BKT budgets more than $200 million to upgrade, expand capacities in India

MUMBAI, India — Off-highway tire maker Balkrishna Industries Ltd. (BKT) is budgeting more than $200 million to upgrade and expand capacity for tires and carbon black at plants in India.

The Mumbai-based company disclosed the plans — affecting its plants in Bhuj and Waluj— in an investors presentation for the firm's fiscal 2019 second quarter, ended Sept. 30.

The investments in India are in addition to the $100 million BKT is committing to build a tire plant in the U.S. and include upstream component supply that will impact the U.S. investment.

The projects in India are:

• $72.5 million to replace a 30-year-old farm/industrial/OTR tire plant in Waluj, Maharashtra, with an expanded factory on a 22-acre greenfield site nearby. The plant's capacity will remain at roughly 30,000 metric tons per year but at a facility with its own co-generation power plant and warehousing. The current plant is size-restricted and operating at "sub-optimal" levels, BKT said.

• $72.5 million to add 5,000 metric tons of annual production capacity at the 5-year-old Bhuj, Gujarat, factory, in particular for larger sizes, along with a rubber mixing plant and additional warehousing. The investment includes the addition of building equipment for the larger-sized tires.

BKT said the increased mixing capacity also will be used to supply the U.S. plant when it comes on stream in 2021.

In 2015 at the plant's ceremonial opening, the company said it was preparing to add 51-inch OTR radials size and was evaluating market conditions to determine when to add capacity for 57-inch giant OTR radials.

•  A third investment, of $61.6 million, is designated for the construction of a carbon black plant on the grounds of the Bhuj factory complex in northwest India.

The new plant, rated at 140,000 metric tons a year at full capacity, will supply the new U.S. plant in addition to BKT's Indian facilities, BKT said. The plant will start producing in March 2019 at an annualized rate of 60,000 tons and ramp up to full capacity by March 2021.

For the quarter and six months ended Sept. 30, BKT reported double-digit increases in pre-tax operating profits and sales.

For the quarter, operating income was up 10.1 percent to $49 million on 18.3-percent higher sales of $205.3 million. For the six months, operating income was up 29.1 percent to $100 million on 24.3-percent higher sales of $414.6 million.