Eicher Motors Ltd Management Discussions

ECONOMIC OVERVIEW

Indian Economy

Amid a volatile global economic landscape, the Indian economy stayed on a steady growth path, retaining its position as the worlds fifth-largest economy. As per the Second Advance Estimates of National Income, 2023-24 from Ministry of Statistics & Programme Implementation, Indias GDP growth remained strong at 7.6% in FY 2023-24 as against 7.0% in FY 2022-23, supported by robust domestic demand, moderate inflation, a stable interest rate environment, and strong foreign exchange reserves. The growth observed in the Index of Industrial Production (IIP), Goods & Services Tax (GST) collections, Manufacturing Purchasing Managers Index (PMI), per capita income, and increasing private capital expenditure collectively indicate strong economic momentum.

The CPI inflation eased down to 4.85% in March 2024, as per RBIs Bulletin for March 2024. The RBI has left the policy repo rate unchanged at 6.50% as of April 5, 2024 and remains vigilant to take effective measures to achieve the target of 4% inflation while supporting economic growth.

Global Economy

Global economic growth remained flat at a sluggish 3.2% in 2023, as per the World Economic Outlook by IMF. While the growth rate (on a year-to-year basis) improved from 2.3% in 2022, the pace of economic expansion is below historical levels, owing to high borrowing costs, withdrawal of fiscal support in many countries, long-term effects of COVID-19 pandemic and geopolitical tensions.

The global headline inflation rate is estimated at 6.8% for 2023 as per IMF, which has moderated from the peak of 9.4% in 2022. Although, in our key International markets such as USA, UK, Europe, Australia & New Zealand, the Inflation rate remained higher than the targeted range by respective central bank targets. This resulted in weaker consumer sentiment(s) on the back of higher rates of interest, persistent inflation and higher cost of living. In the key emerging countries such as Argentina and Brazil, the economic growth stagnated, as per IMF, as the sustained higher inflation resulted in increase in interest rates as well as selective controls on Foreign exchange flows.

INDUSTRY OVERVIEW

Indian Two-Wheeler Industry

According to the Society of Indian Automobile Manufacturers (SIAM), the two-wheeler segment continued its recovery path and recorded a healthy growth of over 13.3% in domestic sales, reaching 17.97 million units in FY 2023-24. The motorcycle industry grew by 13.9% in FY 2023-24 to 11.68 million units. The PST (Defined as Power, Style & Technology; Engine size >125cc) segment motorcycles grew by 21.6% to 2.81 million units and now contributes to 24.1% of the overall motorcycles (22.6% in FY 2022-23).

The >250cc segment grew by 19.2% in FY 2023-24 to 0.94 million units and is now 8.1% of the overall motorcycles (7.7% in FY 2022-23). However, the two-wheeler segment is yet to reach the pre-pandemic levels as the industry navigates through higher costs of ownership and sharp increase in input costs.

Global Motorcycle Industry

The global motorcycle industry underwent a year of uncertain demand environment influenced by macroeconomic and geopolitical factors, including higher inflation leading to sluggish consumer spending, higher interest rates, and re-emergence of supply chain disruptions due to the Red Sea crisis in 2023.

As per motorcycles data, two-wheeler sales across ~90 countries have posted a growth of 2.7% in 2023 to around 62.6 million units. The growth was predominantly driven by key markets in Asia, with India (+9.1% in 2023) leading in sales followed by Indonesia (+20.1% in 2023) as the second-largest market. However, the demand for motorcycles in the USA, UK, Europe and other developed markets remained sluggish.

As per Society of Indian Automobile Manufacturers (SIAM), Two-wheeler exports from India declined during FY 2023-24 with 3.45 million units shipped out of India in FY 2023-24, 5.4% below 3.65 million units shipped in FY 2022-23.

COMPANY OVERVIEW

Eicher Motors Limited (EML) (Bloomberg- EIM: IN) is an Indian, multinational automotive company that has diversified interests in motorcycle and commercial vehicle manufacturing. Listed on the BSE and NSE, EML is the listed parent company of Royal Enfield, the worlds oldest motorcycle brand in continuous production since 1901. In addition to motorcycles, EML has a joint venture VE Commercial Vehicles Limited (VECV) with Volvo Group, global CV leader based out of Sweden.

About Royal Enfield

The oldest motorcycle brand in continuous production, Royal Enfield has created beautifully-crafted motorcycles since 1901. From its British roots, a manufacturing plant was established in Madras in 1955, a foothold from which Royal Enfield spearheaded the growth of Indias mid-sized two-wheeler segment. Royal Enfields motorcycles are engaging, uncomplicated, accessible and fun to ride; a vehicle for exploration and self-expression. Its an approach the brand calls ‘Pure Motorcycling.

Royal Enfields premium line-up includes the Meteor 350, Super Meteor 650 cruiser, Interceptor 650 and Continental GT 650 twins, the Shotgun 650, the all-new Himalayan 450 adventure tourer, the Scram 411 ADV Crossover, the iconic Bullet 350 & Classic 350, and Hunter 350. Riders and a passionate community are fostered with a rich profusion of events at a local, regional and international level. Most notable are Motoverse, an annual gathering of thousands of Royal Enfield enthusiasts in Goa, and Himalayan Odyssey; a yearly pilgrimage over some of the toughest terrain and highest mountain passes.

A division of Eicher Motors Limited, Royal Enfield operates through more than 2,000 stores across all major cities and towns in India and through nearly 1,085 stores in more than 60 countries around the globe. Royal Enfield also has two world-class technical centres, in Bruntingthorpe, UK, and in Chennai, India. The Companys two state-of-the-art production facilities are located at Oragadam and Vallam Vadagal, near Chennai. Across the world, Royal Enfield has five modern CKD assembly facilities in Nepal, Brazil, Thailand, Argentina and Colombia.

About VE Commercial Vehicles Limited (VECV):

VE Commercial Vehicles Limited (VECV) is a joint venture between the Volvo Group and Eicher Motors Limited. In operation since August 2008, the Company includes the complete range of Eicher branded trucks and buses, Volvo Buses and exclusive distribution of Volvo Trucks in India, engine manufacturing and exports for Volvo Group, Eicher Power Solutions and Eicher Engineering Components. A multi-brand, multi-division company, backed by innovative products & services, VECV today, is recognised as an industry leader for modernising commercial transportation in India and the developing world.

New Board members at EML

In FY 2023-24, the Board of Directors of the Company, with the objective of bringing in wider scope of experience and expertise and to strengthen the independence of the Board and its committees, has appointed Mr. S Madhavan and Mr. Tejpreet Singh Chopra as Independent Directors of the Company. With said appointments, the total Board strength increased to eight Directors, out of which five are Independent Directors.

