Royal Enfield sales growth and VECV operations in Q1 2013

Eicher Motors Limited has announced their financial results for the first quarter January to March 2013. Reporting the best ever quarterly total income from operations, Q1 2013 saw an increase of 3.4% to Rs 1724.3 crores as compared to Rs 1668.2 crores in Q1 2012.

Royal EnfieldTotal VECV sales for Q1 2013 stands at 12529 units as compared to 14,289 units in Q1 2012, equating to 12.3% sales decline. In all, 98.1% growth of Earnings before interest and tax (EBIT) was recorded to a total of Rs 53.1 crores as against Rs 26.8 crores in Q1 2012.

With commencement of production its new plant at Oragadam undergoing second phase of expansion, Royal Enfield has pitted increased production to over 500,000 units per year when in full capacity in a few years as against present sales target of 175,000 units from both plants. Royal Enfield also launched their new Bullet 500 in Indian markets while the Continental GT is scheduled for launch by end 2013. This was also the best quarter where Royal Enfield was concerned in terms of Operating margin which stood at 15.9% in Q1 2013. They reported sales of 34,736 units during the three month period, an increase of 45.3% over the same period a year ago when 23899 vehicles were sold.

Siddhartha Lal, Managing Director & CEO, Eicher Motors Limited said, “The commercial vehicle industry has been in the midst of a cyclical down-cycle and that has impacted all the players including VECV. This has been a challenging quarter for the CV industry but even in these trying times VECV has continued to outpace the industry and improved its overall CV market share across all industry segments. VECV posted a strong financial performance in tough market conditions by its sharp focus on managing costs and working capital.”

He added, “At Eicher, our focus has always been on a long term strategy. At VECV, we have been consistently working towards building a futuristic commercial vehicle company. We are actively pursuing all our plans, investing in every aspect of commercial vehicles- building infrastructure and creating a robust pipeline of differentiated products that will be launched starting this year. VECV’s Eicher Engineering Components (EEC) division has recently commenced production at its new Rs. 90 crores plant in Dewas, Madhya Pradesh. At Royal Enfield, the ability to increase capacity fast and superior quality of motorcycles is a crucial step towards meeting our global ambitions. While we are adding new products and dealerships in the Indian market which is fuelling our growth, we are also working on building our presence globally. Higher investments into brand and distribution, as well as new products that are very appealing to international markets are going to be key for us to achieve global leadership in the mid-size motorcycle category. We are also progressing very well on our 50:50 joint venture with Polaris Industries Inc. where all project milestones are being met as per our plans.”

Talking about Royal Enfield, Mr Siddhartha Lal, Managing Director & CEO, Eicher Motors Limited said, “Royal Enfield continues to power ahead even in Q1 2013. With its second plant at Oragadam commencing commercial production, Royal Enfield is now prepared for its next level of global growth. The new facility has been conceived on a much larger tract of land and created with a master-plan that can take the eventual production to over 500,000 per year. With the speedy execution of the first phase of the plan, we will now have a capacity of 175,000 motorcycles in 2013, from both plants. We have already begun working on the second phase of expansion at Oragadam, which will further increase the production capacity to 250,000 motorcycles in 2014. With this new facility, we now have the ability to scale our production quantity quickly in response to market demand.” “Royal Enfield has launched the new Bullet 500 in a phased manner in February 2013 in India which has been received very well. The much awaited Continental GT will be launched later this year”, he further added.