 "Siddhartha Lal, MD, Eicher Motors")
On September 1, Eicher Motors Managing Director (MD) Siddhartha Lal conducted the virtual launch of the new Royal Enfield Classic 350, describing his motorcycles as “timeless, unhurried and uncomplicated”. None of those adjectives would have applied to his situation barely a week before when he faced a major crisis since he started running the show.
On August 17, shareholders voted down the reappointment and pay hike of 10 per cent for Lal. On August 23, Eicher Motors’ board of directors decided to unanimously reappoint him MD but with a revised remuneration package. The company will go back to shareholders for a vote via postal ballot.
Shareholders had sought more clarity on an enabling provision that allowed payment of remuneration up to 3 per cent of profit. Eicher Motors Chairman S Sandilya had clarified, however, that the actual remuneration for FY21 was at 1.04 per cent of profits, but the percentage had been lower in preceding years. Given this background, the board had approved a revised remuneration structure with a maximum cap of 1.5 per cent of profits.
Whatever the finer points of the issue, the episode has brought into sharp focus Lal’s performance at the helm of the company in the last few years, despite being widely accepted as Royal Enfield’s turnaround man since he took charge as MD in 2006-07.
Was the board’s subsequent vote of confidence justified? Certainly, Eicher has seen an over 18-fold acceleration in annual two-wheeler sales volumes on his watch, from 32,612 units in 2006-07 to 609,403 in 2020-21, and 822,724 in 2018-19, the last pre-pandemic year. However, when he, along with his family, relocated from Delhi to London in August 2015, it raised eyebrows since the firm had minimal presence abroad. In Lal’s own words, the shift was done to “understand the cultural nuances of the markets so that Royal Enfield becomes a global brand in 10-15 years”.
Did Enfield’s overseas plans work? The storied brand wasn’t unknown, since Royal Enfield India — acquired by Eicher in 1994 — had been exporting the famous 350cc Bullet to the UK and Europe.
On August 17, shareholders voted down the reappointment and pay hike of 10 per cent for Lal. On August 23, Eicher Motors’ board of directors decided to unanimously reappoint him MD but with a revised remuneration package. The company will go back to shareholders for a vote via postal ballot.
Shareholders had sought more clarity on an enabling provision that allowed payment of remuneration up to 3 per cent of profit. Eicher Motors Chairman S Sandilya had clarified, however, that the actual remuneration for FY21 was at 1.04 per cent of profits, but the percentage had been lower in preceding years. Given this background, the board had approved a revised remuneration structure with a maximum cap of 1.5 per cent of profits.
Whatever the finer points of the issue, the episode has brought into sharp focus Lal’s performance at the helm of the company in the last few years, despite being widely accepted as Royal Enfield’s turnaround man since he took charge as MD in 2006-07.
Was the board’s subsequent vote of confidence justified? Certainly, Eicher has seen an over 18-fold acceleration in annual two-wheeler sales volumes on his watch, from 32,612 units in 2006-07 to 609,403 in 2020-21, and 822,724 in 2018-19, the last pre-pandemic year. However, when he, along with his family, relocated from Delhi to London in August 2015, it raised eyebrows since the firm had minimal presence abroad. In Lal’s own words, the shift was done to “understand the cultural nuances of the markets so that Royal Enfield becomes a global brand in 10-15 years”.
Did Enfield’s overseas plans work? The storied brand wasn’t unknown, since Royal Enfield India — acquired by Eicher in 1994 — had been exporting the famous 350cc Bullet to the UK and Europe.
