Bajaj Auto evaluates shifting KTM production to India

Bajaj Auto

Pune-based Bajaj Auto is evaluating shifting production of KTM bikes from its home market Austria to India as the process of assuming full control of the ailing European bike maker enters the final leg.

A senior Bajaj Auto official told Moneycontrol on Friday that the company is readying a three-pronged turnaround plan for the revival of KTM, where it has plans to inject Euro 800 million (around Rs 8,200 crore).

Rakesh Sharma, executive director, Bajaj Auto said: “Now that we are going to be in the driver’s seat later this month or next month, we will look at all options for reduction of costs provided quality is not compromised. This is a very important piece in the turnaround.” Sharma was speaking on the sidelines of Bajaj Auto’s September quarter results.

Bajaj Auto has applied to take majority control over KTM AG in the previous weeks. There are in total nine approvals required from various commissions in Europe for the takeover to go through. “Eight of these have been secured and by mid-November the ninth should also be in, which is when the turnaround can start to be very actively led and directed by us,” Sharma added.

When asked if the turnaround plans involve moving production to India, Sharma added: “Yes, of course it includes that because we have had very good experience in manufacturing some of the lower capacity bikes and that is very much on the table and will be evaluated and progressed.”

Large bikes may not made in India

He clarified that though Bajaj has been producing mid-capacity bikes from its Chakan plant, the company will not be making large bikes from here as these require equal support from its auto parts vendors. Besides India, KTM also has a manufacturing base in China.

“There are some products which we will not be able to make – 1290cc, 1390cc - bikes. We are not going there with an agenda of shutting down a plant. We are going with an agenda of reducing cost and it will include part of the range getting moved to here. To completely start sourcing new products takes time,” Sharma added.

Elaborating on the revival plan, Sharma said that besides the financial infusion into KTM, the ailing company will have to be supported with fresh  manpower at the senior level to steer  management as the older management have either left or are on the way out.

“We must work with them to put a proper people structure because a lot of the old management had to go and is going and a new breed of management is getting into position. The third leg is about cost reduction which is both overhead and direct costs of manufacturing which includes components and this takes time to develop here or elsewhere,” Sharma added.