K. Giriprakash

Bangalore, Nov. 8

TOYOTA is likely to set up its next plant by the side of its existing factory near Bangalore.

A car plant outside Karnataka may come up only in 2015. Sources close to Toyota Kirloskar Motor told Business Line that the top brass of the company's subsidiary in India feel that it would be more beneficial to locate the second plant near the existing plant in Bidadi rather than setting it up elsewhere.

The top officials are understood to have taken the view that the current situation in North India is not conducive enough to locate the next plant there. The Toyota board is expected to meet shortly to take a decision on the new location, followed by a formal announcement, which is expected to be made either later this month or the next.

Toyota has already announced that it expects sales of around 2.5 lakh units by 2010 and 6 lakh units by 2015. Hence, to create capacity for 6 lakh and to expand further, a plant in North India would make logistical sense in the future, the sources said.

The Karnataka Government has already cleared Toyota's proposal to set up a plant worth Rs 1,147 crore near the existing plant. It will have a capacity to produce 1.5 lakh compact cars and create around 2,600 jobs.

Toyota's existing plant has used only around 100 acres on a 432-acre property. Hence, the new plant, which requires not more than 150 acres, can easily be set up in the available land.

The sources said Toyota's management has been under pressure from the governments in Haryana, Rajasthan and Tamil Nadu to set up the next plant in their States. Several incentives have also been offered to lure the auto giant to the new location. However, Toyota officials are understood to have taken into consideration several issues ranging from the political climate to the law and order situation in these States.

In the case of Karnataka, Toyota officials had feared that the recent agitation by the factory workers could escalate further and there was a possibility of the workers roping in one of the trade unions to strengthen their union. Now that the workers' agitation has been amicably settled and the Karnataka Government has assured that it will try its best to provide a good industrial climate, the company seems to have decided in favour of setting up the next plant in Karnataka itself.

(This article was published in the Business Line print edition dated November 9, 2005)
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