In late March this year, China saw the roll-out of two locally-assembled motorcycles from the brand of Austrian off-road specialist, KTM.

The latter, Europe's largest two-wheeler manufacturer, joined hands with Chinese company CFMoto, building the two bike brands at a facility in Hangzhou, Eastern China.

Both motorcycles were designed, developed and manufactured at Pune by India's second-largest two-wheeler producer, Bajaj Auto, before shipping to China for final assembly.

Also, the 200 Duke and 390 Duke, sold in Europe and America alongside the 125 Duke, are also made by Bajaj. In fact, Bajaj-made bikes accounted for a fifth of total sales of KTM in 2013.

Categorised as street bikes, they led growth for KTM last year when sales grew to an all-time high of 124,000, growth of 16%, beating BMW for a second year in Europe.

Street bikes, mostly including those made by Bajaj, grew 40% to 45,681 units, opening a new segment for KTM.

Traditionally, KTM has been recognised for its dirt bikes, high-end street bikes and powerful super-bikes. But a 14.5% stake-buy by Bajaj in 2007 paved the way for a global strategic partnership covering joint product development, technology and distribution sharing between the partners.

Bajaj Auto has since raised its stake to 48% and secured two of the 11 seats on KTM's supervisory board, occupied by Rajiv Bajaj and S. Ravikumar.

KTM has also outsourced all product development work up to 800 cc to the Rajiv Bajaj-led company.

A new, twin-cylinder engine platform and two new models - the RC 200 and RC 390 - to complement the existing range and to be launched later in the year, are some of the projects Bajaj Auto is working on with KTM.

A total of 11,000 KTM bikes were sold in India in 2013-14 and another 24,000 were exported. Bajaj aims to raise the annual export figure to 70,000 annually.

Further, it is making room for producing the Husqvarna motorcycle, a brand KTM chief Stefan Pierer acquired recently from BMW.

The first ones are expected to roll out in 2015-16 from Bajaj's Chakan factory, near Pune.

Bajaj will develop vehicle platforms and engines which will be shared between Bajaj, KTM and Husqvarna in future.

Riding on new-found successes, the Austrian motorcycle-maker posted net profit of € 36.5 million (US$ 50.04 million) in 2013, a far cry when compared with a € 81.4 million net loss in 2008-09.

From annual sales of around 90,000 units before the stake sale to Bajaj, these grew to 123,859 units in 2013.

Rajiv Bajaj, managing director of Bajaj Auto, said, "KTM has gained market share without exception in all its existing markets, including Europe and Japan while being able to finally enter markets such as China and Thailand, for which it didn't have viable products so far."

Bajaj's frugal manufacturing base is allowing KTM to enjoy greater pricing advantage, as products are made for 30% less than those produced in Europe. Development costs on these high-performance machines are much lower in India than in the research-centre of KTM in Austria.

After dethroning BMW from the top position, KTM has set its sight on Japan's bike-makers.

It has an ambitious plan to displace Kawasaki and Suzuki by 2020 - going past Suzuki in two years and beating Kawasaki in five years - in the premium motorcycle segment. KTM is already ahead of Suzuki on sales in Japan and claims it has reached halfway on beating Kawasaki.

Bajaj's Pune plant will hence become the production hub for all KTM bikes with engines up to 800 cc.

On being asked if Bajaj will assume a bigger role in defining the way forward for KTM, Rajiv Bajaj said, "Qualitatively, it's as originally envisaged whereas quantitatively, with each passing year, our joint products represent a greater share of KTM's global sales."