Reduced holding for promoters in LML

The share of Indian promoters in LML Ltd has got reduced to 39.99 per cent, consequent upon 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, at a premium of Rs.29.99 a share.

This has taken place because of the conversion of 2250 FCCB series A, due for maturity in 2008, of $ 1000 each, for a total of $ 22,50,000.

This was effected on February 9, 2006. It has brought down the equity of promoters from 43.70 per cent to 39.99 per cent. The holding of other stakeholders has alsocome down proportionately.

However, promoters remain the largest shareholders in the company. Around 15,650 FCCBs are due for maturity in 2008, and 6,000 in 2010. When that happens, the Indian promoters' holding will be substantially diluted. For the time being, the company is facing severe crisis. Plans chalked out at the last AGM have not worked out.

In the 30th AGM of the company, Deepak Singhania, chairman and managing director of LML Ltd said 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, on which the revival was anchored, was launched on August 1-2005. This was predicted to cause a paradigm shift in the bike market as "it was truly and in every respect, a deluxe commuter motor cycle at a very aggressive and exciting price point."

But this did not happen, leading to the ceasing of production from Feb 1, 2006. Even earlier, there were signs that the company was not able to do things, which it had set out for itself.

Whether results would have been different, if the company had found a better professional team, is difficult to say.

Since taking on Hero Honda or even Bajaj or TVS would require continuuos funding for brand building, it was not possible for LML.However, current circumstances indicate that it should not take long for the firm to reinvent itself.