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Bajaj Auto sets up joint venture in Indonesia

Business Standard:  July 17, 2006

Pune: Two-wheeler major Bajaj Auto has set up a joint venture company in Indonesia to assemble and sell three-wheelers and high-end motorcycles there.

The JV, to be known as Pte Bajaj Auto Indonesia, has received the approval of the Indonesian authorities and will start assembling the three-wheelers in August.

“The company will invest $12.5 million to set up the unit with a capacity of 10,000 three wheelers and 100,000 motorcycles,” said Bajaj Auto Executive Director Sanjeev Bajaj at the company’s annual general meeting on Saturday.

He said the company would start assembly of motorcycles by the third quarter of the current financial year. “These will be high-end bikes, in the range of Pulsar and higher engine capacities,” Bajaj added.

The joint venture has been formed with a financial consultancy group Boentaro which holds five per cent. The remainaing is held by Bajaj Auto. The investment would be stepped up to $50 million in stages, Bajaj said.

The three-wheelers will be both CNG-based and others conforming to local conditions, he said, adding that the vehicles to be supplied in Jakarta would be entirely CNG-based.

He said the company had already set up dealerships there. Three-wheelers would be in the passanger category alone.

According to him the size of the Indonesian market for two wheelers, mainly comprising stepthrough category vehicles, is about 4 million per year currently (though it was 5 million last year, prior to the oil price rise) and the company intends to garner a sizeable share of the market over a period of time.

“Our first priority would be to build the Bajaj brand as a supplier of high quality and affordable vehicles,” Bajaj said.

Bajaj said the Indonesia plant would receive completely knocked down kits(CKDs) in the initial stages and the assembly will be done locally.

The company will later localise the bulk components and get critical components from the Indian parent. The company is already in the process of selecting vendors for the bulk items, he said.

Bajaj said the company would start exporting Pulsar motorcycles from the last quarter of the current year.

He said the company had yet to decide whether it would export both the varients of Pulsar.

It has begun selling motorcycles in Nigeria since last four weeks and sold 400 units so far, he said.

In Columbia, where the company has been exporting since last five years, Bajaj has emerged number one motorcycle brand, he added.

About Bajaj Auto’s entry in Pakistan, he said the company was waiting for the settlement of Safta related issues between India and Pakistan.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.