BANGALORE, July 13: The Kanpur-based automobile manufacturer LML is diversifying into motorcycles and variomatics. The company will come out with mobikes and variomatic scooter next year.

The 100cc four-stroke motorcycles and 90cc variomatic scooter will be ready for test-launch by mid-1998, according to company sources. The products will be initially test-marketed and then, launched in phases all over the country, sources said.

The motorcycles are likely to roll out from 1999 onwards, company sources say. The company is also open to the idea of setting up separate assembly lines for mobikes at its Panki factory near Kanpur.

"The motorcycles may be manufactured close to Kanpur or at a new greenfield site elsewhere," said company officials. The new bike will be different from the existing ones available in the market, sources say.

The company's Italian partner, Piaggio SPA, is known for its stylish mobikes and is currently developing a new bike for domestic customers, sources said. In the case of 90cc variomatic scooters, vehicles will have cosmetic changes and electronic ignition, sources say.

The LML variomatic scooters are expected to give Kinetic Honda a run for its money. Kinetic Honda is the only variomatic vehicle manufacturer in the country, sources say. Kinetic Honda is currently selling around 8,000 vehicles per month.

LML is also adding two new products to its product-line by the year-end. The 125cc scooter and a 70cc scooterette are currently being test-marketed in New Delhi. The company is exploring new segments of the automobile industry by introducing these products, sources say.

The company is in the process of increasing the production capacity of its Panki Plant from 3 lakh per annum to 4.5 lakh by the end of the year.According to LML's Rs 204-crore expansion programme, launched in 1995-96, the company will enhance its production capacity to 6 lakh by 1998-end, becoming the world's largest producer of scooters under one roof.

According to the company, the projected cost of the expansion project will not be more than Rs 204 crore. The company has already roped in a sum of around Rs 184 crore by way of terms loans from financial institutions.

For the remaining Rs 20 crore, the company has decided to go in for preferential allotment. According to a company official, discussions are on for preferential allotment of shares which may slightly hike the equity holding of the two promoters.

The rise in the equity will be same for both partners as both LML and Piaggio currently hold 23.56 per cent stake. The financial institutions hold 9 per cent stake in LML, while the rest 35 per cent is with the public.

The company was planning a Rs 43-crore right-cum-public issue. But due to poor market conditions, LML dropped the rights issue plan and decided to opt for the preferential allotment route, a company spokesperson said.

The product range of LML, currently, consists of four models, NV, Star, Select II and Supremo.

The company manufacturers 25,000 vehicles per month. Of the 25,000 scooters, 9,000 are Senate, 6,000 are Star and the rest 2,000 are Supremo models.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.