Balkrishna Industries, a prominent player in the off-highway tyre (OHT) sector, is investing Rs 1,300 crore in expanding its production capacity. This expansion, scheduled from FY24 to FY26, will be carried out in phases at the company’s Bhuj plant in Gujarat. The plan includes adding 35,000 Metric Tons Per Annum (MTPA) of OHT capacity through a brownfield expansion, as the existing facilities are operating at full capacity with an achievable output of 360,000 MTPA.
Rajiv Poddar, Joint Managing Director of Balkrishna Industries, highlighted the strong market demand and success of their OTR/OHT products as the driving force behind this investment. The new capacity will mainly cater to the mining sector. Currently, the Bhuj plant has a capacity of approximately 195,000 metric tons, with potential for an additional 100,000–150,000 tons through further expansions.
In 2022, the company invested Rs 800 crore in a brownfield expansion that increased production by 50,000 MTPA. This latest capital expenditure, though higher for a smaller volume increase, is due to the need for more advanced moulds. The new capacity is expected to be operational by the first half of the fiscal year and could generate a revenue of Rs 300 crore–Rs 350 crore, with improved operating margins.
Balkrishna Industries, which currently holds a 6-7% share in the $15 billion global specialty tyre market, aims to capture 10% of the global off-highway market within the next four to five years. This expansion aligns with their medium-term goals, and the company has also planned an additional Rs 600 crore–Rs 700 crore in maintenance and growth capex for FY25, with Rs 200 crore already spent in the first quarter of FY24.
Over the past three years, the company has invested over Rs 44,000 crore in expanding its tyre and carbon black capacities, as well as in modernization and automation. The recent financial report indicates a 47.6% year-on-year increase in net profit, with revenues rising by 25.7%.
Despite facing raw material cost inflation and rising freight costs, BKT expects moderate volume growth and stable EBITDA margins in FY25. The company is optimistic about its ability to maintain its market share and drive future growth with the new capacity additions.
