ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Strategic Restructuring


In the last couple of years the Indian twowheelerindustry has undergone a seachange on account of changing demandpattern. Consumer preferences have shiftedfrom traditional metal body geared scooters(MBGS) to more trendy motorcycles,mopeds and plastic body gearless scooters(PBGS). This has brought about a structuralchange in the operations of twowheelermanufacturers. The operations of 27year old Kanpurbased Lohia Machine(LML) are undergoing a structural change. Chairman M R B Punja says in the annualreport of the company for 19992000,“With the market tilting in favour of motorcycles(48 per cent share) and away frommetal body geared scooters (26 per centshare), your company has commenced productionof 4stroke motorcycles in March2000 and would launch the same in thecurrent year”. The company is set to introducevehicles in new segments and fortifyits presence in existing ones. The newrange of products include 4stroke motorcycles,2stroke PBGS and 4stroke scooters,both in geared and gearless segments.

Due to a change in the company’saccounting period, operations for 19992000 were for 12 months while the previousperiod was 18 months. Hence theperformance in 19992000 is not strictlycomparable with that in the previousperiod. Nonetheless, major performanceindicators in terms of sales turnover, PATand other profitability ratios, including thedividend payout, declined during the yearunder review. The chairman observes,“There was a 14 per cent (YoY) declinein sales volume during the year underreview on account of reduced demand formetal body geared scooters. The decreasein the volumes eroded the profitability ofthe company. During 19992000, LML’sshare in scooter market was 23 per centwhich was a decline of around 2 per centfrom the previous year. In view of theabove, the directors have decided not torecommend any dividend for the year underreview.”

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