Royal Enfield to set up new production unit near Chennai at Rs 800 cr

Royal Enfield, which makes the iconic ‘Bullet’ retro motorbikes in India, said it will invest Rs 800 cr this financial year to create the second phase of its factory at its Vallam Vadagal site near Chennai.

The company, whose products cost upwards of Rs 1.15 lakh, has seen sales of its motorbikes rise rapidly in recent years as more and more Indians splurge on premium motorbikes.

It was selling about 35,000 bikes per month in 2015. This rose to about 55,000 in 2016, and is now at around 78,000.

The company’s main factory is located at Oragadam on the outskirts of Chennai.

In August, it inaugurated its new factory at Vallam Vadagal, also near Chennai, boosting its production capacity to about 79,000 per month.

Despite this, said the company, it is not able to meet the demand for its bikes, and has decided to set up one more unit at Vallam Vadagal.

“Our demand continues to exceed supply, and we continue to see strong growth from all our markets. Therefore, we have decided to expand our production capacity with the second phase of our Vallam Vadagal plant near Chennai, Tamil Nadu,” said Siddhartha Lal, MD & CEO of Eicher Motors, which acquired the Indian operations of Royal Enfield in 1994.

He said some of the Rs 800 cr capital expenditure will be used to complete its Technology Centre in Chennai.

“We continue to strengthen our offerings with new models and variants such as the new Thunderbird X, the Classic Gunmetal Grey, Stealth Black and Redditch series, as well as our soon-to-be-introduced Twins,” he added.

SOUTH EAST ASIA

The company, which entered the South East Asian markets like Thailand and Indonesia two years ago, said it will aggressively expand in the region in coming days.

“Royal Enfield’s unique and evocative motorcycles have found strong traction in the region,” it said.

Royal Enfield has decided to set up wholly owned subsidiaries in Indonesia and Thailand in 2018-19 to strengthen the brand and accelerate market development, it added.

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