Dear Shareholders,

I’m writing to you after what’s been a fairly tough year for the Indian automotive industry and your company. The latter half of 2018-19 was very challenging for the industry in India with a slowing economy, coupled with price increases driven by a number of regulatory changes, weakening demand across the industry.

After several years of double-digit sales growth, we recorded flat sales volumes at Royal Enfield as slowing economic growth along with price increases brought on by regulatory changes affected demand. VECV was also affected by the economic slowdown, liquidity crisis and an all-time high discounting across the commercial vehicles industry.

We believe our fundamentals are robust, and that we have built outstanding capabilities for our next phase of growth and evolution. The trend of premiumisation continues to show significant potential for Royal Enfield in India and many parts of the world. For the CV industry, we continue to believe that we can be the catalyst to drive the modernisation of commercial transportation in India and other developing markets.


Royal Enfield

In the year ended March 2019, EML’s consolidated net revenue from operations (reflecting the business of Royal Enfield motorcycles) was up by 9% to Rs. 9,797 crores, compared to Rs. 8,965 crores recorded for the year ended March 2018; Consolidated EBITDA was Rs. 2,903 crores, up by 3% compared to Rs 2,808 crores; Profit After Tax rose to Rs. 2,203 crores from Rs. 1,960 crores in the same period last year.

Royal Enfield sold 822,724 motorcycles in the year, largely flat from 820,121 motorcycles sold last year. In 2018-19, we added 90 dealers in India and the Royal Enfield network strength was 915 dealerships as of March 2019. We now have 42 exclusive stores outside of India, spread across 19 countries and we just began sales in South Korea with our first exclusive store in Seoul.

In June 2018, we introduced the limited edition Pegasus at the Imperial War Museum in Duxford, U.K. Inspired by the RE/WD motorcycle, lovingly known as the Flying Flea, which played a pivotal role in World War 2, only 1,000 motorcycles were available across the world. We sold all the 250 motorcycles meant for India in just 178 seconds via an online sale! We also successfully introduced Anti-lock Braking Systems (ABS) on all our motorcycles, well ahead of the regulatory deadline, starting with the Signals, inspired by our long association with the Indian armed forces.

2018-19 will be remembered as the stand out year for Royal Enfield’s global ambitions, with the fantastic 650 Twins going on sale. The Interceptor 650 and Continental GT 650 have emerged as serious contenders for riders across the world, looking for simple yet charming, engaging and fun to ride motorcycles.

We have been making steady progress in International markets with the success of the Himalayan, and more so since the Twins went on sale around the world. The Twins have only had a few months of sales in 2018-19, and in our key priority markets such as Thailand and Brazil, we are now expanding our distribution. We have also formed our wholly-owned subsidiary in Thailand, where the customer response to our products has been fantastic.

To transform RE into an experiential brand, selling a motorcycle has to be seen only as a start of the relationship with our customer. Our ambition is to become #1 in customer satisfaction in 2019-20 (we ranked #2 last year for customer satisfaction by JD Power) and to maintain that position over time. To do so, we need to dramatically change the entire ownership experience for our riders. We have various initiatives underway that will give our riders more support and confidence in our brand.

As I look ahead into the longer term, I see that we are in the perfect space in the motorcycle industry globally. I believe the trend for premiumisation of most product categories, including motorcycles, in India and developing markets will continue for the next few decades; and we are very well positioned for that. In addition to outstanding and distinctive premium motorcycles, our brand experience, distribution, and organisational approach are all upmarket - creating a unique and desirable positioning in people’s minds. In developed markets, there is a trend towards down-sizing and simplification - and again, we are on the right end of that!

Our 2030 goal is to catalyse the global motorcycle market towards mid-size motorcycles, by making aspirational motorcycles and a world of pure motorcycling experiences that are still accessible. We will also create symbiotic products and a world of deeply engaging and frictionless experiences delivered by us, our partners and the ecosystem that we harness.

To achieve our ambitious goal, which will make Royal Enfield India’s first premium global consumer brand, I strongly believe that we need a leader with a fresh perspective and approach. I am absolutely delighted that Vinod K. Dasari has joined us as the new Chief Executive Officer of Royal Enfield. I cannot think of a better person to lead Royal Enfield into its next phase of evolution to a global brand. Vinod will also join the EML board as Executive Director.

Vinod Dasari needs no introduction to most of you. He’s amongst the top few CEOs in India. This is not just my opinion; he has won many accolades for his leadership including “CEO of the Year” from Business Today and Business Standard in the recent past.

