Royal Enfield to set up new plant near Chennai

Bullet motorcycle maker to invest Rs 350 crore in Oragadam unit

Iconic bullet motorcycle maker Royal Enfield Motors, which has been facing supply constraints to meet the strong sales growth, has finalised its plans to establish a new greenfield production unit in Oragadam, near Chennai at an investment of Rs 350 crore.

The company, part of New Delhi-based Eicher Motors, already has a production unit at Thiruvottiyur, near Chennai. Financial Chronicle broke the news about company’s plans to establish a new factory at Oragadam a month ago.

Siddhartha Lal, MD and CEO of Eicher Motors, on Tuesday, received the land allocation letter from chief minister J Jayalalithaa for Royal Enfield’s proposed expansion.

The plant will come up on a 50-acre site and is expected to have a total production capacity of about 150,000 units a year. The unit, which will employ 300 people directly, is expected to commence production by early 2013.

Royal Enfield has been recording 40 per cent rise in sales every month during this calendar year.

The company has been gradually ramping up the production capacity at its Thiruvottiyur plant to meet the increasing demand. However, the waiting period for its products continues to be very long.

“While we intend to set up a new, world class production unit at Oragadam, we are also increasing the capacity of our existing plant at Thiruvottiyur to support the demand growth and reduce long waiting periods.

Last year, we produced about 50,000 units and this calendar year we plan to produce about 70,000 units at the existing unit,” Dr Venki Padmanabhan, CEO, Royal Enfield Motors told Financial Chronicle.

The second factory at Oragadam means a lot for the company as it seeks to emerge as a global motorcycle marquee. Exports will be a key part of the second unit. “The manufacturing process, design and everything will be world class in the new factory, reflecting international brand image of the products,” he said.

The company’s vintage-styled bikes are big hit in developed markets such as the US, the UK, Germany, Italy, France and Australia and Royal Enfield has made significant expansion across geographies in the past five years.

The company is also devising the right brand positioning needed to appeal to the vastly untapped developing markets. By 2012, the company expects export to contribute about six per cent of annual sales with presence in over 40 countries across the globe.

Royal

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