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Eicher Motors Ltd.

BSE: 505200 Sector: Auto
BSE 00:00 | 29 Nov 3415.10 -27.65






NSE 00:00 | 29 Nov 3416.10 -25.30






OPEN 3450.00
52-Week high 3886.00
52-Week low 2110.00
P/E 43.03
Mkt Cap.(Rs cr) 93,403
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 3450.00
CLOSE 3442.75
52-Week high 3886.00
52-Week low 2110.00
P/E 43.03
Mkt Cap.(Rs cr) 93,403
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Eicher Motors Ltd. (EICHERMOT) - Chairman Speech

Company chairman speech

Dear Shareholders

I trust you and your families are safe and doing well.

I am writing to you at a time when the world as we know it is changing. Over the lastfew months the Coronavirus global pandemic and the ensuing emergency have resulted indisruptive changes in our world. We've seen a paradigm shift in the way we live the waywe work and in the way we connect engage and collaborate with people.

At the Eicher Group we've moved swiftly to tackle and respond to this situation and wehave taken several initiatives to secure the interests of our internal and externalstakeholders. We employed a three-pronged strategy to address and engage all stakeholdersoutside our fences close to our fences and within our fences. We worked to ensure ourcommitment and support to our dealers and suppliers and helped them with over Rs. 700crores as we believe that we need to ensure the sustainability of the entire ecosystem.We have made an initial CSR commitment of Rs. 50 crores towards relief and supportmeasures to fight the pandemic in India and are committed to increasing spends to deployadditional support and for longterm rehabilitation in the aftermath of the pandemic.

Businesses have been impacted too and the automobile industry in India and across theworld has been considerably hit. At Eicher Motors - both at Royal Enfield and VECV - wehave witnessed the impact of this situation as several parts of the world including Indiawent into lockdown.

Our manufacturing facilities and offices remained shut in compliance and so did ourstores and service centres.

We believe we have built our business on sound fundamentals that gives us enough roomto tackle unprecedented situations such as this. We have a solid balance sheet and cashposition a robust business model with a very focussed and cash- optimized approach astrong line-up of excellent products among the best retail footprint and overall anexceptional management team at Royal Enfield and VECV. I am confident that we are able topursue our focus and investment for the long term while we address near term challenges.


In the year ended March 2020 EML's consolidated net revenue from operations(reflecting the business of Royal Enfield motorcycles) was Rs. 9154 crores ConsolidatedEBITDA was Rs. 2180 crores and Profit After Tax was at Rs. 1827 crores.

Royal Enfield sold 697582 motorcycles in the financial year.

In an effort to increase the retail footprint in India and to cater to smaller townsand cities Royal Enfield announced the Studio Stores format and launched 600 new StudioStores during the year. These together with the 921 dealerships take Royal Enfield'sretail touchpoints to 1521 across India. In the international markets we now have 77exclusive stores outside of India and a retail network spread across 60 countries.

We have opened new consumer touchpoints in Thailand

Brazil Argentina France and the UK taking our total dealer touchpoints ininternational markets to over 660 stores including multi-brand outlets.

On the back of a challenging year growth momentum for the automobile industry wassluggish and subdued. At Royal Enfield we continued to push ahead with our long-termplans while adapting our strategies to tackle immediate challenges.

We remained focussed on creating more accessibility with the introduction of newvariants of motorcycles and on building engaging experiences for the customer.

It has been our constant endeavour to strengthen Royal Enfield's position as a trueglobal brand and as a catalyst for pure motorcycling. In that context it is a greatpleasure for me to report that we have had an excellent performance in markets outside ofIndia this year.

We have recorded an overall volume growth of 96% in international markets which hasbeen highlighted by overwhelming growth across all geographies - both developing marketsand matured markets have performed exceedingly well with Europe registering a 100% growthover last year. The 650 Twin motorcycles and the Himalayan have led this growth for usacross these markets as these gorgeous motorcycles received unprecedented response fromconsumers across the globe.

