Royal Enfield, the two-wheeler arm of homegrown Eicher Motors, announced on Thursday that it will invest an additional Rs 500 crore by 2021 to expand its three manufacturing facilities in Tamil Nadu under a pact signed with the state government under which the automaker will also receive fiscal and monetary incentives.
The investment is proposed to go towards capacity expansion at Royal Enfield’s three existing manufacturing facilities in and around Chennai at Thiruvottiyur, Oragadam and at Vallam Vadagal that produce motorcycles for both the Indian and international markets. Some investment will also go towards setting up a technology centre on the Old Mahabalipuram Road (OMR) in Chennai.
The company had last year announced setting aside a capital expenditure of Rs 800 crore to expand its manufacturing capacity across the three plants to 9,50,000 units per annum.
In the last fiscal ended March 31, 2018, the firm logged total sales of over 8 lakh units, registering a growth of over 23 per cent in the domestic market and exported about 20,000 units, up 25 per cent. However, sales of RE bikes declined by 13 per cent in December 2018 to 58,278 units.
Royal Enfield had signed a similar MoU in May 2012 with the Tamil Nadu government for setting up its new manufacturing unit at Oragadam with an investment commitment of Rs 350 crore by 2016 and were completed before promised period, the company noted.