Royal Enfield to invest Rs 500 cr in Chennai plant

Chennai: Royal Enfield is set to invest about Rs 500 crore towards developing new products and increasing the capacity at its Chennai manufacturing facility. Siddhartha Lal, managing director and CEO, Eicher Motors, said by 2014-end, the company was producing 30,000 units a month and by 2015-end, the company is looking at 50,000 units a month. The company has reported a 44.5 per cent growth during the first quarter of this calendar year at 92,845 units as compared to 64,268 units a year ago. Royal Enfield’s exports grew 62 per cent to 2,342 units from 1,450 units a year ago.

Lal said the company is developing new platforms on which it would develop multiple products for the next three years. “Our focus will be on (a product) that is having between 250 cc and 750 cc. The company is gearing up for a big launch next year. We will launch one big product every year for a few years.”

The first quarter of 2015 has been the best quarter so far for Royal Enfield, with record sales of 92,845 units, a growth of 44.5 per cent against the first quarter of 2014.

The record number of units produced in the March quarter has resulted in a significant increase in EBIT at Rs 232 crore in Q1 2015 as compared to Rs 136 crores in Q1 2014. Eicher Motors has been able to extract significant operating leverage in Q1 2015 and recorded its best ever operating margin (EBIT %) at 24.1%.

Lal said that Royal Enfield has maintained a very strong volume growth in Q1 2015 and is moving ahead with an extremely healthy order book.

“Royal Enfield is working on new platforms and products that will fuel our growth in the coming years. It is also expanding its footprint in India and in key markets across the world, to build its presence globally. We will continue to make higher investments into brand, distribution and globally relevant products that will be essential for us to achieve global leadership in the mid-size motorcycle category," he added.

Eicher is building its R&D centre on the new Mahabalipuram road at Chennai and a satellite centre at UK. Its engineering team, which consists of around 250 people, will be moved to the Chennai facility, while the UK satellite centre will have 20 people to start with.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.