Wednesday, November 4, 2009

Royal Enfield to double capacity at Chennai plant

Motorbike manufacturer Royal Enfield said on Wednesday that it plans to invest Rs 65 crore to double the capacity of its Chennai plant from 50,000 to one lakh units by 2013.

This is apart from the Rs 65 crore the company has already invested in the plant.

“We will add a production capacity of about 10,000 units in 2010 and by 2013 we aim to reach annual production of one lakh units,” said Mr R.L. Ravichandran, CEO, Royal Enfield, at the sidelines of a bike launch.

The company has generated revenues of Rs 300 crore in the January-September period, said Mr Siddhartha Lal, Managing Director and CEO, Eicher Motors.

He added that at present monthly sales are 4,500-5,000 units, while it is targeting to sell about 50,000 units in the whole year.

“We are looking at a 25% growth in bike sales and a 20-30% growth in revenues,” he said.

Mr Lal added that Enfield exported about 1,700 bikes until September in the current calendar year, which is about 5% of the total production.

“We aim to increase exports by about 5% every year. In the next four to five years, exports should be 15% of our total sales,” he said.

On a descending order of export volumes, Enfield’s primary overseas markets are the UK, US, Germany, France and Italy, followed by Japan and Australia. “In the future, we will go to Africa, Latin America and the Middle-East,” he said.

New models

The Eicher Group company launched the Classic 500cc and 350cc motorbikes in the country, priced at Rs 1,24,918 lakh and Rs 98,086 respectively. The bikes are powered by an all-new single cylinder unit construction engine with fuel injection technology.

According to the company, the new engine platform has 15% fewer parts than the previous one, making it lower on maintenance.

“We have doubled our service interval for the new bikes to 6,000 km,” said Mr Ravichandran.

The motorbike, launched overseas in October 2008, has sold more than 2,000 units, said Mr Lal.

Mr Lal added that the product profile for India would still consist mostly of 350cc bikes with the carburettor technology, although it will slowly be replacing its older engines with the new fuel injection-based ones.

“It is mainly a pricing challenge for the company, margins are obviously higher in exports,” he said.

To relaunch Machismo

He said that Machismo would soon be re-launched with a new design and engine change. “We will change from the lean burn engine to the new platform and will announce it shortly,” he said.

On product upgrades to meet the new emission norms which come in place in April next year, Mr Lal said that the company would look to upgrade drivability and design as well, besides the engine.

When asked about the October sales of Eicher Motors, he said that it had shown a growth of around 70%.

“Last month we sold around 2,300 commercial vehicles in Eicher and 50-60 from the Volvo joint venture,” he said.