Toyota Kirloskar Motor is a joint venture with Toyota Motor Co holding an equity stake of 88.86 per cent and Kirloskar Systems, the balance. The foreign equity amounts to Rs 622 crore.

The joint venture manufactures the passenger utility vehicle `Qualis' at Bangalore. The royalty duties will be charged at the rate of 2 per cent on domestic sales of accessories and components from January 1, 2001 till December 31, 2003. After January 1, 2004, the royalty would be three per cent. The agreement has been signed for technical assistance in design, testing, evaluation, manufacture, assembly, inspection or quality control of accessories and parts for the manufacture.

The components under the agreement will be manufactured by the vendors of Toyota Kirloskar Motor exclusively for its consumption with a technical and financial assistance from the Japanese company. The agreement does not envisage lumpsum payments towards technical knowhow but estimated payments of $69,145. The Indian partner has the right to buy back 104,000,000 equity shares of Rs 10 each, subject to the terms and conditions of the agreement which was signed in May 1999 and a supplemented agreement that would be executed in a phased manner before December 31, 2004 in accordance with the policy guidelines.

As part of the agreement, the company will pay a royalty of six per cent on exports subject to taxes for a period of seven years. The duration of the technology collaboration agreement is 10 years from the date of agreement. The approval is subject to the condition that imports will be subject to the provision of Exim policy and the issue of additional shares and eventual pre-purchase of these by Kirloskar Systems Ltd would be as per Securities and Exchange Board of India and Reserve Bank guidelines. The company launched the multi purpose vehicle (MPV) `Qualis' which has been a hit in the market with an attractive price of Rs 4.5 lakh for its base model.