Bajaj Auto Ltd yesterday said it has increased its stake in European motorcycle manufacturer KTM Power Sports AG to 35.67 per cent with an additional investment of 20 million euros (Rs120 crore).
The Pune-based company had a 31.92 per cent stake in KTM, and decided to hike further by participating in a 42.99 million euro capital increase exercise undertaken by the European motorbike maker.
"KTM Power Sports AG, Europe's second largest motorcycle manufacturer, has increased its capital by 42.99 million euros by inducting 13.24 million euros through conversion of loans and 29.7 million euros through cash rights issue.
"Bajaj Auto Ltd has invested 20 million euros in this capital increase and consequently has increased its share-holding in KTM from 31.92 per cent to 35.67 per cent," Bajaj Auto managing director Rajiv Bajaj said in a statement.
KTM will, however, continue to have majority control through Cross Industries, owned by Stefan Pierer (chief executive officer of KTM) and Rudy Knunz (chairman of KTM), which retained its shareholding of over 50 per cent by a combination of cash subscription and loan conversion.
In 2007, Bajaj had picked up 14.9 per cent stake in KTM for around Rs300 crore. A year later, it increased its stake n the European bike maker to 25 per cent.
The two companies also signed an agreement for jointly developing 125 cc bikes, which will be built at Bajaj's Chakan plant near Pune, for exports to European market under KTM brands. The joint development projects are proceeding well and the first product will be introduced in Europe by the end of current year and in India by mid 2011, the statement added.
"Bajaj will distribute KTM products in India and in markets like Sri Lanka, Bangladesh, Indonesia and Africa," it said.