Makers of iconic bullet motorcycles Royal Enfield Motors, which has been facing capacity constraints to meet the demand growth, are likely to set up a new manufacturing unit near Chennai. The company is reported to have finalised a location for the proposed green-field project and the production unit, its second factory, is likely to come up at the Oragadam automobile corridor here.
The company has been evaluating sites in both Tamil Nadu and Andhra Pradesh to set up its second Bullet manufacturing unit. “We are very confident that Royal Enfield will remain in Tamil Nadu and will not go to any other place for its second plant,” a top state official told Financial Chronicle.
Royal Enfield, part of Eicher Motors, is reported to have committed a total investment in the range of Rs 300-350 crore over a period of time for the project. However, it is expected to invest Rs 150-200 crore initially in establishing the Bullet production unit, which may come up over 50-60 acre land area near Oragadam. The proposed plant will be bigger than the existing one. “We are in discussion with the state government and we hope to finalise things in about 10 days,” a top Eicher official said.
Royal Enfield has been facing production constraints to meet the demand growth for its motorcycles. Though the company has been gradually ramping up the production capacity at its Thiruvottiyur plant, near Chennai, the waiting period for its products continues to be very long. It has over six months waiting list in most of the models. The company has now improved its supplies significantly to over 6,000 units a month during the January-March 2011 quarter from about 4,500 last year. It hopes to achieve a monthly run rate of over 6,500 by the second half of this year as the order book continues to be strong.
As per the proposed expansion, Royal Enfield intends to ramp up the capacity with the establishment of new plant to 12,000 per month by the end of 2012.
Royal Enfield has expanded its presence from North America to Europe and Japan to Australia over the past five years. In 2010, UK ranked it among the top 10 selling motorcycle brands in the 125-500 cc category.
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