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Last Updated : Jul 20, 2017 09:45 PM IST | Source: Moneycontrol.com

Bajaj says close to finalising an alliance; markets speculate it could be Ducati

Speaking to shareholders at the company’s 10th annual general meeting, managing director Rajiv Bajaj mentioned about an addition of a second brand to the Bajaj-KTM alliance

Bajaj Auto and its Austrian partner KTM are believed to be in advanced stages to buy out Volkswagen’s prized asset Ducati.

Speaking to shareholders at the company’s 10th annual general meeting, Managing Director Rajiv Bajaj mentioned about an addition of a second brand to the Bajaj-KTM alliance, the likely announcement of which will happen in 1-2 weeks.

There have been speculations during the past few weeks that Bajaj had entered the fray to buy out Ducati. However, there was no confirmation on this from Bajaj. KTM's name came up only yesterday when a European news agency quoted sources saying KTM has joined the race.

Husqvarna was the first brand added by the alliance when KTM bought equity in that company. The Swedish brand Husqvarna products will now be made at Bajaj’s Chakan facility sharing bike architecture with KTM and Bajaj.

According to Bajaj, the acquisition will plug the final gap in the Bajaj-KTM portfolio which has expanded to as many as six models and is due to add more products shortly. Bajaj, however, did not name the target company.

“KTM rides in a space which is sporty riding. There is also another world out there which is the world of easy riding, the world of Harley-Davidson, Triumph and Royal Enfield.

"This segment so far was the only missing piece in our puzzle,” said Bajaj.

“We are very close to finalising an alliance, it will take a week or two to announce. If it happens it will open up enormous possibilities because that is a brand, that is the format of products that is even more suitable. So if KTM and Husqvarna can do half a million motorcycles a year believe me they can do a million motorcycles together,” added Bajaj.

Ducati clocked sales of little over 55,000 units last year reporting a growth of under 2 percent. Though the company tried to get into low capacity, mass market bike segment, it could not gain much headway. The Italian brand makes 1000cc super bikes on par with similar bikes from Honda, Yamaha and Suzuki.

Bajaj’s confidence in growing volumes of Ducati stems from the fact that at the time of buying stakes in KTM, the Austrian company’s annual sales stood at 65,000 units. This had grown to 250,000 units by the end of last year.

“After ten consecutive years in losses, they are solidly in the black. After Harley-Davidson, KTM is the most profitable company in the premium two-wheeler space,” added Bajaj.

A shareholder enquired, with reserves of Rs 13,256 crore by the end of June, 2017, why the company is simply building on its reserves without a strategy in place on how to use it?

Bajaj replied, “We stand before a very promising opportunity and hopefully you will read it in the papers very soon. That is why we need the money (reserves) because if we have to build Husqvarna and this second brand then we will need this money”.

As per international media reports, Harley Davidson, Hero Motocorp, Royal Enfield and some other companies were in the race to buy Ducati. The sale of the famed Italian two-wheeler brand will be made soon.
First Published on Jul 20, 2017 06:56 pm
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