With More than Enough Capacity, BKT Doesn't Need a New Plant -- Yet

Bob Ulrich
Posted on August 13, 2019
BKT's $500 million plant in Bhuj, India, opened in 2015.
BKT's $500 million plant in Bhuj, India, opened in 2015.

Balkrishna Industries Ltd. (BKT) is putting its U.S. plant project on hold after 8 1/2 months of prep work.

“After reviewing various aspects of the project in the backdrop of current challenging economic and business environment, the board has decided to put the proposed project in abeyance or on hold,” said the company.

“In view of the above decision, we are suspending further working on the project, with immediate effect.”

In my opinion, that is a smart financial move, because production capacity is not yet a problem for BKT. I was at the grand opening of the company’s fourth plant, in Bhuj, India, in 2015, and that plant was designed to match the capacity of the other three plants combined within two years.

At the time, BKT’s production capacity was greater than demand for its products. But the company’s board of directors also knew that in order to expand and keep up with radialization, the plant was necessary.

Four years later, demand has nearly caught up with supply. The Bhuj plant has the capacity to produce an estimated 450 to 480 metric tons per day, all radial ag, OTR and industrial tires.

In addition, BKT is in the process of modernizing its Aurangabad, India, plant, which includes increasing its capacity.

So given not only economic and political uncertainties, but also, from a logistics standpoint, unknown weather concerns (a site has yet to be chosen), I think it is financially prudent for BKT to suspend – not end -- the project.

Related Topics: B.O.B., Bhuj, commercial tires, farm tires, industrial tires, OTR tires, plant capacity

Bob Ulrich Editor
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