I have observed him in his previous role, and he has really shown courage, innovation and drive, as well as reshaped many of the dynamics of what is usually a slow-moving industry.

While that proves his credentials as a CEO and a leader, it’s much more than that. Vinod, first and foremost, is a people’s person. His real strength, as I see it, is in guiding, supporting, enabling, and encouraging people and teams to perform their best. He moves around a lot, and is good at getting the pulse of the organisation, customers, dealers, suppliers, and the ecosystem - and then acting on that.

I am convinced that Vinod’s leadership combined with the fantastic team at Royal Enfield will create magic together for our next phase of growth.



At VECV, while we saw strong demand in the first half of the year, sales slowed considerably in the second half. A slowing economy, a tightening of credit from Non Banking Financial Companies (NBFCs) and new axle loading regulations led to a drop in demand. All-time high discounting across the industry hurt profitability. VECV has focused on profitable growth and as a result, and has been disciplined in discounting.

In the year ended March 2019, VECV’s total revenue from operations was up by 15% to Rs. 11,600 crores, compared to Rs. 10,049 crores in the previous year; EBITDA was Rs. 988 crores, up by 9% compared to Rs. 905 crores; Profit After Tax rose to Rs. 475 crores from Rs. 472 crores in the same period last year.

VECV sold 72,969 trucks and buses in the year, an increase of 11% from 65,932 units in the previous year. We produced 39,827 Medium-Duty engines (84% of which were exported), an increase of 14% from 34,805 engines in the year ended in March 2018. Our exports rose 11% to 10,010 commercial vehicles from 9,001 units a year earlier, and we began manufacturing trucks for the Indonesia and South African markets under the UD brand, where we think there’s a significant growth potential.

At VECV, we have clearly identified that our brand promise of “ensuring the best uptime in the industry” will be a key differentiator for us, and we need to ensure that we create a customer experience that is truly best in class. While we have made good progress with building a wide distribution network and strong aftermarket support, creating a superior customer experience by ensuring industry best uptime and retail excellence is critical for our long term success.

The coming year is critical for the industry with the run-up to the implementation of BS-VI emission norms from April 1, 2020. At VECV, we see this transition as a big opportunity. We have had a fantastic experience with this technology and we have produced tens of thousands of Euro 6 engines for some time now - for export to Volvo globally. I’m sure that we will be well prepared to seize the opportunity that this transition gives us.

This year, we will be aiming to sustainably grow our market share and achieve profitable growth especially by breaking through in the HD segment where uptime is of supreme importance. Our Pro 6000 series is gaining in reputation as the definitive benchmark in the value truck segment, and this segment could possibly become the mainstay post BS-VI. Based on the new axle norms in the 48-ton and 55-ton segments, we have expanded our product portfolio by adding new models. We will continue to enhance our LMD portfolio with an increased range of products such as our recently launched Pro 2000 platform. In our endeavour to drive modernisation of commercial transportation, we have also introduced electric buses and industry-first 7-speed transmission. We will continue to press on with our commitment to build products that deliver industry leading mileage and performance.

By April 2020, we plan to complete construction of our new plant in Bhopal with a capacity to produce an additional 40,000 units a year. When completed, our overall capacity will be 130,000 units a year.

I’m also delighted to share that Vinod Aggarwal, VECV's Chief Executive Officer, has joined the board of Eicher Motors Ltd effective from April 1st, 2019.

Looking ahead

At EML, we have created a business model that has enabled us to achieve a strong and sustained growth over the years. While the short term looks challenging, we believe that the long term potential for both Royal Enfield and VECV is extremely robust. We will continue to focus on building products - motorcycles and commercial vehicles - that will keep our customers delighted.

Royal Enfield’s new technology centre in Chennai is nearly complete and part of the Product Development team has already moved in with the rest of the teams due to move in the course of the current financial year. We are also close to commencing production at phase 2 of the Vallam Vadagal plant with the construction of the building having been completed and the installation of equipment will commence soon.

We are committed to being a company that provides Pure Motorcycling experiences to riders and travellers, and we are looking for new ways to engage with people outside of just selling them a motorcycle. We are going to step up our efforts in rides, events, and community building - so that these act as catalysts for more people to enter the amazing world of motorcycle adventures and journeys, in India and around the world.

I would like to thank all our stakeholders for their resolute faith in us. We are well poised to capitalize on the opportunities coming our way, and to create new ones, to take EML to a new orbit of growth and success.

Siddhartha Lal

Managing Director
Eicher Motors Limited