Bajaj Auto To Start Local Assembling KTM Motorcycles In Indonesia

The Bajaj Auto and KTM partnership have yielded positive results for both brands and the Indian two-wheeler major plans to expand it further with the Indonesian market. Expanding its global presence, Bajaj Auto has said that it will be setting up a local assembly facility in Indonesia by the end of this financial year. The new facility will act as a CKD production plant for KTM motorcycles that are already on sale in the South East Asian country. The Austrian bike maker entered the Indonesian market last year through Bajaj Auto's 100 per cent subsidiary PT. Bajaj Indonesia, and the bikes have been met with a good response, which has prompted Bajaj to expand with a CKD production site in the country.

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In a note in the 2017-18 annual report, Bajaj Auto stated that, "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 licences have been renewed. Further, studies on the product acceptability have been conducted, which look favourable."

KTM retails a range of offerings in Indonesia including the KTM 200 Duke, 250 Duke and the 390 Duke; apart from the RC range including the 200, 250 and 390 motorcycles. All the bikes arrive in the country as Completely Built Units (CBUs) for now from the Bajaj-KTM facility in Chakan that acts as a global export hub. The manufacturer is in the process of getting clearances for starting local assembly in Indonesia with plans to start operations by year-end.

"In addition, 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," said Bajaj.

Bajaj first entered the Indonesian market in 2005 in collaboration with erstwhile partner Kawasaki and launched the Pulsar range in the country. However, the operations failed to pick up as hoped and the company incurred losses over the years.

Routine business operations of PT. Bajaj Auto Indonesia has been stopped at present. Bajaj had written-off its investment in the subsidiary last year to the extent of $39.95 million (about Rs. 260 crore), as a result of the share capital reduction effecting PT. Bajaj Auto Indonesia to the same extendt.

Bajaj in its annual report said, "During the year under review, in order to bring the capital of PT. Bajaj Auto Indonesia in line with its true net worth, PT. Bajaj Auto Indonesia with concurrence of Bajaj Auto Ltd. undertook the reduction of its share capital by writing down the par value of share from USD 100 per equity share to USD 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. Necessary approvals from the regulators in Indonesia and from Reserve Bank of India have been received."

Bajaj rejigged its operations with the KTM brand last year in Indonesia and the orange bikes have been off to a good start. Local assembly will only help sales grow further as prices are brought down and spares become cheaper for the end buyer.