Royal Enfield all fired up with growth plan
With a brand-new plant at Oragadam that ramps up its capacity to 150,000 units, Royal Enfield has its work cut out — cater to burgeoning local demand for its motorcycles and also establish a base for a global role. Brian de Souza reports.
It’s undoubtedly one of the Indian automotive sector’s trail-blazing turnaround stories, of a brand that could have been lost had it not been for a decision taken a decade ago that saw the Royal Enfield nameplate make a comeback. And adding a significant milestone in that amazing journey, indeed capping all the hard work that went in, was the opening of Royal Enfield’s new Rs 150-crore facility at Oragadam, near Chennai, on April 30.
The new plant forms the bedrock of Royal Enfield’s plans for its second decade of the turnaround even as the company embarks on a game-changing transition from its old, legacy plant at Thiruvottiyur, 72km away.
“In 2011, we took the decision to start to build a new plant and did a master-plan for 500,000 units,” Siddhartha Lal, managing director and CEO, Eicher Motors, which owns the bikemaker, told Autocar Professional.
The first motorcycle from the new facility – a 500cc Desert Storm – has now rolled out and for Royal Enfield, this heralded more than just a product rollout. While the new plant is state-of-the-art, built over a 50-acre plot, it will test the company’s well-laid out strategy to transition to a new phase of growth. The inauguration was just the first step.
Future sense
As part of the transition, the assembly and painting of the product range will be moved to the Oragadam facility. However, the Thiruvottiyur unit will take on a new role that can be described as being akin to that of a supplier. So engines will continue to be made at the old facility as well as the company’s unique chrome-plating operations which, in the words of chief operating officer B Govindrajan, is a key part of the product aesthetics and branding. The plant also provides scope for Enfield’s spare parts and could well be roped in at a later stage for the export strategy, given its proximity to the port but that is still some time away.
The company has also set itself a target of selling 175,000 motorcycles in 2013 (Royal Enfield follows the calendar year), up from 75,000 units in 2011 and 113,000 units last year. The company is premising this increased target on the tremendous demand for its products in which all models have a waiting list. The longest is for the Bullet Classic 350 which, in some local markets, stretches verily to a year.
While the new plant begins its own journey to what it aims in terms of takt time, one minute, one bike, Royal Enfield has, according to Lal, "triggered off the second phase" as well. As part of this phase, the company will further increase production capacity to 250,000 units in 2014, thus having the ability to scale up output to respond more quickly to market demand. This will also involve new investments, said Lal.
Starting afresh
The inauguration of a new plant always gives its manufacturer the opportunity to have the best of manufacturing processes as well as equipment and this was clearly in evidence when we were given a tour of the facility as part of a group of journalists.
Here are some examples: the vehicle assembly line at Oragadam has an ergonomic workstations and torque-controlled tools with feedback advice. The state-of-the-art painting plant has a zero-liquid discharge, thus ensuring that no paint is wasted and with bike parts painted in the horizontal mode, the surfaces are more optimally painted. The painting capacity of the unit is 600 units per day. Overall, a robotic painting and powder coating system has been added. However, the pinstriping work will continue to be manually done to as the company’s press release puts it “to lend a human touch to each motorcycle."
“This new plant has been benchmarked to achieve the highest level of quality and productivity. We have re-tooled many of the parts that make up our motorcycles – so that they are of exacting accuracy and finish. The substrate quality of the sheet metal parts, for example, is now at par with the best in the world; when these parts undergo the world-leading CED and paint process here at Oragadam – they will have a surface finish and life of the highest quality,” said Lal.
With the new facility, Royal Enfield will endeavour to lower its waiting list. The Oragadam line should be able to roll out 800 units on a two-shift basis. And it will also look at making a solid international impact with its product range. It certainly pays to have such a top-notch facility when Royal Enfield puts into play its global strategy. At present, its bikes go the UK (about 400 sold) and the US (600 units sold) among other destinations. For the local market, the focus is on widening its reach with the company setting up about five dealerships a month.
One would have to go quite far back in time to see how the Royal Enfield story unfolded in India. That began when an order was placed for the army in 1953 which led to a plant being set up in 1955. Even as the new facility begins its own journey, the old plant was stretched to achieve production of 12,000 bikes in March 2013, an achievement that the think-tank at Royal Enfield has every reason to be proud of.
Photofeature on how a Royal Enfield takes shape at Oragadam in the May 15, 2013 issue of Autocar Professional