FY 2023-24: Best ever year for

Royal Enfield

Royal Enfields resilient 123-year successful legacy has been deeply rooted in its ability to remain fiercely unique based on the deep understanding of motorcycling and its customers. The Company has created its own differentiated approach that has given the brand its character and a distinct positioning in peoples minds, guiding the Company to create unique products, services, and experiences that have helped it deliver ‘Pure motorcycling experience.

Royal Enfield (RE) has maintained its impressive growth trajectory and delivered a spectacular performance in FY 2023-24, where the Company delivered 9,12,003 motorcycles in the year, its highest ever overall volumes. In the domestic market, RE sold 8,34,798 motorcycles, highest since 8,01,899 motorcycles in FY 2018-19.

Volume & market share performance - India	FY 2022-23	FY 2023-24
RE volumes (India)	7,34,840	8,34,794
REs market share in Motorcycles	7.2%	7.2%
REs market share in PST	31.8%	29.7%
REs market share in Mid-Size	92.8%	88.5%

The sales in International markets stood at 77,209 units, marking a decline of 13.5%, as the end markets continued to face macroeconomic headwinds. In FY 2023-24, RE made steadfast progress in further strengthening its position in International markets amidst a challenging economic environment.

The Company also recorded its highest ever Revenue from operations at Rs. 16,536 Crores with a growth of 14% over the previous year, highest ever EBITDA at Rs. 4,327 Crores registering a growth of 26% over the previous year achieving a margin of 26.2% in FY 2023-24; and highest ever Profit after tax (PAT) at Rs. 3,999 Crores, implying a fully diluted Earnings per Share (EPS) of Rs. 145.8 per share.

We continue to grow with strong momentum and strengthen our product portfolio to solidify our pure motorcycling ecosystem.

REBALANCE - Strategic long-term vision

Royal Enfield remains true to its purpose, mission, and values with the strategic direction of REBALANCE - a strategic approach to making the business more resilient in the face of challenges. The Company aims to recalibrate and renew its mission to create an agile, resilient, and timeless business led by Pure Motorcycling, to bring harmony between people, machine, and terrain. The REBALANCE approach is based on the following four key pillars:

1. Pillar 1: Products - ICE & EV: Deliver best-in-class products with enhanced desirability in our Internal Combustion Engine (ICE) portfolio while balancing the transition to Electric Vehicles (EVs) as a game changer through sustained innovation.

2. Pillar 2: Brand Led CX: Elevate our brand led customer experience as opposed to a conventional transactional approach to deliver a pure motorcycling experience.

3. Pillar 3: Growth Focus: Steadfast on our aggressive long-term Growth focus approach, while maintaining a balance between profit and profitability.

4. Pillar 4:Sustainability: Build a Sustainable business balancing our social and commercial objectives to be mindful of our impact on the environment and society.

PRODUCT - ICE & EV

2023 ROYAL ENFIELD BULLET - NEW HEART

SAME BEAT

Royal Enfield launched the new Bullet 350 in September 2023, heralding a new chapter in its enduring legacy. This iconic motorcycle, synonymous with resilience and deeply ingrained in automotive history, now emerges in a new avatar, completing the transition of all 350cc models from the previous generation Unit Construction Engine (UCE) to the all new super refined J series engine platform. The 2023 Bullet achieves a new level of sophistication to meet modern aspirations while keeping true to its roots of an old-school British Overhead Valve (OHV) single cylinder machine.

A gleaming symbol of limitless resilience in motorcycling history, the Bullet The longest-running motorcycle model in continuous production in the world stands as a testament to aesthetics and craftsmanship, encapsulating the vibrant culture it has cultivated over nine decades. Since its launch in September 2023, more than 100k units of the New Bullet 350 have already been sold in the year and the model has received huge praise from motorcycle enthusiasts and automotive publications.

HIMALAYAN 450 - BUILT FOR ALL ROADS : BUILT FOR NO ROADS

Royal Enfield unveiled its most awaited adventure motorcycle absolutely purpose-built for the Himalayas The All New Himalayan 450 at EICMA 2023 in Italy to its global audience and launched it at the brands biggest motorcycling festival in Goa, Motoverse 2023.

The new Himalayan has evolved into a highly capable, yet unimposing motorcycle which effortlessly adapts to various terrains, making it an ideal companion for both seasoned adventurers and riders new to the off-road experience. The response from community, riders, customers and reviewers has been outstanding for the motorcycle and amidst a swarm of new launches in the industry. The Himalayan 450 has swept almost all major awards (12 and counting). It has been awarded "Indian Motorcycle of the Year (IMOTY) 2024" which marks Royal Enfields 4th IMOTY in the last 6 years and multiple other awards and accolades from the Indian and Global Motorcycling Industry.

Embarking on the creation of the new Himalayan, we immersed ourselves in the riding experiences of our community, engaging with globetrotters, explorers, and athletes. Informed by these insights and our own journey in the Himalayas, we retained the crucial elements of its DNA and reimagined the underlying tech in the new and evolved Himalayan which is absolutely purpose-built for the Himalayas.

SHERPA 450 - HEART OF THE MOUNTAIN G.O.A.T

The all-new Himalayan is powered by the all new Sherpa 452cc engine platform Royal Enfields lightest, highest performance, most technologically advanced and vehicle integrated powertrain yet. The new Sherpa 452 is the first liquid-cooled engine from RE with Dual Overhead Camshafts (DOHC) layout belting out 60% more power and 25% more Torque, while being lighter in weight as compared to previous Gen Himalayan. The new engine platform also features ride-by-wire throttle, for the ideal delivery of power and torque in challenging terrains that makes it a highly capable adventure tourer.

The new Himalayan also features Tripper Dash a first-of-its-kind 4 inch colour TFT display with the worlds first full-map navigation on a circular display built with google maps platform. The Tripper Dash comes with a simple and intuitive UI/UX focussed on infotainment with easy access to navigation through the joystick-based controls.

SHOTGUN 650 - INSPIRED BY CUSTOM, FOR CUSTOM

After decades of inspiring, as well as being inspired by custom culture, Royal Enfield unveiled a stunning, one-of-its-kind, custom-inspired roadster, The Shotgun 650 at Motoverse 2023 in Goa. Built on the proven 650cc twin platform, the Shotgun is a tribute to the culture of customisation as it serves as a canvas for the most creative minds in motorcycling. The Shotgun 650 blends retro-futuristic design with modern features such as the newly-launched Royal Enfield Wingman, a connected motorcycle device that provides the rider with critical information such as the motorcycles live location, fuel and engine oil levels, service reminders and more. The Shotgun 650 is set to redefine the motorcycling landscape, offering riders not just a mode of transportation but a lifestyle where every rider becomes a storyteller, and every motorcycle, a unique expression of individuality. Carrying through with the concept of customisation and personalisation, a diverse range of 31 Genuine Motorcycle Accessories are available for the Shotgun 650.

