S Muthukrishnan, chairman, Ucal Fuel Systems Ltd, and an automobile industry veteran, smiles when I ask him about the impact the downturn in the automobile industry has had on his company last year. ?We did alright,? he says. The company provides engineering solutions for fuel management for the automobile industry. Muthukrishnan?s Ucal group is one of those Chennai pioneers in automobile industry. A clutch of auto component companies that came up in the early days of Independence have experienced all the cataclysmic changes the auto industry has gone through in our country, and they have not only lived to tell the tale but have also emerged as industry leaders. Some of the well-known groups are TVS, Amalgamations, Rane and Ucal.

Muthukrishnan?s grandfather K Gopalakrishna was the promoter of Standard Motors. He made the transition from trading in auto parts to manufacturing by assembling Massey Ferguson Tractors in a shed. Apparently Sir M Visvesvaraya, the architect of the Mysore state, persuaded Gopalakrishna to make cars. Those were the days when no more than three car manufacturers were allowed in the country ? Birla?s Ambassador, Vinod Doshi?s Fiat (Premier Padmini) and the Union group?s (Gopalakrishna?s group of small companies) Standard cars. Standard Motors came out with models like the Standard Vanguard and the iconic Standard Herald. Later on when the government allowed the manufacture of light commercial vehicles, Standard Motors along with Bajaj came up with Standard 20 LCV and the Bajaj Tempo.

Those were the days of unbelievable restrictions. ?I remember we were so happy one year when we produced 4,000 cars,? recalls Muthukrishnan who joined the business in 1964. In the 1960?s Muthukrishnan?s grandfather decided to enter component manufacturing. The Ucal group started making carburettors and shock absorbers. The restrictions on the auto industry were quite unbelievable. ?We spent half our working lives in Udyog Bhavan, Delhi.? Government decided the number of cars to be manufactured, where they should be manufactured, at what price they should be sold and so on. Standard Motors had to stop manufacturing Vanguards as it was decided that Indians did not need more than two medium-sized cars (Ambassador and Fiat).

Starting a manufacturing industry was truly painful those days. Not only did one have to grapple with licences and permissions, one also had to interact with departments like the Directorate General of Technical Development (DGTD), which dealt with allocation of raw material. The DGTD used to control imports and used to cut somebody?s import requirement if a local manufacturer claimed he could manufacture that product. Junior clerks in the department used to insist that aluminium could be used in place of copper!

By 1980?s, liberal winds started creeping in. That was also the time when the Union Group was divided among the grandchildren of Gopalakrishna. Ucal Fuel Systems (headed by Muthukrishnan) was incorporated as a private limited company in 1985. Four years later it entered into a technical and financial collaboration with Mikuni Corporation of Japan to manufacture carburettors and fuel pumps. In 1989 the company went public. ?The most important thing that happened during this period was that resources were finally available. Money market improved. People were prepared to invest in shares. We could finally think of expansion and invest in modern methods of manufacturing,? says Muthukrishnan. Groups like Ucal could shake off their cautious approach to business (so typical of South Indian companies then) and start thinking big.

The entry of Maruti completely changed the way component manufacturers thought. Ucal Fuel initially catered to the requirements of Maruti 800. Then it moved on to other Maruti models such as the Maruti 1000, Maruti Zen and Maruti Esteem. Ucal Fuel?s carburettors soon achieved international standards and could match the requirements of the export models of Maruti.

In 1990?s things changed even more. In the early 1990?s the auto sector went through one of its recessionary trends. And it was time for Ucal Fuel to look beyond Maruti and at other four-wheeler and two-wheeler manufacturers. By mid-1990?s, the company emerged as the largest manufacturer of carburettors in the country. This also meant that the company had to plan for increasing competition in technology, quality, constant capacity enhancement and export volumes. It also had to anticipate future trends. Muthukrishnan was clear that the new millennium will see a lot more of electronics in automobiles, newer types of materials, particularly plastics. So, the company had to prepare technologically and financially for the future.

Technology has certainly changed. Carburettors have been replaced by multi-point fuel injection systems in passenger cars. Only two-wheelers use carburettors now. Today, Ucal Fuel has reinvented itself as an engineering solutions organisation, the only one of its kind in the country offering fuel management equipment. It has bought out Mikuni, which had a 26% shareholding in the company. Ucal Fuel does not deal with commercial vehicles, which is one of the reasons why the company was not impacted by last year?s downturn. Ucal Fuel?s major customers, Maruti and Hyundai, registered growth figures of 4% and 38%, respectively, during 2008-09. In spite of decline in the sales figures of both major customers TVS Motors and Bajaj, the company managed to end the year with a turnover of nearly Rs 300 crore. This is because of the range of products it offers for fuel management.

Ucal Fuel has also done something that would have been unthinkable a few years ago. It has bought an American company Amtec Precision Products, based in Illinois, which makes components for heavy commercial vehicles. The timing of the acquisition was disastrous as it was at the precise moment when the auto industry in the US was collapsing. But the Indian owner, after struggling for two years, has managed to turn around the company and stem the bleeding.

Ucal Fuel is not the company Muthukrishnan inherited almost 50 years ago. It has withstood the collapse of Standard Motors?the flagship of the group, competition?both internal and external, and globalisation. Muthukrishnan has used the advantages of the past to make sure the company does well in the present and continues to grow in the future. Now it is up to his son and son-in-law who manage the day-to-day affairs of this no-longer-conservative growth-averse group from Chennai.