Piaggio may sell LML stake

As one of its options, Piaggio is considering selling off its stake in LML Ltd and pulling out of the venture, the sources added. quot;However, nothing has been finalised to that end as yet.quot;

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.quot;We have a whole range of two-wheelers, including scooters, scooterettes and custom bikes which would prove to be a success in India,quot;the sources said.quot;The entire project range in the company8217;s stable is being studied to select the initial roll-outs for the Indian marketplace.quot; 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 standoff 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.

quot;This battle has affected the cordial relations between Piaggio and LML.quot; The Singhanias had filed a suit in the Kanpur court against Piaggio seeking claim on its 23.6 per cent stakeholding in the company and to prevent Piaggio from selling it to an outsider. But Piaggio has opposed this move stating that Singhania8217;s interpretation of the joint-venture agreement to exercise such an option onPiaggio8217;s shareholding in LML was erroneous. The company had, in a statement issued then, said, quot;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 Piaggio8217;s international presence.quot; 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 the production of Vespa.Thecontract was later converted into a technical and financial joint venture in 1990.