Eicher Motors plans Rs 600 cr investment

Eicher Motors, which reported a robust fourth quarter earnings on Wednesday is looking to invest Rs 600 crore over the next two years towards capacity expansion and launching new products in its motorcycle division, Royal Enfield.

The company’s net profit jumped 117.9 per cent to Rs 74.43 crore on 78 per cent growth in net sales to Rs 525.44 crore in Q4 December 2013 over Q4 December 2012.

The Q4 result was announced after market hours on Wednesday, February 12. The company, which sells Bullet, Classic, Thunderbird and Continental GT models of its flagship Royal Enfield, will be enhancing its dealer network in the next three years.

Siddhartha Lal MD and CEO, however, said that there would be no new offering by the firm in the ongoing calendar.

“There are no plans of launching any new products in 2014. In the next five to seven 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,” Lal said.

The firm said Royal Enfield may 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 from 1.78 lakh bikes in 2013.

The management remained confident of achieving strong growth in the Royal Enfield business with order backlogs still ranging 3-6 months, despite the higher production,

The company has increased production guidance for CY14 to 280,000 from 250,000 units in order to further lower the waiting period.

Speaking on the company’s performance Lal said, “While the industry continues with its down trend given the weak domestic economic scenario, Eicher Motors has once again reported a robust financial performance. For CY 2013, we have recorded our highest ever-total income from operations at Rs 6,810 crore. We have also recorded our highest ever operating profit of Rs 583.2 crore for the same period.”

“We continue to work towards increasing our overall market share in commercial vehicles through our 50:50 JV with the Volvo Group – VE Commercial Vehicles Limited. For CY 2013, while the industry declined by 32.5 per cent, we improved our heavy-duty market share to 4.4 per cent from 3.9 per cent in CY 2012. In addition, we have also continued with our strong performance in the bus segment where we have improved our market share to 13.5 per cent in CY 2013 from 12 per cent in CY 2012.” Said Lal.

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