Motorcycle Refreshes

Meteor Aurora

Royal Enfield unveiled a range of captivating new colourways for its Meteor 350, named Aurora, inspired by the hues of the sky. The Meteor 350 has expanded its lineup with the introduction of the new Aurora range, alongside the existing Fireball, Stellar, and Supernova variants. With chrome-finished components such as the engine and spoke wheels, complemented by aluminium switch cubes and Tripper navigation as standard, this stylish range promises a fresh and radiant appearance.

Hunter Dapper

Royal Enfield launched two new colourways of the Hunter 350. Introducing two lively and vibrant colourways in the Dapper series - Dapper O and Dapper G, injecting a new sense of vigour and excitement while maintaining the ideal balance of style, performance, and versatility, Royal Enfield has solidified its position as a favoured motorcycle in the mid-size segment globally. The Hunter 350, recognised for its compact riding geometry and user-friendly handling, has strongly connected with the young and dynamic riders community, who have embraced it as a symbol of their passion for motorcycling.

RESEARCH AND DEVELOPMENT

The Company has more than 500 research and development engineers seamlessly working between two technology centres in India & UK along with Dynamics facility in Spain to bring together global knowledge & experience to co-create world-class motorcycles. There is a Technology Roadmap in place for development to enable us to be future-ready. During the year, the Company filed 11 patents in multiple advanced engineering projects and continues to set new standards in product quality.

1. New platform(s) and technology

During FY 2023-24, RE completed the transition to the J platform with the new Bullet 350 and upgraded all the models to E20 (Ethanol Blend) compliance. The new Himalayan brought many advanced new technologies into the Sherpa 452 platform, in addition to new powertrain and digital Tripper Dash such as LED Trafficators (Integrated Brake and tail lamps with turn signals), Forged Piston, OTA (Over the Air) updates for RE app & Cluster, Long Travel Upside fork, Tool-less Seat Height adjustment mechanism, Side-laced Tubeless Wire spoked wheels and many more.

2. Alternate fuels – ICE

Moreover, expanding the alternate fuel powertrains, RE developed a flex fuel motorcycle - Classic Flex 350 - which is capable of operating between E20 - E85 Ethanol Blend Petrol. The model is showcased at the Bharat Mobility Show in February 2024 and is under testing with Automotive Research Association of India (ARAI).

3. Connected technology

The Company introduced two pioneering connected motorcycle systems, providing seamlessly blending with the man, machine and terrain, with advanced telematics capabilities.

Tripper Dash – An adventure ally

The new Tripper Dash from Royal Enfield is the worlds first full map navigation on a circular display built with Google Maps and audio guidance in more than 130 languages. It features a joystick controller that allows the rider to control the cluster and also enables music, calls, messages and mobile connectivity. Riders can choose between Performance and Eco ride modes, altering the throttle response through the new ride-by-wire setup. The classic round shape has a number of innovative features for the rider, with options to switch from a traditional analogue style to a fully digital layout.

Wingman - Never ride alone

Royal Enfield launched the ‘WINGMAN - an all-new feature designed to ride alongside and make the connection between rider and motorcycle stronger than ever. Wingman was launched with two models, the Super Meteor 650 and the Shotgun 650 and delivers real-time data to the phone, even if the rider is miles away from the motorcycle. It includes features such as critical vehicle health alerts, real-time tracking, riding insights etc. backed by dedicated Royal Enfields GRID support. The Royal Enfield Wingman takes care of both rider and the motorcycle at all times.

4. Circular economy principles

The Company conducted the RRR (Recyclability, Recoverability and Reusability) study for all the models on J (350cc) platform and P (650cc) Platform conforming to the norms as per Automotive Industry Standard (AIS) 129 for End-of-Life (ELV) of vehicles. The audit of the evaluation has been successfully completed by ARAI (Automotive Research Association of India).

Further, a Product Life Cycle Assessment (LCA) has also been conducted in the year for the Classic 350. The comprehensive study covered the complete end-to-end life cycle consisting of Cradle to Grave analysis to measure the environmental impacts of the product in line with ISO standards 14040 / 14044.

	J Platform	P Platform
RRR (Recyclability, Recoverability and Reusability) study	Hunter 350	Interceptor 650
Reusable and/or recyclable by mass	97%	97%
Reusable and/or recoverable by mass	99%	98%

5. EV: Himalayan Electric Testbed

Royal Enfield remains committed to creating an innovative and sustainable motorcycle experience as part of its REBALANCE approach. Royal Enfields vision for Electric Motorcycles is focussed on the consumer requirements and aimed at creating a differentiated, high performance, and fun to ride motorcycle with the Royal Enfield design DNA.

In the financial year, the Company has made significant progress in its electric vehicle (EV) product development journey through extensive testing of mules and prototypes and in-house development of parts. A strong team of ~150 members has been put in place for product development, and the Company is progressing well on its path for the development of EV Motorcycle. The Company is in the process of filing ~20 patents for in-house developed parts.

Royal Enfield unveiled its first ever electric vehicle design concept at the EICMA Motor Show 2023, in Milan, Italy. Inspired by its pursuit of pure motorcycling, and by the design of the original Himalayan, the Electric Himalayan Testbed was an imaginative rendition of what an electric adventure tourer could look like. This motorcycle is a part of a much bigger sustainable ecosystem of exploration and adventure that we have envisioned for long-term sustainable travel in the Himalayas.

BRAND

Motoverse 2023: Bigger, Bolder & Global

Motoverse is Indias largest community-driven motorcycle festival for enthusiasts and it celebrates the shared passions of its vibrant motorcyclists community. This exhilarating event serves as a launch platform for Royal Enfields new motorcycles amidst a vibrant blend of music, adventure and camaraderie. From new motorcycle launches, thrilling dirt track races to captivating music performances and a diverse array of merchandise shops, Motoverse 2023 offered an immersive experience for the participants. The major attractions of the event included the unveiling of Shotgun 650, the price reveal of the all-new Himalayan 450, a curated ride through the Western Ghats to test the all-new Himalayan at sea level, and a media dirt track race for the media and creators on the all-new Himalayan on the dirt track.

The highly anticipated annual event attracted motorcycle enthusiasts from across the globe, with 57% of participants riding their motorcycles to Motorverse, underscoring the events emphasis on the thrill and camaraderie of motorcycling culture. Impressively, 76% of the attendees were new participants, highlighting the events growing popularity and appeal. With an extensive reach of over 51 million through internal content and an additional 18 million through media, creators, and PR efforts, the event garnered widespread attention both within and outside the community.

EICMA 2023

Royal Enfield unveiled and commenced bookings for the all-new Himalayan 450 at the EICMA Motor Show 2023 in Milan, Italy. In addition, the unveiling of its first-ever electric vehicle design concept, Him-E, an electric Himalayan Testbed marked a significant milestone in Royal Enfields 123-year journey of evolution and sustainability. Inspired by Royal Enfields pursuit of pure motorcycling and by the design ethos of the original Himalayan, the Electric Himalayan Testbed showcased Royal Enfields innovative vision for an electric adventure tourer, offering a glimpse into the future of sustainable exploration of the Himalayas.

