LML plans comeback with Vespa

Tempted by the recent revival of the scooter segment in the country, the beleaguered LML (Lohia Machines) has re-entered the domestic market after a hiatus of 14 months with its Vespa brand of geared scooters.

The Kanpur-based company launched its 150cc Vespa brands — NV SPL and Select II — this week with an on-road price of Rs 35,000 in New Delhi, traditionally its biggest market. The company used to sell around 1,000 units a month in New Delhi before it went out of production in February 2006.

LML has started operations with two dealers in New Delhi and is targeting sales of 500 units in the next few months. The lone player in the geared scooter segment, LML is keen to grab its old market, with scooter sales showing growth in the past few months. Scooter sales rose 17% during April-July 2007 to 3,44,006 units.

Said a senior LML executive: “We have had a good response till now. There have been substantial queries at our two dealers for both the variants, and a few have translated into sales. We expect to touch the sales target (of 500 units) in the coming festive season.

The success of the scooter business would help us launch other products in future.” LML resumed partial operations in April with the export of geared scooters to Egypt, West Asia and Africa, besides Bangladesh and Sri Lanka. It exported 16,000 units till July-end and is targeting another 50,000 units during this fiscal.

The success at the export front and the positive movements in the domestic market have encouraged the company to gradually enter the National Capital Region in the second phase next year.

LML had stopped production at its Kanpur plant in February last year due to financial problems. The plant has an installed capacity of 3 lakh scooters and 2.4 lakh motorcycles. The company, referred to the Board for Industrial & Financial Reconstruction (BIFR), has submitted a revival plan with a strategic investor and fresh capital investment.

“We are facing a severe financial crunch. The aim is to export scooters and market them in the domestic market and generate some working capital and tide over the financial crisis. Fruitful discussions with investors are on and some positive results are expected by early 2008,” said the LML executive.

LML, once the fifth-largest player in the motorcycle segment, is not planning to re-enter that lucrative and mass-volume market before its operations are revived entirely.