Eicher Motors said it has decided to focus more on its two-wheeler business — Royal Enfield, given the huge demand for its products — both in India and abroad. Accordingly, the company has decided to not only ramp up production but also dealerships and format stores both in India and abroad. Buoyed by an impressive 23.1% growth in its total volume during the fiscal ended March 2018 to 801,230 units as compared to 651,110 units sold in the previous fiscal, the company is ramping up its production to little over 9.5 lakh units per annum at its plants in Chennai and then to cross the 1 million mark in volume by 2020. The company has announced an investment of Rs 800 crore to ramp up production capacity as well introducing new products in the current fiscal, said Siddhartha Lal, managing director and CEO, Eicher Motors Limited. The company has reported a 28% growth in volume during Q4, FY2018 to 221,768 units.
Exports during the fiscal 2018 grew 26% to 18,891 units as compared to 15,025 units sold in the previous fiscal. This could be possible due to company’s entry into newer markets as well opening up of new format stores.
While expanding our production capacity to little over 9.5 lakh during the fiscal, we equally decided to increase the number of dealerships by 120, taking the total to 950 dealers in India. “Over the last three years, the company has been adding 150 dealers annually, consistently,” Lal pointed out. To increase its exports further, the company will be adding 30 format stores abroad to take it to 65 stores. Following an encouraging response to its just launched Himalayan Sleet + Explorer kit as well Thuunderbird X, the company will launch more products, including sleek models, Lal said further. Both these products hold waiting period of around 1.5 to 2 months.
To prove the matter further, the company has closed down its JV with Polaris and incurred an impairment loss of little over Rs 300 crore. An analyst with Motilal Oswal said that the net realisation has grown 8.7% during the fiscal under review and 4.9% Q on Q due to price hike taken during the quarter and owing to an increasing share of higher-priced updates (Gunmetal Grey Classic 350, Stealth Black Classic 500, Thunderbird X). “Royal Enfield posted its best ever performance for the quarter ended March 31, 2018. In this quarter, Royal Enfield sold 226,907 motorcycles, registering its best ever quarterly sales and posting a growth of 27% over 178,345 motorcycles sold in the same period last year. Royal Enfield also posted its highest ever quarterly revenue from operations at Rs 2,528 crore for Q4 2017-18, a growth of 34% over the corresponding period last year,” Lal said.
According to him, “We had a phenomenal year on all fronts of its business. While we launched several relevant and differentiated variants, the highlight of the year was the unveiling of our first modern twin cylinder motorcycles – Interceptor 650 and the Continental GT 650. These motorcycles have created quite an excitement both in emerging as well as developed markets and we are confident that once launched, they will grow the middleweight segment globally.”
Royal Enfield will invest Rs 800 crore in FY 2018-19 towards setting up phase-2 of the company’s third plant at Vallam Vadagal near Chennai, completing construction of the technology centre in Chennai this year, investing towards the development of new products to meet upcoming regulations and to expand Royal Enfield’s portfolio for its global markets.