BKT's Rajiv Poddar: Plant Was Needed to 'Seize Sales Opportunities'
The new off-highway tire plant built by Balkrishna Industries Ltd. (BKT) in Bhuj, India, is already running at 46% capacity. In 2017, it will be at full capacity, producing 51-inch OTR tires, ag tires, industrial tires and more.
As part of the recent "Game Changer Conference" hosted by BKT, close to 600 dealers, suppliers and journalists were recently invited to visit the plant, which is located in the state of Gujarat and the city of Bhuj. Modern Tire Dealer Editor Bob Ulrich was one of them. Here is the second of his four news reports, which includes a blog on Thursday, Dec. 10. (To read the first report from India, check out this link: "Chairman Arvind Poddar: Ag and OTR Tires Lead the Way at BKT.")
At the recent grand opening of the Bhuj, India, plant BKT Joint Managing Director Rajiv Poddar talked about the facility like he was a proud father. The "birth" of the plant was not an easy one, and there will be more growing pains, but the end result -- daily production of small and large off-highway tires -- is a reality. On Saturday, Dec. 5, he spoke to 120 members of the press from around the world; here is a transcript of his speech in Mumbai, India. -- Bob Ulrich
Changing the game, again and again, means changing the baseline scenario. This ability and attitude, as my father has just outlined, has been a steady feature of our corporate identity. A feature that has given us the strength to face the various challenges thrown at us over the years.
Bhuj, another example of this at BKT, marks a further milestone in our history.
Now, I will tell you about the strategic reasons for setting up a new plant.
At the beginning of this decade, BKT defined its vision whereby it set the overall strategic objective: to achieve the leadership in the off- highway tire market worldwide.
To pursue this ambitious target, strategic planning across all organizational areas was necessary.
The higher a company’s objectives are, the more essential it becomes that these are shared by all corporate functions, creating operational synergies.
In our case, it became evident that to support the new ambitious vision, we had to make some radical changes in our production set up. This needed to be done swiftly in order to effectively seize new sales opportunities in global markets.
After carefully analyzing different factors, it emerged that Aurangabad, Chopanki and Bhiwadi production plants were already working at full capacity.
Taking into account all factors, clarity emerged, that we needed a new plant. With this, we started working on the macro requirement of a new project.
To take this forward, three steps were followed to define the scope of this plant.
Firstly, we had to decide how much space was needed. The new plant should be capable of producing more than 140,000 MT a year. That was the starting point. We conducted a survey in all departments to find out their needs and necessities, giving them some leeway for wishful thinking.
After assessing the outcome, a decision was made on the area required for production.
In addition to the production area, it was decided that we should host a state-of-the-art R&D center, along with a modern outdoor testing track, large warehouses for tire storage, as well as additional facilities for housing our team including recreational spaces for their families. This meant a land requirement of around 300 acres, or 121 hectares.
The next step was to determine how much investment was required.
The objective given to us was very clear. All the machinery should be state-of-the-art. The equipment should be nothing but best in its class, thereby helping us maintain the high standards of quality for which our products are known.
This was in addition to the aforementioned facilities.
After lot of working and discussions with various machine manufacturers, we concluded that to fulfill our dreams we needed an amount of $500 million.
Now, all that was left what to convince the board of directors to go ahead with the plant. Thus started a series of presentations and discussions between the team and board of directors. After a lot of convincing, we managed to get their formal approval for a $ 500 million investment, paving the way for us to pursue our strategic vision of global leadership.
What a powerful moment. A moment full of emotions. A dream was born!
Now, the dream started taking shape and turned into a project.
Undoubtedly, it was clear that choosing the right location would be anything but an easy task. Especially a continuous land of around 300 acres.
However, none of us anticipated the stress and strains to come.
In line with our mid- and long-term export plans, logistic requirements became a key determining factor. This perspective led us to focus on a location that was able to host such a large production site, being at the same time easily accessible and close to a large logistic hub. All these concurring elements restricted the number of options available.
BKT examined and evaluated all major ports in India. The Port of Mundra, in the state of Gujarat, which was already being used by us for exports, turned out to be the most suitable one. It was and is considered a highly efficient hub with great container handling capacities.
