LML may rope in European ally

Foreign partner will have majority stake in venture.

Two-wheeler manufacturer LML Ltd is close to signing an agreement with a European automobile manufacturer for a marketing joint venture.

The foreign partner will have majority equity in the venture. The European company also wants to buy 14 per cent equity in LML.

LML executives said the proposal was under consideration and a deal could be signed in the next two months.

"The final shape of the agreement could be different from what they have proposed to us," said a senior LML official.

The joint venture will handle the sales and marketing both in India and abroad.

On the product front, LML plans to fight back in the motorcycle market with three new launches in the next few months, one each in the 100cc, 125cc and 150cc categories.

"We are seeking working capital of Rs 80-100 crore to keep the plant running," said the LML executive. LML's plant in Kanpur can churn out 3.5 lakh two-wheelers a year, but has suffered from labour trouble. Close to 2,000 people work at this factory.

According to union leaders, affiliated to the All India Trade Union Congress in Kanpur, a large number of these workers are employed on a temporary basis and the company has not been paying wages regularly.

Earlier last week, LML officials had admitted that the company was faced with liquidity problems and was finding means to fix it.

The company's recently-launched motorcycle, LML CRD, could not be produced as anticipated owing to the liquidity crunch.

Although LML's debt-related problems have been affecting its operations, company executives said the debt on its balance sheet had been brought down to Rs 100 crore.

"It is not so much of a financial problem as it is to do with products. In the coming months, we will be launching some stunning new models in three segments," said the company executive.