Balkrishna Industries Ltd is one of the world’s leading manufacturers of off-highway tires with more than 90 per cent of BKT’s tyre production exported to over 120 countries worldwide. Rajiv Poddar spoke to Sandeep Menezes on BKT’s growth plans in the coming years.
The Indian mining sector is currently not witnessing much activity. How has this impacted the mining equipment sector?
The mining sector is currently down in India, but it is not so globally. Also, this is the short-term vision. Eventually, one has to look at the long-term vision. Mining is going to come back; it is not going to be down forever. We have already seen in international markets some positive signs compared to last year and feel that, going forward, even in the Indian market it will be good for us.
Most of the OEMs are also witnessing declining sales. How BKT strategise in such a scenario?
For everyone it’s all about sales; if they are able to generate sales that they plan for, then there will be fewer reasons to complain. There has been support from the government. Newer products are getting approved by OEMs and in such a scenario everyone is looking at cutting costs. That’s where we come in; we provide a value for money product. We are not the cheapest but give relatively cheaper products with similar quality when compared to other top industry players.
Overall, around 80 per cent of BKT’s sales come from the replacement market. Going forward, we are aiming to increase our sales from OEMs.
A major portion of BKT’s revenues come from the export market. However, do you see increased focus on the domestic segment?
Our new plant is coming up in Bhuj, Gujarat, which is expected to nearly double our capacity. Today, if we are looking at 8 per cent of our capacity of 160,000 tpa going into domestic market, then we are planning to go up to nearly 280,000 tpa by 2015. Therefore, percentage gain might not be there but overall tonnage will definitely increase. We hope to grow this current 8 per cent to around 10 to 12 per cent for the domestic market.
Can you elaborate?
We had initially started out as a manufacturer for Indian tyres but shifted our focus towards exports because the agricultural market was booming abroad, due to automation, while in India it was still done the manual way. Therefore, we started out with agricultural products which eventually became one of our major products. The requirement of such products was not there in India but now that we see more machines being used in India due to automation, we are focusing on it.
Till about six months ago, we did not have extra capacity; now that our Bhuj facility is slowly ramping up and that capacity is coming onboard, slowly we can focus on the Indian market.
Are you looking at any new export markets?
Yes, we are looking at new export markets such as Russia, Eastern Europe, Canada, South America and Africa.
What is the current status of the Bhuj plant?
The Bhuj plant is ramping up as per plan. We have already commenced partial production for commercial use. At Bhuj plant, we will have capacity for around 335 tonnes per day. Out of this partial production, around 25 per cent has commenced. Full production will commence by 2015.
We have invested around $450 million in our Bhuj plant. Out of this around $275 million is through debt and remaining is internal accruals.
Do you intend to launch any new products?
We will be launching the Ultra Large OTR radial tyres. In first half of 2014, we will have the 27R49 and slowly BKT will go up to 51 inch. This is basically for mining applications.