Marquee rides and events

1. One Ride 2023

Royal Enfield held its flagship global event, the 12th edition of One Ride 2023. This iconic global ride united over 28,000+ passionate riders and enthusiasts from 420+ cities across 58 countries. The event celebrated the essence of pure motorcycling, nurturing a sense of camaraderie. One Ride 2023 stood out as Indias largest cause-driven ride with its consistent commitment to its social mission of promoting Responsible Travel practices through the theme One Mission : One World : One Ride.

2. Himalayan Odyssey

The 19th edition of Royal Enfield Himalayan Odyssey was flagged off from Delhi, where 75 riders embarked on an 18-day adventure ride, covering approximately 3,050 km to reach Umling La, the highest motorable pass in the world, via some of the most breath-taking terrains in northern India.

3. Himalayan Adventure Zanskar

The Himalayan Adventure Zanskar is an intricately-curated ride through the Zanskar Valley, situated amidst the sublime peaks of the Himalayas in the Ladakh region of India. This valley is adorned with ancient monasteries, picturesque villages, and breathtaking landscapes that enchant travellers and adventurers. This ride presents an opportunity to explore the uncharted realms of the Himalayas, enhancing the adventure experience with the Royal Enfield Himalayan as a trusted companion.

4. Himalayan Adventure Changthang

Crafted to awaken the explorer within the rider, The Himalayan Adventure Changthang is another marquee ride of Royal Enfield on the Himalayan, amidst the untamed terrain of Changthang. Offering a genuine exploration experience, it features navigation exercises and checkpoints, along with sand surfing and carving routes across desolate landscapes. Positioned as the epitome of the ultimate adventure, the ride embodies the essence of true adventure and discovery.

5. Uncover North East

The Uncover North East ride, tailored specifically for the Meteor 350, combines culture, music, and the thrill of riding. This ride was designed to complement the Meteor 350s highway cruising capabilities and its adeptness at navigating challenging terrains. It offers an unforgettable experience for Royal Enfield Meteor owners who are passionate about music and eager to explore the North East.

6. Cosmic Caravan

Royal Enfield initiated the Cosmic Caravan ride, offering a unique opportunity for motorcycle and photography enthusiasts to immerse themselves in the cultural richness of the Rann of Kutch while capturing captivating images of the night sky. This ride provides a rare experience for Royal Enfield riders passionate about photography to grasp the intricacies of astrophotography amidst the unique landscape of the Rann of Kutch, allowing them to capture its breathtaking night sky.

7. Royal Enfield Continental GT Cup Season 3

Hosted at the Kari Motor Speedway in Coimbatore, the event epitomised Royal Enfields philosophy of ‘Pure Sport and its commitment to nurturing a vibrant racing community in India. This uniquely inclusive motorcycle racing championship comprised eight races over three rounds. With 200 entries, the final grid showcased the top 25 riders, including 10 professionals and 15 amateurs, fiercely competing on the circuit aboard the race-ready Royal Enfield Continental GT-R650.

Global marquee rides and events

2023 was a banner year in terms of industry events and marquee rides. Royal Enfield conducted its "Build. Train. Race." program in the Americas region, where new and experienced motorcycle racers are welcomed to the racing community with the opportunity to travel the country and compete in a national championship series.

Riders Club of Europe

The Riders Club of Europe now stands at over 26,000 members across the wider European region. Regular ride outs, community engagement activities, and store room launches through the Rider Club resulted in the largest One Ride in the region. A strong brand community presence was celebrated at some of the most prestigious motorcycle lifestyle events in Europe such as Wheels & Waves, The Malle Mile and Glemseck.

Project Origin US

Royal Enfield unveiled ‘Project Origin, a faithful working replica of the brands very first ‘motor-bicycle at its 120th anniversary in 2021. This very machine built the foundations of Royal Enfields enduring legacy of ‘Pure Motorcycling. The brands famous tagline, ‘Since 1901 pays testament to just how important the concept of heritage and embracing the richness of the past is to Royal Enfield, and ‘Project Origin embodies that sentiment wholeheartedly. During the year, the Project Origin motor-bicycle was featured at the brands own experience centre in Milwaukee. Royal Enfield historian Gordon May also rode the 2.5 mile track at the Mid-Ohio sports car course, marking Project Origins inaugural ride on North American soil. ‘Project Origin represents yet another seminal chapter in Royal Enfields illustrious story; marked by decades of creativity, development, ingenuity and resilience.

Digital Engagement

Your Company witnessed an impressive growth in online engagement with more than 122 million hits on our website. The Company has more than 11.3 million users across our social media platforms in FY 2023-24, marking significant growth from 10.6 million in FY 2022-23. The social media platforms are the primary source of marketing and community engagement for the brand. Additionally, the brand has a 50.2% share of voice in the global market, with a net sentiment of 92.3%.

GROWTH FOCUS

India Business

Royal Enfield - India Performance

FY 2023-24 marks a 13.6% growth in motorcycles for Royal Enfield in India and the Company has outperformed the Indian two-wheeler market. Royal Enfield holds a dominant position in the middleweight segment (250-750cc) with 88.5% market share in the segment, as well as a stronghold in the PST (Power Style Technology; Engine size >125cc) motorcycles with 29.7% market share in FY 2023-24. During the festive period in October-November 2023, Royal Enfield witnessed its highest ever retail sales registering a strong growth across the country. FY 2023-24 also marks a significant milestone in terms of sales of the stylish and compact roadster - the Hunter 350 which has crossed 300K in sales since its launch in August 2022.

	FY19	FY20	FY21	FY22	FY23	FY24
Royal Enfield Domestic Sales (000)	803	659	574	521	734	835
Domestic Motorcycle Market (Million)	13.6	11.2	10.0	9.0	10.2	11.6
REs market share in overall motorcycles	5.9%	5.9%	5.7%	5.8%	7.2%	7.2%
Motorcycles >125cc (000)	3,213	2,409	2,207	1,813	2,308	2,807
REs market share in PST	25.0%	27.4%	26.0%	28.7%	31.8%	29.7%

Network, Financing and Business Activities

i. Retail Network

Royal Enfield has built the largest premium distribution network across the country with over 2,000 stores consisting of 1,102 large dealerships and 901 smaller format studio stores. The Company has continued to expand its network through the year identifying the pockets of potential growth and to expand its reach to the customers.

