Sep 10, 2006

0 Indian 2 Wheeler Manufacturer LML Ltd. in troubled waters

Plagued by a lockout at its Kanpur plant coupled with a massive erosion in demand for its motorcycles has eroded the entire net worth of two-wheeler maker LML Ltd, turning it into a sick enterprise. The board of directors of LML — which was once seen as a major competitor to then supremo Bajaj Auto with its portfolio of Vespa scooters — has decided to now knock on the doors of Board for Industrial and Financial Reconstruction (BIFR), a government body that helps sick companies recover. The firm stated that it does not see the possibility of the business generating profit in the near future. LML promoter and MD Deepak Singhania was not available for comment despite repeated attempts. LML, in a notice to the BSE, said it has become a sick company as its net worth had been eroded as of August 31. The Kanpur-based two-wheeler maker has been declared a sick company under the Sick Industrial Companies Act following the prolonged lockout of its production unit. The company cited the lockout and an "uncertainty of generation of profits in near future" among the reasons for the decision to approach BIFR. The company said the board has decided to reverse the provision of Deferred Tax Asset (DTA). LML's woes in the two-wheeler market had started with the sudden shift in customer preference nearly half a decade ago from scooters to motorcycles. LML, which was predominantly a scooter manufacturer, tried to step into the motorcycle market to keep pace with the changing market dynamics, and even joined hands with South Korean company Daelim, but it did not work. However, their joint effort faild to yield any dividend and the firm saw its profits slide fast, pushing the company into the red zone.

It's sad to see LML (Lohia Machines Private Limited) in such a state because LML tried to build motorcycles for the enthusiast (read as LML Graptor & LML Beamer). The intention was correct maybe the execution was not... Quality issues werenever sorted out. Hope things turn around for LML...

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