After reviving the iconic but struggling Royal Enfield brand in India and taking it to utter domination in the premium cruiser motorcycles segment in India, Siddhartha Lal has set his sights abroad.
Lal, scion of Royal Enfield’s parent Eicher Motors , outlined his plan in his first TV interview in two years — with CNBC-TV18’s Ronojoy Banerjee — that focuses on upping the company’s global play in a big way.
The plan: commission a study to enter Latin America’s largest market Brazil, apart from considering developing markets like Indonesia and Thailand. Royal Enfield will also set up an assembly plant in Indonesia in the future in order to be more competitive. And finally, there is the elephant in the room: the US market, where premium cruiser brands like Harley-Davidson rule the roost.
It is not that Royal Enfield has not been present in the US. The company, whose Bullet range of motorcycles resurrected itself in India in recent years to make its parent one of the world’s most profitable two-wheeler makers, has been present in the for 15 years — a foray Lal terms as a “half-hearted play”, considering they sold motorcycles under a distributor.
That is going to change starting next year.
“January 1, we start our own marketing company, [undertake] sales. We are appointing our own dealers, we are probably opening up stores or two on our own and that is how we are going forward in US,” Lal says.
To give a real push to its first serious attempt at cracking a major market like the US, Lal has got on board 15 senior executives from the top of the US auto industry — including, according to some media reports, from Harley.
“We have been able to attract them, which is also really exciting for me. Actually that is probably the most exciting part: that we talk to these people and they are actually willing to join us — but for a reason, I hope,” he says.
So while Lal is targeting growth on a low base — increasing the current sales tally from 100 to about 1000 in three-five years — the play isn’t entirely about volumes or profitability.
“If you can start selling a 1,000 a month that is an interesting start. Then we are making a dent in the market,” Lal says. “[But] I don’t care about making a dent in our P&L here in India, that is not important but dent in that market, that is important. People see us as relevant, as somebody who makes quality motorcycles, which are evocative and beautiful; that is important for us.”
Eicher Motors stock price
On December 21, 2015, Eicher Motors closed at Rs 16000.00, down Rs 175.9, or 1.09 percent. The 52-week high of the share was Rs 21618.30 and the 52-week low was Rs 13930.00.
The company’s trailing 12-month (TTM) EPS was at Rs 276.17 per share as per the quarter ended September 2015. The stock’s price-to-earnings (P/E) ratio was 57.94. The latest book value of the company is Rs 454.53 per share. At current value, the price-to-book value of the company is 35.20.