Bajaj has termed the next phase of the alliance as KTM-Bajaj 2.0 however there were no strategic details
The proposed realignment of partnership between Bajaj and KTM is aimed at deepening the 12-year-old alliance by leveraging future mobility opportunities across the world, said a senior Bajaj official.
“This move is the first step in a process that will unfold progressively in the coming weeks to broaden and deepen this partnership between KTM and Bajaj,” Rajiv Bajaj, managing director, Bajaj Auto told Moneycontrol.
The partnership so far has made the Austrian brand world's biggest premium bike manufacturer, beating US heavyweight Harley-Davidson (in volumes) last year.
Pune-based Bajaj Auto, in return, has benefitted from technology sharing and becoming the sole manufacturer of KTM (and soon Husqvarna) bikes outside of Europe with exports reaching the US, Japan and South Asia.
The restructuring
On Thursday, Bajaj Auto said that its Netherlands-based subsidiary Bajaj Auto International Holding BV is in talks for transferring its 48 percent stake in KTM AG, to the promoter company KTM Industries AG.
After a proposed 50 percent increase in share capital in KTM Industries AG, subject to legal and economic requirements, the promoter company's total stake in KTM AG would increase to 51.7 percent from 99.7 percent presently. It was not clear how much will be Bajaj's stake in KTM Industries AG in lieu of the equity transfer.
Bajaj has termed the next phase of the alliance as KTM-Bajaj 2.0. However there were no strategic details shared by either companies. Further details are expected to be shared towards the second quarter of this year.
“KTM-Bajaj 2.0 will be the basis for developing strategies and technologies to leverage future mobility opportunities across the world. It is to broaden and deepen the partnership. We will share details soon”, added Bajaj.
The success of KTM prompted German heavyweight BMW to engage with TVS Motor Company to jointly build performance bikes in India.
“The enormous global success of the KTM-Bajaj partnership has become the benchmark for many premium brands that are seeking to grow their business by smartly addressing emerging markets through more competitive product development and manufacture” added Bajaj.
Till the end of last financial year Bajaj Auto has invested a total of 198.1 million euros (Rs 1,219 crore) in KTM AG since first acquiring stake in 2007. Two in every five motorcycles of KTM were manufactured by Bajaj in 2017.
Calendar year 2017 was a record year for KTM, with highest sales in units and highest turnover in the history of the company. It sold 238,408 motorcycles globally, a growth of 17 percent and achieved a turnover of Euro 1.33 billion, a growth of 17 percent. Profit after tax was at Euro 78.9 million (Rs 600 crore), a growth of 10 percent.
During the year, Bajaj Auto manufactured 98,132 units of KTM branded bikes at its Pune-based Chakan plant. Of these, 46,321 units were sold through the Pro-Biking network in India and 53,211 were exported worldwide.
Besides KTM Bajaj Auto also has a tie up with UK-based Triumph to make middle-weight category bikes for India and world markets.
