Royal Enfield eyes high-end market, plans to double production

The latest mantra in the Chennai-based Royal Enfield is ‘555'. And it has nothing to do with the famous cigarette brand.

“It is our way of articulating the company's three-point agenda of producing 5,000 bikes each month, posting a turnover of Rs 500 crore and, finally, an operating profit of Rs 50 crore,” says Mr R.L. Ravichandran, Chief Executive Officer. Royal Enfield, better known as the Bullet manufacturer, is already close to achieving each of these targets.

“We now plan to produce 70,000 bikes in calendar 2011 and are confident of growing even stronger from now,” he adds. Capacity at the decades-old plant is a big issue which has prompted the company to scout for a second facility. From the viewpoint of logistics, it would make sense to zero in one of the city's auto hubs which are home to Ford, Hyundai and Renault-Nissan but Royal Enfield is keeping the location under wraps for the moment. “A decision will be made soon and we are naturally excited about taking the success story forward,” Mr Ravichandran says.

Things were not as hunky-dory when he took charge five years ago and production numbers were little to write home about. “Nobody was even thinking of a second plant then,” he quips. Royal Enfield was never in the volumes game but even as a niche brand, the magic was missing in the market.

The company then began putting the building blocks in place which included a sharper focus on costing and quality, getting the product mix clearly defined and establishing a smart retail network. It was particularly important to ensure that each of the models did well since Royal Enfield was not in the mass market and just could not afford a failure.

The recently launched Classic 500 did wonders in terms of taking the brand to another level. There is still a long waiting list for the bike and the company is pulling out all stops to ensure quicker deliveries.

“Capacity is the biggest issue but we are moving heaven and earth at this plant to ramp up numbers,” Mr Ravichandran says.

It is a heady feeling though, he admits, to have this kind of demand which is a testimony to the hard work put in by the team over the last few years.

In his view, one of the biggest achievements relates to the “incredibly smooth transition” of the unit construction engine across all the models. It was not an easy task, especially with the new fuel emission norms, but the exercise went off without a hitch.

The following weeks will see Royal Enfield launch the Classic 500 in California. “It is a big moment for us and will pave the way for a bigger script in North America,” Mr Ravichandran says. The bikes are already being retailed in Europe and the commissioning of the second plant will see the company's global business grow further.

source : The hindu