Facing steep U.S. tariffs and softening European demand, BKT is doubling down on India’s domestic market and specialty materials to drive a 2.2x revenue leap by 2030.
03 Nov 2025 | 3463 Views | By Shahkar Abidi
Balkrishna Industries Ltd. (BKT), a major player in the global Off-Highway Tire (OHT) market, specializing in large tyres for agriculture, mining and construction vehicles is accelerating a major diversification strategy in response to severe trade headwinds that have undercut its core export sales. Amidst currently facing crippling tariffs in the ...
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Balkrishna Industries Ltd. (BKT), a major player in the global Off-Highway Tire (OHT) market, specializing in large tyres for agriculture, mining and construction vehicles is accelerating a major diversification strategy in response to severe trade headwinds that have undercut its core export sales. Amidst currently facing crippling tariffs in the critical U.S. market and easing situation in Europe, the company is sketching an ambitious plan to achieve a revenue of Rs 23,000 crores by 2030, requiring approximately a 2.2x increase from current levels.
"New growth capex for carbon black, rubber tracks and new category tyre: would be Rs. 3,500cr over next 3 years," the company informed in its investor presentation, helping the company capture 8% global market share in OHT segment. The strategy hinges on rapidly expanding domestic market share in India, venturing into new consumer tire verticals, and boosting its internal specialty material production, by building a stronger foundation during challenging times.
Established in 1987, Balkrishna Industries, is one of India’s foremost exporters in the Off-Highway tyre segment,with a solid presence across agriculture, construction, mining, and industrial applications. In terms of tyre manufacturing capacities, the company has an achievable output of 3,60,000 MTPA. For carbon black, Balkrishna Industries has an in-house achievable capacity of 2,00,000 MTPA, including 30,000 MTPA of high-value advanced carbon material. During FY25, the company reported a net profit of Rs 1,628 crore on the back of Rs 10,413 crore in revenue. The company has manufacturing bases in Waluj (Maharashtra), Bhiwadi and Chopanki (Rajasthan), Bhuj (Gujarat). Some of the leading customers it supplies to include CASE, John Deere, JCB, CAT, TAFE, among several others.
US Tariffs Force Strategic Retreat
BKT's challenges intensified dramatically during the second quarter of Fiscal Year 2026. The U.S., a vital market that accounted for approximately 10% of the company's sales volume last year, increased import duties on tyres from India to a steep 50%. This 50% tariff was already in effect during the latter part of Q2, the company informed in an analyst call on Saturday.
In light of this punitive duty, BKT is currently not selling to the US market and is not absorbing any part of the impact. This development contributed directly to the company’s recent performance figures: Q2 volume stood at 70,252 MT, representing a 4% degrowth year-on-year, with the first half showing a similar 4% volume degrowth.
While acknowledging the near-term volatility, management expressed cautious optimism based on political developments, noting that there is growing optimism regarding the early conclusion of a trade agreement between India and the U.S. which could ease the current tariff challenges. Should the tariff situation ease, BKT believes it is ready to quickly service the market, potentially capitalizing on pent-up demand.
From Global Headwinds to Local Tailwinds
Although the European market is currently facing headwinds and softening demand, the company is seeing signs that these challenges are beginning to ease out. The company's top leadership highlighted that BKT’s early entry into the Indian domestic market, a key element of its de-risking framework, is now paying significant dividends. The company’s domestic market share in the agricultural (agri) segment has grown to over 20%. The company is quite upbeat about the future prospects in India, seeing a huge opportunity across various private sectors.
New Verticals: Entering the Competitive Consumer Tyre Market
Seeking growth beyond its traditional agricultural and industrial segments, BKT is undertaking a significant push into new tyre verticals for the Indian market, particularly focusing on the consumer segment (often referred to in the industry as Passenger Car Radial or PCR, and Commercial Vehicle Radial. The initial focus is on the Indian replacement market for both the categories.
This is a highly competitive segment within the automotive industry, typically dominated by major global players. BKT, however, is setting an aggressive target: its long-term aspiration is to generate about Rs 5,000 crores in revenue from this new business by 2030. This is planned alongside a premium market positioning. "CV radial tyres pilot will launch in Q4FY26 and will ramp up gradually. PCR tyres pilot will follow in Q3FY27 and will ramp up gradually," the company said in its investor presentation.The midterm objective is to secure between 7% to 8% market share in this category. The new business will help in generating 20% revenue contribution by FY30, with a 5% market share.
Commenting on the development, Nuvama Research, stated that over the medium term, an increasing presence in the domestic TBR and PCR segments is likely to be challenging, considering the high competitive intensity with several established incumbent mass-market tyre companies. "Tyre companies in these segments have lower levels of profitability given EBITDA margins of less than 15% versus Balkrishna Industries’ current margin of 25%," Nuvama Research noted.
Expanding Specialty Materials: The Carbon Black Advantage
In a move to increase self-reliance and gain margins on specialty materials, BKT is also expanding its carbon black operations, another crucial element of its de-risking strategy. Carbon black is a material used as a reinforcing filler in tyres and rubber products.
Currently, carbon black sales represent less than 10% of BKT’s total turnover, although it accounts for about 55% of the total production intended for internal use. A ramp-up in specialty carbon black revenues is expected to begin in the next financial year.
To support these growth and diversification initiatives, BKT is continuing its aggressive capital expenditure (capex). The company spent approximately Rs 1,737 crores during the first half of the year and expects the year-end capex to total close to Rs 2,000 to Rs 2,200 crores. Management noted that these investments in infrastructure, plant machinery, and testing facilities are being made to ensure the company is ready to "jump and take use of the opportunity" once global volatility subsides
Regulatory Compliance and Outlook
BKT is also proactively managing emerging trade regulations, notably the European Union Deforestation Regulation (EUDR), set to take effect on January 1, 2026. The company has created an inventory of raw materials to comply with the regulation. While the cost implication of EUDR (primarily higher procurement costs for natural rubber) will be fully reflected in the next quarter (Q3), this impact is expected to be offset by some extent by the softening of other raw material prices, keeping the overall raw material cost impact stable or flat in the near term.