Eicher to pump in Rs 600 crore to ramp up bike production capacity

Eicher Motors plans to invest Rs 600 crore in two years to ramp up production capacity of its motorcycle division - Royal Enfield - and also to develop new global platforms as well launching new bikes starting 2016.

Royal Enfield is looking to complete work at its Oragadam facility in the next two years thereby taking the total capacity across the two plants to over 5 lakh units annually by 2016.

It had produced a total of 1.78 lakh bikes in 2013.

"We will be making an investment of Rs 600 crore in Royal Enfield towards capacity expansion and development of new global product platforms over 2014 and 2015," Eicher Motors managing director and chief executive Siddhartha Lal told reporters here.

The investment will go into capacity expansion, improving research and development (R&D) infrastructure and adding new products, he said.

"Last year, we had set a production target of 2.5 lakh units for 2014, but now it has been revised to 2.8 lakh units considering the demand for our bikes in the market," Mr Lal added.

By 2015-end the Oragadum plant would be completed fully thereby taking the total capacity to around 5 lakh units per annum, he added.

He also said the additional capacity would help in reducing the waiting periods for various models.

When asked about the new product platforms, Mr Lal said, "In the next 5-7 years horizon, we will be entirely focused on the mid-sized motorcycle segment (250 cc-750 cc). We do not have any intention to enter below or above this segment."

He added that the new platforms are being developed keeping in mind global ambitions of the company.

"We are working on multiple platforms. What will be the final outcome can't be known now," Mr Lal said.

The company, which sells Bullet, Classic, Thunderbird and Continental GT models, is also looking to enhance its dealer network in the next three years.

"We currently have around 300 dealerships across the country. In the next 2-3 years this number would grow to around 500."

Commenting on the recently introduced 'Pro Series' range of trucks in the 5-49 tonnes segment, the Eicher Motors chief said the entire product range would be out in the next 18 months.

When asked about progress on the 50:50 joint venture with US-based Polaris Industries, he said, "It is well on track for a commercial launch in 2015."

"We are trying to create a new segment in personal four wheel space. It is an on road personal vehicle, a new segment, which we are trying to create."