This led us to our second challenge of scouting for around 300 acres of continuous land around the port location, to ensure short transportation time between the production site and the logistic hub.
The state authorities of Gujarat were forthcoming to welcome a large industrial site in their territory in view of potential benefits of the local economy, in terms of development of both direct occupation and the induced effects. This definitely facilitated the discussions that we had with numerous land owners to try and convince them to sell their land. After months of discussions we concluded with a positive outcome of negotiations with numerous land owners.
Finally, Bhuj turned out to be the ideal solution for us. We acted quickly to obtain the selected land. The paper work was done swiftly.
Once the approval from the board of directors to invest in the project had been obtained, and the land had been identified and purchased, everything seemed to be under control.
Our dream of building Bhuj was getting closer.
However, extremely hard and exhausting operating conditions put all efforts so far at risk.
The area, where BKT’s largest and most modern production plant was to rise, made it almost impossible to perform the task.
It really seemed, we had all the odds against us: a previously desert area, lacking of access roads, lack of electricity and water supply, and even herds of wild animals – just to name a few of the reasons why the company was almost unable to find labor force willing to work at Bhuj.
When finally, some manpower was found, it was likewise difficult to keep them: leaving and waiving, unfortunately, happened on an almost daily basis. Starting the project in Bhuj turned out to be a real challenge with henceforth unpredictable and uncertain outcome.
But when the “going gets tough, the tough gets going”.
And so did our team. We all gritted our teeth, rolled up our sleeves and did the job.
Showing great commitment and dedication, everything was created out of nothing.
The first trails turned into large paved roads suitable for transporting people and goods. An over 8 km-long pipeline for drinking water was laid conveying water from the closest water reservoir to the factory, passing through private properties which had required long and patient negotiation.
Electricity poles were installed, stretching over a distance of more than 13 km, to finally supply the plant with electric power; canteens and basic service facilities -- like toilets and showers -- were built for the workers in order to create decent working conditions.
After so many odds and adversities, Bhuj finally started to take shape and come to life.
Also, our team was able to maintain its commitment to the board of directors, employees, partners and customers even in difficult times.
In the course of its history, the state of Gujarat had been tormented and devastated by several natural calamities. Local inhabitants still recall painful memories of some of these disasters. As it often happens, land can be generous and fruitful as well as tough and unpredictable. Building the BKT plant of Bhuj in a desert and inaccessible area, which was anything but hospitable, required also higher efforts and expenditure than expected.
Right from the start of excavations, another pitfall was soon figured out: Black soil of volcanic origin, extending over large areas, was unsuitable for the emerging construction site and the final purpose. Extraordinary measures needed to be taken, such as removing up to 7 m (25 feet) of black soil, replacing it with soil that was suitable for the construction works. But that was not all.
Other natural forces did their bit. Rare but heavy rainfalls, for instance, were able to flood roads blocking all transport within the site. Moreover, the state of Gujarat, like large parts of India, bears a high seismic risk. For this reason, the construction of the entire site was planned and realized taking into consideration earthquake engineering.
This meant an extra cost of $15 million USD, but all possible measure to withstand earthquakes till magnitude 9 on the Richter scale were taken.
In addition, being a desert area, the wind is blowing at high speed capacity, so the roof top of the buildings has been conceived to stand such strong wind.
But all is well that ends well.
If we look back, recalling the difficulties and the obstacles we overcame along this path, we cannot but be proud of Bhuj. We are proud of what we have achieved.
But let us see how Bhuj is organized as a whole.
As we have seen before, the new BKT site stretches over a total surface area of 312 acres, or 126 hectares.
An area of 25 acres, almost 10 hectares, is dedicated to a modern outdoor track. Tractors and industrial vehicles equipped with our tires are tested there. Together with the R&D area, it constitutes a true masterwork.
Our state-of-the-art R&D center, which will be completed by early 2016, contains an innovative structure, where research on new polymers is done and new tread compounds are developed.
Our researchers, engineers and technicians can boast of having the most advanced equipment for chemical, physical and mechanical testing.
