Balkrishna Tyres: Looking for growth
The eyes of many large companies in the West are turning increasingly eastwards, with Asia and the Pacific Rim being touted as the growth markets of the early 21st century. As such, multinational companies are falling over themselves to invest in manufacturing across a variety of industries.
Or so the received wisdom goes, but this attitude is a trifle simplistic as it implies that the East is waiting for western companies to come to their aid and show them how things are done. Another misconception is that, when people talk about “the East” as a potential industrial powerhouse, most people are talking about China.
And there is little doubt that China has real potential, but it is by no means alone; there is another giant in the East preparing to flex its industrial muscles and that is India. Not only does India have enormous human resources, but it has an established industrial base – companies in India are not reliant on western firms introducing technology and ideas, as they have been manufacturing products for domestic and foreign consumption for many years, in many industries.
This is certainly true for the tyre industry, as India has a number of companies producing products which perform well on the punishing Indian domestic market, with its lack of good roads and overloading as the norm, as well as outside countries with more sophisticated infrastructures. It could be said that, if you can make a tyre that can withstand the rigours of Indian roads, then it will work anywhere.
One of the leading tyre manufacturers in India is Balkrishna Tyres (BKT), based in Mumbai. It is part of the Siyaram Poddar group, which is a conglomerate turning over US$ 250 million a year and, apart from tyres, has interests in textiles, clothes, rubber products and paper.
BKT established a factory at Aurangabad, in western India, in 1988, which had a capacity of 3,000 tonnes per annum and all related facilities, including an in-house R&D department. Four years later, the company developed a range of light commercial vehicle tyres, aimed largely at the export market and, in 1996, the product range was expanded to include industrial and agricultural tyres. Exports began to Europe, the USA and Australasia.
Overseas sales led to an expansion programme in 1999, entailing an investment of US$ 50 million. As sales increased, so did the range of products to include flotation and MPT tyres. In 2002, production capacity was doubled at a stroke when BKT acquired a factory at Bhiwadi; in the same year BKT was awarded ISO 9001:2000 quality accreditation by KPMG, Netherlands.
Last year an expansion programme was successfully undertaken at the Bhiwadi factory and the product range enlarged to include ATV tyres, plus tyres for lawn and garden implements and earthmovers.
As BKT’s reputation has grown, so too has its export business, until today 95 per cent of production is sold outside India, in both replacement and OE markets. The main markets are Western Europe, North America and Australasia, although BKT has distributors across the globe, on all continents except Antarctica. Looking ahead, BKT aims to increase its global presence and has planned what the company calls “an ambitious expansion programme”, costing over US$20 million, which will further increase the product range and production capacity. Exports will form a key part of this strategy, with BKT looking to consolidate and grow its presence in existing successful markets and to move more aggressively into new markets, such as Eastern Europe, Latin/South America and Africa.