Over the next two to three years, Mahindra & Mahindra (M&M) and other investors would invest Rs 875 crore in Classic Legends, the manufacturer of Jawa and Yezdi motorcycles.

This is the single-largest investment budgeted for the bikemaker, which is one of M&M's core units, as attempts are underway to turn around and profit the two-wheeler industry.

M&M will invest Rs 525 crore, while Classic Legends' external and existing investors will contribute Rs 350 crore. The new investors were not identified by the company. Classic Legends' existing shareholders include Boman Irani, chairman and managing director of the Rustomjee Group, and Anupam Thareja, founder and managing partner of Phi Capital.

On Wednesday, M&M, the current shareholders, and the new Classic Legends investors signed a securities subscription agreement and another revised and restated shareholders' agreement. Investors will receive compulsorily convertible preference shares and equity shares in Classic Legends, according to a stock exchange statement.

M&M will continue to own 60% of Classic Legends' paid-up capital.

"Classic Legends will use the proposed investment to build a strong business that leverages the strengths of M&M and its partners," the statement went on to say.

Classic Legends said in September that it would invest Rs1,000 crore over the next three years in marketing, distribution, and new product development. Half of this is claimed to be set aside for British motorcycle manufacturer BSA, which is planning to launch its first fully electric motorcycle in the UK.

While Classic Legends does not provide sales volume figures, the Federation of Automobile Dealers Associations (Fada) reports that it had a 0.14% market share in the Indian two-wheeler industry in November. It sold 3,166 Jawa and Yezdi bikes during the month, a 15% decrease from the same month last year.

The Classic Legends range competes directly with the range offered by Royal Enfield, the market leader in the niche class and the largest participant in the 350cc+ category. According to Fada data, Royal Enfield volumes increased 18% in November.