The famous saying: “fortune favours the brave”, goes very well with Siddhartha Lal, managing director & CEO of Eicher Motors. Under his leadership, the Gurgaon-based company not only reinvented itself but is well on its way to become a major global force in the mid-size motorcycle segment. Sales of Royal Enfield (RE) bikes continue to be in double digits, and have already surpassed 5,00,000 units in the on-going financial year.
The tall and rugged CEO, who is often seen wearing black leather jacket, knows how to decode future trends. When sales of Royal Enfield bikes were low, he trusted its brand appeal and focused more on marketing. It launched Himalayan to cater to the growing number of adventure enthusiast riders and brought transformational changes in its commercial vehicle segment to suit the changing dynamics of logistics.
Lal joined Eicher in 1999 and soon took over took over as the CEO of the ailing Royal Enfield brand in 2000. In 2005, when he was appointed as the chief operating officer of Eicher Motors, he had to do take some tough calls. The group had a diverse portfolio of 15 businesses, including tractors, trucks, motorcycles, components, footwear and garments, but none was a market leader. After intense study, Lal decided to divest 13 businesses and put all his money and focus on brand Royal Enfield and trucks. Lal also made crucial hiring for the top post, be it president at Royal Enfield, Rudratej Singh, who comes from Unilever, or Rod Copes, a former Harley-Davidson manager, to head North America operations. In the last 10 years, RE became the fasted growing motorcycle brand in the world.
In the third quarter ended December 2016, Eicher Motors reported a 61.7 per cent increase in net profit at Rs 399 crore. Lal says, “Eicher Motors has continued its strong run and reported its quarter results posting the highest ever quarterly income from operations at Rs 2,071 crore for Q3 2016-17, a growth of 42.7 per cent over the corresponding period last year. In this quarter, the company also recorded its highest ever and best-in-class EBITDA at 31.4 per cent.”
In the past three years, the company opened outlets in America, Europe, Latin America, South Asia and recently in Australia. Total exports in the nine-month period, from April to December 2016, grew by a whooping 78 per cent to 10,545 units from 5,943 units a year ago.
During the third quarter of FY16-17, the company sold 1,73,838 units of two-wheelers in comparison to 1,25,690 units during the same period last fiscal, reporting a total growth of 38.3 per cent. Lal says, “Despite demonetisation, Royal Enfield has maintained its strong volume growth in the third quarter of FY16-17. Our order book continues to be strong.” During the April-December period, Enfield’s Total sales in the domestic market was at 4,88,262 units as against 3,59,968 units in the year-ago period, up 36 per cent. While sales of Royal Enfield motorcycles grew 38.3 per cent to 1,73,838 units last quarter, those of VE commercial vehicles, a Volvo Group and Eicher Motors joint venture, dropped around 7 per cent to 11,784 units.
During the months of November and December 2016, the commercial vehicle industry was severely impacted due to demonetisation. The market conditions appear to be improving after a sharp fall in sales immediately after demonetisation.
BW Reporters
The author is Senior Correspondent with BW Businessworld
