Royal Enfield was one of the first auto companies that entered Chennai in 1955.

Royal Enfield has its productions plants based in Channai only. The first plant in
Tiruvotriyur is operational since 1955. The sales were meager till few years back
so the same plant was able to fulfil the demand. Subsequently when the demand
started rising the production capacity of the plant was increased to the fullest.
In 2011 to expand its current production capacity owing to the growing demand for
its motorcycles worldwide it was decided that a second plant at Oragadam will be
started in Chennai itself, thereafter second plant started production in 2013. The
plant, spread over 50 acres, got completed in first quarter of 2013. The new plant
increased Royal Enfields capacity of 70,000 units per annum to 1,50,000 units per
annum. The new plant is equipped to produce the entire product range of Royal
Enfield motorcycles. For Royal Enfield, expanding in Chennai comes with several
advantages. Proximity to existing plant in Tiruvotriyur brought synergies for the
supply chain as well as existing human capital. Further, Chennais growing
importance in the global automotive industry combined with the effective auto- eco
system at Oragadam augmented the growth curve. The current combined
production capacity of both plants is 450,000 units per annum. The company has
recently concluded second round of expansion at its Oragadam plant.
Royal Enfield announced it will install its third manufacturing facility and increase
its production capacity in India. The aforementioned plant that will be set up by
2018 in Vallam Vadagal on the outskirts of Chennai will allow the bikemaker to
double its total production capacity to 900,000 units per annum as compared to the
current output of 450,000 units. The TamilNadu Government has allotted land at

the SIPCOT Industrial Growth Centre, Oragadam for building the new Royal
Enfield plant.

Siddhartha Lal, CEO and Managing Director, Eicher Motors, informed that the
first phase of the new plant will aid the proposed increase in production and the
work for which will begin in 2016. Other than the new plant, Royal Enfield is also
looking to launch new products; well, 2 to be precise. Mr Lal said the bikemaker
will bring in 2 new models, out of which one will be launched in early 2016 i.e.
Hiamalayan, while the other has an expected launch date of 2017.
Revving up the throttle on its expansion plans following 'huge' demand, Royal
Enfield is looking at ramping up production at its two facilities besides setting up a
third plant. The Eicher Motors' company has been witnessing huge demand for its
products soon after launch of various models, including the 'Classic' range.
In 2013 company produced just over 1.70 lakh motorcycles and in 2014 it made
three lakh units. So there was about 70-75% increase in capacity from last year to
2014. For the proposed third unit at Vallam Vadagal, over 50 acre land was
acquired at a cost of Rs 57 crore. This plot is located within 10 km of Oragadam
facility. This prepares for future expansion to meet growing demand of
motorcycles worldwide.
Eventually, the two plants put together will be able to manufacture six lakh units.
Right now, company is focusing on ramping up the capacity of Oragadam plant
which became operational in 2013.

Currently average waiting period on all models is around five months which has
come down from 10 months after the capacity increase of second plant. Royal
Enfield will continue to focus on demand generation activities because they want
to continue to grow the market and supply will catch up. Royal Enfield reported a
47.45% increase in total sales in October 2014 at 26,039 units as against 17,659 in
the same month of previous year. Exports in October 2014 grew to 529 units from
353 units shipped during same month of last year.

The capacity expansion is part of company's global aspirations. In July, last year
Siddhartha Lal, moved to London to strengthen its motorcycle business overseas
market. Currently, India contributes 96% of the total sales of Royal Enfield which
they are looking to increase. The cult bike maker has been gaining ground in
domestic as well exports market. In the nine months (Jan-Oct,2015) of the year
Royal Enfield's sales grew by 51 percent at 364178 units sold compared to 240993
units sold in the previous year in the same period. Royal Enfield's 60 percent sales
in India come from top 20 cities which opposite compared to regular two-wheeler
company.
Between January-October 2015 exports also registered a strong growth of 37% at
7412 units compared to 5422 units in the same period a year ago.
The company continue to have higher order book than the production capacity. The
company is looking at reduce the waiting period which is two-four months. In
2014 the company was producing about 25,000 units a month which is now 45,000
units and by the year end they expect it increase it to 48000 units a month.