Royal Enfield currently stood at #2 rank in the FADA

(Federation of Automobile Dealers Associations) Dealer Satisfaction Survey conducted in 2023 within the two-wheeler Industry in India.

ii. Financing

The aspiration to own a Royal Enfield remains strong among motorcycle consumers across the country, further enhanced by an expanding product portfolio and multiple options for personalisation. The Company has worked on: 1) low down payment requirements (as low as 15%), 2) lower EMI payments by extending loan tenures (over 4 years), and 3) low-interest schemes. As a result, finance penetration among consumers steadily improved to 61% by March 2024 as against 55% as of March 2023. The Company has a digital finance market place on the RE App where the leading financiers of the country are onboarded to enable customers to evaluate and select the best financing option for them. The feature further enhances Royal Enfields digital reach to its consumers and is a major step in our efforts to provide seamless brand-led customer experience.

iii. Enhancing customer experience through Innovations

To aid the ever-growing love and aspiration to own a Royal Enfield motorcycle, the Company launched REOWN

- a one-stop-solution for customers looking to own ‘pre-owned Royal Enfield Motorcycles. REOWN has been designed to help overcome ownership barriers and provide customers with easier access to ownership and upgrading while ensuring trust, convenience and complete assurance by the brand for customers. REOWN guarantees fair pricing and hassle-free documentation support for those looking to sell or buy a pre-owned Royal Enfield Motorcycle. Additionally, pre-owned motorcycles are offered with a brand warranty and two free services.

Royal Enfield also launched a first-of-its-kind product in the motorcycle industry, The Assured buyback scheme, to cater to the shifting consumer needs from ownership to usership. This initiative establishes a new industry standard, reshaping the traditional motorcycle buying process and thereby has a potential to further grow and develop the mid-size motorcycle segment in India. At the end of the Assured buyback tenure, customers can opt for either trading their motorcycle for a brand new Royal Enfield, retain, or return their motorcycle. Under this programme, the customers get lower monthly EMIs along with a guaranteed buy back value for their motorcycle, flexible tenure options ranging from 1-3 years and cash back incentives at the end of the buyback tenure. The Assured Buyback Programme, shows our commitment to making motorcycle ownership more seamless, more accessible and more fun for potential riders.

International Business

In 2023-24, your Company has made remarkable progress in its long-term ambition of becoming a premium global consumer brand from India offering access to an unhindered, authentic Pure Motorcycling experience. In the context of weak macro economic factors impacting consumer sentiment, we have managed to hold on to our market share across regions we are present and have made significant strides toward unlocking newer opportunities in international markets led by the expansion of our international footprint. Royal Enfield is currently present in over 60 countries and operates via five subsidiaries across multiple continents. Its global retail network (outside of India) spans over 1,085 touchpoints with over 235 exclusive stores and over 850 multi-brand outlets (MBOs). Moreover, your Company strengthened its global presence by adding a new CKD assembly unit in Nepal, in addition to existing facilities in Brazil, Argentina, Columbia, and Thailand.

Royal Enfield has been actively expanding its global footprint, launching the 650 Twins (Continental GT 650 and Interceptor 650), along with the Shotgun 650, in the North American market. Additionally, the Bullet 350 was introduced in Japan, contributing to the brands international presence.

Americas

The Americas including North and South America is the largest market for Royal Enfield outside of India by sales volume, clocking a 4x growth in the last five years. Major markets for Royal Enfield include: United States of America, Brazil, Argentina, Columbia and Mexico and the Company operates through 2 subsidiaries in the region: Royal Enfield North America and Royal Enfield Brazil for South American operations.

Your Company added stores in 17 new locations and now has a network of 324 retail stores in the Americas region. In the context of a market degrowth due to weak consumer sentiment in the USA, Royal Enfield managed to hold on to its market share and is currently ~8% of the middleweight market in FY 2023-24. The retail growth in the region was a solid 12% over the previous year, driven mainly by growth in Brazil and other Latin American countries which are large two-wheeler markets.

Europe, Middle-East, and Africa (EMEA) Market

The key markets for Royal Enfield in the region include: United Kingdom, Italy, France, Spain, Germany. The Company has a subsidiary in the UK (Royal Enfield UK) and in the year it commenced operations of the distribution network to drive sales and after sales activities in the UK through the subsidiary. Royal Enfields market share in the mid-size motorcycle segment was at 9% in FY 2023-24 and is currently the #1 player in this segment in UK and #4 in the rest of Europe. The Company has added stores in 42 new locations in the region and now has a total of 590 retail outlets in the region.

In Q4 FY 2023-24, Royal Enfield incorporated Royal Enfield Europe B.V (a wholly-owned subsidiary) in the Netherlands with the purpose of getting closer to our channel partners and consumers in Europe and to enhance the non-motorcycle supply chain for all of Europe.

The Company also partnered with Kibar Holding to enter the Turkey Market. The partnership signifies a convergence of legacies and a commitment to delivering authentic Royal Enfield experiences to Turkish motorcycling enthusiasts, with the inaugural flagship store opening its doors in Istanbul, becoming the epicentre for the vibrant Turkish Royal Enfield community.

In the Middle-East region, the Company has appointed AW Rostamani Group as its official distributor partner for the UAE region. This collaboration represents a significant step in our growth strategy.

The Extra Mile Retail Development Programme has been launched across the region, a programme that focusses on the Customer Journey Experience. The Extra Mile initiative has been designed to raise retail standards by providing a consistent sales process, knowledge and training for all dealer sales & aftersales staff.

Asia Pacific (APAC)

Royal Enfield currently operates a subsidiary in Thailand in the Asia Pacific (APAC) Region. The key markets in the region are Thailand, Japan, Korea, Australia and New Zealand. The Company has added stores in 15 new locations in the region and now has an expansive network of 172 retail outlets in the APAC region. In the context of a market degrowth due to weak consumer sentiment in ANZ, Japan and Korea, Royal Enfield managed to hold on to its market share and is currently ~9% of the middleweight market in FY 2023-24 while gaining market position to #2 in Korea and #3 in Australia. In the APAC countries, the Company witnessed good growth in retails in Indonesia and Thailand, large two-wheeler markets and the brand is currently #2 in Thailand in the middleweight segment.

The Company unveiled the ‘Project Origin - an incredible faithful working replica of Royal Enfields very first ‘motor-bicycle from 1901 across Australia, Japan & Thailand - to experience the brands rich 123-year-old history & legacy. In Japan, we collaborated with the Taichi brand in creating a curated range of Apparel with 2 legendary brands coming together to address the lifestyle requirements of our customers & lifestyle-conscious consumers alike.

In Thailand, we have partnered with the Tourism Authority of Thailand (TAT) for travel & exploration projects, with Sports Authority of Thailand (SAT), covering all major provinces in Thailand. As per our ongoing relationship with Tourism Authority of Thailand (TAT), we currently are the only motorcycling brand who is actively contributing to their Travel & Tourism stories in their coveted monthly magazine. Tourism Authority of Thailand (TAT) has been part of our marquee events such as REUNION Thailand 2022, 2023, Tour of Thailand 2024.

