The Hindu Business Line : Indian compact car project only one to be retained

Bangalore, Dec. 23 With Toyota Motor Corporation announcing that it will post losses for the first time in over 70 years, the Indian compact car project will be the only big ticket global project of the car maker that has been allowed to be retained.

Sources close to the company told Business Line that the Rs 3,200-crore project, which is being set up near Bangalore, might, however, witness a few changes as the passenger car maker is considering the possibility of either deferring plans to recruit a fresh workforce or recruit a lesser number for the new plant.

But it will not lay off any of the 2,800-3,000 employees who are currently working for Toyota-Kirloskar Motor (TKM) Company, a joint venture between Toyota Motor Corporation and the Kirloskar Group.

Sources said Toyota Motor Corporation maintains that India and China, among the BRIC nations, will continue to experience growth in spite of a global slowdown. Hence, it was important not to scrap the India compact car project, sources pointed out.

Deferring recruitment

The thinking behind the move to defer further recruitment is that with the existing production slowing down, the current workforce would be enough to take on additional work for some more time. TKM has already announced that it will reduce production of its existing models 30 per cent during this month. The company might, however, start recruitments for the new project one year later.

The investment on constructing the new plant and the nearby ancillary units are also expected to come down significantly as the construction material costs have reduced during the last few months, sources said.

Out of the Rs 3,200 crore for investment, Rs 1,647 crore has been earmarked for buildings and basic equipment for the new plant. The new plant is expected to begin operations in 2010 with an initial annual production of around one lakh vehicles. The existing plant, which makes Corolla as well as Innova, has an annual production capacity of 60,000 units.

According to agencies, Toyota Motor Corporation has forecast that it will post a loss of $1.7 billion in the year through March, while its vehicle sales are expected to reduce 8.5 per cent to 7.54 million for the same period.

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