Eicher Motors targets 15% mkt share in HCVs in next 3 yrs

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Eicher Motors targets 15% mkt share in HCVs in next 3 yrs

Eicher Motors is betting on growth. It hopes to capture nearly 15% of the market in the next few years. The company has laid out an aggressive expansion plan. The company wants to have a foothold reach in every segment of the commercial vehicle market.

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Q: With the emphasis on fuel economy, cutting down emission - are we going to see smaller bikes from Royal Enfield?

A: In the next 5-7 years its by and large going to be within the realm that we are currently operating in, which is 350 cc to 500-600cc - good solid single-cylinder engine and bikes based on that. But where we are going to innovate a lot is firstly to make this engine absolutely bullet proof and make it very strong and very good and certainly not smaller.

On the other end where the real innovation comes and what a customer sees in the bike is not the engine but he sees a new model as a bike - something, which is visually very different. The Classic bike, which we launched last year in Europe and US and this year in India, has created extremely good waves for us.

Q: What is the strategy then in terms of hitting the markets with new products if you look at the traditional two wheeler market space we have got atleast four launches, some are variants and some are new launches? What can we expect from you?

A: We are looking at maybe 1-2 big launches in a year - maximum 2 and probably 1 in most years. It takes us enough time, love and energy to put it together - the Classic took us more than 4-5 years. We don't need to be in the same rate race as some other people. Our bikes, the way me make them, are supposed to last many years.

So for example, we are coming to the end of the line of Bullet Standard and normally when you are coming to the end of the line, nobody wants that vehicle. But today it is over booked and its going on a premium, so we don't need to keep deleting and adding models. But we do want to do is to add beautiful new models. So we are looking at one or two big launches in a year and refreshing the current crop of bikes every 2-3 years.

Q: What are your parameters of success as far as you're concerned because clearly you are not going after market share and volume game etc? So how you judge your success in that sense?

A: We want to have long-term plan. So like I said, in the 10-15-20 year horizon we want to do 15-20% growth. That is on the revenue front we are looking at that sort of growth. On the profitability front, we are already doing extremely well. We are already at a double-digit operating profit for the year. We are already at well over double-digit on return on capital employed for the month. We want to keep that extremely tightened and definitely focus on profitability in this business.

Q: Two wheelers and CV are the mainstays of your strategy going forward. Are you looking at any further diversifications or any other foray at this point in time?

A: We are certainly going to have to look at least one more areas to enter into.

Q: Have you identified that one more area?

A: Not right. But that comes more from a perspective from the fact that our balance sheet is so strong. On the joint venture side we are now having a surplus cash of Rs 1,000 crore right now and we are generating good cash every month. But that is purely earmarked for the CV space, so all that is going to go in the CV space. But in the Eicher Motor's balance sheet, which is where Royal Enfield is housed, we have around Rs 400 crore of cash and we have zero debt. So there is certainly a possibility.

We need to get into a business, which I believe creates a very strong brand in the first place. We are doing that with the Eicher brand, which is under the Volvo-Eicher joint venture umbrella, it is going to be a brand for all developing markets and a very strong commercial vehicle brand. Royal Enfield is a brand play as well. So anything else that I do is certainly going to have a very long term approach to it.

Q: In the automotive space or outside of it?

A: The automotive space is certainly an area, which I understand well now. That doesn't constrain us 100%.We could look at some bit different as well.

Q: Not the car or three wheeler way?

A: Absolutley not - no cars.