The central area in the plant hosts the production house that extends over 72 acres (29 hectares).
Looking at figures and dimensions, Bhuj is a very impressive industrial complex. Yet, it is more than just a prestigious entity for production, research and testing. Bhuj is a small town offering manifold social and leisure facilities for those who work in our company and their families.
The “township area,” extending over 15 acres (6 hectares), comprises of 406 flats for our employees’ families. In addition, there are 90 rooms for university students who have opted to work with BKT, within the scope of an industry-university cooperation project. Just to name a few of the facilities for the community: There is a large green area with jogging trails, a large recreation center for indoor and outdoor activities, a medical center and a mall.
Bhuj plant also has its own fire station, with seven firefighting trucks, two ambulances and a smooth firefighting system covering the entire complex, extending over 37 km.
Our intention here in Bhuj was not to draw a plan for social commitment, but to tangibly materialize and bring to life corporate social responsibility.
At BKT, we care for our employees and cater for their needs.
This is not limited to occupational issues, but we wish to offer an ideal living environment for them and their families -- a social community, living in harmony, in a peaceful present and having good prospects for the future.
I firmly believe, this is one of the most qualifying and most exceptional features, making Bhuj an unparalleled and peerless site, not only at a national level, but also from a much broader international perspective.
There is another aspect I wish to highlight, namely the environment. The entire production site of Bhuj operates setting new standards in terms of energy efficiency.
In full coherence with BKT’s business model, which has been attentive to environmental aspects ever since, Bhuj includes an area entirely dedicated to plant design and installation, optimizing all site issues related to water and waste management as well as energy autonomy.
In Bhuj, our green motto “reuse-renew-recycle” is fully implemented in terms of respect and care for the environment and efficient use of energy and resources.
Let me take you quickly through the main stages of our new and extraordinary production site.
Before we start any new work, we are used to do a small prayer with the team seeking the blessing of His Almighty. This prayer is named “Pooja.”
The first Pooja took place on Aug. 2, 2010.
Groundbreaking was on Jan. 28, 2011.
The first solid tire was produced on March 3, 2012.
The first pneumatic tire was cured on March 16, 2012.
Just over one year from the ground breaking, we reached a daily production of 100 MT a day on March 21, 2015.
All this leads to the official plant inauguration in November/December 2015.
Presently, about 150 MT are rolling off the production lines in Bhuj every day, even though the plant has a capacity of 325 MT per day.
There is still some way to go to achieve this ambitious target.
A new and exciting challenge, like the many we have faced and mastered so far.
So, what is our secret?
The secret lies in a clearly defined strategic vision supported by some organizational talent, well blended with a strong commitment shared by a great team.
If any of these elements were lacking, BKT would not be a global player in the off-highway tire market, and Bhuj would be mere fantasy.
There is a popular quote that says: “When a man dreams alone, the dream remains just a dream. But if many people dream the same thing together, the dream is transformed into reality.”
Bhuj is a dream that has come true.
And I really appreciate to be here with you today to share and celebrate the first outcome of this dream.
I take this opportunity to personally thank all BKT team that has worked hard on this project and has stood strongly behind me. Without them this journey would have not been completed.
There is a last thing I wish to mention before I conclude.
Without any doubt, BKT has gained enormous potential thanks to the production capacities in Bhuj. Likewise, extraordinary are the perspectives of development and growth.
Over the years, we have made clear that we are willing to seriously play our match on the global chessboard adapting to trends and evolution.
We carefully surveyed the market and observed our competitors before making our moves.
Now we feel ready to change the rules of the game, setting new horizons for the challenges to come.
Bhuj is the landmark epitomizing this revolutionary change, matured within our company and organization.
Without ever losing sight of BKT’s fundamental values such as the care for our people, the care for the environment, and the care for our customers, Bhuj has enabled us to play a completely new game from the perspective of exponential growth and aiming at global leadership -- even if we are just at the initial moves and the results are just a little gleam.
The path has been paved, and soon, this gleam will shine bright unveiling the results. What remains to be done is to follow in the footsteps of our founder.
Bhuj has changed the game -- here and today. Thank you.