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Royal Enfield eyes expansion; buys 50 acres in Tamil Nadu

Royal Enfield is planning to expand its production capacity at Chennai. The company has acquired a 50-acre plot, 10 km from the existing facility at Oragadam, near Chennai.

While the company did not disclose the proposed capex, total cost for acquiring 50 acre land was Rs 57 crore.

"At Royal Enfield, we have set our sights on becoming the leaders in global mid-sized motorcycling segment and we are working towards it persistently. While we continue to ramp up capacity at our Oragadam plant month on month, we have recently acquired a 50-acre plot in Vallam Vadagal, near Chennai, Tamil Nadu. This plot is located within 10 km of our Oragadam facility. This prepares us for future expansion to meet the growing demand of our motorcycles worldwide," Siddhartha Lal, managing director and chief executive officer, Eicher Motors, said.

Royal Enfield's current capacity from both plants - at Thiruvottiyur and Oragadam - will be 3,00,000 units for 2014. In 2015, the company intends to manufacture 4,00,000 units from these two plants.

Eventually, the two plants put together will be able to manufacture 6,00,000 units.

"The recent acquisition of the 50-acre plot prepares us for future expansion to meet the growing demand of our motorcycles worldwide. However, we have not decided the capex and the capacity for the same and it will be communicated in due course," said Lal.

Total annual sales (both domestic and exports) for the company is expected to be about 3 lakh units this year as against 1.78 lakh units last year.

The second phase of expansion is expected to be completed by the middle of the next year, following which it would have a installed capacity of 6,00,000 units per year.

In 2013, Royal Enfield rolled out its first product from a new Rs 150-crore facility at Oragadam, near its old factory in Chennai. It forms the bedrock of Royal Enfield's plans for its second decade of the turnaround. The old factory will now take on the role of the supplier where the engines will continue to be made and the company's chrome-plating operations - which is a key part of the product aesthetics and branding. The first motorcycle from the new facility was a 500cc Desert Storm.