Category: Genuine (LML/PGO)

An unregistered user “Dr. Sparks” claimed yesterday on the ScooterBBS that he’d heard that a british concern was trying to buy the Star/Stella tooling from LML, not with the intention of producing the bikes, but simply to prevent its destruction. Today a rumor is circulating that LML distributors have been contacted by LML and notified that the Star would no longer be produced. Both these rumors are thirdhand and unsubstantiated, and it’s unclear whether LML’s recent financial shuffling signals a plan to reorganize or a final cash-in to pay creditors. 2SB rarely posts rumors, but it sounds like we can expect big news about LML soon.

From HindustanTimes:

Two-wheeler manufacturer LML Ltd said on Thursday that it has allotted about 27 lakh equity shares to Merrill Lynch Capital Markets Espana upon conversion of Foreign Currency Convertible Bonds (FCCBs). At the meeting held today the Financial Restructuring Committee of Directors allotted shares of Rs 10 each at a premium of Rs 21.10 per share upon FCCB conversion, the company informed the Bombay Stock Exchange.The shares were allotted upon conversion of 2000 FCCBs Series B of 1,000 dollars each aggregating to $2 million, LML added.

So make of that what you will.

LML employees continued their protests last week, going to the district magistrate’s office to chastize the government for their lack of involvement. The Indian government has been publicly supportive of the workers, but has done little to end the lockout or secure promised payments. Monday, at a meeting between Indian labor officials, LML managment, and the union, an LML official aanounced that there was no chance the factory would resume production within the next six months. No agreement was reached as workers continued to demand payments (few workers have been paid since January 2006) and more effective government intervention. It’s now very safe to say 2006 Stellas are out of the question.

Moneycontrol.com reports venture capitalists Warburg Pincus plan to purchase at least 14% of LML. The deal would generate enough cash to cover about half LML’s immediate financial needs. LML will continue to seek additional investors.

More rumors are developing about a new LML partner, but nothing substantive yet.

As 2500 locked-out LML employees tried to collect their long-disputed temporary checks today, they discovered that LML had terminated 12 employees active in the union, including union president Jai Prakash Pandey and general secretary Suresh Singh. In the ensuing chaos, the enraged and chanting employees did not collect their checks, and union officials, including Pandey, were refused permission to enter the factory to meet with management. Two labor inspectors were present as specified by the original agreement, but were apparently unable to quell the masses or mediate any discussion. As we suggested last week, if you have your heart set on a Genuine Stella, don’t wait for the next batch to come in.

Indian scooter manufacturer Lohia Machines Ltd (LML) continues to fight financial and labor woes, as a lockout starting May 7–following strikes and protests–continues amid complaints from the workers’ union that interim payments are not being distributed properly. (It also appears they’ve blown off their web hosting bill). It’s unclear if LML has produced any scooters at all since the beginning of the year. While the Indian business press has frequently reported on potential investors and buyers, nothing has come of these rumors to date.

With demand for small motorcycles and modern automatic scooters on the rise (in India and worldwide), the Honda Eterno, Bajaj Chetak, and LML Star together accounted for only 16% of Indian scooter production in 2006, including 95,000 Eternos, and a combined 70,000 Stars and Chetaks. The Chetak presumably outsold the Star in the Indian market, so LML could certainly benefit from the Chetak’s recent demise (not to mention the demise of the Vespa PX150). Another sales boost comes from the hot, but relatively small, market for the Stella and Belladonna (both LML-manufactured variations of the Star) in the USA and New Zealand, respectively.

As it stands, most US Stella dealers are running very low on stock, and Genuine’s large backorder is–at best–months away (LML surely has domestic obligations, and Belgian, British, and other international dealers are promising a 2006 model). Sadly, it may never come, unfortunate considering US demand has never been higher. Genuine’s deal with PGO (manufacturers of their Buddy 50, 125, and Black Kat, along with other models likely to be announced soon) should reduce the shock on Genuine, their dealers, and scooterists, and Belladonna has introduced a Vino knockoff to their lineup. But those with their hearts set on a Stella would be wise to act fast and settle for whatever color they can get (some colors appear to be sold out nationwide), or place an order for what, if it comes, will likely be the last batch of metal-bodied 2-stroke geared scooters to ever see American soil.