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Bajaj hikes stake in KTM; new 125cc coming by mid 2011

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Bajaj Auto (BAL) today said it has increased stake in European motorcycle manufacturer KTM Power Sports AG to 35.67 per cent with an additional investment of euro 20 million (about Rs 120 crore).

The Pune-based company had 31.92 per cent stake in KTM, and decided to hike further by participating in euro 42.99 million capital increase exercise undertaken by the European bike maker.

"KTM Power Sports AG, Europe's second-largest motorcycle manufacturer, has increased its capital by euro 42.99 million by inducting euro 13.24 million through conversion of loans and euro 29.7 million through cash rights issue.

"Bajaj Auto, has invested euro 20 million in this capital increase and consequently has increased its shareholding 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 by Cross Industries, owned by Stefan Pierer (CEO KTM) and Rudy Knunz (Chairman 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 Rs 300 crore. A year later, it increased its stake in the European bike maker to 25 per cent.

Both companies also signed 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, it added.

"Bajaj will distribute KTM products in India and in markets like Sri Lanka, Bangladesh, Indonesia and Africa," BAL said.