BKT Offers Bhuj Plant Update
Last December, Balkrishna Industries Ltd. (BKT) held grand opening ceremonies for its new off-highway tire plant in Bhuj, India. Modern Tire Dealer’s Editor Bob Ulrich was there and reported on the event in our January issue, along with several online reports.
In September, BKT invited MTD to see the progress that had been made at the plant since its opening.
To recap, in 2010 the then $300 million company decided to build its fourth off-highway tire plant. The city of Bhuj in the Gujarat state of India was selected. It is located about 45 miles from the Pakistan border in a desert area. It is also strategically located near the Kandla Port.
In addition to building a factory, BKT decided to build an R&D center, test track, power plant and employee housing. In the end, BKT spent about $500 million on the project, which it says will double its tire production capacity. Production started in Bhuj in 2015.
BKT’s goal is to reach 800 metric tons of capacity per day by the end of 2017. The company currently produces agricultural and OTR tires at its four plants in India. The others are in Aurangabad, Bhiwadi, and Chopanki. BKT produces roughly 2,400 SKUs.
The Bhuj plant is now producing 175 metric tons per day, although its current capacity is 225 metric tons.
During an interview with Arvind Poddar, chairman and managing director of BKT, and Rajiv Poddar, joint managing director of BKT, expansion plans for the company were discussed.
“Our goal is to have the products to take us to a 7% to 8% global market share in off-highway products and our long-term vision is to be in double digits,” Arvind Poddar explains. The company’s vision statement is “to achieve leadership in off-highway tire markets worldwide.”
To do this, the Poddars are planning to continue to expand globally, but also increase their presence in the Indian market. The company currently exports 90% of its tires, but wants that percentage lowered to 85%. “In India, nobody knows us yet,” comments Arvind Poddar, “we’re more popular abroad than in India.”
The company is exporting about 10% of its tires to North America. BKT is confident that the recent round of tariffs won’t hurt its business in the U.S., but cautions that the process is still on-going with a final determination by the U.S. government not due until January 2017.
The company is still targeting 2017 for the launch of a 51-inch OTR tire. Arvind Poddar clarifies that the equipment to produce the tire is already installed, along with the molds, but the company is still testing its 49-inch tires and wants to make sure there are no problems before it begins production of a 51-inch tire.
Rajiv Poddar says the company is currently producing 75% agricultural tires and 25% industrial, but wants to adjust the percentages to a more balanced 60% ag and 40% industrial.
So, is a 57-inch tire on the horizon? Arvind Poddar says it is possible, but there are no plans for now. “We want to have the 49-inch and 51-inch tires working, then we’ll decide on a 57-inch. But, not a 63-inch tire.”
When the Bhuj plant was built, the company wanted a three-year payback and both Poddars say they are on schedule. Rajiv says the company also is on track to be completely debt-free by 2018.
The R&D center at Bhuj is still under construction, but the company plans for the building to be completed and in use during early 2017. The power plant is now fully operational and the water reservoirs are full.
The facility now has 200 families living in the housing, with a clubhouse, fitness center, and store in place. The plant also has its own fire station, with seven fire fighting trucks and two ambulances.
Today, more than 7,000 people are employed at BKT, with an average age of 37 years.
BKT reveals plans for North America
Arvind Poddar was asked to talk specifically about its North American plans.
“We are not here for the short term. We are here for the long term. We want to build a strong brand and want to be known as a serious, long-term player,” says Poddar.
“ The key is for us to keep our speed and be flexible. We don’t believe in cutting corners to make a short-term growth. We are not the cheapest product. Our customers know that they receive value for the money spent on our products. That is what BKT is about.”
Bhuj by the numbers
Here is an updated breakdown of BKT’s plant in Bhuj, India.
Plant cost: $500 million
Total acres: 312
Main plant area: more than 72 acres
Power plant: 30 acres
Outdoor track and R&D center: 25 acres
Township area: 15 acres
Raw material storage area: 6 acres (45 days of storage)
R&D center (due to be completed in early 2017): 25,000 square feet
Tire building machines: 51 with goal of 65
Tire presses: 177 at goal
Daily present capacity: 225 metric tons
Daily present production: 175 metric tons
Daily full capacity (late 2017): 350 metric tons
Tire warehousing capacity: 25,000 metric tons
Largest tire currently being produced: 2700R49