The Cooling Off Period?

We have made it very clear in our renewed agreement with Piaggio that we can introduce models from other leading manufacturer's stable as well by entering into tieups with them, says Mr Singhania. We will, however, first approach Piaggio and if they cannot come up with the right vehicle, we will go in for another tieup.

LML, born in 1975, entered into a joint venture with Piaggio in 1991, which ran into major problems leaving many to doubt the very survival of the company.

The reason for the failure, according to senior LML officials, was that while on the one hand there were certain deficiencies in the CKD packs leading to faulty products, on the other, the two sides found it difficult to see eye to eye on market perception and other managerial decisions.

LML tried to get out of this crises by launching a massive exercise of value engineering which led to a Rs 600-700 cost reduction on each scooter, drastically cutting down the workforce and relaying the machinery.

The two companies then reworked their agreement in 1994 wherein the rules of the game were more clearly spelt out, and today LML is looking beyond Piaggio.

The result: LML has carved out a Rs 300 crore expansion plan which includes more than trebling its capacity by 1998-99, an array of vehicles to be launched, to push the company's turnover up to Rs 1,600 crore by the end of the expansion plan.

Talks are already on for motorcycles and three-wheelers apart from scooters. For motorcycles, particularly, it is more likely that the company will opt for a new partner, as according to LML sources, Piaggio had stopped manufacturing its range of motorcycles three years ago.

The company says that if it has to keep its share intact when pitted against a heavyweight like Bajaj, it has to continuously introduce new models, either designed by itself, or Piaggio