Q&A: Vikram Kirloskar, CMD, Kirloskar Systems

'Automobile industry will be the locomotive to drive economy'

Nearly two years after coming out of the various businesses of the Kirloskar family, Vikram Kirloskar is working on the six joint ventures with the Toyota Group in India, which cumulatively has a topline of around Rs 8,000 crore. Passionate about the manufacturing sector, he is actively involved in the expansion of the flagship, Toyota Kirloskar Motors. In an interview to Raghuvir Badrinath, the CMD of Kirloskar Systems shares his keenness on building enterprises and joy in nurturing future leaders. Edited excerpts:

You have a good rapport with the Toyota Group; you seem to be the sole partner for all their ventures in India? How is it shaping?
It has been a great experience of partnering with Toyota. Even as we are growing in India, I am taking an active role in the operations of all the arms, even as they are charting aggressive expansion plans. Be it the flagship Toyota Kirloskar Motors or the auto parts, the fork lifts, textile machinery, bumpers or the latest venture, insurance broking. We are upbeat on the opportunities in India. All my resources are being channelled towards these and it is an exciting time for us. The cars business is growing and we should be doubling our volume and turnover in the near future.

Coming from a family which owns businesses and corporations, you are now playing a role where you hold minority stakes in several of these ventures. Wouldn’t you prefer to control or own the businesses?
I would be happy if my holdings in these ventures get re-invested properly. In terms of monetary value, it will grow, since the scale of all these businesses is pretty vast. In fact, the expansion of our flagship plant is being funded totally with internal resources. The Toyota management always takes a consensus view while taking decisions and relies on developing people and is process driven.

Also, we have reduced our stake in Toyota Kirloskar auto parts as I did not want to hold on to a majority stake and not let the business grow. If you want operations to scale up and be recognised globally, you need more people to grow. Having a minority stake will not diminish my role. It feels great to be actively involved in expansion of these businesses, providing employment and training a host of talent.

Toyota Kirloskar Motors has now entered the volume game with launch of the Etios sedan. How is the company coping with demand?
The challenges are in getting new dealerships and meeting the demand for the new sedan Etios as well as the Innova. We have advanced the second shift at the new plant and have pushed back the launch of the Etios hatchback. We intend to reduce its waiting period. With Etios, we will have volumes in India and the profitability will improve given the huge start-up cost. I believe the automobile industry will be the locomotive to drive the Indian economy and we are well positioned to ride the crest.

In addition to the ventures with Toyota, you are also sitting on a good asset base of land, which came your way after the restructuring? How do you intend to unlock value in these?
I have around 18 acres in Bangalore and there are some joint development projects in partnership with the Embassy. The most important development besides this is the Rs 120-crore multi-speciality hospital, which my wife, Geetanjali, is promoting. This is her project and the hospital is a logical extension of a small medical equipment business which she runs. Going forward, we will dilute our holding in the hospital project to around 51 per cent.

Does that mean you will cut off ties with the Kirloskar Group of businesses?
I am emotionally attached to the Kirloskar Group, my cousins, our products and, especially, our manufacturing facilities, which I believe are as good as any in the world. I continue to be a director on some of the companies, attend review meetings, but I am not responsible for those businesses, which was the case earlier. As a family, we own our brand company, run an education trust and continue to be involved at various socially-relevant development projects. I am very much a part of the Kirloskar Group!