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N. Ramakrishnan

Chennai, Aug. 15 The two leading Japanese car-makers — Honda and Toyota — saw the fortunes of their Indian operations dip in 2008-09, with Honda Siel Cars India Ltd reporting a loss for the year, while Toyota Kirloskar Motor Pvt Ltd saw its profit fall 41 per cent.

The vehicle sales of the two companies fell, resulting in a drop in income.

Both the companies have said in their annual reports that their operations were affected by the general economic slowdown, rising input costs and the weakening rupee.

Last year, Honda Siel sold two sedan models — the mid-size City and the luxury Accord — and the SUV CR-V.

Toyota sold the Corolla sedan, the Camry luxury car, the Innova multi-purpose vehicle, and the Prado SUV.

This financial year, Honda has launched its premium hatchback Jazz, while Toyota has introduced the premium SUV Land Cruiser and plans to launch its small car towards the end of 2010.

According to the Honda Siel Cars’ 2008-09 annual report, the company postponed its plans to increase capacity through a new plant in the Tapukara industrial area in Rajasthan.

However, it began operations of its press (body) parts facility with an installed capacity of 1.70 lakh car sets a year and the powertrain facility, both at Tapukara, as scheduled in 2008-09.

The production at the Greater Noida plant in Uttar Pradesh was scaled down to maintain lean operations.

“As a consequence of the lower demand, rising input costs, especially due to weakening of the Indian rupee, and restricted ability to pass on higher costs to the market, the company’s financial results from operations, for the year 2008-09, were impacted,” the annual report said.

The company said it was taking several steps, including increasing the local content levels in its cars, to mitigate the risk of currency fluctuations.

“These will stand the company in good stead for the next upturn.”

Honda Siel spent Rs 635 crore during the year on capital works, including land, building, plant and machinery, equipment for the Rajasthan plant.

Capital works-in-progress as on March 31, 2009, were Rs 416 crore.

The company invested Rs 37 crore in picking up stakes in three suppliers — Rajasthan Prime Steel Processing Centre Pvt Ltd (19 per cent stake), Global Auto Parts Alliance India Pvt Ltd (20 per cent) and Bestex MM India Pvt Ltd (6.7 per cent) — that have set up facilities adjacent to the Honda Siel plant at Tapukara.

According to the annual report, Honda Siel paid a royalty of Rs 156 crore (previous year Rs 181 crore) and a technical guidance fee of Rs 34 crore (Rs 23 crore) to Honda Motor Company, Japan.

Honda Motor Company has a 99 per cent stake in Honda Siel Cars and Shriram Industrial Enterprises Ltd the balance.

Toyota Kirloskar Motor, in which Toyota Motor Corporation of Japan holds an 89 per cent stake and the Kirloskar group the balance, paid a dividend of Rs 30 crore for the year, and a royalty of Rs 72 crore to the Japanese company.

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