Relaunch of Freedom bike: LML gears up for a long ride uphill

The Freedom and Star Automatic would be available in Delhi and Punjab by mid-May; and in Gujarat and Maharashtra in three months

LML Ltd, which used to make the iconic LML Vespa in collaboration with Italy's Piaggio & C Spa, is working hard to regain its lost glory with the relaunch of the Freedom motorbike, besides making new two-wheelers as well as light-weight three-wheelers.

The company, in a downward spiral after its break-up with Piaggio in 1999 and a lock-out at its Kanpur factory in 2006, will initially focus on the Gujarat and Maharashtra markets, apart from Delhi and Punjab where it already operates, a senior official said.

LML posted a net loss of Rs 45.2 crore in 2011-12. In the December 2012 quarter, the latest quarterly result available, the company's net loss widened to Rs 17.46 crore from Rs 9.25 cr in the corresponding period last year.

The company is now ready to relaunch the old 110cc Freedom motorbike, a two-stroke scooter LML NV, and an all new four-stroke gearless scooter, the Star Automatic, which is dubbed as the "man's scooter". "We are also planning to come up with 125cc and 150cc motorbikes, apart from the 125cc Unisex scooters and 150cc and above lifestyle scooters," said Partha Sen Chowdhury, head of sales and marketing, LML.

There are plans to launch light-weight three-wheelers for cargo applications.

The LML Freedom and Star Automatic will be available in 70 outlets in Delhi and Punjab by mid-May. In Gujarat and Maharashtra, the products will be launched in three months, Chowdhury said. "We have been able to develop a four-stroke engine and meet euro-emission norms, without altering the vehicle's dimensions, the prime reason why the scooter is popular in the exports market."

LML is looking to add at least 12 dealers across Gujarat and 20-25 in Maharashtra. "We are not looking at huge numbers initially, but maybe 50-60 units a dealer per month," Chowdhury said. That would mean 26,640 units a year from Gujarat and Maharashtra, and 50,400 units from Punjab, Delhi and parts of Uttar Pradesh.

Even so, the numbers would be far higher than what LML sold in 2012-13. Chowdhury said it exported 40,000 units the last financial year and sold 25,000-28,000 scooters in the domestic market. This was down from 44,435 units (exports) and 31,148 units (domestic) sold in 2011-12.

"(The) company has been passing through a difficult time and facing problems for the last few years, which has affected its operations," LML's 2011-12 annual report said. "Since the company's net worth became negative, it filed reference before the Board for Industrial and Financial Reconstruction (BIFR), where it is registered and declared as a sick industrial company."

The company has proposed a revival scheme to the BIFR in 2011, under active consideration of LML's banks and various financiers. "Stakes of a lot of banks and financiers are involved; hence everybody's views have to be considered," a finance official in the company said, requesting anonymity.

"Europe is a heritage-oriented market, and our particular bodyline has a lot of demand. We are even selling decent numbers in Piaggio's home ground, Italy. More, we also managed to get an attractive pricing in the foreign market," Chowdhury said. LML has been exporting to Italy, France, Germany, the UK, Belgium, Denmark, apart from some Latin American and African countries.

"The positive in favour of LML is that it has a good brand recall, but results would depend on what kind of a product they can come up with. The motorcycle market has remained flat during 2012-13, while the scooters segment has grown by around 14 per cent. However, the 110-125 cc segment in bikes is the fastest growing," said Yaresh Kothari, an automobile analyst with Angel Broking.

"The timing is crucial as the overall industry is not doing very well at the moment. Moreover, with stiff competition, almost every player has increased their ad-spend budget. It might be difficult to position the products without a strong marketing campaign," Kothari added.