The Hindu Business Line : `We have tapped machine tool industry's potential'

THE Rs 230-crore Toyota Kirloskar Auto Parts (TKAP) factory, which will supply manual transmission parts to the IMV project of Toyota Motor Corporation, will be formally inaugurated on Tuesday. TKAP is the first Indian company to join the exclusive club of Tier 1 auto component suppliers of Toyota. These high-technology transmissions (a very critical part of the automobile after the engine) are being done in India for the first time in a complete manner, meeting global specifications.

The Toyota Kirloskar Auto Parts Vice-Chairman, Mr Vikram Kirloskar, in an interview with Business Line talks about the future plans of the project and how it will change the face of the Indian auto component industry.

How much of revenues do you expect during the first year of operations and how many units do you plan to export? What is the roadmap for the Toyota-Kirloskar Auto parts during the next five years?

The transmissions project is a big step not only for us but also for the country's future in auto components' industry. This is the first time a company in India would be supplying full boxes. This project has also brought benefits other than the export earnings. There has been growth in the positions of team members, some of them started off as operators and thanks to this project they have grown to occupy the position of team leaders and even group leaders.

Being a Tier I supplier is a great responsibility as one is not only responsible for what one produces but also for the quality of other suppliers as well. Producing at full volume at the current level will help TKAP secure a place among the top three auto component manufacturers in the country. We plan on reaching full capacity in 2005-06. It would be difficult to peg down export turnover figures as we are still in the process of finalising our prices. As far as units go, we plan to export 1,60,000 units this year.

What are the other components apart from manual auto transmission parts that you plan to export to Toyota? How do you think it will impact the Indian auto component industry?

Apart from transmissions we do not plan to export any other components to Toyota as of now. The project marks the emergence of the country as a major global hub for sourcing of auto component.

Nearly 40 per cent of the machinery installed at the transmission plant is of Indian make. TKAP has tapped the full potential of the domestic machine tool industry in the country instead of importing capital machinery. There is also a high level of dependence on local suppliers with localisation of up to 70 per cent of product cost.

How many Tier 2 and 3 suppliers are involved in the project as far as India is concerned. On what basis do you select these suppliers? There are 13 Tier II suppliers and 45 Tier III suppliers involved in this project. We work closely with our suppliers. Based on continuous interaction, we finetune our strategies as we move along.

As the project is new and participating suppliers, as far as the IMV project is concerned, are likely to need to acquire specialist skills and technical ability. What has Toyota-Kirloskar done in this regard?

Like all other manufactures we have a normal selection process based on QCD (quality, cost and delivery). We usually look at the supplier capability and his ability to supply our requirements on time and of course price is an important factor. Of the 13 Tier II suppliers who supply to us, 11 have existing business in India. Two export-oriented units were set up especially for the transmissions project. They are KTTM (Kirloskar Toyoda Textile Machinery Ltd), which supplies dye casts and small parts, and OPPI (Owari Prescion Products India), which supplies synchro rings. While KTTM is a Toyota company, OPPI is a Japanese company, which supplies to Toyota Motor Corporation, Japan.

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