Swaraj Baggonkar Moneycontrol News
Bajaj Auto will start its assembly operations in Indonesia this financial year after years of stalemate.
The Pune-based motorcycle specialist launched bikes from its Austrian partner KTM last year in Indonesia through its 100 percent subsidiary PT. Bajaj Auto Indonesia.
The launch was received positively, prompting the two companies to start exploring an assembly plant in that country to avail taxes benefits and reduce costs.
“The plan for PT. Bajaj Auto Indonesia is to spearhead the development of KTM and Bajaj partnership and bring the jointly developed products into Indonesia. To take this further, all the required manufacturing, import, and business licenses have been renewed. Further, studies on the product acceptability have been conducted, which look favourable,” said Bajaj Auto in a note to its 2017-18 annual report.
At present Bajaj’s team is seeking clearances for starting a completely knocked down (CKD) operation in Indonesia.
“CKD configurations have been created and the process of seeking clearances for these configurations has started. The company plans to kick off the business operations for PT. Bajaj Auto Indonesia in the current year with the CKD production in Indonesia,” added Bajaj.
During last year Bajaj had written-off its investment in PT. Bajaj Auto Indonesia, to the extent of $39.95 million (Rs 260 crore), consequential to a share capital reduction effected in PT. Bajaj Auto Indonesia to the same extent.
“In order to bring the capital of PT. Bajaj Auto Indonesia in line with its true net worth, PT. Bajaj Auto Indonesia with the concurrence of Bajaj Auto undertook the reduction of its share capital by writing down the par value of share from $100 per equity share to $3 per equity share. Consequently, the total paid-up share capital of PT. Bajaj Auto Indonesia got reduced from $ 41,500,000 to $1,245,000, without actual repatriation of funds from Indonesia”, said Bajaj Auto.
Routine business operations of PT. Bajaj Auto Indonesia, a 99.25 percent subsidiary of Bajaj Auto, have currently stopped. Necessary approvals from the regulators in Indonesia and from Reserve Bank of India have been received.
Bajaj first entered Indonesia in 2005 with the launch of the Pulsar models with the help from its then-partner Kawasaki. Despite years of trying Bajaj’s operations in that country remained in losses. Only last year did the company decide to start afresh with KTM models.
As a result, Bajaj Auto will manufacture KTM bikes in kits to Indonesia where it will be put to the final assembly before being sold to local distributors. Bajaj makes KTM bikes at its Chakan plant and exports to several markets including the US and Europe.
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