The Hindu Business Line : Toyota to invest Rs 600 cr in new car project

A top Toyota Kirloskar official told Business Line that the investment would go towards product expansion. The investment is apart from the expenditure towards capacity expansion from 45,000 units to 60,000 units per year. The car manufacturer had last December announced that it was investing around Rs 130 crore towards expansion of the capacity in its plant near Bangalore.

Last week, agency reports quoting Toyota worldwide President, Mr Fujio Cho, said that the world's second largest car maker, Toyota and its mini-vehicle unit Daihatsu would consider jointly developing a high-performance small car in emerging markets such as India.

The Toyota-Kirloskar official said the new investments would be funded through internal accruals, which includes incentives from the Government in the form of tax deferrals, reserves and profits over the last two fiscals. He said there would be no change in the equity pattern because of fresh infusion of funds as it was through internal accruals.

The official said Toyota-Kirloskar posted a turnover of around Rs 2,700 crore during 2003-04, which is expected to go up by around 10 per cent during the current fiscal. He said the company was totally debt-free and was making profits for the last two years. He also said the company planned to increase its work force by around 5 per cent every year till 2010. The company currently has around 2,400 employees.

Last fiscal, the company invested around Rs 80 crore for vehicle upgrades and other activities. The official said that as per Toyota's long-term plan for India, the company had set a target of around 10 per cent of the total market share in India by 2010 - which is around two lakh units. He said the company had been able to make profits largely because of extremely good sales , innovative manufacturing practices like `just-in-time' and strong financial discipline. The savings from these exercises will be ploughed back for further investments.

The official said the company would be able to recover past losses over a period of the next two years. He said automobile companies in India worked on extremely thin margins of two per cent to three per cent. Hence, it was necessary to run a tight ship to post profits.

Toyota has invested around Rs 700 crore so far since it started operations in 1999 and around Rs 250 crore in ancillary industries like Toyota-Kirloskar Auto Parts.

Toyota manufactures the multi-purpose Qualis and Corolla and imports Camry as a completely built unit.