Financial Daily from THE HINDU group of publications
Saturday, Mar 23, 2002
Financial Daily from THE HINDU group of publications Saturday, Mar 23, 2002 |
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Corporate
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Announcements Toyota-Kirloskars equation unlikely to be disturbed Janaki Murali
NO HICCUPS? Workers at the Toyota factory in Bangalore.
BANGALORE, March 22 TOYOTA Motor Corporation's plans to increase its equity stake in Toyota Kirloskar Motors from 88.88 per cent to 99 per cent with foreign direct investment of Rs 106.5 crore will mean that the Kirloskar group will now have only one per cent stake in TKM. However, sources say that this will not mean that any of the Kirloskar appointees will be eased out. For instance, Mr K.K. Swamy, Deputy Managing Director of the company, who is number two in the organisation, will not be disturbed. "The status quo will continue, we will continue to have the same relationship with Kirloskar Systems. They have a buyback option till 2004, so till then, the spirit of partnership will continue with the Kirloskars, '' sources said. There will be no name change and no change in the equation on the board, according to these sources. "From the beginning, when the Kirloskars had 26 per cent equity to now when they will have only one per cent equity, the nature of the joint venture has remained the same, as this relationship is not based on equity,'' said these sources. That the Japanese company wants to continue the cordial relationship it has enjoyed with the Kirloskar business group is evident with the new business it is planning to set up in Karnataka with the Kirloskars in the area of auto components. A fortnight ago, the Japanese company got clearance from the Karnataka Government to set up Rs 480-crore project for automotive transmission systems for the export market. The plant will export all its products to Toyota group companies outside the country. Meanwhile, the company has also announced that it will invest $500-700 million during 2004 in the second phase and another $400 million during 2007. The Japanese company has till date invested Rs 1,200 crore in the country. Toyota expects to begin trial production in the new unit by December 2003 and commercial production by June 2004. The automotive transmission systems will be exported to various Toyota units located in Argentina, Venezuela, South Africa, Thailand, Malaysia, Indonesia and Taiwan. The company had been exploring the possibility of the export market for components from India and had undertaken a redesign and reengineering process at the TKM facility a few months ago. With this, the company had postponed its plans to bring its second vehicle until these plans became clearer. This was despite a feasibility study, which had been undertaken to gather information as to which passenger vehicle would suit the Indian market. Whether this would be in the 1500 cc range or a compact car, India-specific car, mid-size car, or import of a CBU (completely-built unit) from Japan, the company kept industry watchers guessing. Sources also said that the striking employees at the TKM facility had all gone back to work and the labour situation had normalised at the factory. The strike was declared illegal by the State Government around three weeks ago. Toyota has 4,030 acres in its possession and produces the Qualis, with a current capacity of 33,000 units per year.
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