Citizens’ Research Collective on SEZ

Mithun Roy

New Delhi, January 10, 2008: Balkrishna Industries (BIL), a leading tyre exporter, plans to set up a 75,000 tonnes per annum (tpa) plant in a Special Economic Zone in Gujarat with an investment of Rs 500 crore spread across three years from FY09.

B K Bansal, head-finance, Balkrishna Industries, said, “We are analysing 2-3 SEZs in Gujarat and are in talks for acquisition of land, though nothing has been finalised as yet.”

The company will spend Rs 140 crore to expand its total production capacity facility from the current 100,000 tpa to 129,000 tpa by March 2008.

It also plans to get its Chopanki facility registered as an export-oriented unit (EOU), making it eligible for excise and CST benefits. Approval of the registration will cut the company’s tax outgo by Rs 20 crore in FY09.

“Our Chopanki unit will be converted into an EOU, hopefully in next two weeks, which will give tax benefits,” Bansal said. BIL derives about 90% of its tyre revenues from exports, Bansal said. Europe accounts for 65% of its sales, followed by the US and Middle East.

BIL is also looking to gain share in the off highway-tyres and off-the-road (OTR) tyres segment. The company is among the top 10 global makers of off-highway automobile tyres. It is playing on its strengths of cheaper labour costs and in-house engineering capabilities.

BIL’s labour cost as a percentage of sales is 3%, significantly lower than big tyre companies, whose labour costs can go up to 30% of sales.

Source: DNA India