The BKT vision is to become the global leader in off highway market worldwide, Arvind Poddar, VC & MD of the Company, tells Syed Ameen Kader
You started in 1995 and have grown quite rapidly in the last few years.
Actually, we established the BKT tyre plant way back in 1988 with the view to produce two-three-four wheeler tyres. It is a commodity and there is high competition in that segment so we decided to move out of it and shift complete focus on the specialty tyre – which is the off highway tyre. So today we don’t produce any two-three-four wheeler tyre. Our focus is only off highway and gradually we built up the entire team. Every year we produce about 150 SKUs; I don’t think any company in the world is rolling out 150 new SKUS. Our focus is there and we believe in quality and service and of course reasonable pricing. We continue to build on it.
What was the reason to look at international market?
At that point of time, the Indian agriculture market was not that much advanced. So our team went to Europe and we identified a few tyres and developed them.
Was it a big challenge?
Yes, it was and it is still is. We are competing with all the leading brands in the world.
How geared up are you to address the needs of your markets?
We have three plants; one in Maharashtra (Aurangabad) and two in Rajasthan. We are enhancing the production capacity at all our three existing units marginally due to space constraints. So by April 2012, our capacity will rise to 12,500 tonnes from the existing 11,000 tonnes. In the long term, we are putting up a new green field project in Bhuj, in Gujarat, with an estimated cost of about US$300 million. Once this new plant is ready by the last quarter of 2012 (calendar year), it will add another 7500 tonnes per month. It is going to be one of the most modern plants in Asia, with R&D facilities as well as a testing track. We will have a lot of activities there.
How much of this will go to the Indian market?
Currently, of our total capacity, the share of the Indian market is about 6%. However, the market is growing with a lot of infrastructure and construction activities. So the share will increase to around 10%.
How evolved is the off highway segment in India specifically?
We do not have exact data of the market size but it is definitely expanding rapidly. If you talk about construction equipment, the growth is around 20-24 % year on year. If you look at road building equipments, the growth is around 17-18% year on year. Earthmoving or mining tyres is around 18% while with material handling equipment we are looking at about 16-20% year on year. Cumulatively you can say about 20% year on year.
India is emerging as a major production centre after China. What they are doing is that they are shutting down their facilities in high cost countries and shifting to India. So there is going to be big growth.
What are some of the big achievements of BKT?
We are the first ones to roll out the agriculture radial tyre. Even today, if you are talking about a quality, we are the only one in the country to roll out all steel radial tyres. We have the widest range which is 1900 SKUs; no other company in the world is hitting that kind of number of SKUs. We have continuously clocked high exports winning Awards from the Govt of India. We comply with all the requirements of every country requirement, like in India you need to have ISI and so on, so we have all the approvals with us.
During 2010 we have also rolled out the bullet proof military tyres which we are regularly supplying to Thai military. Basically again due to capacity constraints, we have not expanded that production, otherwise there is a huge demand out of every country.
Any specific geographical focus?
Once the capacity is available, we will focus on India. We are not very strongly focussed in CIS countries. So these are two major markets which we are looking at.
What kind of support do you offer to your customers besides providing quality products?
We survey the requirements of the OEMs and understand what the customers in the after market are looking for to get the maximum output from these tyres. We provide technical support, technical training – which I don’t think any other Indian manufacturer is providing particularly to the big contractors or OEMS. Our team visits them and provides them training on how to maintain the tyres and improving the life of the tyres. Our focus is on training the actual user.
What is the market share in the Indian market?
Basically it varies from sector to sector. If you see the road equipment, we are holding the major chunk of business, maybe 90%. In the backhoe-loader segment, we are approximately at 39-42%. In the material handling equipment, we are holding more than 50% of the market share.
How fast is the industry growing and what is your growth rate?
From an Indian perspective, you cannot truly assess our growth rate because it will be totally different. However, if you look at the company as a whole, we are growing at year on year between 30-35%.
Key driving factors for growth?
Everybody needs a complete range, good quality, good service and continuity; so all these factors will be important. It is not just selling tyres; we are providing the complete package. And since it is produced in India, a low cost manufacturing hub, it helps us to pass on the cost benefit to our international customers. We will work closely with all the OEMs. Once you come to a certain level you have to be innovative. We will give them a solution.
Are you participating at Excon 2011?
Yes, our premium segment will be exhibited at the Excon. We are not very clear if any other tyre manufacturing company will be there.
Also you have changed the logo by adding a green element?
The world is moving towards green. We believe in the environment; whether we discharge the water or burn the coal, everything is as per the regulatory norms.
What is the vision for BKT?
To become the global leaders in off highway market worldwide.