Bajaj Auto has bought a 14.5% stake in Austria’s KTM Power Sports AG, Europe’s second-largest manufacturer of sports-bikes, for over Rs 300 crore.
The acquisition has been done through its subsidiary Bajaj Auto International Holdings BV.
The stake and alliance allows Bajaj to manufacture KTM-branded bikes in the range of 125cc and 250cc at its Chakan plant, which will be sold in Europe.
An added benefit: KTM’s platforms for 125 cc and 250 cc bikes will be used by Bajaj to design its own ones.
But there will be no joint branding — Bajaj and KTM bikes will be sold separately, both in India and abroad.
Bajaj will also distribute KTM’s entire range of motorcycles in India and the ASEAN region. These include top-end models such as the 990cc Super Duke, the 690cc Duke, and the 450cc executive model.
Following the stake acquisition, Bajaj becomes the second-largest shareholder in KTM after its promoters.
The company could consider increasing stake at a later date, sources said, though company officials declined to comment.
S Ravikumar, vice-president (business development) told DNA Money that while it was too premature to dwell on production numbers, the first bike could roll out of the facility during 2009-10.
“This is an integrated operation involving R&D, engineering and the supply chain of vendors and distributors,” he said.
The 125cc and 250cc bikes could typically focus on discerning customers on the lines of the Bajaj Pulsar and, to that extent, will contribute to the ‘going up the value chain’ mantra.
This is Bajaj Auto’s single biggest investment in an international entity (not taking into account money spent in Indonesia).
Sources said Bajaj could go in for more such strategic alliances and possibly buyouts, too, which fit in with its bigger global plan.
As managing director Rajiv Bajaj once said, the road ahead is to position the company as an international player and not confine numbers and market share to India alone.
Source: DNA India