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Karnataka CM urges Toyota to expand Indian operations

Karnataka Chief Minister S M Krishna yesterday urged the Toyota Motor Corporation's honorary chairman Shoichiro Toyoda to advance the construction of the second phase of their plant at Bidadi.

Krishna who formally inaugurated the first phase of the plant constructed at a cost of Rs 7 billion said the project's first phase was already in place and the production of the Qualis van had started. The demand had also picked up considerably, and hence the management should go ahead with the second phase and expand their operations. He promised to extend all the help for the project.

Later talking to newsmen, Toyoda said the second phase was scheduled to start in 2003 with an additional investment of $ 500-700 million. The first phase was commissioned at a record time of 18 months.

To a question about the company's Indian partner, the Kirloskar group, withdrawing 15 per cent of its stake Sachio Yamazaki, Toyota Kirloskar Motor managing director, said during initial stages it was agreed by Toyota to hold 74 per cent and the balance by the local partner.

However, Toyota increased its capital equivalent of 89 per cent to meet the financial requirements. As the Kirloskars were not able to raise their stake the equity component was reduced presently. He said the Kirloskars would buy back their divested 15 per cent before 2003 to regain their capital share to 26 per cent, he added.

Yamazaki said the automobile market was expected to grow at the rate of 10 to 20 per cent in India and would touch one million vehicles during 2000. India stands 12th in world rankings and the current demand after the revival would push it up further.

To a question on cutting down the cost of Qualis in the near future, he said the price of the vehicle was kept low to gauge the market, while ruling out the possibility of any reduction in prices.

The company chairman said that the company had the capacity to produce 25,000 vehicles initially and with the full capacity it would be able to produce 50,000 vehicles.

He said 60 per cent of the components were now localised. A Toyota technology park has also been developed.

UNI

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