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Piaggio to set up 2-wheeler plant in India

V Phani Kumar & Rumi Dutta

Piaggio is all set to re-enter the Indian two-wheelers market through its wholly-owned subsidiary, Piaggio India. Two years after its controversial exit from the Singhanias-controlled LML, Piaggio is drawing up plans to set up a greenfield manufacturing unit.

Shekhar Datta, non-executive chairman of both the Piaggio arms in India-Piaggio Vehicles (formerly Piaggio Greaves) and Piaggio India-said that the first two-wheeler from the transnational could roll as early as in a year's time.

"Piaggio India, a company based in Delhi, will get into two-wheelers. I am not in a position to discuss more about it at this juncture," Datta said. He declined to reveal whether Piaggio was getting into scooters or motorbikes, or both.

Piaggio India is understood to be finalising plans for the greenfield unit and is also in the process of appointing vendors and dealers for the venture.

Piaggio India is the company's second serious attempt to make a re-entry, and follows the recent abortive attempt to acquire the government's stake in Scooters India. Piaggio's interest in India is believed to be due to the mammoth size of the domestic two-wheeler market.

Piaggio Vehicles, the Italian group's other entity in India, has decided to enter the four-wheeler load carrier segment, as an extension of its presence in the three-wheeler load carrier segment.

Piaggio exited India in November 1999 after selling its 23.6 per cent equity in LML for Rs 135 million, after a bitter protracted battle in the courts with the Singhanias.

The Singhanias wanted to buy out Piaggio's stake in LML following the death of Giovanni Alberto Agnelli, the promoter of the Piaggio group in December 1997.

The Singhanias had insisted on Piaggio's exit according to a 1995 agreement, which gave them the right to Piaggio's stake following Agnelli's death. After a spate of charges and counter-charges, Piaggio and the Singhanias made an out-of-court settlement in November 1999, leading to Piaggio's exit.

Currently, there are no restrictions on the Piaggio group on getting into the 2-wheelers business, barring technicalities on engine specifications till 2007.

The Italian major's entry could see a major shake-up in the market where the consumers' preference is shifting more towards motorbikes.

The leading scooters manufacturer, Bajaj Auto, has been significantly affected in recent months as a result. Both LML and Bajaj Auto, hence, have been increasingly focussing on motorbikes.

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