We don't get swayed by movement in numbers: Siddhartha Lal

Eicher’s Bullet (read motorcycles) has been firing on all cylinders in recent years, driving profitability to new highs year after year. The market continues to drive up the stock, making it the second most valuable two-wheeler maker in India, with a market cap of Rs 68,000 crore. MD and CEO Siddhartha Lal, the man behind this growth story, speaks to Ajay Modi on the motorcycle business, the international thrust and scope for growth in commercial vehicles. Edited excerpts:
 
Eicher has been one of the most awarded companies in the country, year after year. What importance do these awards hold for you?

 
Any recognition is deeply gratifying for us. It means a lot to me personally and to the company. It reinforces that we are doing something right and validates certain things. We really enjoy and celebrate these, but we want to keep our heads down and keep working.
 

The company’s physical and financial performance is at its peak. What are the factors making things work?
 
It is really about being focused and having a long-term approach. An extremely important thing is not to get swayed or worried about daily, monthly, quarterly or even annual movements in numbers. We like them but these don’t drive us. These numbers are the outcome of our long-term strategy.

 
When the domestic two-wheeler industry faced steep cuts in volumes post-demonetisation, Royal Enfield volumes grew at strong double-digit rates. What insulated you?
 
I must say that we are not immune to problems. We had cancellations of bookings. But since we have an outstanding brand and a strong distribution network, we were able to make early deliveries to customers who could arrange finances. We reacted in time. Ours is a company with a focused approach towards a niche line-up. We don’t have multiple products. When you have hundreds of objectives, it does not work.
 
The motorcycle business makes up for the bulk of profits, while being smaller in revenue. What is the scope for the commercial vehicle segment to enhance its contribution to Eicher’s bottom line?

 
There is a tremendous potential in the commercial vehicle (CV) business to contribute to Eicher’s growth story. In the last one decade, we have done a lot of groundwork in CVs. We will see an inflection in this business in the coming years. Along with Volvo, we have worked to bring superior products compared to incumbents. We are building a modern trucking company different from the legacy truck-makers. Entry of modern end-users and logistics providers will redefine the segment. We have been gaining tremendous market share, generally more than some of our competitors.
 
How are you expanding the network of Royal Enfield? Are you looking at tier-III markets in the country for the next phase of growth?

 
We have a very strong footprint in all large markets and tier-II cities. There is scope to increase in new catchment areas around these markets and we continue to add stores. But our biggest expansion in numbers is coming from tier-III towns where we are adding two-three stores every week. The current store count is around 650. The new ones are bringing incremental sales, as many buyers never used to step out of their town to make a purchase. 
 
How do you view the contribution from the international market, since you have relocated to London?
 
From my career perspective and the company’s future, international is the next big phase. The last two decades were about developing the India market where we are at a strong point and have significant headroom for growth. We have been putting energies in the international market. We will experiment, make mistakes and learn but doggedly and cleverly move forward. We already have some great breakthroughs in some markets. We are in the process of understanding the market potential and customers. Once we have sustained demand, we will increase retail presence. We are not setting up overseas manufacturing units. Our exports are now growing at a faster pace than domestic sales, though on a lower base.