LML SCOOTERS VESPA NV SPL AND SELECT

LML launches Vespa NV SPL and Select II scooters

LML makes a comeback with Vespa brands.

August 16, 2007

Lohia Machines Limited (LML) has re-entered the Indian market, after a gap of 14 months, with its Vespa brand of geared scooters. The company’s decision to stage a comeback has been fuelled mainly by the revival of the scooter sector in India of late.

Shares of the troubled two-wheeler manufacturer shot up on August 14, 2007, after newspapers reported that the company had resumed the sale of its Vespa brand of geared scooters in the domestic market.

Lohia Machines Limited, based in Kanpur, India, launched its 150cc Vespa brands – named NV SPL and Select II – at an on-road price of Rs 35,000 in New Delhi, which is traditionally its biggest market. The company used to sell around 1,000 units a month in New Delhi before it went out of production in February 2006.

It has started operations with two dealers in New Delhi and is targeting sales of 500 units in the next few months.

Lohia Machines, the only manufacturer of geared scooters in India, seems to be keen to seize its old market, with scooter sales growing in the past few months. Scooter sales rose by 17% to 3,44,006 units during April-July 2007.

LML had resumed partial operations in April 2007 with the export of geared scooters to Egypt, Bangladesh, Sri Lanka and countries in West Asia and Africa. It exported 16,000 units till the end of July 2007, and is now targeting sales of another 50,000 units during this fiscal.

The success in exports as well as the positive response it received in the domestic market has encouraged the company to enter the National Capital Region in the second phase in 2008.

Lohia Machines had stopped production at its Kanpur plant – which has an installed capacity of 300,000 scooters and 240,000 motorcycles – in February 2006 because of a financial crunch. The company, which was referred to the Board for Industrial and Financial Reconstruction (BIFR), has submitted a revival plan with a strategic investor and fresh capital investment.

Lohia Machines Limited, which was once the fifth-largest player in the motorcycle sector, however, is not planning to re-enter that profitable and mass-volume market before its operations are revived entirely.