Royal Enfield expanded its retail footprint in the Asia-Pacific region this year bysetting up its first standalone flagship store in Seoul South Korea. The overallfootprint grew by 50% in key priority markets across the Asia-Pacific region. RoyalEnfield now features among the Top 5 brands in terms of volumes in the middleweightsegment in Thailand Australia-New Zealand and South Korea. In Europe we are now at No.6among brands in the middleweight motorcycling segment. This year we also started directoperations of our Thailand subsidiary. This will be instrumental for us to grow the RoyalEnfield brand and the middleweight motorcycling segment in the Asia-Pacific markets.

We have continuously worked to strengthen our technical competencies. This year wecompleted the set-up of our Global Headquarters in Chennai which also houses a world-classproduct development and technology centre. We now have the advantage of twin technologycentres in the UK and in India that house world-class testing and developmentcapabilities and work in close collaboration across projects.

Our focus this year in India has been to build accessibility and aspiration amongemerging markets within the country. With

this view we launched the Royal Enfield Studio Stores this year. These are smallerformat stores with leaner investment that gives us presence across smaller towns andcities in India. We opened 600 Studio Stores across India taking our overall consumerretail touchpoints to 1521. We also launched new variants of the Royal Enfield Bullet 350and the Classic 350 during the year to further enhance accessibility for consumers.

This was a landmark year for the Indian automobile industry as everyone transitionedto the new emission norms. At Royal Enfield we ensured complete BS VI compliance acrossour portfolio much ahead of the mandated timelines. I am also very happy to report that wewere among the first automotive companies in India to successfully sell all existinginventory of BS IV motorcycles before time. Astute production planning and closecollaboration with the retail network made this possible.

In addition to the BS VI compliant Classic 350 Bullet 350 the 650 Twin motorcyclesRoyal Enfield also launched the BS VI Himalayan in the fourth quarter of the fiscal year.The Himalayan bS VI has a vibrant new look and improved features that have made itinstantly successful in India and across the world. The new motorcycle has received greatreviews from media experts and from consumers.

The single-cylinder 500cc Unit Construction Engine has been an iconic part of RoyalEnfield's heritage. In January this year we bid adieu to the 500cc UCE platform with aspecial Classic 500 Tribute Black edition. These motorcycles were the last in India tocarry the iconic long-stroke single cylinder UCE 500cc engine and were exclusively made toorder in a limited production run that saw great response.

Over the last year the 650 Twin motorcycles have brought in a lot of first time buyersinto Royal Enfield. In Europe both motorcycles were very well received by ridingenthusiasts. The Interceptor INT 650 and the Continental GT 650 continued to win manyaccolades and awards globally. The list of prestigious awards include - Thailand Bike ofthe Year 2019 award in the 'Best Modern Classic MiddleWeight' category 'Best LAMS RetroAward' in Australia and 'Best Roadster' award in Philippines MCN Retro Bike of The Year2019 in the UK for Interceptor INT 650 and 2019 best-looking Naked/standard Motorcycle ofthe year from Motorcyclist magazine USA for Continental GT 650.

Royal Enfield motorcycles have always been the ideal canvas for customization and overthe last few years we have been focussing on making this an integral part of our brand'sjourney. The Royal Enfield Custom Programme was set up with a purpose of nurturing thespirit of self expression among the community and deepening engagement with motorcycling.This programme has seen significant forward thrust during this year with severalinteresting collaborations and participation across iconic trade shows and festivalsacross the world. During the year 2019-20 our programme showcased 37 new Custom Buildsacross 11 countries with several new properties being launched.

Rider Mania 2019 was a vibrant and exciting event as we had the best everparticipation of around 8000 Royal Enfield enthusiasts from across the world. We launchedseveral new exciting initiatives and significant among them was the launch of the RoyalEnfield Slide School the first demo of which was held at Rider Mania. The Slide Schoolwas launched in an endeavour to revive the culture of fun and engaging flat track racing.The first edition of the Slide School was held in February in Bengaluru and receivedwonderful response from all participants.

