Founded in 1880, with its headquarters in Belgium, Bekaert is a global company whose 27,000 employees worldwide together generated almost EUR 7 billion in combined revenue in 2022. Bekaert, the leading steel tire cord manufacturer in India, has played a vital role in this radialization for the tire industry and has maintained the number 1 position for 25 years. Bekaert applies its expertise beyond steel to create new solutions with innovative materials and services for markets including new mobility, low-carbon construction, and green energy. The company has been focused on the mantra of perform, transform, and grow. Recently, Bekaert has decided to invest INR 500 crores for tire cord capacity, which will help them fulfill more than 50 percent of the Indian market needs. In a recent interaction with Wire & Cable India, Mr. Srikanth Chakravarthy, Vice President and Managing Director, Bekaert Industries, shared his insights about the company’s history, product portfolio, USP, etc. He also shared investment plans for the expansion of the facility, their robust performance in Q1 FY23, and also challenges faced by the company in recent times.
Wire & Cable India: Could you provide a brief overview of Bekaert’s history and major achievements?
Srikanth Chakravarthy: Bekaert was founded in 1880 in Belgium by Leo Leander Bekaert. The company started manufacturing barbed wires for fencing purposes and went on to develop many other types of steel wires and solutions and expand globally. Now, 140 years since birth, we are known as an innovator, quality benchmark, and market leader in most of the segments we operate in. Bekaert’s ambition is to be the leading partner for shaping the way we live and move and to always do this in a way that is safe, smart, and sustainable. As a global market and technology leader in the material science of steel wire transformation and coating technologies, Bekaert also applies its expertise beyond steel to create new solutions with innovative materials and services for markets including new mobility, low-carbon construction, and green energy. Bekaert (Euronext Brussels, BEKB) is a global company whose 27,000 employees worldwide together generated almost EUR 7 billion in combined revenue in 2022.
In India, Bekaert started in 1998 with its first office in Pune, and then a factory to produce steel tire cords. India had a truck and bus radialization degree of only 5 percent then. Ever since the Indian market has grown organically, it has also evolved in terms of technology, and steel radial tires are now used in 55 percent of trucks and buses. This is due to good roads, improved vehicles, and better infrastructure over the years. Bekaert has played a vital role in this radialization and has maintained the number 1 position for 25 years- thanks to the patronage of our valued tire customers and business partners. We demonstrated commitment to Make in India much before it became a national policy.
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WCI: Kindly shed some light on the product portfolio. What is the USP of your company?
SC: Over the years, Bekaert has expanded In India with solutions for the agri segment, automotive, construction, energy, and services for our global business as well. Our main product in India is steel cord for tire reinforcement which is used in all kinds of applications from 2-wheelers to passenger cars, light trucks, SUVs, trucks, and buses, and also off-road tires used in mining applications for instance. We provide the latest solutions in each of these applications along with the best quality available in the world with the shortest lead time as we are the only local manufacturer for these today in India. Additionally, we make wires for hose applications – both braided and spiral (to some extent) and import the bigger diameters for spiral as required from our other sister plants. With this, we address both the domestic and international market needs as our customers make hoses both for India and export. Our SWS division makes and trades in multiple wire solutions such as spring wires for 2-wheelers and garage doors, barbed wire and fixed-knot products for fencing solutions, bezinal-coated wire that offers corrosion resistance for poultry and vineyard applications.
Apart from hose wire, our specialty business division offers solutions for car glass manufacturing, defence applications where we proudly work with the Indian Airforce and other automotive players. We also have various solutions for the construction industry through steel fibres that reinforce concrete and are widely used both in underground as well as over-ground applications. Our ropes division sources and offers ropes for various applications including window regulator ropes, conveyor belt cords, elevator cables, etc.
We are proud to be a truly global powerhouse that allows us to leverage global R&D capabilities and footprint, combined with local proximity. Bekaert’s USP has always been about creating the highest value for its customers by providing innovative, high-quality solutions that fulfill both their current and future requirements. This requires very high levels of customer intimacy and collaboration and by being close to our customers more than most of our competitors, we are able to understand their needs better and develop targeted solutions for our various end markets and specific regions
WCI: Despite facing a challenging market environment, the group has delivered robust financial results in Q1 FY2023. What strategy was used to deliver such performance?
