Balkrishna Industries Ltd, the manufacturer of specialty tyres, plans to set up its fourth plant in Bhuj, Gujarat, by the third quarter of fiscal 2013, which would raise its capacity by 73%.
Balkrishna Industries Ltd, the manufacturer of specialty tyres, plans to set up its fourth plant in Bhuj, Gujarat, by the third quarter of fiscal 2013, which would raise its capacity by 73%.
“It is a greenfield project, wherein we are planning to invest around Rs1,000-1,200 crore over the next two years,” said Arvind Poddar, vice-chairman and MD, Balkrishna Industries.
The company, whose about 90% of business comes from exports, is reviving expansion plans that were kept on hold due to recession.
“Originally, the plan was to buy land in an SEZ (special economic zone) in Gujarat. However, the plan did not materialise due to the downturn in global economy. Now we are going for a non-SEZ land, which was acquired during the current financial year,” said Poddar.
The company has acquired 300 acres for this project.
Balkrishna is looking at increasing capacity from 150,000 tonnes per annum (tpa) currently to 260,000 tpa through the Bhuj plant.
It intends to increase market share in India through the Bhuj facility.
“We are seeing a huge demand for specialty tyres in India. However, we are unable to meet the demand due to capacity constraint.”
Balkrishna would spend Rs200 crore in upgrading its existing facilities - one in Aurangabad and two in Rajasthan — by September 2011 to meet the growing demand of tyres.
The fundraising will be done through ECB route ($175 million) and balance from the internal accruals.
On input front, Poddar said, “We are majorly hit by the constant increasing rubber and metal prices. We have already hiked prices of our tyres twice during the current financial year. The next hike is slated sometime in November-January.”
“Rising raw material prices have increased pressure on our margins, which have reduced 7-10% over the previous year,” he said.
The company is estimating a growth of around 35% this fiscal as compared to the previous one.
Out of company’s total business, around 52% is contributed by western European market and 22% by North America.
Balkrishna’s products are also available in 120 countries.
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