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LML bike to take on competitors with new models

Fakir Chand in Bangalore

LML Ltd, the Kanpur-based leading two-wheeler producer, which has been rolling out only geared scooters over the last two decades, has finally woken up to stay afloat by entering the popular motorcycle segment and take on established players with new models every year.

Having snapped the umbilical cord with its original Italian partner Piaggio after an out-of-court settlement, the company has decided to follow its peer scooter players like Bajaj Auto and Kinetic Honda, rather belatedly, to get into the motorcycle segment, which has come to dominate the Indian two-wheeler market.

Scaling down substantially its geared scooter production due to its stagnant growth rate, the company has invested Rs 75 crore (Rs 750 million) at its existing manufacturing facility to rollout its first 4-stroke 110cc motorcycle 'Freedom' with superior technology in collaboration with the Korean firm Daelim, besides Adreno FX and Energy FX models in the top-end niche segment.

"Being a late entrant in the motorcycle segment has its own advantages as we can not only deliver the best bike money can buy, but also stay ahead of our competitors in rolling out three models every year in different categories ranging from 110cc to 150cc," LML managing director Deepak Kumar Singhania told rediff.com in Bangalore on Tuesday.

Since its motorbike launch last month, the Rs 600 crore (Rs 6 billion) company has already delivered about 9,000 vehicles in the northern, eastern and western markets, and targeting around 100,000 by the end of the current fiscal year (2002-03).

"With our entry into the southern India this month, where sale of motorcycles dominate the 2-wheeler market, we have decided to double our production capacity to 600,000 by the end of fiscal 2003-04 from the present capacity of 300,000 for meeting the growing demand and also enter the export market in a big way," Singhania stated.

The company plans to invest an additional Rs 125 crore (Rs 1.25 billion) to expand the installed capacity for producing new motorcycle models, and 100,000 each of geared and geareless scooters from next fiscal year.

The motorcycle market in India is broadly divided into three main categories, viz., the top-end niche segment, where LML has forayed recently with its Adreno FX and Energy FX, capturing about 20 per cent of the premium market. It constitutes around 7 per cent of the total motorcycle segment.

Secondly, Hero Honda, Victor of TVS, and Splendor of Bajaj Auto pitch the deluxe commuter segment, which constitutes a whopping 53 per cent and where the battle for a major share of the market is intense, LML's Freedom against the likes of Passion.

Thirdly, the basic commuter segment, in which LML will enter with its new 100cc model next fiscal year, is the entry-level, which corners about 40 per cent of the total motorcycle market.

After a major exercise to realign its manufacturing capacity, the company rejigged its plant and invested substantially to ramp up its production.

"We plan to take our capacity utilization to about 90 per cent with new motorcycles in other segments and a 4-stroke gearless scooter. This extensive coverage of the two-wheeler market will help make up for the substantial losses it had occurred owing to steep decline in its geared scooter segment in the previous fiscal year (2001-02)," Singhania said.

The company hopes to turn around its fortunes and get into black by the end of the current fiscal year with the sale of its motorcycles.

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