LML making a come back into the two-wheeler industry.

Tempted by the recent revival of the scooter segment in the country, the beleaguered Lohia Machines (LML) has re-entered the domestic market after 14 months with its Vespa brand of geared scooters. The Kanpur-based manufacturer launched its 150cc Vespa brands -- NV SPL and Select II - with an on-road price of Rs 35,000 in New Delhi this week, traditionally its biggest market. The company used to sell around 1,000 units a month in the Capital 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 what with scooter sales showing positive growth in the past few months.

Scooter sales rose 17 per cent during April-July to 344,006 units. A senior LML executive said, "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 hit 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 targetting another 50,000 units during this fiscal. The success at the export front and the initial healthy response in the domestic market has 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 & 2.4 lakh motorcycles. The company is now registered with the Board for Industrial & Financial Reconstruction (BIFR) and has submitted a revival plan with a strategic investor and fresh capital investment.

"We are facing a severe financial crunch. The aim to export scooters and market them in the domestic market is to 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 a senior LML executive.

LML, which was once the fifth largest player in the motorcycle segment, does not plan to re-enter that lucrative and mass-volume market before its operations are revived entirely due to the massive investments required in the plant. It had five motorcycle models in the domestic market before February 2006.

Rough ride
LML had stopped production at its Kanpur plant in February 2006 due to financial problems. The company is registered with BIFR and has submitted a revival plan.
LML resumed partial operations in April 2007 with the export of geared scooters.
The lone player in the geared scooter segment, LML has started operations with two dealers in New Delhi.