With a view to bring in newer formats of rides Royal Enfield focussed on greatercommunity inclusion and created new rides centred around customers' hobbies and interests.This year the first edition of Astral Ride - a distinctive ride that combines the passionfor astrophotography with the spirit of motorcycling

was conducted. We also conducted the first edition of the Himalayan Adventure -Rongbuk a treacherous ride across three of the Everest Base Camps.

We began a new journey towards Sustainability this year with the #LeaveEveryPlaceBetterinitiative in an endeavour to promote sustainable tourism and transport especially tomore ecologically fragile regions. We want to be able to preserve pristine touristdestinations and restore and sustain delicate ecosystems so that our generation andfuture generations can enjoy them responsibly. Our first steps in this programme have beentowards encouraging riders to be wary of littering mindful of plastic waste and leaveevery place they travel to cleaner than they found it. This year the Himalayan Odysseyand Rider Mania were conducted as a zero 'single-use-plastic' events. Participants inthese rides and events were delighted about this initiative and acted as catalysts tospread the word further among their riding communities. In the years to come we plan tointroduce many such initiatives that will reflect our commitment to sustainability andtowards our social mission and take the concept well beyond our riding community to thelarger tourism industry.

We continue our journey towards environmental and community led sustainabilityinitiatives at our manufacturing locations. This year we focussed on building initiativesto strengthen our resolve towards sustainability and improving performance standards. Weare making sure that we continue to remain water positive and have also facilitatedgroundwater replenishment and renovation of traditional water bodies near our facilities.In addition to ensure more green cover we have planted over 1000 trees around ourmanufacturing locations.

Royal Enfield has the largest the fastest growing and most engaged online motorcyclebrand community in the world.

We have a social media community of more than 7.5 million passionately engaged users asof March 2020 an increase of 30% from the last year. Our on-ground and on-linecommunities together make for a vibrant audience that share content and want to eagerlyengage with the brand.

For the past few months during the lockdown we initiated several digital campaignssuch as the #TripStory and the WhatsYourAdventure with a focus to keep our audiencesengaged through contextual campaigns. Our overall community participation levelsengagement levels and reach were at an all-time high and Royal Enfield was reported thesecond Most Engaging Brand in India during the lockdown.

We also introduced a new version of the Royal Enfield website to deliver a superioruser experience in terms of navigation and discoverability through a design that makesinteraction a lot more intuitive. We launched geofenced websites in 3 more markets thisyear - Korea Malaysia and Vietnam - taking our total website footprint to 21 countriesnow. We now also have an online configurator that allows a user to visualize the productwith his or her preferred choice of accessories. This is truly a step forward indelivering a vastly superior and continuous customer experience.

I do believe that we are very well poised to expand and lead the middleweightmotorcycling segment globally. We endeavour to build and grow the pure motorcycling way oflife and bring more and more people across the world to experience the joy of leisuremotorcycling. Our international markets are beginning to show significant and sustainablegrowth trends on the back of motorcycles we have recently introduced - the Himalayan andthe 650 Twin motorcycles - and we believe we have strong potential for further growingthese markets for Royal Enfield.

We are committed to remain invested in these geographies and continue our effortstowards building a robust ecosystem of rides events and community so we can furthermobilize more enthusiasts into experiencing Royal Enfield's pure motorcycling way of life.

The last few months have been challenging but as the lockdown gradually begins to easeout we are witnessing strong initial customer interest and confidence. Going forward wedo estimate an increased demand for personal transportation and two-wheelers as peoplewould be wary of using public transport. This we believe will augur well for us and forthe industry as a whole. At Royal Enfield we continue to make concrete inroads to expandour retail network while we further strengthen our supply chain and vendor ecosystem.With an aim to further build accessibility through a host of seamless digital solutionsand a variety of financial solutions we are confident of capitalizing on this demand asthe situation stabilizes.


The commercial vehicle industry has been going through a very challenging time over thelast year. The medium and heavy commercial vehicles segment was severely impacted duringthe year and high discounting in the sector led to an impact on profitability. Apart fromthis VECV also had to tackle challenges in retail finance availability change inregulation leading to increase in payload and the transition to new emission norms duringthe year.

