Royal Enfield targets LatAm, Asean as part of global strategy

Chennai-based Royal Enfield is working on a de-risk business strategy, which will see its share of global business double to 10 per cent of total volumes by 2015.

“This is the best way going forward. At present, we only export five per cent of our output but plan to add more countries in the coming years,” Mr Shaji Koshy, Senior Vice-President (Sales & Marketing), told Business Line.

As part of this objective, Royal Enfield will look at Latin America aggressively this year, which will supplement its rapidly growing presence in Europe and North America. The countries that have been identified as key growth centres include Uruguay, Ecuador, Argentina, Colombia and Peru.
Nerve centre

Mr Koshy added that Brazil was also on the cards during 2012-13 and indications are that this could be a critical nerve centre in the future given the sheer size of the country.

In addition, plans are under way to open a warehouse in Vienna (Austria) shortly, which could pave the way for an entry into relatively smaller parts of Europe. Eastern Europe is also tipped to be on Royal Enfield's radar as part of the mid-term strategy.
Asean entry

According to Mr Koshy, the company will shortly begin making inroads into the Asean region where Thailand, Malaysia and the Philippines are top priority for the moment. New Caledonia, further south in the Asia-Pacific region, will follow as also Madagascar near Africa.

“We will look at each and every potential part of the world for our growth. It is absolutely imperative if we have to insulate ourselves from downturns elsewhere,” he said.
Domestic demand

The domestic market, of course, is all-important and Royal Enfield already has its hands full coping with the long waiting list for its bikes, which range from four months to a year. Dr Venkatesh Padmanabhan, CEO, said the new plant to be commissioned near Chennai, will go a long way in reducing these numbers though it is still over a year away. Its capacity is around 1.5 lakh units and will help meet the requirements of geographies beyond India.

At present, Royal Enfield produces its bikes at its decades-old facility, north of Chennai, and expects to close this calendar with 70,000 units. Thursday saw the company launch two new 500cc bikes, the Classic Chrome and Desert Storm priced at Rs 1.65 lakh and Rs 1.58 lakh (on-road, Mumbai) respectively.