DCM TOYOTA LIMITED
CONSOLIDATION WITH EXPANSION
I gives me great pleasure to welcome you to this 11th Annual General
Meeting of your Company. The Directors Report and the Audited Accounts have
been with you for some time, and with your permission, I will take them as
As I step down from the Chairmanship of DCM Toyota Ltd. after a long stint
through turbulent times, I hope you will bear with me if I speak in a
somewhat personal vein.
I look upon my years as Chairman of DCM Toyota as most challenging and
satisfying in terms of a major mission accomplished. During the last
decade, this Company went through various ups and downs. The ups were
related to our establishing a reputation for quality and service, and the
downs with the continuously strengthening Yen vis-a-vis the Rupee.
Consequently, at the beginning of this year as Chairman of the company, I
was faced with the daunting prospect of DCM Toyota Ltd. becoming a BIFR
case. In this situation there were three options before us : (a) to keep
pumping in cash merely to linger on, (b) to make an exit from the auto
business and (c) to bring about a total transformation which would put us
firmly on the threshold of becoming a major player in the auto industry.
The third option was particularly difficult because despite a continuous
dialogue with Toyota Motor Corporation, no solution was forthcoming. This
is not to doubt their sincerity, but they too were under going a traumatic
experience on account of the Yen-Dollar situation and the fact that they
had no suitable passenger car in their product line for a developing market
To me, retaining a foothold in the automobile business was paramount
because I could see that this industry would inevitably lead to the
modernization and industrialization of the whole country and would carry
forward a large segment of the engineering industry with it. It would also
give us direct access to global markets which, once again, would benefit
our group as a whole.
It was then that the thought occurred of activating a three year old
relationship based on Daewoo Corporation's interest in DCM's foundry
capabilities. What impressed them during this period was our
professionalism. The transformation of DCM Toyota by bringing in Daewoo
Corporation as partners involved a series of meetings in Delhi and Seoul.
A crucial element, I might add here, was a human equation struck between
Chairman Kim Woo-Choong and myself.
The broad details of the new relationship between DCM Toyota & Daewoo were
hammered out in Seoul, after which Chairman Kim visited Delhi and saw our
plant at Surajpur. Once again we projected the idea that what Daewoo would
really acquire is a human engine based on our professional experience, infrastructure, engineering skills, dealership channels and a solid back up
from DCM's own engineering facilities. The final details of the agreement
were concluded in Seoul and the result is a transformed company based on a
unique three way alliance between DCM Ltd., Daewoo Corporation and Toyota
What we needed is a complete product range which would bring to the market
world - class products on a continuing basis. I am happy to inform you that
in Daewoo Corporation we have found a partner who can help us achieve this.
Daewoo is ranked 33rd among the world's largest industrial business groups
by Fortune's Global 500. It currently exports sedans, buses ant trucks to
more than 120 nations and their vehicles have been widely recognized for
their design, safety, performance, quality and price competitiveness.
The joint venture will make an investment of Rs. 600 crores in the first
phase to set up a world-class manufacturing facility for production of fuel
- efficient, modern cars in the range of 1500 to 2000 cc capacity. In this
phase, the manufacturing facilities will be created for 50,000 units per
The joint venture envisages direct foreign investment by Daewoo of
approximately Rs. 118 crores in the first year, which will give them 51%
equity in the joint venture.
One of the salient features of this joint venture project is that the
manufacturing and marketing activities for DCM Toyota's Dyna range of Light
Commercial Vehicles will continue. In fact, production and marketing
activities for these will get a further boost. The customers of Dyna
vehicles in India and abroad will continue to be served and supported with
full back up of service and parts. Action for quick implementation of the
joint venture has already begun. And the two companies are confident of
introducing the Racer car in a very short time.
The Automobile industry has shown tremendous resilience in the recent past.
It has bounced back from recessionary trends and is poised for high growth
in the years to come. Over the last ten years, the passenger car market has
grown by about 330%, from 46,000 numbers in 1983 to 200,000 in 1993. Yet
there are only 2.8 cars per 1000 persons in India, and with the economy
poised for growth, there is no doubt that the car market will expand
We in DCM, along with our partners, believe that we are not in business for
short term objectives. We are here on a long-term basis to contribute and
participate in all- round growth and prosperity.
I am happy to inform you that your Company has registered an impressive
increase ot 15% in the sales ot vehicles in comparison to 1992-93. We
continue to be the market leaders in the export of Indo-Japanese Light
Commercial Vehicles and for the last two years we have been able to
maintain the lead by having 64% of the total export market share of all
Indo-Japanese LCVs in our range of products.
Your Company has always maintained its thrust and emphasis on improvement
of quality, productivity and customer satisfaction. These have always remained the mainstays of the management philosophy of the Company and will
remain the guiding spirit for us.
In today's world of global business, shareholding patterns are secondary.
What is important is the complementarity of management strengths based on
technology, human inputs and knowledge of the local conditions. This
Company will now bring to the market world-class products on a continuing
basis. To the DCM group and to me as Chairman of DCM Ltd., this transition
symbolizes a difficult task well accomplished.
In conclusion, I would like to put on record our appreciation for the
support and cooperation received from the Central Government, the U.P.
State Government, the Financial Institutions and the Bankers to the
Company. I would also like to convey our appreciation for a high level of
motivation and commitment shown by the employees of your Company at all
levels. Finally, I would like to extend my best wishes to Mr. S.Y. Wei, the
incoming Chairman, Mr. Vivek Bharat Ram, Vice Chairman, Mr. S. G. Awasthi,
Managing Director and Mr. M.S. Bahng, Deputy Managing Director. I am sure,
under their able leadership this Company will achieve great heights.
Formalising of the three-way accord between DCM Ltd., Toyota Motor
Corporation and Daewoo Corporation for their new venture, with Daewoo
holding 51% share in the Company.
Strengthening of the Company's resources with regard to increased marketing
and distribution, significant expansion of plant and state-of-the-art
Paving the way for introducing a new line of international sedans in India.
Using Daewoo's automotive technology that's already established in over 100
Dr. Vinay Bharat-Ram
Place : New Delhi
Date : September 29, 1994