With an eye on high-value European and other western markets in the long run, Bajaj Auto has acquired yet another set of shares from the open market of off-road bike specialist KTM Power Sports AG which is headquartered in Austria.
The Pune-based company, which is also India’s second biggest motorcycle manufacturer after Hero Honda, hiked its stake in KTM marginally by 0.2 per cent to 31.92 per cent with the purchase of 15,260 shares.
Bajaj Auto has till date spent close to Rs 800 crore in buying nearly 2.42 million shares in KTM, which is listed on the Vienna Stock Exchange, at various intervals since November 2007. The company owns these shares through its 100 per cent Dutch subsidiary, Bajaj Auto International Holdings BV.
The interest in KTM holds strategic significance for Bajaj Auto as it will help it gain a foothold in the world market. This market is more competitive than India with large players such as Yamaha, Honda, Suzuki and Harley Davidson, to name a few. Bajaj Auto was also in talks with some cult biking companies including UK’s Triumph for a strategic partnership before finalising KTM.
KTM’s intricate and in-depth technology of making bigger motorcycle engines, which range from 250cc to 1,200cc, coupled with its reach in the high-value markets of the US, Latin America and Europe have proven to be the key drivers for Bajaj Auto’s interest in the company. Bajaj Auto currently makes engines up to 220cc for its bikes.
Moving forward, Bajaj Auto can tap into the Austrian-bike maker’s technology and could make it available in its domestic range of motorcycles — a strategy it used in the past when it had a tie-up with Japanese biking giant Kawasaki.
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Bajaj Auto’s Managing Director Rajiv Bajaj had made it clear in December that the company aims to become the largest bike producer in the world with a presence in every major market of the world. India is the second-biggest two-wheeler market in the world after China; more than 50 per cent is controlled by Hero Honda.
KTM is also developing new commuter bikes (with 125cc engines) for Europe and India. These bikes will be made at the Chakan facility of Bajaj Auto near Pune and will be launched in early 2011 in India.
Besides, the superbikes of KTM, some of which will be assembled at Chakan and others will be imported, will be introduced in India in due course. The two companies are also working on electric four-wheelers that will cater to the growing demand of such cars in developed markets like Europe.