpts from the interview.
What is the present market scenario for industrial filtration, the market size and growth potential?
With the country growing at approximately 9 per cent and having the potential to grow at 12 per cent, at present the market scenario is upbeat where industrial filters are concerned. With government targeting double-digit growth, infrastructure projects will get the required focus, and this will facilitate industrial filter growth by 15-20 per cent.
The industrial filter market has a very wide spectrum: it has heavy-duty engine filters, hydraulic filters (power packs, wind turbines, steel plants, earthmoving equipment), air compressor filters, machine tool filters, oily water separators for marine applications, genset filters, agriculture equipment, railway filters, aviation filters, process filters dust filters, nuclear power plant and NBC filters, lifescience application filters. Since no single manufacturer covers the complete industrial filter range, the market size estimation varies a lot. Since I have covered the complete spectrum in my 32 years of experience, my estimation for the industrial filter market size is around Rs 500 crore.
What made you enter a highly competitive market of filters, and what are the focus segments for Filtration Effects?
The automotive filter market is certainly very competitive but the same is not true for industrial filters where customers consider technical competence over price, especially the hydraulic filters and air compressor filters market which is our focus area; it is dominated by imported filters which not only adds to equipment cost but also pinches the customer?s pocket when it comes to replacement. Competition in construction machinery and high-end equipment is forcing customers to look for good indigenisation options.
What kind of growth is envisaged, and where do you see this growth coming from?
Since our credentials are well established with OEMs, we are focusing on the OEM business and are targeting growth in this area. We understand the need of OEM customers much better than our competition and are sure to deliver quality and reliable products.
What is the capex aimed at in the coming fiscal? Are there any technological tie-ups for the products to be launched in India?
We have invested Rs 20 million in plant and machinery and plan to spend another Rs 5 million in R&D and expansion programmes in the next two years. We have no plan to go for any technical tie-ups as we have the required technical competence and understand the requirements of Indian OEMs much better than foreign manufacturers; Indian conditions are totally different and require much better products at affordable prices.
Taking into account the coming emission norms, how do you view the capability of meeting such stringent norms, from an aggregate suppliers? point of view?
New emission norms are certain to bring in changes in filtration requirements as tolerances are becoming finer, hence better contamination control is required for protection of engine components, especially in air and fuel filtration. These changes are forcing quality manufacturers to shift to costly, high-performance imported filter media; Indian filter media manufacturers are neither addressing this issue nor are the resin manufacturers making any effort to develop new- generation environment-friendly, and high-performance resins.
What are the core competencies and strengths of Filtration Effects?
The core competence of Filtration Effects is its technical knowledge in the field of industrial filters; our strength is to design and develop products which are suitable for the highly stringent Indian conditions at competitive prices. We will be mainly focusing on filters for construction and agriculture machinery. Faster product development will continue to be our key strength area.
How do you look at the potential from the aftermarket?
Although most of the bottomline growth comes from the aftermarket, since we are only focusing on OEM and OES sales, we do not have any plan to venture in this segment. For industrial filters, the aftermarket sale is approximately 40 per cent of OEM and OES sales, and the main reason for this is high warranty costs.
Being a new entrant, how do you look at competition in this sector? What makes Filtration Effects different from the competition?
This segment is mainly dominated by international players (imports) due to high product reliability requirement. My experience with the industrial customer is that if the customer is 99 per cent convinced technically, it is hundred per cent sure that you will not get the business. To get the industrial filter business, the customer needs to be more than hundred per cent convinced about your technical capabilities to deliver a quality and reliable product. Although we are new entrants, we are well-known and enjoy the confidence of Indian OE customers. The difference we have over competition is our superior technical competence.
What is your take on some of the major challenges, such as increasing import of filters from LCCs, product piracy, and use of sub-standard filters in the aftermarket?
Although there are some cheap imports from low-cost countries (LCCs), industrial customers are hesitant to use these due to high warranty costs. Fortunately, awareness among end- users in the industrial segment in comparison to automotive is much higher, although high cost difference is still a major challenge.
Brief us about your R&D spend, and also the latest technological trends in the market?
Although we have the required test facilities for both engine and hydraulic filters, since innovation is key to survival and growth, a dedicated R&D set-up is planned for installation by October 2011.
What about your production facility, capacity, and capacity utilisation?
At present, we have installed capacity for 5 lakh filters, per annum. Our production facilities have the most modern paper pleating machines for both cellulose and seven layers of absolute rated elements. Our spin on the filter line is capable of seaming heavy-duty filters of diameter of up to 170 mm and length 400 mm.