SC: Bekaert has been focused on the mantra of perform, transform, and grow. This has allowed us to put the necessary focus on the current opportunities, change with the times and as per the need of the hour, grow by having a clear focus on the future – of not only us but also our customers and their markets. In that spirit, we proactively addressed weaker conditions in many of our end markets. Despite lower volumes, our core businesses continue to benefit from the successful execution of Bekaert’s strategy, alongside swift actions to maintain pricing discipline and cost efficiencies. Bekaert also continues its global strategic effort of re-positioning the business towards higher margins, higher growth, and less commoditized sectors and focusing on growth markets, innovation, and sustainability. Our values of trust, integrity, agility, and boldness have helped the teams greatly to rise up to the challenges and deliver results. We have to work hard every day to earn the right to be the preferred partner to our customers.
WCI: Bekaert Industries recently announced an investment of INR 500 crore to expand their plant capacity by 50 percent. Please elaborate on your capacity expansion plans.
SC: Bekaert is the only steel tire cord manufacturer in India. This is a high-tech product and requires significant capital. To do so requires a company to make a long-term commitment to the market and this is what we have been doing all these years. Thus the management of Bekaert, true to its strategic intent for India, has decided to invest INR 500 crores for tire cord capacity, which will help us fulfill more than 50 percent of the Indian market needs. In addition to the finished product, we will also be further expanding with another brass plating line in the spirit of Make in India, which increases the flexibility, robustness, and sustainability of our global supply chain.
WCI: What are the key drivers of this investment? What is the expected timeline for the completion of the expansion?
SC: The next decade belongs to India and we get a lot of requests from our customers to expand for the growth that they are expecting. There is a need to reduce dependency on imports as well to ensure business sustainability. So the combination of increased radialization, growth in both domestic tire demand as well as export demand, and the need to reduce dependency on imports by our customers is driving this investment. We just did the groundbreaking and will have the first phase ready by mid-next year, while the final phase will be completed by March 2025. We are convinced that speed is key in enabling our customers to realize the potential of the Indian tire market.
WCI: How do you see your investment yielding results in the long run? What other recent developments have you invested in?
SC: Indian customers are value-focused. They produce very high-quality products, deliver very high service levels, and invest in innovation. We need to keep pace with them and through this investment, we will be offering them the required value better than anyone else. We focus on innovation – new solutions in anticipation of future requirements. Now we are looking to achieve the difficult triangle of performance, sustainability, and cost efficiency.
We are working closely with our suppliers and customers to find success with these challenges and we are confident that we can be their partner of choice, leveraging our longstanding experience and deep expertise in tire reinforcement.
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WCI: What are the challenges that Bekaert faces in India? How do you plan to address the challenges?
SC: Compared to some of our competitors’ production locations, India is not a cheap country to manufacture. Energy costs are high, labor inflation is quite high and the availability of good quality wire rods remains a challenge because we are the only ones needing these grades and quality. However, we are working on multiple ways to improve our cost position. For instance investing in green energy, energy-efficient machines, new process routings, etc helps us reduce consumption of units and therefore addresses to some extent the inflationary costs. We are working through strategic partnerships with some of the steel mills to develop the right qualities and they are making a tremendous effort for us too.
WCI: What are the vision and mission of Bekaert Industries for the coming years?
SC: Bekaert has recently launched a new chapter with a new ambition to “Be the leading partner for shaping the way we live and move”, accompanied by a new visual identity to better represent what Bekaert stands for. Our strategy is to continue to strengthen and optimize our core in steel wire applications, and we will pioneer creativity beyond steel into new materials, new markets, services, and solutions. We pursue select beyond markets with a focus on enabling the energy transition for instance through our hydrogen activity, helping to decarbonize construction, and providing advanced components for new mobility. We unite our heritage with a new boldness to dare to go beyond and continue to find solutions for the world’s global challenges, which we have anchored in our new purpose of establishing the new possible. What remains unchanged is that we will do this the Bekaert way – safe, smart, sustainable – and based on our core belief that we are always better together – including suppliers, partners, and customers.