The Company facilitated almost 600 rides during the financial year across all markets of APAC through our subsidiary and our dealer partners. One Ride 2023 had the highest number of rides this year across APAC with over 4,600 riders across markets celebrating the brand. The Moto Himalaya 2023, saw participation from Japan, Korea and Indonesia where the riders thoroughly enjoyed the one-of-its-kind experience in the Himalayas. APAC comprises some of the most exciting tourist & motorcycling destinations across the world. We have passionate Rental Operators to manage Royal Enfields fleet of motorcycles in Thailand (Phuket & Chiang Mai), Indonesia (Bali), Vietnam (Da Nang), Australia (Queensland), who believe that our motorcycles are poised to deliver authentic & memorable riding experiences across these picturesque locations.

The Company has won multiple awards for its products in the region: The Grand Prix group Thailand awarded our Super Meteor 650 the "Best Cruiser Middleweight", our Hunter 350 "The Most Popular Modern Classic" & "The Original Unique Design" to our Classic 350 motorcycle at the Thailand Bike Of The Year 2024 Awards.

Indonesia International Motor Show awarded Super Meteor 650 as the "Best Cruiser for the Year 2024".

New Zealand: Autocar awarded Super Meteor 650 as the "Bike of the Year 2023".

In FY 2023-24, the Company started CKD operations in Birgunj, Nepal in June 2023. Through the year, the Company has launched Classic 350, Hunter 350, Meteor 350 and Scram 411 models in Nepal and is currently the market leader in the >125cc segment with 38% market share in the region. The Company delivered 10,025 units in Nepal in FY 2023-24, marking its highest ever volumes in the region. The Company currently has a network of 10 large size and 15 studio stores in Nepal and has conducted more than 280 rides through its dealer partners that has enabled engagement with more than 9,000 unique customers.

NON-MOTORCYCLE BUSINESS

Royal Enfield offers a pure motorcycling experience including rides, hassle-free ownership, personalisation, and convenient and comprehensive maintenance and care for motorcycles.

Royal Enfield has established itself as a lifestyle brand in the last decade and its non-motorcycle business has a sizeable following of its own. It provides consumers a platform for self-expression and an open canvas for easy customisation and personalisation of motorcycles with a broad range of accessories, apparel, etc. to display their personality. It also provides consumers with complete peace of mind by offering holistic maintenance options. The non-motorcycles revenue stood at Rs. 2,439 Crores for FY 2023-24 and the business accounted for ~15% of overall revenue.

After Sales Service and Spare Parts

The Company continued to deliver best-in-class service experience in FY 2023-24 and as a result has registered its highest ever job cards in a year and improved dealer profitability for all its dealer partners. With best-in-class options available to customers under the Ride Sure programme, we continue to increase our service market share. The Company has also made significant improvements in the training for customer facing service teams, digitalisation of marketing, product range and frequency of updates to offer to customers and quality improvement in after sales services. The Company has taken positive strides in enhancing its after sales service to protect the ecosystem of riders associated with the brand. In FY 2023-24, the Company ranked #1 in After Sales in a survey conducted by the Federation of Automobile Dealers Associations (FADA), which is a testament to our efforts of providing a pure motorcycling experience.

The Company has introduced the service cost calculator, to improve the transparency of RE service cost and is available to our customer through our website and RE app. Various soft products from Royal Enfield are now available to purchase online through our website and mobile application. The Company has improved its RSA response time and our digital team has also enabled live updates of RSA, which has been piloted in 4 major cities where the live location of technicians / towing vans will be available to our customer when deployed.

Spares

The Company delivered 99.8% availability rate for the current parts in FY 2023-24 and 100% of the orders were despatched within 24 hours. The Company expanded its warehouse operations to Chandigarh and Kolkata in FY 2023-24 in addition to Chennai and Mumbai.

Spares availability in the international markets were improved in the year such that the availability in the warehouse in Thailand improved from 74% to 100% in March 2024.

Genuine Motorcycle Accessories

The genuine motorcycle accessories (GMA) business grew by an impressive 26% over the previous year and achieved its highest ever sales in FY 2023-24. During the year, the New Himalayan and Shotgun were launched with 27 and 19 SKUs respectively. Overall, the active GMA product range as of March 2024 comprises 276 SKUs, providing customers with a diverse array of personalisation options. The Company has established Regional Supply Hubs that can efficiently handle high-volume, fast-moving products, aiming for a supply ratio of 99% or higher with reduced turnaround times (TAT).

Increasing International presence GMA scaled new highs in sales during the year from International markets by supplying products to 47 countries globally. Additionally, the GMA Configurator, a platform allowing customers to personalise their Royal Enfield Motorcycle with GMA enhancements, was successfully launched in three countries: Australia, the United Kingdom, and the United States of America.

Apparel

In FY 2023-24, Royal Enfield launched a flagship riding jacket Streetwind Eco which reflects our philosophy of Leave every place better and is made using 75 plastic pet bottles and 100% recycled materials. This riding gear is also equipped with Ergo Pro Tech CE level 2 armour, meticulously crafted with a focus on precision and ergonomics for superior impact protection. During the year, we surpassed the milestone of 50k riding jackets in India.

Royal Enfield took the initiative to collaborate with and provide a platform to the artisan community in our spiritual home The Himalayas. The Himalayan Knot range explored contemporary fashion, working with heritage textiles and local communities. Driven by its ethos of creating unique and differentiated products, Royal Enfields apparel business launched products that aim to penetrate newer segments, expand the existing portfolio, and produce sustainable products.

In FY 2023-24, Royal Enfield also launched the Kids Helmet range with two models. These models assure safety and protection, along with an appealing design. With the Kids range of helmets, Royal Enfield promotes the idea of the joy of motorcycling for young explorers. Royal Enfields apparel business continued its growth trajectory with a solid 27% growth in FY 2023-24 over the last year, primarily driven by a healthy mix of revenue from dealerships and third-party e-commerce channels.

Manufacturing Excellence

The Company has established world-class product development capabilities spanning across its three major manufacturing facilities at - Vallam Vadagal, Oragadam and Tiruvottiyur, with a combined production capacity of 1.2 million units a year.

Our plants continue to create new benchmarks in Quality, Efficiency and Automation to achieve manufacturing excellence. During the year, our Oragadam plant has been awarded "Future Ready Factory Of The Year 2023" by Frost Sullivans IMEA (India Manufacturing Excellence Awards). In addition, Royal Enfield also Awarded Excellence in Operations & Smart Factory of the Year by Manufacturing Today Awards 2023.

On the quality front, the Company has raised the bar with every new launch and has been successful in reducing Fault Frequency per 100 units after 3 months (FF3) to 1.2 in FY 2023-24.

