June was good for us; we faced some roadblocks in July due to lockdowns in containment zones: Vikram Kirloskar, Toyota Kirloskar Motor

Vikram Kirloskar, Vice Chairman, Toyota Kirloskar Motor Pvt. Ltd., talks about his experiences amid COVID crisis, business, demand, the outlook for FY21, Atmanirbhar Bharat, a global partnership between Toyota and Suzuki among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts: 

Q: Now, we are in the mid of this COVID crisis, we have seen the lockdown and slowly we are unlocking and there is a gradual increase in demand. What is your experience and how are you assessing the situation? By when do you think that demand will come back to its normal?

A: Lockdown started opening at the end of May and early June. Factories were opened towards the end of June, while production, dealership and sales were started in June. All of these were lying in the containment red zones due to we faced difficulties in starting them, earlier. June has been good but July was a bit difficult as the mini lockdown was imposed in several containment zones. In August, we are getting some orders and things are getting smooth, now. Enquiry position is 74% and order position is roughly 71% as compared to previous numbers. We are facing difficulties as a few of the team members who are suffering from COVID-19 are staying at home and fewer people are coming to work. We are also facing issues related to supply chain. So, it is not easy right now. It is not easy in the factory just like it is not easy at home. I feel, as we get frustrated and feel bored at times by sitting at homes and hope the same happens with the customers. We have to get over this and I think things will get better after the vaccine is out but we have to figure out how to manage through COVID to deal with the situation. 

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 Q: I would like to know about Toyota and the way you have lined up the business and what kind of activities can be seen in this fiscal? Also, update us about the launches that you planned for the year and are they coming on time?

A: Two, three launches were planned and minor changes will be made in it and they will be launched. They have been delayed a bit because there is a need to end the parts of the old models before they are changed. Everything is delayed when volume goes down as there is a need to take care of the supply chain and make sure that they don’t have inventories. Due to this, perhaps there will be some delays but I think that we will go ahead with our plans as we have to. Corporate Average Fuel efficiency (CAFE-I) is active now and CAFE-II will come in 2022-23 when many changes will be introduced to beat CAFE-III. This year there was a requirement for BSVI and everyone has changed things for which they had worked a lot. Now, they will have to work for CAFE-III, which is not so simple and will require model changes, weight-saving and there will be a need for fuel-efficiency. So I think, more launches will take place at that time.

Q: You are saying that supply concerns are there and supply chains are strained a bit yet and we are talking about the creation of an Atmanirbhar Bharat where the auto industry will have to play a major role. How are you seeing at it as a company and an industry on locally manufacturing the components and what activities are being carried on at the company level as well as the industry level?

A: We always had a philosophy that the suppliers are our partner. It has been our philosophy since when TKM was started and I think that more than 95% of the cases are taken from a single source, we don’t take one component from two different sources to make sure that clashes don’t occur between two suppliers. What we have done is work closely with the supplier to improve quality, productivity and cost over the last 15-20 years with the same suppliers. So, the whole system works on mutual trust and respect. We respect the supplier and trust them and the supplier trusts us. This is most important and I will tell you result of that the result is 20 years ago maybe average PPM level, the quality level of the supply termed as parts per million defects, stood somewhere in 2,000-3,000 and today 80-90% of our suppliers are zero PPM suppliers, means zero-defect suppliers. Rest is at 6-7 PPM. This difference has been created due to trust and respect. 

Apart from this, every year we spend about 40,000 man-hours with all of our suppliers in enhancing process, system, hardware, people, manuals, processes. We spend a lot on these aspects to get improvement. We also spend about 8,500 man-hours every year for people development with our suppliers. So in this time of COVID, the suppliers are standing with us and we are standing with our suppliers. 

Q: Toyota and Suzuki have a global partnership and its ramifications are visible even in India and you have jointly launched products here like Glanza and new products are in pipeline. So, update us about the way the synergies are going ahead between the two companies and what kind of activities can be expected in terms of joint production?

A: I would like to answer holistically to this question because I can’t say anything about a specific product. We are interested in creating a self-reliant ecosystem whether alone or with Maruti Suzuki, our interest is that. If I look at our import situation, it has come down dramatically, over the years. On the steel front, since a long time, we have worked in detail with Tata Steel and have developed similar relations on forge steel with forging suppliers and take steel supplies from them. Import dependency is almost zero. In addition to this, there are several components and machinery that are developed here for the suppliers and us. Now, we have an interest in which when a new joint model arrives with Suzuki inculcated with Toyota’s technology and Suzuki’s good business practices like how to localize, cost control among others, volume production. So, the two types of ideas will be merged to provide the best product to our consumers. In the coming year, you will see more and more products with new technology and more and more self-reliant products. 

Q: The government in its recent notification related to electric vehicles has provided the freedom to consumers to buy vehicles without the battery. How the OEMs are looking at it and do you see any opportunity in it and what role Toyota will play in the electric vehicle setup, especially in the new announcement made by the government?

A: Lot of discussions is happening with the government and many people. But we forget the big elephant present in the room, the customer, and we have to focus very hard on what the customer requires now and future. What is that he really wants in the product that we are selling? Now, we are not making an electric vehicle, so I don’t want to make a comment on the sale of batteries separately, I don’t know enough about it. But as far as Toyota plans are then we are assembling hybrid vehicles which are essentially electric vehicles with the engine in it, the structure is almost identical to electric vehicle and in the future, you will see more and more hybrid manufacturing in India with a lot of localization with new products coming in as CAFE-II comes in.

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And, we think that it will best again for the customer based on what they are talking to our customers. The information we are getting from our customers. We are looking at what is good for the customer and the country as well in terms of emission and fuel consumption.