Boost from Royal Enfield helps Eicher aim higher

Eicher Motors , the manufacturer of the iconic Royal Enfield series of motorcycles, is witnessing a pick-up in sales as the downturn recedes. Emboldened by the rebound, the company is setting itself aggressive sales and export targets. CNBC-TV18's Pranshu Sikka reports.

With a compounded annual growth rate of close to 18% and operating margins at double digits, Eicher Motors is stepping on the gas to drive sales and exports. The company sells close to 50,000 Royal Enfield motorcycles every year. Around 5% of it comes from exports to countries like United Kingdom.

Eicher, which has invested over Rs 60 crore into the Enfield production line at its Chennai facility, will further invest in the years ahead.

Says Siddhartha Lal, Managing Director and Chief Executive Officer of Eicher Motors, "We have learnt from our mistakes and realised where we went wrong. Now we have adapted our products. Currently we are exporting around 5% of our sales but we want to take it up to 15% over the next three to five years."   

Riding on the back of recent growth, Eicher today launched the Classic 350 and 500 models in the Indian market. Whereas the 350 cc model is priced at nearly Rs 98,000, the 500cc model carries a price tag of Rs 1,25,000 ex-showroom Delhi, which has already sold 2000 units worldwide.

Eicher is also looking to increase exports and plans to venture into newer territories including areas like California, which perhaps has the strictest emission norms worldwide.

Things are certainly looking much better for the Royal Enfield than they were about three years ago and the company has now set itself a sales target of 1 lakh units per annum by 2012. However, the recall of 800 odd units of its classic 500 from the European markets is still fresh in customers' memory.

There is a waiting period of four to six weeks for its vehicles.