Supply Chain Management

The Company has delivered 9.12 Lakh motorcycles in FY 2023-24, with strong support from its supply chain partners. It maintains real-time collaborative connections and interactions with supply partners for effective management of daily production. The Company also performed a risk assessment of its suppliers on various aspects such as safety, operations, quality, technology, geopolitical factors and financial performance. 100% of the direct material suppliers were assessed and mapped to a risk matrix. Based on the matrix, potential high risks were identified and a risk mitigation plan was developed to ensure more reliability in the supply chain.

During the year, the Company has achieved a significant increase in overall supplier satisfaction. A survey is conducted annually to align the vision and strategic objectives of the Company and its supplier partners.

SUSTAINABILITY

Sustainability is the fourth key pillar of our strategic vision, REBALANCE. The Company has taken major strides during FY 2023-24 to achieve its Environmental, Social, and Governance (ESG) vision. Across the business segments, Royal Enfield continues to adopt conscious business processes and strives to minimise its environmental footprint, incorporate eco-friendly practices, and undertake multiple social initiatives. In addition, our comprehensive approach to sustainability is not only limited to our products but extends to vendors, manufacturing, and collaborations, ensuring that the entire supply chain is environmentally friendly.

1. Green Business Operations

Energy Management System (EMS) ensures monitoring, control, and optimisation of energy consumption to reduce overall carbon footprint. Royal Enfield has steadily transitioned towards renewable energy, which now contributes to 35% of energy mix in the operations. The Company is committed to enhancing the share of renewable and cleaner alternative fuels in the overall energy mix.

Emission management - During the year, the Company further reduced its emission footprint by 20% (gCO2 per motorcycle). It continues to explore new ways of achieving resource efficiency and environmental protection. The Company has also initiated the measurement of Scope 3 emission and product life cycle assessments to better estimate the overall emission footprint and draw a path to Net Zero.

Water management - During FY 2023-24, the Company achieved Zero Liquid Discharge in our operations with a water positive index of 3.23 in the Oragadam plant and 2.02 in the Vallam plant. It has implemented rainwater harvesting systems and sewage treatment plants, the water from which is used for various applications. The Company ensures providing water access to the surrounding community and natural ecosystem.

Waste management - The Company ensures a circular economy through the principles of ‘Reduce, Reuse and Recycle in all operational activities. All our facilities are zero liquid discharge factories where wastewater is treated in the state-of-the-art STP and ETP plants and reused for irrigation and process top-ups. Further, the Company has significantly reduced plastic consumption in packaging. During the year, the Company has achieved zero waste to landfill status and has also commenced the usage of Compressed BIOGAS in operations at the Vallam Plant.

Supply and Packaging - The Company has also deployed carton packaging conversion of its orders with Forest Stewardship Council (FSC) certified carton suppliers with a view to drive a more sustainable value chain. By March 2024, 65% of the Genuine Motorcycle Accessory packaging had already been transformed, and efforts continue to achieve 100% sustainable packaging.

2. Product Lifecycle Emissions Assessment

The Company conducted the RRR (Recyclability, Recoverability and Reusability) study for all the models on J (350cc) platform and P (650cc) platform, as highlighted in the R&D section.

Further, a Product Life Cycle Assessment (LCA) has been conducted during the year for Classic 350. The details are highlighted in the Circular economy principles under R&D section.

3. Brand-led Social Mission

Royal Enfields social mission is to build resilience in communities and nature in the iconic Himalayan Region. By 2030, the Company aims to partner 100 Himalayan communities so that they are adapting and thriving even in the face of climate change. The social mission also aims to catalyse a global movement of 1 million riders to explore sustainably and become active stakeholders in the mission. The Great Himalayan Exploration a partnership project with UNESCO to safeguard the living heritage of the Himalayas through rider-researchers. Several such cause-led rides are organised throughout the calendar year, documenting and preserving the Intangible Cultural Heritage (ICH) practices across the Himalayas. Game Changer - A strategic blueprint was unveiled for the development of Ice Hockey in Ladakh, aiming to field an Indian Ice Hockey team at the 2042 Winter Olympics. Helmets for India - Royal Enfields road safety initiative, that is a not-for-profit artist collective focussing on changing mindsets towards helmet safety and encouraging riders to ride with their helmets on each time they get astride their motorcycles.

4. Corporate Sustainability

Eicher Motors Limited (EML) currently ranks among the top 15 percentile within global auto companies in the Corporate Sustainability Assessments.

• Among Top 3 Automotive leaders in India in the S&P CSA 2023 Assessment (DJSI).

• Ranked within top 10 Auto companies globally in the MSCI sustainability ratings.

• Ranked #8 (out of 89 in the Global Auto Industry) in the Sustainalytics Assessment.

During the financial year, the Company has received the platinum rating from CIIs Indian Green Building Council (IGBC) for our global headquarters at Chennai; this is a testament to our consistent efforts in driving innovation for sustained exploration. The Company has also planted 10,862 trees in the year.

HUMAN RESOURCES

Over the last year, the Company has focussed on 3 key areas to develop our Human Resources: capacity building, employee engagement and diversity, equity, and inclusion (DEI).

Capacity Building

During FY 2023-24, the Company provided more than 1,00,000 training hours to its entire workforce with a commitment to empowering our employees in their development by strengthening their functional, managerial and leadership capabilities to make them future-fit. Business Management programme to develop the business acumen of our Area Sales Managers (ASMs) by significantly expanding their knowledge of the business in terms of finance, customer experience, and digital marketing. The Emerging Leadership Program (ELP) with an aim to enhance leadership, teamwork, and cross-functional expertise, preparing managers to strategise and achieve organisational goals in challenging environments while keeping them up-to-date on new management concepts. Strategic Brand Management programme facilitated by MICA, to empower participants with indispensable skills and knowledge to thrive in the dynamic realm of brand management and delving deep into strategic concepts, market dynamics, and simulation exercises.

Enterprise Risk Management (ERM) training programme that educated employees about organisational risks, their impact, and its management. The programme promoted risk-awareness, informed decision-making, and proactive risk management for resilience and sustainability.

Employee Engagement

The Company has continued to enhance the empowered, synergetic, harmonious and transparent work environment that values meritocracy and innovation to drive the employees passion for the brand. REConnect is an Annual Employee Engagement Survey that enables our employees to express their opinions, expectations, and suggestions openly. The Company has achieved a score of 93% for Employee Engagement, indicating that EML continues to be an Employer of Choice. The results of REConnect survey highlight valuable insights, which help the Company in action plan implementation and accelerate the speed of various projects.

RE Open Road - Core Committee

The RE Open Road - Diversity, Equity & Inclusion (DEI) core committee was formed with employees across domains, geographies and roles. The core committee believes in the collective sum of our individual differences, life experiences, diverse backgrounds, unique capabilities, and talents which make the fabric of our work culture, our brand, and achievements that span more than 120 years. A DEI roadmap has been created by the core committee to explore the endless opportunities through RE Open Road.

