Financial Daily from THE HINDU group of publications
Friday, Jul 12, 2002
Marketing - New Products & Services
LML hopes Freedom will drive it into the black
Mr Deepak Singhania, MD, LML Ltd, at the launch of Freedom in New Delhi on Thursday.
NEW DELHI, July 11
WITH the launch of its new 110cc motorcycle, LML Freedom, LML is aiming to bounce into the black by the second half of the current fiscal by generating volumes, according to Mr Deepak Singhania, Managing Director, LML Ltd.
"With this launch, our coverage of the total two-wheeler market will increase from the current 16 per cent to 56 per cent," he said. LML currently has losses of about Rs 80 crore. The new motorcycle has been launched in the deluxe or the smart commuter segment, which constitutes 53 per cent (around 1,55,000 units per month) of the total market. LML is also planning to launch two more bikes (an entry level bike, and a 125cc bike targeted at the lifestyle segment) in the next nine months. It will also venture into the four-stroke gearless scooter category by launching two (100cc and 125cc) models within a year.
"These launches will ensure that our product coverage of the two-wheeler market then increases to 89 per cent," said Mr Singhania.
Meanwhile, company officials told Business Line that LML was planning to introduce 180cc motorcycle next year, which would put it in direct competition with brands such as the Bajaj Pulsar.
LML is targeting to sell 1,50,000 motorcycles and 1,00,000 scooters this fiscal. The company is also looking at growth through exports. It is currently in talks with local companies in Egypt and Colombia to set up assembly plants there. According to company officials, overseas production should commence in about six months' time. Says Mr Singhania, "We expect to break new ground with our motorcycles and aim to have, by 2005, around 10 per cent of our business from exports. The initial response of our overseas buyers to our motorcycles has been extremely encouraging."
LML had recently undergone a restructuring exercise aimed at increasing the capacity for motorcycles (LML incurred Rs 70 crore as product development expenditure on motorcycles) and also cutting cost in relevant areas. According to Mr Singhania, the company had rationalised its workforce from 10,000 to 5,000. However there were no plans for a VRS package.
Company officials denied LML was looking to take fresh borrowings (at a lower interest rate) to pay off its long-term debt.
Launches Freedom: LML today launched its latest 110cc motorcycle called the LML Freedom in the deluxe segment. Priced at Rs 40,050, the bike will initially be released in select markets in Uttar Pradesh, and will be available across the country from August onwards. The Freedom will be in competition with well-known brands such as Hero Honda's Splendor and Passion, and TVS Motors' Victor. LML is targeting to sell 20,000 units of the model within the next 9-10 months.
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