Royal Enfield Overhauls Operations

Royal Enfield Motors, makers of Bullet motorcycles, has restructured its operations as part of a turnaround strategy.

The division of Eicher Ltd has also decided to launch new variants every six months and invest around Rs 40 crore over the next two years, chief executive of Royal Enfield Motors, Siddhartha Lal, said.

He admitted the division suffered losses during the last year and was hopeful that the restructuring exercise will turnaround the division.

The restructuring exercise is being carried out in two parts. The first part consists of rationalisation of manufacturing process to reduce variable costs. It also carried out reduction in employee cost.

A sizeable cut in executive manpower was also initiated and the workmen were offered VRS. The non-permanent manpower was also reduced.

The division hired the services of SAP to carry out inventory management and also went in for large outsourcing to reduce costs.

The second part consists of weeding out underperforming dealers who will be replaced with newer ones. There are around 227 exclusive dealers for Royal Enfield bikes and more will be added soon.

A brand-building exercise is also expected to be carried out soon. Siddhartha Lal said the production of motorcycles will be increased to 2,600 per month from 2,000. Royal Enfield plans to increase the total number of units to around 26,000 from 22,000 units which were sold during 2000-01. In 1999-2000, around 25,000 units were sold.

Siddhartha Lal during the first half of the current year, 1,000 units were exported, while for the entire year during the previous year, around 1,200 units were exported. The division plans to tap the Middle East and south-east Asian countries soon.

Siddhartha Lal said apart from launching newer bikes every six months, the division was studying the pricing of its products closely. The Bullet range of bikes consists of 350 Standard, 350 deluxe, Bullet 500, Machismo, and Electra. These bikes are priced between Rs 55,000 and Rs 63,000.

In the Lightning range, it has 535 cc bike called Cruiser which costs around Rs 69,000. The division plans to introduce another bike in the Lightening range shortly. While institutional sales constitutes around 12 per cent of its total sales, the rest is from retail.

Royal Enfield developed its Machismo A 350 bikes in association with AVL, Austria and Lightning 535 in association with Fritz Egli of Switzerland Royal Enfield Motors, is a division of the Rs 1,000 crore Eicher Group which has diversified business interests in auto engineering, tractors and gear boxes.