Royal Enfield to invest Rs 600 crore for FY-17, third plant to come on stream by March 2017

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MUMBAI: Royal Enfield, the flagship company of Eicher Motors will be investing Rs 600 crore in its two wheeler business for FY-17, as it creates new capacity to meet the sustained strong demand.

The investment will be made in the upcoming third plant in Vallam Vadagal on outskirts of Chennai, which will go on stream by September of 2017, the investment in UK tech centre and new products. Come FY-19, Royal Enfield will have a capacity of 9,00,000 units. The company will be launching one major product and few variants for the next couple of years to sustain the excitement in the brand.

Speaking at the Q2 earnings conference call, Siddhartha Lal, MD of Eicher Motors said, the company has got a very good response from newly launched Himalayan motorcycle and Royal Enfield continues to get strong order booking. And on the commercial vehicle side, the company has seen significant expansion in market share.

“Himalayan has done exceptionally well. We are delighted with its performance and it is growing in numbers. Going ahead, we will have one big product this financial year, we will be launching something significant next year, we will have variants as well. At Royal Enfield level, this financial year, we are going to be investing around Rs 600 crore, a good chunk of this. The largest will be in new plant, followed by UK tech centre, followed by products,” said Lal.

Lal said in the September ending Q2, the company reported the best ever total income at Rs 1981 crore, registering a growth of 35%, with consolidated profit after tax of Rs 413 crore and highest ever EBIDTA margin of 30.9%

Royal Enfield which has a share of over 95% in 250 cc market and above, says he does not see a major competition from large foreign brands as they sell very limited volumes and though the homegrown players are entering the same price points, but Royal Enfield is seen very differently.

On the global expansion of Royal Enfield brand, the company will be expanding its footprint both in developed markets as well as emerging market. The company plans to set up about 15-20 new stores in Europe next year and it will be looking at building its presence in markets of Colombia, Indonesia and Thailand.