Royal Enfield on expansion mode; to set up 3rd plant

Royal Enfield currently has two manufacturing facilities inTiruvottiyur and Oragadam

Revving up the throttle on its expansion plans following 'huge' demand, premium motorcycle manufacturer Royal Enfield is looking at ramping up production at its two facilities here besides setting up a third plant, a top official said.

The Eicher Motors' company has been witnessing huge demand for its products soon after launch of various models, including the 'Classic' range. To augment the expansion plans, the firm recently acquired land near here to set up another facility.

Royal Enfield currently has two manufacturing facilities one each at Tiruvottiyur and Oragadam near here.

"Last year we produced just over 1.70 lakh motorcycles and this year (2014) we will be doing three lakh units. So we are talking about 70-75% increase in capacity from last year to this year," Eicher Motors MD and CEO Siddhartha Lal told PTI.

For the proposed third unit at Vallam Vadagal near here, over 50 acre land was acquired at a cost of Rs 57 crore.

"This plot is located within 10 km of our Oragadam facility. This prepares us for future expansion to meet growing demand of our motorcycles worldwide. We will in due course inform our plans and investments on the site", he said.

Lal said the move to set up the third facility was in the backdrop of company's vision of becoming leaders in the mid-sized motorcycle segment.

"At Royal Enfield we have set our sights on becoming the leaders in the global mid-sized motorcycling segment. Royal Enfield's current capacity from both plants (Thiruvottiyur and Oragadam) will be three lakh units for 2015. In 2015,we intend to manufacture four lakh units from these plants", he said.

"Eventually, the two plants put together will be able to manufacture six lakh units. Right now, we are focusing on ramping up the capacity of our Oragadam plant which became operational in 2013", he said.

On reducing the waiting period for some of its models, Lal said it had come down from around 10 months to five months following increase in capacity from last year to this year.

"Royal Enfield will continue to focus on demand generation activities because we want to continue to grow the market and our supply will catch up", he said.

Royal Enfield reported a 47.45% increase in total sales in October 2014 at 26,039 units as against 17,659 in the same month of last year. Exports in October 2014 grew to 529 units from 353 units shipped during same month of last year.