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Ambarish Mukherjee

NEW DELHI, May 6

TOYOTA Kirloskar Auto Parts Private Ltd (TKAPPL) has filed an application with the Foreign Investment Promotion Board (FIPB) seeking permission for setting up a 100 per cent export-oriented unit (EoU) near Bangalore at an estimated investment of Rs 230 crore for manufacture of automotive parts and transmissions for the global market.

To be set up as a joint venture unit with three partners, namely Toyota Motor Corporation (TMC), Toyota Industries Corporation (TICO) and Kirloskar Systems Ltd (KSL), TKAPPL proposes to manufacture 1,68,000 units of R-type manual transmissions per annum for new multi-purpose vehicles to be introduced in the global market in 2004.

For this, Kirloskar Systems Ltd, has incorporated TKAPPL on April 10 this year, following a memorandum of understanding signed by Toyota Motor Corporation, Toyota Industries Corporation and Kirloskar Systems on April 2.

TKAPPL has been incorporated with a paid-up capital of Rs 10 lakh divided into one lakh shares of Rs 10 each.

As laid down in the MoU, Kirloskar Systems will transfer its auto parts unit to TKAPPL on or before July 1. Following this, the issued share capital of the company will be Rs 135 crore comprising 1,35,000,000 equity shares of Rs 10 each held by Kirloskar Systems, according to company sources. After transfer of Kirloskar System's auto part unit to TKAPPL, the foreign partners will acquire 75 per cent stake in the new company. TMC and TICO will acquire 72,000,000 shares (53.33 per cent) and 29,250,000 (21.67 per cent) shares respectively of TKAPPL held by KSL.

In the final stage, in order to bring down resident holding to 10 per cent, it has been decided among the three partners that Toyota Industries Corporation and Toyota Motor Corporation shall subscribe to the additional equity shares to be issued from time to time by TKAPPL in proportion to their then respective shareholdings in the new company until the shareholding ratio of Kirloskar Systems, Toyota Industries Corporation and Toyota Motor Corporation becomes 10 per cent, 26 per cent and 64 per cent respectively.

Toyota already has a strong presence in India through its two joint ventures with the Kirloskar group. Toyota Kirloskar Motor Ltd (TKML) launched its multi-utility vehicle Qualis in January 2000. Another joint venture, Kirloskar Toyota Textile Machinery Ltd (KTTML), is engaged in the sector of textile machineries.

KTTML will also set up an EoU as a joint venture with Toyota Industries Corporation with an estimated investment of Rs 130 crore at Jigani near Bangalore which will supply transmission parts such as aluminium pressure die casting items and sell it to TKAPPL, which again will sell it to the global market through TKML.

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