Bajaj Auto planning to invest $150 million in a plant in Indonesia.
Indian two-wheeler makers have shown their appetite for global markets for some time. The leading two-wheeler maker Hero MotoCorp has unveiled its brand name in London few days ago and now it has been reported in Business Standard that Bajaj Auto, India’s second-biggest two-wheeler maker, may set up an assembly plant in Indonesia in a bid to increase presence in Southeast Asia and gain from the lower duty structure in the world’s third-largest market.
The report states that the Pune-based firm is looking to spend $150 million (Rs 675 crore) to set up the facility. The report quoted Tomotaka Ishikawa, president and director of PT Bajaj Auto Indonesia (PT BAI) as saying that the plant, which would be the company’ first major facility outside India, shall be ready by late 2013. The proposal would be approved if the Indonesian unit keeps monthly sales above 3,000 units. The Indonesian media quoted Ishikawa as saying “My target is that by the end of the year we will be convinced to have a complete knock-down operation in Indonesia.’’
It was mentioned that the factory is likely to produce 100,000 units a year. However, it’s not clear whether Bajaj Auto would upgrade its existing facility, where it assembles semi-knocked down (SKD) parts, or set up a new one. The report states that PT BAI, 98.94 per cent owned by Bajaj Auto, assembles and markets Pulsar 135, 180 and 220. The loss-making subsidiary has localised some of the assembly operations to bring down Customs duties. It would continue to pursue the localisation of sub-assemblies further this financial year. PT BAI has accrued a loss of Rs 92.17 crore since it began operations in 2006-07. Last year, it posted a loss of Rs 9.35 crore. It was reported that for some time, the Rajiv Bajaj-led company has been looking to expand its operations outside India, with products which have been successful in the domestic market. The Indonesian two-wheeler market shares a variety of similarities with the Indian market. Last year, the firm sold 81 per cent more bikes in Indonesia at 21,586 units, compared to 11,954 units in the corresponding previous period.
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Bajaj Auto planning to invest $ 150 million in a plant in Indonesia | WheelsUnplugged
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Guys, more than us, its a bigger news for the Indonesians. Lesser Custom Duties are often accompanied by a decrease in the end product's price.
It's the same procedure Harley Davidson went for, in India. First, Import as a whole (CBU), then import in SKD/ CKD and assemble, and lastly, use the host country's resources to manufacture the product's parts.
An almost 81% growth rate suggests that Bajaj's Indonesian attempt might not be that big a challenge, although it has a long way to go and its too premature to announce anything.
Expanding market, contracting price, the Indonesian future seems bright as of now. Best of Luck, Bajaj Auto.
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08-23-2011, 11:16 PM
Bajaj Auto planning to invest $150 million in a plant in Indonesia.
