BKT Continues Off-Highway Market Growth

In the off-highway tyre sector, Balkrishna Industries Limited – better known as BKT – is going from strength to strength. When Tyres & Accessories met with senior BKT management at the Reifen 2010 show, we learned the Indian manufacturer holds the ambition of attaining segment leadership within five years and a ten per cent market share. And as the top men at BKT outlined, this goal is no idle dream.

“We have taken a lot of steps to increase our market share,” comments vice chairman and managing director Arvind Poddar. “First, we have looked at whether we have sufficient capacity. In the short term we are increasing capacity in our existing plants wherever we can. In the long-term we have finalised to put up our fourth plant, we already have obtained land for the plant in Gujarat, in the western part of India. We are planning to break ground by the end of 2010 and completion will take about 18 to 24 months, depending on machinery supplies.”

According to Mr. Poddar, the new greenfield factory will produce the entire existing BKT range plus a number of products currently missing from the tyre maker’s portfolio, such as larger radial sizes for the agricultural and OTR segments, solid tyres and inner tubes. A capital outlay of US$200 million is required to complete the project, he discloses. Company executive director Anurag Poddar adds that a capacity of around 225 to 250 tonnes per day is anticipated in the plant’s first phase of operation.

As mentioned, this new plant will fill some existing gaps in the BKT range. This, the company believes, is necessary in order for it to reach its stated goals: “Ultimately, what we want is that, regardless of what our customers and channel partners’ off-highway needs are, they can be provided by BKT,” explains Arvind Poddar. “They will not have to look around at the other companies. We want to be a sole solution provider. We are always looking at what the market needs and when we identify an area where demand exists, BKT’s strongest point is its ability to quickly develop a product and meet this demand. Our aim is to bring in around 150 to 160 new SKUs every year.”

New product development is very important to BKT and recently, reports executive director Rajiv Poddar, the Indian manufacturer has branched into areas of the off-highway business where it was not previously well represented. “We are expanding our all-steel OTR radial range and getting into the bigger tractor radial sizes. Along with that we are getting into a segment that is especially important for the German market, namely MPT radials – multi purpose truck radials.”

“A lot of categories have been added in the last few years, such as the forestry range,” adds Anurag Poddar. “We have now really gotten into it and are now in the process of developing the entire range as it is very prominent in the European market. There is a huge presence for the forestry segment in Northern Europe. Another new segment we’ve added is military tyres. While we have already begun producing these, this is an area in which we’re looking to increase our range. Overall, we are looking to focus on specialised areas; within the off-highway sector exist applications that are very specialised, such as military or port application tyres – these are the segments we are looking to grow in.

In addition to growing the business through the introduction of new products, BKT is investing in raising customer awareness in its existing product portfolio. Rajiv Poddar explains: “On the sales front we are engaging in marketing activities to enhance brand awareness, including holding technical seminars for end users to generate grassroots demand. We are doing this in most of our major markets.”

European sales have traditionally been of key importance to BKT and the region still accounts for 60 per cent of the tyre maker’s business. This is admittedly a smaller proportion than a couple of years ago, yet the reason for this is because while European market sales are still growing, expansion in other regions is taking place at an even greater rate. “Overall BKT sales volumes have grown,” Anurug Poddar confirms. “We are doing more business than last year or the year before that. But what is happening is we are now concentrating more on other territories, for example we have seen a lot of growth in the US market. We have established a good presence and have our own US office, which is located in Akron, Ohio, and have about 6 people operating out of that office. This has helped us significantly in Canada, the US and Mexico – US sales have more than doubled since 2008. Similarly, we have looked at other markets such as Asia-Pacific and the Middle East, and have brought out new tyres for those markets.” Rajiv Poddar reports that volumes in Australia and New Zealand have also doubled in the last two years, a trend that has been repeated in many markets outside of Europe. Incidentally, the company’s domestic market sales have also skyrocketed: “The India market was only two per cent of total BKT sales,” says Rajiv. “We have also focused there and sales have gone up to six to seven per cent of the total.”

While volumes in the off-highway segment cannot compare with those for passenger car tyres, BKT remains more than happy to focus upon this specialist market. “For us, I think the biggest advantage we have is our customers can outsource their entire off-highway requirements to BKT. They don’t need to come to us and say ‘you don’t have an industrial range’ or ‘you don’t have forestry tyres’. We can meet all their off-highway needs. So that, in a sense, makes this niche segment situation more of an advantage for us than a disadvantage. If you look at the other players specialising in off-highway, many only concentrate on one particular aspect of the business. When a customer comes to them they are more restricted.

The final word on BKT’s plans to reach segment leadership comes from vice chairman and managing director Arvind Poddar. He reports that while most growth will be organic, the company has not ruled out acquiring another manufacturer. Any such transaction would however need to meet certain criteria, he adds: “We would be in the market for a company that matches our philosophy. It must be a company that produces its own range as opposed to one that outsources to other manufacturers. A suitable company would need to be a good player in the marketplace.”