Bridgestone's Chakan plant to drive growth

Bridgestone India’s new Chakan plant near Pune is slated to go on stream in January 2013. The tyre major had earlier announced its plan to invest Rs 2,600 crore in a new facility for passenger car, and truck and bus radials (TBRs) to meet rising demand for radial tyres. Capacity constraints at the existing Indore plant that predominantly produces 15,000 car radials daily had necessitated the setting up of the new factory at Chakan. TBRs account for a miniscule 300-400 radials per day at Indore.

The Chakan plant will initially produce about 10,000 car radials per day, with TBRs to be launched in September. Estimated TBR production will be around 3,000 units per day. Some of the key customers for TBRs will be Mahindra Navistar, M&M and Tata Motors, whose plants are located in the vicinity in Maharashtra.

H Tanigawa, managing director, Bridgestone India, says that currently the company has no plans for a third plant in India. Depending on the market situation and the location where vehicle manufacturers are setting up manufacturing facilities, it will explore that option.

For the moment though, Bridgestone has its eyes focused on the growth potential in the passenger car segment with over two million cars in the Indian market, which is boosting demand for new radials as the segment is almost 100 percent radialised.

Radialisation in TBRs is yet to really take off and is pegged to be between 10-20 percent. Tanigawa foresees radialisation in TBRs inching towards 50 percent in 10 years as the Indian customer understands the benefits of radials in vehicles in terms of fuel savings and increased mileage.

“We will have to expand our production capacity accordingly to cater to this increase in radial tyres. We have aggressive plans of growth in India as we think the Indian market will grow very fast,” he adds.

At present, Maruti Suzuki and Hyundai Motor India are among the key customers for car radials, though Bridgestone caters to most carmakers. Maruti has already announced plans to expand its production capacity to two million units with a new plant in Gujarat. And, with almost every carmaker nursing aggressive growth plans in India, the opportunities for tyre makers are also high.

Bridgestone has an around 27 percent share in passenger car radials in the replacement market and 25-30 percent overall in the car segment. It is targeting a share of around 35 percent, depending on the growth in the car market, and as it expands its market activity and capacity within five years. However, it is still a marginal player in TBRs with the bulk of the TBRs imported from Japan and Thailand from where it also imports some passenger radials to cater to the requirements of the replacement market. With the auto market experiencing a slowdown this year, there had been talk of an oversupply of tyres but Bridgestone is optimistic that demand will pep up soon, putting an end to the oversupply situation.

The replacement market for car radials is currently pegged at around 10 lakh per month while in the TBR segment, bias tyres predominate. The company procures most of its natural rubber for tyres locally while other raw materials like synthetic rubber are imported. Natural rubber prices are believed to have risen 30 percent in recent times while imports have been affected by the volatility of the dollar versus the rupee.

On the expansion front, Bridgestone India recently inaugurated its Select Super Concept Store in Delhi to revolutionise the tyre buying experience for the customer with a focus on safety, reliability and eco-friendliness. The company plans to raise the number of these concept stores from the existing 19 to 40 by end of 2013. Similarly, there are plans to increase the number of exclusive showrooms from the current 275 outlets to 315 by 2013.

SHOBHA MATHUR