Royal Enfield Aims To Ride High With A Rs 600 Crore Investment

In a recent interview with ET, Royal Enfield’s CEO, Siddhartha Lal has said that it will be investing Rs 600 crore to cater to the growing demand for its bikes. The investment will be key to the third plant, which is under construction in Vallam Vadagal, near Chennai, all the while devoting a part of it in the manufacturer’s UK tech centre for new product development. RE plans to make the unit functional by the fourth quarter of 2017. 

Thanks to the investments, Royal Enfield plans to boost its annual production capacity to a whopping nine lakh units by 2019 fiscal. Interestingly, RE will also be launching at least one new product in the next two years, along with an array of new variants to its existing bikes to keep up the charm of its offerings. The 'one' product in question could be the recently spied parallel-twin Enfield, which got our hopes high for a budget motorcycle in the segment. 

"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," commented Lal. 

Currently, RE has the biggest market share in the 250cc+ motorcycle segment, with a colossal 95 per cent cut. The historic and sentimental value associated with an Enfield, along with the unavailability of budget bikes in competition, allows RE to dominate the category.

To give you an idea, RE’s sales grew by 35 per cent in September 2016 as compared to the same period the previous year. This growth amounted to the best ever income for the company of Rs 1981 crore, while its profits after tax amounted to near to Rs 413 crore. 

Moreover, the manufacturer is stalwart towards expanding the brand globally. RE has planned around twenty new brand stores for the European market in 2017, and emerging markets like Colombia, Indonesia and Thailand are on the cards as well.

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