Pushing the Frontiers

BKT to invest $100 million for setting up a greenfield tire plant in USA through a wholly owned subsidiary to be set up.

Balkrishna Industries (BKT) is the market leader given the augmenting sales and volume growth in the mining tyres segment. The segment shows robust growth potential given the company’s new product launches and network expansions through tie-ups with mining service providers.

The Board of Directors of the company firmed a capital expenditure (capex plan) of up to $100 million for setting up a greenfield tire plant in USA through a wholly owned subsidiary to be set up. The company shall also incur capex of up to over Rs 1,000 crore for its local operations. The entire capex will be completed within a period of 30 months and is in addition to the current capex underway for the Carbon
Black Plant.

Moreover, the USA capex, sales volume has been around 30,000 MT in Americas and increased traction in sales volume is expected over the next few years and a local plant would accelerate growth prospects. The Board of Directors have therefore approved setting up of a greenfield project with a capacity of 20,000 MT p.a. through a wholly owned subsidiary to be set up. The capital outlay will be up to $100 million. The USA project will be funded via investments from the parent company and local debt.

With regard to Waluj, a greenfield project will be setup on a freehold land of 22 acres owned by the company which is within the 5-km radius of the current location. The capex for setting up the new state-of-the-art facilities will be approximately Rs 500 crore including a co-generation plant and in-house warehousing facilities for raw materials and finished goods. The new facilities will bring operational efficiencies compared to the existing plant leading to a recurring saving in operation. The existing plant will continue to operate till the new plant becomes operational. There would be no change in the capacity.

Moving on to Bhuj, the Board of Directors have approved a capex of up to Rs 500 crore towards setting up a new line of 5,000 MT p.a. considering the overall demand in the higher diameter segment, for layers of All Steel Radial OTR Tires and additional mixing line in Bhuj.

The entire capex of Rs 1,700 crore would be funded via a mix of debt and internal accruals.

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