In a significant financial manoeuvre, Bajaj Auto Ltd.'s European subsidiary, Bajaj Auto International Holdings BV, has secured a 566 million euros (approximately Rs. 5,431 crore) unsecured loan to aid in the restructuring of Austrian motorcycle manufacturer KTM AG. This development comes ahead of KTM's critical May 23, 2025 deadline to deposit 548 million euros with its creditors, a requisite step to avoid liquidation. The one-year loan was arranged with financial institutions such as JP Morgan Chase Bank NA, DBS Bank Ltd., and Citigroup Global Markets Asia. According to regulatory filings, the funds are designated for investment activities, which industry analysts interpret as support for KTM AG's insolvency plan.
Also Read: KTM Financial Headwinds: Can Partnership With Bajaj Help Turn Things Around?
Background on KTM's Financial Challenges
KTM AG filed for bankruptcy in November 2024, citing an inability to service debts accrued from the acquisition of MV Agusta and substantial investments in its MotoGP operations. These financial strains were exacerbated by a significant downturn in two-wheeler demand in Europe, leading to inflated inventories and operational challenges.
Bajaj Auto's Continued Support
Since KTM's bankruptcy filing, Bajaj Auto has demonstrated ongoing support through multiple financial infusions totalling 200 million euros till date. These contributions have been instrumental in resuming production at KTM's Mattighofen plant and in meeting the conditions set forth in the restructuring plan, approved by creditors in February 2025. But then, the production at the plant stopped again on April 28, 2025. There was a supply issue due to the fear that KTM AG will not be able to pay the suppliers back for all parts and components used in the manufacturing of the motorcycles.
Also Read: KTM Halts Production In Austria Again
Bajaj-KTM Ownership Structure
Bajaj Auto holds a 49.9 per cent stake in Pierer Bajaj AG, a joint venture with Austrian entrepreneur Stefan Pierer, which in turn owns a majority stake in Pierer Mobility AG, the parent company of KTM AG. The recent financial developments have led to speculation regarding Bajaj Auto's potential to increase its stake or bring in external investors to acquire Pierer's share. Further clarity is anticipated during Bajaj Auto's upcoming financial disclosures. Bajaj is KTM's key manufacturing and development partner. KTM's small and mid-capacity bikes (like the 125, 200, and 390 series) are manufactured in Bajaj's Chakan plant near Pune and exported globally.
Market Response
Following the announcement of the loan, Bajaj Auto's shares experienced a 1.91 per cent increase, closing at Rs. 8,487.15 on the BSE, indicating some level of investor confidence in the company's strategic decisions and its commitment to sustaining KTM's operations. This strategic financial intervention underscores Bajaj Auto's dedication to preserving its investments and supporting its European affiliate during a rather tough period of financial restructuring.