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Strategies & Market Trends : India Coffee House -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (3721)	2/14/1999 12:40:00 PM
From: Mohan Marette	Respond to of 12475

Paggio (Italy)to go it alone in India,may shed LML stake-Scooters/Motor Bikes. Sunday, February 14, 1999 Piaggio plans to go it alone, may sell LML stake UNITED NEWS OF INDIA -------------------------------------------------------------------------------- New Delhi, Feb 13: Italian major Piaggio Spa plans to go it alone in India and set up a wholly-owned subsidiary for producing its range of two-wheelers, including the famed Gilera motorcycles. The company would soon be approaching the Government for formal approval for setting up the subsidiary. "We are in the process of finalising the details of the venture, selecting the site and are working out the other modalities," sources close to the company told the agency here. As one of its options, Piaggio is considering selling off its stake in LML Ltd and pulling out of the venture, the sources added. "However, nothing has been finalised to that end as yet." The company has an ongoing battle with LML. The tiff and the resultant thumbing down of their motorcycle project in India have forced the company to take this extreme step of setting up a 100 per cent-owned venture here. "We have a whole range of two-wheelers, including scooters, scooterettes and custom bikes which would prove to be a success inIndia," the sources said."The entire project range in the company's stable is being studied to select the initial roll-outs for the Indian marketplace." On the equity base and investments planned for the new project, the sources said, the details of the project are being worked out. The Italian scooter giant was earlier looking at introducing its Gilera range of bikes, including the top-end model Eaglet through LML. But owing to the stand-off between the partners, the project was called off. LML has now joined hands with Daelim of South Korea to foray into the motorcycle segment and the first model would be rolled out in May. "This battle has affected the cordial relations between Piaggio and LML."The Singhanias had filed a suit in the Kanpur court against Piaggio seeking claim on its 23.6 per cent stake holding in the company and to prevent Piaggio from selling it to an outsider. But Piaggio has opposed this move stating that Singhania's interpretation of the joint-venture agreement to exercise suchan option on Piaggio's shareholding in LML was erroneous. The company had, in a statement issued then, said, "Piaggio will oppose such interpretation of the joint-venture agreement in all the necessary fora to safeguard its position, as India continues to represent a strategically important country in the ambit of Piaggio's international presence." The Singhanias and Piaggio hold 23.6 per cent each in the company, while financial institutions control around 9 per cent equity and foreign institutional investors about 7 per cent. The rest is with the public. Piaggio is an italian multinational company, reputed worldwide as a producer of two-, three- and four- wheeled motorised vehicles with its headquarters at Pontedera, Italy. In India, Piaggio began to sell two- and three-wheelers in Mumbai in 1948, which was followed by the signing of a licensing contract with Bajaj Auto for the production of two- and three-wheelers locally. In the 1980s, Piaggio signed a new licensing contract with LML Ltd for theproduction of Vespa. The contract was later converted into a technical and financial joint venture in 1990. Most recently, Piaggio initiated another venture in India with Greaves Ltd for manufacturing the ape range of three-wheelers and light transport vehicles. Besides, Piaggio has also joined hands with Greaves to locally produce in India compact engines with in-built gear boxes for the three-wheelers which the two companies would be manufacturing under their joint venture. A new facility is being set up at Aurangabad in Maharashtra for the purpose at a cost of Rs 45 crore. ''The engines, besides, being used for the ape range of vehicles being introduced here, would also be exported to Piaggio's facilities in Italy for use on the vehicles being produced there,'' the sources said. Under the present agreement, Greaves will not manufacture three-wheelers any more on its own. All the products would now come from Piaggio Greaves Vehicles Pvt Ltd. Greaves would concentrate on its core competence, that is,producing engines, ''and we will be helping them in this endeavour''. Piaggio Greaves Vehicles is a 51:49 joint venture with Piaggio controlling the majority stake in the venture. The joint-venture company had formally commenced operations in April last year. The existing production facilities of Greaves in Baramati, Maharashtra, will be utilised for producing the vehicles. A separate production line has been set up for the purpose. (Indian Express Newspapers (Bombay) Ltd.)