Bajaj Auto expects key approval for KTM takeover in November, Rajiv Bajaj says restructuring underway

Rajiv Bajaj, Managing Director of automobile major Bajaj Auto, said the company is awaiting the final approval for its planned majority stake in KTM AG, which is expected next month.

“We are waiting now for the key approval of the takeover commission. We understand that this may be forthcoming in November,” Bajaj said. Once cleared, Bajaj Auto’s stake will rise to 76%, marking a shift from being a minority partner to taking charge of the company.

Bajaj described how years of operational and strategic missteps led to KTM’s financial troubles. “We were all taken by surprise. Most of the industry was quite shocked at how rapidly this thing developed,” he said. He attributed KTM’s decline to what he called three kinds of “greed” - operational, strategic, and governance. “KTM kept producing and overproducing even after post-COVID demand fell,” Bajaj said, adding that the company’s move into the electric bicycle business was “not synergistic” with its core operations.

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Bajaj acknowledged that as a minority shareholder, Bajaj Auto could not prevent these decisions. “We did our best to resist it,” he said. “Certain decisions were taken without our knowledge or due process.” He added that the company is now working with a new management team at KTM. “This is a problem of the top management of KTM, the erstwhile top management,” he said. “Most of them are gone. What we have now in place is a new team that I personally feel very confident about.”

On the operational front, KTM India’s sales have grown sharply, supported by new launches and tax relief. “Domestic sale is up 70% year on year,” Bajaj said. “Half the credit goes to the goods and services tax (GST) reduction move of the government, and the other half to the new Duke 160, which is flying off the shelves.” He added that exports have also stabilised, with US sales continuing despite a 50% tariff. “We have absorbed most of that tariff. Despite that, we will be exporting at earnings before interest, taxes, depreciation, and amortization (EBITDA) higher than our blended corporate EBITDA,” Bajaj said.

Bajaj also commented on the need for efficiency improvements at KTM’s European operations. He said there is scope to “reduce the overheads by more than 50%,” including R&D, marketing, and administrative costs. According to him, KTM’s headcount has already been reduced from 6,000 to 4,000, though most employees are white-collar staff. “It’s the blue collar that make the motorcycle,” Bajaj said, quoting Mark Zuckerberg to describe the management layers: “We have managers managing managers managing managers who manage the people who do the work.”

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Reflecting on earlier reactions to his comments about Europe’s cost structure, Bajaj said he found the response “amusing.” “It was the erstwhile KTM management that showed us how European manufacturing was becoming uncompetitive,” he said, noting that brands like Triumph, Ducati, and BMW have already shifted production to India and Thailand. “Restructuring the supply chain, moving more things to lower-cost locations, is certainly the way forward.”

Bajaj Auto, which has a market capitalisation of ₹2.54 lakh crore, has seen its shares decline by more than 9% over the past year.

For the full interview, watch the accompanying video

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