Mumbai, May 03 (UNI) Utility vehicles major Mahindra&Mahindra Ltd (M&M) has evinced interest in buying out or taking a majority stake in LML bike unit.
With this, the company has made clear its intention of entering the 2-wheeler segment. M&M is also in talks with a Chinese two-wheeler company Lifan. The Kanpur-based two-wheeler major LML is believed to be talking to overseas strategic investors as well.
Labour unrest and a lack of working capital has practically stopped production and despatches at the plant since months. LML may have to induct a strategic investor or a partner soon and mobilise funds for day-to-day operations.
In the 30th AGM of the company, it had said that the financial restructuring of the company had been accomplished, and this had entailed a reduction of debt from Rs 300 crore to around Rs 100 crore.
The new product CRD-100, launched in August 2005 on which the revival was anchored, has not happened. Over the last few months, the company has not been able to pay salaries and it has been losing a lot of employees, the sources indicate.
Recently, Indian promoters' stake in LML has got reduced to 39.99 per cent from 43.7 per cent, consequent to the issue of 24,47,486 equity shares worth Rs 10 each to Merrill Lynch Capital Markets, and Espana.SA.SV, at the rate of Rs 39.99 each, with a premium of Rs 29.99 per share. However, promoters remain the largest shareholders in the company.
The FII holding has gone up from zero to four per cent, and the rest is divided between institutional investors and the public. LML, which had accumulated losses of Rs 260 crore, is on a rightsizing spree and has already executed this in its front-end operations.
LML is aiming to make a mark in the export markets, which it expects will account for about 10 per cent of sales in the next 4-5 years.
LMLs existing facilities, with an annual capacity of 4.5 lakh units for two-stroke geared scooters, will be restructured to produce both four-stroke geared and gearless scooters in the next two years.
UNI SN PP VKG1758