BKT nurtures off-road tire sales
When Balkrishna Industries Ltd., (BKT) decided they wanted to hold a “day out” for its dealers, they turned the event into a four-day trip to Italy.
The company took more than 100 dealer personnel representing over 30 distributors from the Americas to Italy to thank them for their partnership. The company also held similar trips for their dealers in other parts of the world.
BKT wanted to highlight its commitment to the quality of its products and showcase the performance of their Mega Tractor tires under testing at the ISMA test track in Treviglio, just outside Milan, Italy. The test facility adheres to EU standards for independent testing of agricultural equipment of all types.
The highlights of the test track were slippage testing under in-field conditions, an on-road slalom and high-speed evaluations plus laboratory testing of the products. One of the tests imprints a tractor tire’s footprint — a test developed by and exclusive to BKT.
BKT’s Vice Chairman and Managing Director Arvind Poddar was in attendance at the event. He sat down with MTD to discuss his company’s growth. The biggest challenge for the company is “to keep growing, adding new lines and maintaining quality.
“We must keep our quality while growth is happening... it cannot drop,” insists Poddar.
Poddar says BKT tires must be one of the top quality products in the market. “We focus on pre-sale, that is, finding the right tire for the application, then post-sale... helping the customer properly maintain the tire and handling any problems for them.
“Our objective is to be number one in the agricultural market,” says Poddar. “We want to be only in off-highway tires.” He views the agricultural and OTR segments of the tire industry to be areas of continued growth, despite the current economy.
“We are very, very confident that the agricultural market will grow throughout the world. We don’t see demand coming down,” he says. Poddar believes the same holds true for the OTR worldwide market.
He said the company’s sales are currently at $611 million and they intend to reach $1.36 billion in 2014. This would represent 10% of the global market for agricultural tires.
Poddar says the company’s goal is to achieve a yearly 35% growth rate (in metric tons). Poddar views the overall growth rate in the markets to be 6% to 8%, so he knows his company must take market share from the bigger players.
BKT plans to achieve this goal by emphasizing a quality product at an affordable price.
The company also is constantly growing its product mix, with around 2,000 SKUs in its line at the current time.
Rami Bitran, general manager, BKT (USA), says it is very important for BKT to be viewed as a “one-stop-shop” for dealers. This means the company must understand what tires are going to be needed in each market segment. BKT has the ability to bring on a new tire size or design in three months.
BKT’s world-wide sales are broken down as follows: 50% Europe, 25% Americas, 10% India with the remainder coming from the rest of the world.
Poddar noted that the company’s product mix is currently 66% agricultural, 15% construction, 15% other construction/mining with the rest in lawn and garden tires.
By 2014, he wants the mix to be at 53% agricultural, 22% mining, 20% construction, and the remainder in lawn and garden products. The reason for the shift is Poddar believes the demand for industrial/mining tires will outpace that of agricultural tires during this time frame.
Overall, BKT has a 15% share of the world’s original equipment market, although that number is only 4% in the U.S. The company’s sales are currently 70% bias and 30% radial, but the plans are to be at 50/50 by 2014.
The biggest concern for BKT is increasing its capacity to meet the demand and achieve its growth goals. Toward this end, the company is spending $365 million in its new factory, as well as continuing to invest $50 million per year in its existing plants.
As reported in the May issue of MTD, the company is in the start-up stage of its fourth factory. The factory is in Bhuj, India, and will eventually have a capacity of 90,000 metric tons. Upon completion, this will increase BKT’s total capacity by 80%. The new plant is currently producing solid tires and will begin pneumatic tire production in the next three months, with current total planned capacity coming on-line in the next 24 months. When completed, BKT’s four plants will have a capacity of 300,000 metric tons.
The plant will be producing all of the product lines that BKT produces, says Poddar.
According to Poddar, the facility is located on enough acreage to easily expand as demand dictates it. The company is depending on this factory, plus on-going expansions at its existing factories to loosen up its current supply constraints.
BKT is part of the Siyaram-Poddar Group, a diversified Indian industrial conglomerate with sales in excess of $800 million. Poddar wants the group to grow to $1.8 billion by 2014. The Group is involved in textiles, garments, chemicals, real estate, paper and tires. ■