Bajaj Auto gets nod for Pak venture

Company hopes to export 5,000-100,000 CKDs to Pakistan in the next 2-3 years.

Pakistan Prime Minister Shaukat Aziz has given Bajaj Auto the go-ahead to establish a venture with the Saigol family in the country to assemble completely-knocked-down kits (CKDs) of two-wheelers imported from India.

Aziz has conveyed this to Bajaj Auto Chairman Rahul Bajaj over the phone.

"I spoke to the Pakistani Prime Minister over the phone two or three times. He said we could sign a technology transfer agreement but plans for a manufacturing facility would have to wait," Bajaj told Business Standard.

According to Bajaj, representatives from the Saigol family were recently at Bajaj Auto's headquarters in Pune to discuss the project. He, however, said the date for starting the operations in Pakistan was yet to be decided.

Because of political differences, a full-fledged manufacturing facility cannot be set up by any Indian company in Pakistan. Bajaj Auto hopes to export 50,00-100,000 CKDs to Pakistan in the next 2-3 years.

At present, the Saigols assemble motorcycles in an agreement with the Qingqi group of China. According to reports in the Pakistani media, the arrangement with the Chinese company is likely to be phased out once a deal is signed with Bajaj Auto.

Although the Saigol family could not be reached for comments, senior executives based in Lahore said it might take a couple of months to firm up the deal.

Industry sources said Pakistan currently imported high-cost Japanese two-wheelers and low-quality Chinese two-wheelers. The entry of Bajaj Auto could break fresh ground in the automotive segment in the country.

"I cannot speak about the Japanese or Chinese vehicles. But we hope to sell good quality two-wheelers at reasonable price in Pakistan," Bajaj said.

The size of the two-wheeler market in Pakistan is A fraction of what it is in India. While the domestic market for two-wheelers in India was 6.2 million units in 2004-05, the motorcycle market in Pakistan in 2004 barely touched 300,000 and is projected to grow to almost 400,000 by 2006.