Eicher Motors to invest Rs 1,300 cr this fiscal

Gurgaon-based Eicher Motors Ltd (EML), which reported a consolidated net profit of Rs 462 crore for the quarter ending March, has announced plans to invest Rs 1,300 in its motorcycle and commercial vehicle (CV) business during the current fiscal.

The company had reported a net profit of Rs 459 crore in the year-ago period.

The company’s profits would have been better had it not taken an impact of Rs 187 crore due to winding up of its personal utility vehicle business, which was in collaboration with USA’s Polaris Industries Inc.

Eicher Polaris Pvt Ltd (EPPL)'s Board took the decision in March to shut the company with immediate effect as the business failed to take off after getting incorporated in 2012.

According to the company management, the investment of Rs 800 crore for its motorcycle business includes setting up phase-2 of its third plant at Vallam Vadagal near Chennai, completing construction of the technology centre in Chennai this year, development of new products, among other things.

The targeted capacity for this financial year is 950,000 units. Also, the company will also be setting up wholly owned subsidiaries in Indonesia and Thailand.

In this quarter, Eichers's Royal Enfield sold 226,907 motorcycles, posting a growth of 27% year on year. Further, the company also posted record quarterly revenue from operations at Rs 2,528 crore during the fourth quarter, a growth of 34% on year.

According to the management, the company has about 825 dealers in India for its motorcycle business. Globally, the company has about 540 dealers, of which 36 are exclusive ones.

Similarly, the company has plans to spend about Rs 500 crore in its CV business for which it is in partnership with Sweden’s AB Volvo.

Commenting on VE Commercial Vehicles's (VECV) performance, Siddhartha Lal - MD and CEO, Eicher Motors said during a conference call that despite the heavy discounting by legacy players in order to keep the smaller and newer players out, the company performed rather well. VECV recorded 33% growth year on year, outpacing the industry growth of 21%.

When asked whether Eicher would like to get into other segments again, especially after the failure of its partnership with Polaris, Lal added that at present there are no plans as such and they would rather like to concentrate solely on the existing business of motorcycles and the partnership with Volvo in the form of VECV.

On electric mobility, Lal said that the company is working on the concept for a very-long term horizon, without any preconceived ideas or notions. He added that the economics of the electric vehicles may not be working out at present but may make sense maybe five to six years down the line.