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Toyota-Kirloskar all set to sign MoU for 10-seater

Toyota Kirloskar Motors Pvt Ltd is all set to ink the memorandum of understanding with the directorate general of foreign trade by July-end for launching its much-awaited ten-seater multi-purpose vehicle.

Toyota has already communicated its decision in this regard to the DGFT.

The draft has been prepared and the MoU would be signed by the month-end, sources in the DGFT said today.

The first vehicle under the venture is based on the Kijang multi-purpose vehicle, which Toyota is currently producing in Indonesia. The vehicle would be rolled on to the Indian roads in January 2000.

As per the revised guidelines of the Indian automobile policy, the government has decided to maintain the indigenisation levels at 50 per cent and 70 per cent for three and five years respectively but altered the formula for calculating the levels. Hitherto, even ten per cent import content in a component used to be calculated as imports. But now, the government has decided that imports up to 50 per cent by vendors for making components would be considered as local content.

Besides, once the car company reaches the prescribed limit of indigenisation, it would move out of the purview of the MoU and was free to import and export components as well. Prior to Toyota-Kirloskar, a host of car companies, including Fiat India, Ind Auto, Daewoo Motors and Honda Siel have already signed the MoU.

TKMPL was floated as a 74-26 joint venture between Toyota Motor Corporation of Japan and the Bangalore-based Kirloskar group. But recently, TMC was permitted by the Foreign Investment Promotion Board to hike its holding from 74 per cent to 87 per cent in the joint venture company. The Japanese car maker would be bringing in Rs 740 million for the purpose. Effectively, Toyota's capital in the venture would go up from Rs 4.48 billion to Rs 5.22 billion. However, the Kirloskar group has the option to buy-back the stake by December 2004.

Of the total proposed paid-up equity of Rs 6 billion for the venture, both the partners have till date capitalised only Rs 4.63 billion. With Kirloskar expressing its inability to bring in fresh funds into the venture, Toyota has agreed to pump in the required amount so as to roll out the car by 1999-end, as scheduled.

Toyota has an FIPB approval to set up a 170 million dollar joint venture to manufacture a multi-utility vehicle for India. Besides, the company is also exploring the feasibility of rolling out a small car into the market. Senior Toyota officials, during their recent visit to India, had stated that their small car, which is likely to zip down the city streets by 2002, will take on the might of Telco's Indica, both in price and size. ''We are currently finalising the design and engine details of the model. It will be a small car made specially for India to suit the driving conditions here. It is likely to be priced in the range of Tata Indica,'' the officials had said.

The finer details of the car are being worked out at present. It would be the company's second offering after the multi-utility vehicle. The company is studying a whole lot of vehicles from its stables and from the line-up of sister concerns like Daihatsu for the small car. Mira, an 800cc car from Daihatsu stables is being considered as one of the probables for the Indian market. The assembly plant for the MUV has been set up in Bangalore and the company is also in the process of setting up an ancillary park close to the facility. This is part of the company's efforts to achieve 70 per cent localisation during start-up of the production. The MUV will sport a diesel heart, details of which are being worked on at the moment. The company has already invested close to 170 million dollars in the project for introducing the first model, which will be the key to success in India.

UNI

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