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Eicher Motors: In The Driver’s Seat
His ‘less is more’ strategy has revved up Royal Enfield’s sales in India and set the stage for growing international business
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Tall and rugged, 42-year-old Siddhartha Lal, the managing director and chief executive of Eicher Motors, is easily identified with the Royal Enfield brand, the group’s most prized possession.
It was the year 2000 when Lal decided to rescue the ailing Royal Enfield brand. He saw a huge opportunity, courtesy the legacy and cult that surrounds the motorcycle and with the knowledge that aspiring Indian bikers wanted a powerful machine at affordable prices.
As the CEO of Royal Enfield, he made minor changes in design and put the focus on marketing strategies. From sponsoring mountain biking events and cross-country runs to rapidly expanding its network across India, Royal Enfield soon became the most preferred brand for bikers who wanted something more than just a bike. Royal Enfield promised them a lifestyle!
And the sales figures reflect the turnaround. The company that sold just 25,000 bikes in 2005 has logged in more than 4,50,000 bike sales in the first 11 months of the current fiscal. The scale of Eicher Motor’s success under Lal’s leadership is also reflected in the share price on the National Stock Exchange: It moved from Rs 300-levels towards the end of 2005-06 to Rs 18,470-levels in 2016.
Lal, who strongly believes in the “less is more” mantra, took a tough call when he was appointed Eicher’s chief operating officer in 2005.
The group had a diverse portfolio of 15 businesses, including tractors, trucks, motorcycles, components, footwear and garments, but none was a market leader. After intense study, Lal decided to divest 13 businesses and put all his money and focus on brand Royal Enfield and trucks.
Leading From The Front
Lal, who has a master’s degree in automotive engineering from the University of Leeds in England, says his involvement in product development is similar to that of a technical officer. He is more of a project-oriented man than a true manager who’s on top of everything.
The Himalayan, the recently launched adventure tourer from the Enfield stable, went through years of testing as Lal wanted to ensure that the bike would run smoothly in every possible terrain. But instead of hiring professionals to test the bike, Lal himself took the bike to many rough terrains across the globe.
“There is no compromise on quality and until we are convinced that the final product is similar to what we have perceived, we won’t give it a green signal,” says Lal.
He has also backed up his commitment to quality by focusing on gathering top talent for his Royal Enfield army. He appointed Rod Copes, a former Harley Davidson manager, as president for North America operations; Rudratej Singh of Unilever, as president of Royal Enfield; former Triumph project manager Simon Warburton as head of product planning and strategy; and ex-Ducati designer Pierre Terblance as its design chief.
On The Right Road
After driving the bike segment in the right direction, he turned his attention to the commercial-vehicle segment in 2006. He reshuffled the top management and formed an alliance with Swedish truck maker Volvo, which bought 50 per cent stake in the joint venture Volvo Eicher Commercial Vehicles (VECV) for Rs 1,082 crore.
The venture invested Rs 1,000 crore in a new engine-making plant to make India a global sourcing hub for Volvo, new product platforms, paint shops and lines and a new bus body plant.
After some initial hiccups, the segment is now on the recovery path and posting positive results. VECV sales were up by 57 per cent year-on-year for February 2016.
Seizing an opportunity to fulfil the average consumer’s desire to own a bike that works as a daily commuter and a cruiser, Lal has achieved huge success by placing Royal Enfield as a strong force in the mid-weight category.
Under his leadership, Royal Enfield re-entered its motherland, the United Kingdom. In the past two years, the company has opened outlets in America, Europe, Latin America and South Asia, and is shipping to 50 countries. As per Society of Indian Automobile Manufacturers (SIAM), it exported 8,102 units, up 28.81 per cent, in the first 11 months of fiscal 2015-16.
As Lal said while launching the Himalayan: “With a strong team and products, Royal Enfield is setting the base for its international business, the same way it built the India business between 2000 and 2010.”