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Bajaj Auto Increases Stake in KTM by 1.21%

Bajaj Auto’s stake in the Austrian bike manufacturer KTM could be of immense value for India’s second largest manufacturer of bikes as it eyes the global market share. According to recent reports, Bajaj Auto has raised their stake in the KTM Power Sports Co. to 39.3%, an increase of 1.21%.

The Pune based company, according to reports, has been steadily buying shares of KTM from the open market. However, CROSS Industries, who are the promoter group of the bike manufacturer, have made it quite clear that will not agree for a sell out. Bajaj Auto has spent above Rs.1,000 crore since it acquired a 14.5% stake in KTM in 2007, becoming the second largest shareholder in the company.

Ravi Bajaj, who holds a seat on KTMs supervisory board since four years, has declined to outline their strategy. Meanwhile, CROSS Industries said that they will continue to hold above 50% stake in KTM. Till March, CROSS Industries held a stake of 50.1% in the company, with other shareholders which include HOFER Private Foundation holding less than 5% stake in the company.

Other investors and free float held hardly above 5% according to reports. Bajaj also intends to gain management control in KTM by the year 2013. Its 3.97mn shares or 39.3% stake in the company is valued at Rs.1,400 crore. Both the companies are reportedly working in the development of new engines, bike models and obtaining cheap auto components from India as well as to expand their marketing and sales reach.

Bajaj has also developed bikes which will be sold in the KTM brand range beginning with Europe. The new bikes, which will be the cheapest in the KTM line up will Bajaj by giving it the needed push in the world motorcycle segment.

The turnover of KTM increased to 591.4mn Euros, a growth of 30% in the last calendar year, in comparision to the 454.6mn Euros in the year 2009. The company’s net profit increased to 14mn Euros in comparision to the 81.4mn loss that was incurred by the company earlier. The international holdings of Bajaj Auto, BV Netherlands, which is a wholly owned subsidiary of the company, bought 2,24,000 shares in KTM last November so as to raise its stake to around 38.09%.

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