Financial Daily from THE HINDU group of publications
Friday, Aug 30, 2002
LML targets bigger export pie
Mr Deepak Kumar Singhania, Managing Director, LML Ltd, launching the `Freedom' motorbike in Mumbai on Thursday.
MUMBAI, Aug. 29
EXPORTS will be a major thrust area for two-wheeler company LML Ltd, which has targeted to earn 10 per cent from overseas sales by 2005.
The company has been exporting its two-wheelers, including its latest launch Freedom.
LML Ltd is targeting to carve out a 12-14 per cent share in the category of `smart commuter motorbikes' in the next one year with Freedom.
The company has so far sold 9,000 units of Freedom and plans to ramp up monthly production to 25,000 bikes by March 2003, Mr Deepak Singhania, Managing Director, LML Ltd, said. Currently, 350 units are being manufactured daily.
The company today launched its four-stroke 110 cc motorcycle Freedom for Maharashtra, Gujarat and Goa. The bike was first launched on July 15 in Uttar Pradesh followed by launches in Punjab, Haryana, Jammu & Kashmir, Delhi and West Bengal.
The bike is priced at Rs 40,300 (ex-showroom, Pune) competing against Hero Honda's Splendour and TVS' Victor.
"Our target customers will be the upwardly mobile middle class,'' Mr Singhania said. Currently, the smart commuter category accounts for 53 per cent of the total motorcycle market, niche category accounting for seven per cent share, and basic commuter, the remaining 40 per cent.
He said the company plans to introduce a vehicle in the basic commuter category with a 125 cc bike by May 2003. The company is also likely to launch a four-stroke gearless scooter.
The company's foray into the motorcycle segment was done through a technical collaboration with Daelim of Korea. The company's two motorcycles in the niche segment - Adreno FX and Energy FX - have a market share of around 20 per cent.
According to him, this launch is significant because the scooter market declined more rapidly than expected.
"We were faced with adversity and that prompted us to rejig our plans,'' he said.
"Our thrust is to consolidate,'' he said.
According to him, the two-wheeler industry will continue its growth. From 4.5 million units today, the industry is expected to grow to 7 million units in 2005.
During the year, the company expects to maintain its current market share in scooters and produce around 100,000 scooters and about 150,000 motorcycles.
Price cut not on agenda
LML Ltd would not cut prices to boost its market share in the motor cycle segment that is facing intense competition, Mr Deepak Singhania said.
``We will not get into the price war.''
``LML had all along been in the market with a value proposition and that will continue,'' he added.
The two-wheeler industry faces a declining growth rate due to lower agricultural output as a result of rainfall shortage.
Merrill Lynch, in a recent report, suggested that manufacturers are likely to resort to price cuts to boost sales as new models hit the market and increase competition.
``While renewed rains will limit the fall in farm output, farmers' disposable incomes could be severely hit....This will lead farmers to hold back discretionary purchases such as two-wheelers,'' the Merrill Lynch report said.
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