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Indian LML aims to double motorbike capacity, sales

NEW DELHI, July 23 (Reuters) - India's fourth biggest motorcycle maker, LML Ltd, will spend 1.25 billion rupees this fiscal year to double its annual capacity to 400,000 bikes to meet growing demand, its managing director said on Wednesday.

The loss-making company, which had a revenue of 5.75 billion rupees in the past fiscal year to March 2003, said the expansion would help it double sales this year to more than 240,000 bikes.

LML has nearly a six percent slice of the domestic market, which had sales of 3.83 million motorcycles in the past fiscal year and is the world's second largest after China's.

"We are producing at over our capacity of 15,000 units a month and straining to meet demand," Deepak Kumar Singhania told a news conference called to launch nine colour variants of its 109cc 'Freedom' motorcycle.

He said the expansion would be funded by a debt-equity mix of 1.25 to 1.

He expected the industry to grow 15 percent this fiscal year. It has expanded by over 30 percent in each of the past two years as manufacturers launched jazzy models, cut prices and rural buying jumped as farm incomes rose.

Kanpur-based LML, India's fourth largest scooter maker, has posted losses in the past three fiscal years as consumers shifted to more efficient motorcycles from scooters.

It began making motorcycles in 2000 using technology from South Korea's Daelim Motor Company, and competes with seven other Indian companies such as leader Hero Honda and No 2 player, Bajaj Auto Ltd .

LML is now attempting to ride back to profitability by boosting sales of motorcycles, which account for three-fourths of all two-wheeled vehicles sold in India. It plans to launch two new models this year and boost its distribution network, which now covers only 39 percent of the market.