Automobile major Toyota’s net profit increases more than 3 times in FY24
Toyota Kirloskar Motor’s (TKM) consolidated net profit surged to Rs 4,787 crore in 2023-24 (FY24), more than tripling year-on-year (Y-o-Y), driven by strong demand for its cars, especially hybrid vehicles and cross-badged cars from the Toyota-Suzuki alliance.
This dramatic turnaround marks an astonishing rebound from just three years ago when the company recorded a net loss of Rs 55 crore in FY21. Since then, TKM has staged a remarkable recovery, posting net profits of Rs 519 crore in FY22 and Rs 1,404 crore in FY23.
As TKM’s volume sales jumped by 48 per cent Y-o-Y to 263,512 units in FY24, its sales revenue jumped by 65.6 per cent Y-o-Y to Rs 55,866 crore in the same period, according to the company’s documents submitted to the Registrar of Companies (RoC), reviewed by Business Standard. Its total expenditure increased by about 57 per cent Y-o-Y to Rs 49,026 crore.
TKM sells four rebadged products from Maruti Suzuki India (MSIL)—Glanza from Baleno, Urban Cruiser Taisor from Fronx, Rumion from Ertiga, and Urban Cruiser Hyryder from Grand Vitara—and they comprise almost half of its total sales in the country, sources informed. The first cross-badged model from TKM to MSIL was introduced by the latter as Invicto (from Innova) in FY24.
“As a next phase of the alliance, the company (TKM) is preparing for hybrid system supply… other new technology models,” TKM stated in its RoC documents. The global collaboration between two Japanese giants—Toyota and Suzuki—was announced in FY19 for mutual supply of products and components. The tie-up included swapping of models between their Indian subsidiaries—TKM and MSIL.
Puneet Gupta, director – mobility, S&P Global, stated that Toyota’s strategic alliance with Maruti Suzuki in India rapidly amplified their product portfolio across mass-market segments. “The vehicles from Toyota present an impeccable synergy of pricing, product excellence, and premium positioning, compelling consumers to choose Toyota, thereby bolstering the brand’s market share,” he added.
Toyota owns 89 per cent in TKM, while the remaining 11 per cent is owned by Kirloskar Systems Private Limited.
When asked about the factors behind more than tripling of profits, Vikram Gulati, country head and executive vice president, TKM, told the newspaper that the company’s strong product portfolio, financial tie-ups, high value proposition, and easy accessibility to products and services have helped it increase its customer base. “We have always remained ahead in assessing and understanding the diverse needs of our varied customers and market trends,” he added.
He mentioned that the company’s sport utility vehicle (SUV) and multi-utility vehicle (MUV) segments remained its biggest contributors with models like the Innova Crysta, Fortuner, Urban Cruiser Hyryder, etc. The demand has been so strong that the company’s capacity utilisation at its manufacturing facilities in Bidadi, Karnataka, has been 100 per cent for “quite some time” now, according to Gulati.
“This allowed us to not only increase production but also tap the booming demand in both domestic and export markets. In the current calendar year, over 14,000 units of the Urban Cruiser Hyryder were exported,” he informed.
Amid an increase in demand, the company had in 2023 started a third shift at its manufacturing facilities, expanding its annual production capacity by about 32,000 units. Therefore, its total annual production capacity at its two facilities in Bidadi stands at 342,000 units. In November last year, TKM had announced that it is establishing a third facility near the other two at a cost of Rs 3,300 crore. This third facility will increase the total installed capacity of TKM to 432,000 units per annum.
The company is further expanding its production capacity. Last month, it signed a memorandum of understanding (MoU) with the Maharashtra government to explore the setting up of a greenfield manufacturing facility at Chhatrapati Sambhaji Nagar. “The proposed new facility will focus on advanced green technologies and is aimed at serving wider markets within the country and abroad,” Gulati stated.
First Published: Sep 04 2024 | 8:17 PM IST