93776791 toyota ppt.pdf.neehaa 2

7/30/2019 93776791 Toyota Ppt.pdf.Neehaa 2

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Submitted by:

Avinash Agarwal

Aashish Garg

Nitin Yadav

Rajesh Ch.

Sumit Garg

Module leader:

Ajay Yadav

Financial Risk Management

a Case Study on Toyota Motors Corp.


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History of Toyota

Sakichi Toyoda founded Toyota.

Kiichiro opened auto department.

He faced competition from Ford and

GM.

Estb of company Ltd took place in 1937.

Second World war

Suffered a lot and financial problems.

Company had to be bailed out by

consortium of banks.

Downsized and restructured.


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Cntd

By 1952, Toyotas financial health

restored coz of the Korean war.

Showed interest in TQM.

Launch of Corolla and more than 71,000

cars.

Joint Venture with GM.

Had a major achievement in US market

when it successfully launched the Lexus

and even Celica.

Appreciation of yen and restrictions put

on imports of Japanese cars by western

counties, Toyota stepped up its efforts to

set up plants abroad.


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Toyota had increase in operating income and vehicle

sales.

Made plans to buy 5% stake in Yamaha.

By early 2000s, Analysts considered Toyota to be the

strongest of Global auto manufacturers.


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Problems faced by Toyota & the solutions

Expensive vehicles-

Undercoated prices

Govt. help

After effects of World War-II

Banks helped

Downsizing and segregating business.

Korean war

Higher Cost of Production

Tracing problm to its roots

Dies

Market ExpansionJoint ventures with GM, Tianjin Automobile in China

Buying/Increasing stakes in Daihatsu, Hino motors.

Opening plants in Britain, France

Re-positioning Corona

TQM


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Derivative Type Amount Invested (Yen) Amount Invested ($)

Foreign Exchange Forward Contracts (2464) (21)

Interest rate and currency swap

agreements

103038 857

Option contracts purchased 5935 49

Option contracts written (3581) (30)

TOTAL 115018 957

Strategies used by Toyota to overcome

risks:Financial risks are those due to which

the company might get affected in its

cash flows thus unable to meet its

financial obligations.Risks that are involved in Toyota are:

Credit Risk:Market Risk:


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Particulars 2001 2002 2003

% Change to 2002-

2001

% change 2003-

2002

Revenues 12955237 14190308 15501553 8.70% 8.46%

Operating Income 790729 1093632 1271646 27.70% 14.00%

Net Income 674898 556567 750942 -21.26% 25.88%

Currency Risk:

Translation Risk:

Transaction Risk


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S.No. Particulars Amount ($ millions)

1. Time deposits 461

2. Total Receivables 39,308

3. Short term Borrowings 15,438

4. Long Term Debts 44,969

TOTAL 100,176

Interest Rate Risk:-

Commodity Price Risk:-

Equity Price Risk


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Derivatives Financial Instruments

Adopted in 2001 By Toyota

Classifies Derivatives in 4 Types (FAS 133)

No Hedge

Fair Value Hedge- loss 2002 $5.12 million, 2003 $4

million

Cash Flow Hedge

Foreign Currency Hedge


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Thank You

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