Eicher Motors on expansion drive as Royal Enfield spins money

By: | Updated: July 29, 2016 4:04 PM

Royal Enfield (RE) witnessed a stellar growth in the last quarter with about 70% jump in net profit to Rs 337 crore.

bullet-LAt a time when several well-designed and flagship products by different companies have flooded the market, it is interesting that the RE continues to hold its charm. (Source: Royal Enfield)

Eicher Motors is on an expansion drive across the country as it continues to get “strong responses” not only from smaller towns but the company has also forayed into international markets. In its report for the quarter ended June 30, the company posted a consolidated net profit of Rs 376. 29 crore. Much of this was contributed by Eicher’s most popular product, Royal Enfield (RE), which witnessed a stellar growth in the last quarter with about 70% jump in net profit to Rs 337 crore. The RE recorded a 42% jump in year-on-year profit and 38% rise in its volume.The company also recorded healthy returns in its commercial vehicles (CV) segment.

At a time when several well-designed and flagship products by different companies have flooded the market, it is interesting that the RE continues to hold its charm, so much so that the company has to make extra efforts to ensure that the premium bike reaches its connoisseurs even in the remotest parts of the country. “Capacity constraint is only a temporary phenomena…We are working towards bringing the waiting period down,” Eicher Motor’s CEO and MD Siddhrtha Lal told Bloomberg TV today. “We are adding more than two dealers every week to connect to small towns,” he added.

Lal said the company is receiving strong response for its products from small towns. Buoyed by the steller performance of the company in the last quarter, Eicher Motor’s shares jumped over 6 per cent on the Bombay Stock Exchange today. The price of the share soared up to 52-week high at Rs 22, 382.15 crore.

Lal told that channel that the last few years were “transformational” for the company which is now trying to “build a future for Royal Enfield.” Eicher Motors’ new product Royal Enfield Himalayan (REH) has also generated quite a buzz with positive reviews from critiques. Writing about the bike, Autocar India says, “The Himalayan has delivered better than expected comfort, sensible, all round performance, and a chasis that amplifies its versatility.

However, Lal told the channel that REH didn’t contribute much to Eicher’s earning this quarter as the bike is still in its “nascent stage.” “Lot of capital and effort has gone in making ‘himalaya’ motorcycle,” he said.

As the company makes efforts to deliver its products in time to consumers, it has not yet prepared any plan or timeline for new launches. However, Lal told the channel that the company is developing a lot of “new and interesting motorcycles.” Eicher plans to produce 9 lakh units by 2018-10.

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