Sogefi-MNR | Dawning Upon A New Era Of Collective Growth

Sogefi-MNR | Dawning Upon A New Era Of Collective Growth

Early in April this year, two Indian subsidiaries of the Sogefi Group merged as a part of the Italian company's global strategy of integrating its industrial businesses, technologies and people in the engine systems business sector. Sogefi-MNR Filtration India, a joint venture between Sogefi and Bangalore-based MNR Filtration, has now been merged with SystèmesMoteurs India to form a new entity called Sogefi-MNR Engine Systems India.

This new company would aim at capitalising on the success achieved in the filtration business by both partners, and try and replicate that in the engine air management and air cooling segments. Headquartered in Milan, Italy, Sogefi is a leading global supplier of filtration systems, flexible suspension components, air management and engine cooling systems. In 2011, Sogefi had acquired SystèmesMoteurs.

"This JV has worked beautifully for both of us because we have access to the best technology in Europe and we couple that with our frugal engineering mindset, which is required in a cost-sensitive market like India," said Narayan Manepally (R), Director, Sogefi-MNR Filtration India. Reacting to this, Guglielmo Fiocchi (C), CEO, Sogefi Group said although there are discussions about cost and service, there's much more demand for technology in the Indian market, and that is a very healthy sign for the future.

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Sogefi first entered India through a 60:40 joint venture with the Manepally family in Bangalore in November, 2008. SystèmesMoteurs, on the other hand, was a 100 % subsidiary of Sogefi. The merger meanwhile, was brought about to ensure the best synergies between the two companies that would lead to a larger product portfolio and introduction of newer technologies in India. Sogefi owns 70 % stake in the newly formed company, with the Manepally family holding the rest.

"With the right mix of products, right customers in right places, and having plants in the right locations, you can play a bigger game," said Fiocchi. Naturally, it also allows access to each other's customer base across vehicle verticals. Sogefi currently has business footprint in 21 countries across four continents, with 43 production sites and 17 sales offices. Ford in North America, and JLR in Europe are its biggest customers in those markets.

INNOVATION – PLASTIC OVER METAL

For a group that invests close to three per cent of its annual revenues in R&D, Sogefi is focussed on three critical areas of innovation – materials, integration and processes. The primary material in filtration is paper, and obviously, there are different kinds of papers that can be utilised and are being experimented with. The group is also focussed on becoming a system integrator by combining different products and technologies. The third aspect is processes, including the welding process of plastics, for instance. Fiocchi confirmed the group has multiple patents on welding systems.

In the filtration area particularly, the primary direction is towards reducing fuel consumption and weight. Replacing metal with plastics has helped reach most of the desired objectives for Sogefi, and its customers. In North America, for example, most of the OEMs were using steel for their oil cartridge, and Sogefi has been successful in helping two of the big three OEMs to move to plastic. Fiocchi explained, "That has resulted not just in cost saving, but weight reduction and better efficiency as well. For us, that has created a whole new market, which was primarily a steel market."

Air intake manifolds in India used to be majorly made of aluminium, but acceptability of plastic as a replacement for aluminium is gradually increasing in the Indian market. Manepally informed that the company has now created a state-of-the-art manifold for a customer that spans across multiple platforms. One mould or die arranged differently can actually supply to three different platforms, he noted, leading to reduction in tooling cost as well.

Even diesel fuel filters have undergone the plastic treatment, and are modular. Effectively, the diesel fuel filters made by the company can be accommodated in various platforms of the customer.

However, plastics also bring about certain challenges and complications. In the case of engines that run on biofuels, one has to take into account conductivity of plastic, said Manepally. The company has substantial knowledge and experience of the Brazilian market, which has a sizeable ethanol penetration, and can very well replicate that in the Indian market, as and when demanded.

A lot of new engines in the market today have oil filter modules that perform cooling, filtration and oil management inside one product. Sogefi has successfully replaced metal with plastic in this case as well. This wasn't easy, said Fiocchi, considering engineers had to not just deal with high pressure, but also pulsation.

As a whole, almost 80 % of its products in India today are made with plastic, said Rohit Prakash (L), Chief Executive Officer, Sogefi MNR Filtration India. He added that through all these innovations, the company has been able to bring down the total cost of ownership for the customers.

ROLE OF ELECTRONICS IN FILTRATION

There is little doubt that almost every single part of the automobile will be touched by electronics in some form or the other in years to come. The diesel fuel filter for instance, has multiple sensors in it. Manepally explained, "Be it anywhere in the world, diesel would have some amount of water in it and you cannot let that water go into the engine. Our diesel fuel filters have two ports, and as the water starts building up and touches the ports, it senses and sends a signal to the ECU for the water to be drained out." Some larger vehicles today have an auto drain technology as well, he noted.

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Electronics also play a large role in ensuring adequate and precise heating of diesel as a fuel, especially when it is cold, because overheating may lead to a fire.

The group acknowledges the fact that one of the best places to develop electronics is Bangalore, and sometime in the future, there is every possibility of a centre of excellence for electronics coming up in the city that could potentially supply to the rest of the world. In addition, Fiocchi said, India will remain the centre for development of two-wheeler technologies for the Sogefi Group. "We won't have any development in two-wheeler technologies anywhere else in the world," he confirmed.

The two-wheeler sector, meanwhile, is extremely critical for the group. A major transition that has happened in the area of filtration in the two-wheeler sector is the change from foam to paper, informed Prakash. Foam used to be the dominant material for filters for the last 25 years, but in the last two years, the whole business has moved to paper. Prakash said the next three years would lead to something even better, without particularly giving out details.

CONCLUSION

India is already a large market for the group, but the potential of growth in the future is much bigger, said Fiocchi. Manepally echoed his thoughts, saying Indian consumers are increasingly demanding more technology and features in their vehicles, and the real growth story for the company is yet to come. In the next three years, the company would likely double its revenues from the current figure of ' 160 cr plus, while also increasing manpower from the current 500 to about 800 by that time. As a market, India contributes 1.5 % to the over € 1.3 bn Sogefi Group.

The group has four plants currently – two in Bangalore, and one each in Pune and Delhi – and the new company would continue to use these facilities. There is no immediate plan to invest in a new plant, clarified Fiocchi, but incremental investments would continue to be made in extending production lines, as well as on modernising the existing production sites.

The automotive market is a complex game, but more complex the game is, the better it is for a company like us, concluded Fiocchi.

 

Text: Deepangshu Dev Sarmah

Photo: Bharat Bhushan Upadhyay