The Hindu Business Line : Toyota Kirloskar to invest Rs 2,600 cr in car project

Toyota Kirloskar Motor (TKM) will initially invest Rs 1,400 crore in its new compact car project and may bring in an additional investment of over Rs 1,200 crore during the next two years. The entire amount is expected to be funded from internal accruals.

The new compact car, being designed jointly by both Indian as well as Japanese engineers, is expected to hit the road during 2010. The foundation stone for the project was unveiled today by the Karnataka Chief Minister, Mr B.S. Yeddyurappa.

The additional funds are required for investments in robotics and for newer jigs. The existing plant uses less automation than most of the other Toyota plants in the world. Sources close to the joint venture told Business Line that TKM may not be very keen on equity infusion in case there is a shortfall and would rather go for short-term borrowings. TKM generated revenues of around Rs 3,600 crore during 2007-08, which was nearly 24 per cent more than the previous year.

TKM’s Vice-Chairman, Mr Vikram Kirloskar, said his company, Kirloskar Group will bring in its share of the funds if required. “Right now, the entire investment will be through internal accruals,” he said.

The Kirloskar Group currently has about 11 per cent stake in the joint venture and the rest is with Toyota Motor Corporation.

Other facilities

In another development, vendors are planning to invest about Rs 250 crore for the new car plant and most of them will base their factories close to the new facility. Auto parts’ companies such as Wheels India and Tata Johnson are learnt to be considering setting up their facilities near the new plant.

TKM may also look at producing engines from its other joint venture, Toyota Kirloskar Auto Parts once the production capacity increases to about two lakh cars a year.

The new plant is expected to generate 2,400 jobs and will have an annual production capacity of one lakh cars.

Mr Kirloskar said that the new plant will have a flexi-platform which will enable the company to produce different types of car models.

The joint venture is learnt to have requested the Karnataka Government to enable it to set up a rail link connecting it to the Bangalore-Mysore rail link so that it does not have to depend solely on road to transport its vehicles to other States.

The joint venture will first produce the sedan version of the new car and follow it up with a hatchback within six to eight months after the launch of the sedan. The diesel version of the car will have a bigger engine.

After the India launch, the same model is expected to be manufactured in Brazil, China and Russia. The Indian plant might also start exporting the new model to other countries.

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