Business Today

"Keep cash flows positive"

K.R. Balasubramanyam | Print Edition: January 10, 2010

We did go through difficult times last year—as every other automaker did—but at the end, we did not do as badly as expected. We tackled the crisis head on and survived. And, with the response we’ve received for the Fortuner, I am convinced that a reliable product that brings in customers good value for money will survive any recession.

We decided to tackle the slowdown from the dealers’ as well as the suppliers’ ends. They are far more vulnerable than us in a crisis because there is a sudden drop in cash flow. So, we ensured that suppliers got their money on time and dealers received supplies even as we cut production dramatically. We learnt that if you can manage positive cash flows, you can survive. Alongside, we controlled inventory and costs.

At plants where we had surplus capacity, we encouraged everyone to engage in skill improvement activities, which is primarily concentrated Kaizen (continuous improvement), a pillar of the Toyota Way. In the Tier II and Tier III towns, our sales continued strongly. We realised that the worst-affected were the big places closely connected with the rest of the world.

When the slowdown happened and affected Toyota globally, we were really worried about the future of our second plant and the compact car project. My biggest test was persuading the Toyota management to go ahead with our proposed second plant close to our existing plant in Bidadi.

One of the biggest lessons was never to put money in a 100 per cent export-oriented unit. That will only expose our investments to huge global risks. I would look at a good balance between exports and domestic market to manage the risk.

— Vikram Kirloskar, 51, Vice Chairman, Toyota Kirloskar Motor

As told to K.R. Balasubramanyam

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