The Hindu Business Line : LML in revamp mode; to raise Rs 200 cr

LML Ltd has announced its plans to raise about Rs 200 crore by issuing fresh equity to overseas investors, warrants, and by an overseas public offer of foreign currency convertible bonds (FCCBs).

The restructuring is aimed at mobilising funds for the company to increase its motorcycle manufacturing capacity as well as reduce the debt burden from Rs 310 crore to Rs 105 crore.

LML currently has a bike making capacity of 180,000 units and is aiming to scale this up to 10 lakh units by 2007-08.

Meanwhile, the FCCB is expected to raise a total of Rs 120 crore, besides the mobilisation of around Rs 60-80 crore through fresh working capital facilities, an LML statement said.

The LML board of directors has approved the convening of an EGM of shareholders to obtain approval for issuance of fresh capital, mobilisation of substantial fresh funds and amendments to the Articles of Association, including increasing the company's authorised share capital from the current level of Rs 60 crore to Rs 250 crore.

According to the restructuring package, LML would issue preference and equity capital to its existing lenders (banks and financial institutions) for Rs 120 crore as part of the negotiated settlement proposal with them.

Pursuant to the restructuring, the company's net worth would increase by Rs 131 crore.

LML has also extended its financial year from September 2004 to March 2005 to help the company complete the restructuring transaction and clean up its balance sheet.

The company has been going through a difficult business phase owing to the shift of the market from geared scooters to motorcycles, as a result of which it has perceived the need to realign its business model and strategy.

According to the statement, LML has suffered immensely due to lack of a viable motorcycle manufacturing capacity.

Post-restructuring, LML also plans to focus on the export markets and is looking at garnering 15 per cent of its volumes from exports.

It is working on plans to establish assembly units in West Asia and South America.

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LML in revamp mode; to raise Rs 200 cr