LML eyes comeback, chalks out recast plan

Written by Ronojoy Banerjee | Ronojoy Banerjee | New Delhi | Updated: Jan 31 2011, 19:13pm hrs
Five years after approaching the Board for Industrial and Financial Restructuring (BIFR) due to mounting losses owing to acute labour unrest, two-wheeler maker LML is aiming for a comeback in the domestic market.

The company is looking at completely restructuring its operations and is talking to at least two private equity players including CX Partners and Kohlberg Kravis & Roberts (KKR) to raise funds to drive its ambitions.

As per the plan, the company has decided to increase its current product portfolio, which currently includes the Envy, and re-enter the motorcycle segment. The company is also scouting for land in Brazil to set up a plant to push its exports into the heart of Latin America. Interestingly, the move comes barely a week after its estranged partner Piaggio announced its re-entry into the scooter segment with the Vespa a product jointly developed and marketed with LML.

An industry source privy to the company's comeback plans told FE that LML wants to use its once powerful brand to expand across the country.

Currently, the Envy sells only in the northern belt of Delhi, Punjab and parts of western UP. The scooter market is staging a quiet comeback in India. Ironically, it has happened at a time when motorcycles sales are mounting. Given its powerful brand and some financial assistance, LML could well be back on track, the source said. When contacted head (sales and marketing) of LML PS Chowdhury declined to comment.

In the early 1990s LML was the second largest scooter maker in the country after Bajaj Auto. The increased sales also prompted the company promoters to enter the motorycle segment with the Adreno and Energy. Though these products failed to take off, LML discovered the 110cc Freedom at the nick of time.

However by the late 1990s the company's decline started owing to increased labour unrest. In fact around the same time LML-Piaggio joint-venture which use to make the iconic Vespa brand of scooters also split. In 2006 owing to lock-out of its facilities the company's losses started to mount prompting the Deepak Singhania led company to approach the BIFR.

Within a year the company re-started its operations after a massive programme of downsizing its manpower and fixed costs. In the quarter ending September 2010 the company's loss stood at Rs 17.34 crore, as per BSE data.