Bajaj-Kawasaki Mobike Venture Hits State Block

Bajaj Auto's proposed joint venture for motorcycles with Kawasaki Motors of Japan has hit a roadblock with the Maharashtra government threatening to withdraw tax incentives if Bajaj hives off its motorcycle division into the Kawasaki venture.

Bajaj's motorcycles division is located in Waluj near Aurangabad, a backward area, which entitles the company to tax incentives from the state government.

Bajaj Auto is proposing to spin the division off into a separate company with Kawasaki becoming an equity partner.

The state government has informed Bajaj that the tax sops could be withdrawn if the plan was carried out.

Bajaj Auto president Rajiv Bajaj said: "We are in constant touch with the state government trying to convince them that the sops should also be extended to the new company." As a result, the joint venture arrangement has got indefinitely delayed.

 

Bajaj Auto had earlier said they were looking to extend its partnership with Kawasaki and would offload up to 20 per cent of the equity in the new company to its technical collaborator. Bajaj said the valuation of the division was through, but declined to divulge details.

Kawasaki has also agreed to source the 175cc cruiser bike Eliminator, modelled more on the Harley Davidson, for its south-east Asian operations.

Bajaj said that Kawasaki plans to sell the Eliminator, which yet to be launched in India, to Philippines, Thailand, Malaysia and Indonesia. The Eliminators would be shipped in the CKD form and would be assembled at Kawasaki's plants in the region.

Bajaj Auto is one of Kawasaki's 14 licensees outside of Japan and currently contributes about 60 per cent of its non-Japan sales. With this arrangement, Bajaj said, Bajaj Auto's contribution would go upto around 75 per cent.

Bajaj said the company would also exploit Kawasaki's sales channels to increase its exports substantially. It was planning to export the Boxer and Calibre brand of motorcycles to Mexico and South America. The company has announced increasing the motorbikes capacity to 3 million units by 2004 at an investment of Rs 1,000 crore.