The ailing two-wheeler maker is in talks with overseas two-wheeler majors to infuse the much-needed working capital and augment production capacity.
NEW DELHI: LML, the ailing two-wheeler maker, may be inching close to a deal to induct a strategic partner.
A senior company official indicated on Thursday that the company is in talks with overseas two-wheeler majors to infuse the much-needed working capital and augment production capacity and a decision on the strategic partner could be in the works soon.
“We have been in talks with several companies for induction of a strategic partner. We are talking to both, companies that can supply technology and financial investors. A decision should be reached reasonably soon,” he said.
The official said that LML immediately needs working capital funds and would work on doubling production capacity to about 8 lakh units per year after the deal is finalised.
“We are looking for partners who will bring in funds in lieu of equity stake in the company. But we are not going to offload majority stake to the partner nor will LML promoters pare their stake in the process,” the official said.
Since the beginning of March this year, LML’s manufacturing plant at Kanpur has been shut but production was erratic for some weeks even before the lockout.
The official said that labour unrest and “illegal strike” by workmen forced the lockout.
Meanwhile, employees at the factory said production had been declining progressively till it reached a mere 10,000 units per month by the end of February.
LML has been in the red for close to four years, with accumulated losses pegged at over Rs 200 crore.
As part of a comprehensive debt restructuring exercise over the last few months, the company has been offloading equity stake to several lenders including Merrill Lynch, Credit Suisse First Boston (Singapore) and Credit Suisse First Boston Hong Kong.
According to the latest data available on Bombay Stock Exchange, promoters held 43.7% stake as on December 31, 2005. While institutions held 3.36%, private corporate bodies had 5.46% and the public 32.64%.
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