For the year ended March 2020 VECV's total revenue from operations was Rs. 8524crores EBITDA* was Rs. 415 crores and Profit After Tax was Rs. 58 crores. VECV sold48721 trucks and buses in the year and 28383 Medium-Duty engines (88% of which wereexported). VECV also exported 4568 vehicles and began manufacturing trucks for theIndonesia and South African markets under the UD brand where we think there's asignificant growth potential. During the year VECV has also been able to improve itsmarket share position across segments. While the industry witnessed a decline of 40% VECVwas in a better place in comparison with a 33% volume drop.

VECV was the first company in the Commercial Vehicle Industry to migrate to BS VI normswell before the mandated timeline. Given VECV's experience of more than six years insupplying Euro 6 compliant engines to Volvo we have an edge in handling the challengesposed by the BS VI technology.

In line with our vision to drive modernization in commercial transportation VECVintroduced the Pro 2000 series the new range of light and medium duty vehicles. Thesevehicles set new industry benchmarks for industry-first features in enhanced reliabilitysafety comfort and efficiency. The new vehicles entailed indigenously developing two newengines (two-litre and three-litre engines) designed from scratch and two new contemporarystyle cabins 1.8 metre and 2 metre wide.

We also undertook a complete modernization of our fleet at VECV this year. We haveintroduced several new state-of-the- art features in our trucks and buses aided by theVolvo Group making them relevant and more efficient for Indian conditions while adaptingcontemporary world-class technology.

During the year VECV started operations at the new truck plant at Bagroda near Bhopalfor the assembly of new engines for our Pro 2000 series. This manufacturing facility isbuilt to meet the Industry 4.0 standards. We expect new trucks

to start rolling out of this facility during this year. This new facility togetherwith our manufacturing plant at Pithampur significantly increases our manufacturingcapacity.

We hold true to our brand promise of 'ensuring the best uptime in the industry' andendeavour to be a commercially focussed organization. This year we set up the 'UptimeCentre' a first-of-its-kind initiative in the industry. These centres operate 24x7 andcan provide remote diagnostic services and real-time support to on-ground technicians bylogging into any truck at the dealer workshop or via the Roadside Assistance support team.This will be extremely advantageous for our customers. Furthermore we have plans tointroduce predictive maintenance to avoid potential breakdowns thereby increasing uptimefor our customers.

VECV continues to remain strong in the high-end niche segments of coal mining andacross other applications in the areas of construction cargo movement among others.

In international markets VECV has made further progress in high growth potentialmarkets like Indonesia and Malaysia in SouthEast Asia few more markets of the Middle Eastand Africa apart from our strong presence in India like markets of South Asia.

While we expect the current year to continue to be challenging we remain focussed onour long-term initiatives and are optimistic that the industry will be back on track soonlargely led by investments in infrastructure. At the same time we are bringing sharpfocus on cost management and improving productivity. Our superior technology and expertisegives us the edge for the BS VI journey in future. We will continue to focus on drivingmodernization in the commercial vehicle industry and we hope to better the market as theeconomy improves and the industry comes back on track.

Looking ahead

The global economic impact of the COVID-19 pandemic is likely to be significant aspointed out by several experts. As the virulence of the virus slows down countries andeconomies will begin to reboot. We do believe that recovery is likely to be gradual fromhere but there is marked optimism for economies like India. We will have to adapt to whatwill be the new normal going forward.

At Eicher Motors we have the experience of building resilient and profitablebusinesses with very strong business models that are well prepared to meet such extraneouschallenges.

I am confident of the vision that both Vinod Dasari and Vinod Agarwal have for RoyalEnfield and VECV respectively and believe that we are well poised to take Eicher Motorsto the next level. Both gentlemen have been inducted to the Board of EML and thisstrengthens not just our governance and leadership but also fortifies our vision andbrings in better synergies.

We have robust business models for both Royal Enfield and VECV and have committed andcompetent teams. Both companies have strong product pipelines and will continue to pushforward with our long-term strategic plans.

Siddhartha Lal

Managing Director Eicher Motors Limited