By Dave Zielasko Crain staff (TB)
Garbagnate Monastero, Italy - Balkrishna Industries Ltd. (BKT) billed its recent North American tyre dealer and distributor trip to Italy as â€œBKT's Day Out,â€ but a better tagline might have been â€œComing of Age.â€
It's not that the Indian company is new to the tyre business and just now establishing its line of tyres. To the contrary, BKT has been manufacturing tyres for 25 years and been in business as a company for 50.
Rather it's a testament to how far the company has come and to where it wants to go in the future - especially the near future.
Its plans are aggressive.
The Mumbai, India-based farm and OTR tyre maker intends to more than double its tyre sales over the next three years to $1.36 billion, from $611 million in 2011, which would give it a 10-percent share of the global off-highway tyre market, said Arvind Poddar, vice chairman and managing director of BKT, whose family owns a majority stake in the company.
In the US, the tyre maker forecasts a similar growth trend, targeting $250 million in sales for 2014 from $96 million in 2011.
Poddar, who spoke to ERJ's sister publication, Tire Business, during the Italy event, said he believes these goals are realistic, noting the company has been growing at an annual clip of 35 percent in recent years.
He attributed this success to three characteristics: the quality of the company's products, its high level of service and continuity.
Even if the quality is good, it's important to educate and work with the customer pre sales and post sales, he said. That means educating the customer prior to the sale about the right tyre for the right application, and following through after the sale on how to maintain the tyre.
What could hold BKT back from achieving its sales objectives is manufacturing capacity, Poddar said, although here, too, he said he believes BKT is prepared.
The company has started production at a $275 million plant still under construction in India that is expected to increase its overall manufacturing capacity by 80 percent. The facility in Bhuj will produce all of the company's tyre products â€œand lead us to achieve our vision of $1.36 billion,â€ Poddar said.
The Bhuj plant is expected to reach full operating capacity within 18 months and have an annual tyre output of 90,000 metric tons. This will complement 160,000 metric tons of combined production at the company's three other tyre plants in India.
With 300 acres at the Bhuj site, BKT also has plenty of room for expansion, should the need arise. Overall, the plant's capacity can be increased to 300,000 metric tons, Poddar added.
One of BKT's goals in bringing the 100 North American dealers/distributors to Italy was to show first-hand its testing procedures for agricultural tyres.
Dealers spent a day at the CRA-ISMA (Council for Research and Development in Agriculture/Institute for Experimental Research into Agricultural Mechanisation) test facility in Treviglio, Italy.
There they watched, listened and in some cases experienced first hand the testing BKT does for its farm tyres, especially those for today's high-powered and heavy tractors. These included tests for handling, tyre footprint, soil compaction, vibration and traction.
â€œWe can talk and do PowerPoints till we're blue in the face, but showing them makes them believers,â€ said Bill Haney, BKT's sales manager OE for North America. â€œThis is our Columbiana (Firestone's farm tyre test center in Columbiana, Ohio), and we compare favorably to that facility.â€
Dealers in attendance seemed to understand the company's intent.
â€œMy sense was that BKT wants us to understand that their manufacturing of tyres has a level of technology to serve the needs of the farmer today,â€ said Lenny Jones of Pete's Tire Barns Inc., in Orange, Mass.
Those were big tyres they were testing, noted Peter Gerry, president of Pete's Tire Barns. â€œIt's what separates the men from the boys. Building stuff not everyone can build.â€
Commenting on the larger rear farm radials, Gerry said the challenge is to manufacture them so they can be used on heavier equipment at lower air pressure and reduce soil compaction.
â€œThey've (BKT) accomplished that and not very many other people have accomplished that,â€ he said.
Along with developing its replacement tyre business, BKT has been striving to gain OE contracts in the ag and OTR markets, Poddar said.
The company has been dealing with all of the leading OEMs, he said, but has been held back because of capacity constraints. â€œBut everyone is in discussion now,â€ he said.
Worldwide, BKT has a 15 percent share of the OE market in farm and OTR tyres and 4 percent in the US
The company generates half of its global sales in Europe, 25 percent in the Americas, 10 percent in India and the remainder throughout the rest of the world.
Thirty percent of its tyres are radial and 70 percent bias, a mix Poddar expects to move to 50/50 by 2014.
The product mix is 66 percent ag tyres, 15 percent industrial and construction tyres, 15 percent OTR and mining tyres and 4 percent lawn and garden and ATV tyres. By 2014, Poddar sees this shifting to 53 percent ag tyres, 20 percent industrial and construction tyres, 22 percent mining and OTR tyres, and 5 percent smaller tyres.
The trip to Italy for US dealers and distributors was the third and final event of its type BKT had conducted for its customers worldwide.
The first took place last June when it brought 140 customers and company personnel from Europe to the CRA-ISMA test center.
In September, BKT hosted 150 dealers/distributors and company personnel from the rest of the world, followed by the US event, attended by 170 in total.
BKT is positioning itself as one of the leading players in the US market, Poddar said.
One the firm's key selling points is the number of SKUs it offers customers.
â€œWe have the biggest range across the world in this industry-2,000 SKUs and developing more every year,â€ said Anurag Poddar, BKT executive director.
He said the company has created a product model allowing customers who want, for example, 30 different sizes, to be able to ship them in one container.
But this broad product and size range also presents the company with one of its biggest challenges, adding new lines and SKUs while maintaining quality.
BKT is owned by Siyaram-Poddar Group, which was founded by Poddar's late father and his uncle, Dharaprasad Poddar, who serves as chairman of the group.
While tyres represent the biggest segment of the company, Siyaram-Poddar also is a leading producer of textiles, paper packing materials, chemicals and real estate. Arvind Poddar said group sales are expected to reach $1.6 billion to $1.8 billion by 2014.
Looking at the market for farm and OTR tyres, Poddar said he is confident the ag market will continue to grow continuously. â€œAs far as the ag market, I don't see any demand coming down,â€ he said.
In OTR tyres, he sees all mineral prices going up and, as a result no decline in demand â€œand the market will grow,â€ he said.
From Tire Business (A Crain publication)