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Delhi based, Eicher Motors posted better than expected increase rise in consolidated net profit, which increased by around 32 per cent to Rs 96.25 crore for the fourth quarter ended December 31, 2013 on the back of strong demand for its motorcycles.
The company, which follows January-December fiscal, had posted net profit of Rs 72.72 crore during the same period of previous financial year. Total income from the operations rose to Rs 1,663.96 crore for the fourth quarter, compared to Rs 1,630.49 crore during the same period of previous fiscal.
For the year ended December 31, 2013, the company posted a consolidated net profit of Rs 394 crore, compared to Rs 324 crore during the previous fiscal. Its consolidated net sales stood at Rs 6,686 crore over Rs 6,329.94 crore in the previous fiscal.
“While the overall auto industry continues to be down we have recorded our highest ever total income from operations and also the highest ever operating profit of Rs 583 crore in the last fiscal year”, said Siddhartha Lal, managing director and chief executive officer, Eicher Motors.
Buoyed by the strong growth numbers Eicher Motors announced plans to invest Rs 600 crore over the next two years to increase production capacity at its motorcycle division Royal Enfield and to develop new global platforms for launching new products starting 2016.
"We will be making an investment of Rs 600 crore in Royal Enfield towards capacity expansion and development of new global product platforms over 2014 and 2015," said Siddhartha Lal, managing director and chief executive officer, Eicher Motors. Royal Enfield had produced 178,000 motorcycle sin 2013. The company will now increase production capacity to 280,000 units in 2014, which is higher than its earlier projected capacity of 250,000 units
"Last year, we had set a production target of 250,000 units for 2014, but now it has been revised to 280,000 units considering the demand for our bikes in the market," Lal said. By the end of 2015, capacity at the Oragadum facility would be completely utilised thereby taking the total production to around 500,000 units per annum. Lal said the additional capacity would help in reducing the waiting periods for various models.
Apart from enhancing production capacity, the investment of Rs 600 crore would be used for improving research and development (R&D) infrastructure and adding new products. Lal said: "In the next 5-7 years horizon, we will be entirely focused on the mid-sized motorcycle segment (250 cc-750 cc). We do not have any intention to enter below or above this segment. We are developing new platforms keeping in mind global ambitions of the company.”
The company, which sells Bullet, Classic, Thunderbird and Continental GT models, is also looking to enhance its dealer network in the next three years. "We currently have around 300 dealerships across the country. In the next 2-3 years this number would grow to around 500," Lal said.
When asked about progress on the 50:50 joint venture with US-based Polaris Industries, he said:"It is well on track for a commercial launch in 2015."
"We are trying to create a new segment in personal four wheel space. It is an on road personal vehicle, a new segment, which we are trying to create," Lal said when asked about JV's product development plans.