ENTERPRISE RISK MANAGEMENT

The Company has a structured risk management framework for the timely and effective identification, assessment, monitoring, and mitigation of potential risks that may impact its businesses. The Risk Management Committee of the Board and the senior management personnel prioritise the key risks based on severity and probability, prepare a mitigation framework and formulate robust mitigation strategies. The key risks and their mitigation plan are depicted below:

1. Royal Enfield brand becoming outdated, because of reliance on ICE, outdated features etc. / sensitive to any change in the consumer sentiment and market segmentation

Capital: Intellectual, Social and Relationship

Material issue: Customer-centricity, innovation management

Mitigation plan: The Company is undertaking dedicated efforts to create a deeper connection with younger, wider audiences across the world by inspiring and enabling them to experience the tactile, deliberately old-school pleasures of Pure Motorcycling in its current form. It is also optimising and modernising all aspects of the brands customer experience to attract, engage and retain customers and community members. Further, the Company is gearing to ignite excitement among enthusiasts globally with regards to Royal Enfields unique take on motorcycling.

2. Risk of dynamic regulatory environment and resulting non-compliances

Capital: Manufactured

Material issue: Regulatory compliance, climate change. Responsible use of materials

Mitigation plan: The Company has a strong compliance monitoring and risk management framework which ensures active monitoring of upcoming regulatory changes across all operational regions along with identification of potential business risks and providing recommendations for timely adaptation. A quarterly compliance verification is done for all applicable rules and regulations at global level and compliance certificate is generated. The Company also has technical know-how on the global emissions and engine management system development requirements. It has an experienced team managing global homologation in critical markets. All compliances related to newer geographies are integrated into the existing compliance tool. In addition, the Company also has a Dedicated Advanced Engineering team to exclusively work on future requirements and a flexible development process to fast-track critical projects.

3. Risk of shifting consumer preferences and consumption patterns within next few years

Capital: Intellectual, Relationship and Manufactured

Material issue: Innovation management, consumer-centricity and economic performance

Mitigation plan: The Company is geared to adapt to the technology advancements with a dedicated product pipeline currently under development. It has a long-term, consumer-centric EV strategy in place to introduce products. Further, the Company is making steady investments to support its EV program. Further, the Company has in place a dedicated team to continually track the global environment and the trends shaping up.

4. Risk of supply chain disruption

Capital: Financial, Manufactured and Natural

Material issue: Economic performance, manufacturing efficiency , responsible supply chain

Mitigation plan: The Company undertakes measures to effectively mitigate raw material shortage impact on supply chain and manufacturing output. It has secured sustained raw materials and components availability through alternate vendor sourcing, inventory build-up, and optimising variant-feature mix.

5. Concentration risk (Geopolitical)

Capital: Financial, Manufactured

Material Issue: Economic performance, manufacturing efficiency

Mitigation plan: The Company has strategically diversified its supply base by establishing vendor relations across diverse locations. This ensures supply chain resilience and minimises the risks of delays in material availability. The Companys plants in Chennai have been kept separate, yet are built with a flexible / modular design, enabling them to manufacture any model. This allows for efficient resource allocations, while also giving the agility to swiftly shift production across units. Further, the Company has also established CKD (assembly) units outside India to serve various global markets, diversifying its manufacturing operations globally.

6. Cyber security, potential threat from cyber attacks and data privacy breach

Capital: Intellectual

Material issue: Ethical business practices / corporate governance

Mitigation plan: The Company has dedicated defence mechanisms including firewall routers and anti-virus security to avert potential cyber-attacks and protect data and systems. Further, daily backups of critical data are performed across different sites.

7. Human resource: Succession planning for key positions

Capital: Human

Material issue: Attraction and retention of talent

Mitigation plan: The Company undertakes various initiatives to attract and retain a talented workforce and improve employee engagement. It ensures the availability of adequate right skilled employees through capability development and capacity augmentation activities. The Company has also implemented a succession planning framework for key roles, with focus on ensuring availability of succession by identifying potential internally and selectively external hiring. It is also aimed at retaining critical talent through Long-Term Incentive Plan (LTIP) and positioning individuals for bigger roles.

8. Profitability risk amidst volatile raw material cost and rising pricing intensity in India

Capital: Financial

Material issue: Economic Performance

Mitigation plan: The Company is undertaking initiatives towards ensuring profitability in ICE as well as EV space. The working group analyses and studies the critical material costs and works towards a plan to offset costs through alternate sourcing, value engineering etc. The optimum pricing and global market penetration are also worked upon as offsetting strategies against higher input prices.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company maintains a strong and comprehensive internal control framework that is responsible for monitoring operations, safeguarding assets from unauthorised use or losses, detecting and preventing frauds/losses, maintaining proper accounting controls for ensuring precision and reliability in reporting of operational and financial statements, addressing the evolving risks in the business, sustaining productivity and ensuring compliance to the applicable laws and regulations.

During FY 2023-24, the Company assessed the effectiveness of Internal Control over financial reporting and found it to be adequate and effective. The Company strengthened its Internal Control System by creating a risk and control matrix for various critical processes through a special project ‘Internal Control Centre of Excellence (IC-CoE). The IC-CoE is a centralised team of specialists who provides ongoing support to colleagues and ensures internal checks and controls over processes for continuous improvement. This team also collaborates with project owners who have the primary responsibility of ensuring adherence. EMLs robust SAP-based Enterprise Resource Planning (ERP) system ensures a high degree of system-based checks and controls to protect its assets. Moreover, EMLs governance risk and compliance frameworks ensure the effectiveness of internal controls and adherence to all the applicable regulations and compliances.

An independent Internal Audit team monitors the functions and processes according to a schedule approved by the Audit Committee. The adequacy and effectiveness of the internal financial controls concerning financial reporting are reviewed by the statutory auditor. The Companys whistle-blower policy/ vigil mechanism facilitates all employees, vendors, dealers and other stakeholders to report fraud and wrongdoings without fear of consequences.

FINANCIAL REVIEW

Eicher Motors Limited registered its highest ever annual volumes in FY 2023-24 at 9,12,003 units. Revenue for the year increased by 14.5% year-on-year growth to Rs. 16,536 Crores - another highest ever mark for Eicher Motors.

Overall volumes in International markets (consolidated) decreased to 77,209 units on the back of weak macroeconomic conditions in key markets such as Europe, USA etc. The revenue from International business in FY 2023-24 was Rs. 1,850 Crores and accounted for 11.2% of EMLs consolidated revenues.

A great acceptance and rising penetration of aftermarket parts and services, greater availability of genuine motorcycle accessories and a wider range of apparel underpinned a healthy performance of the non-motorcycle business. Total revenue from spares and services, apparel, accessories and others increased by 19.5% YoY to Rs. 2,439 Crores in 2023-24 and contributed to 14.7% of EMLs consolidated revenues.

Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) of your Company increased by 26% to Rs. 4,327 Crores in 2023-24 from Rs. 3,444 Crores in 2022-23. EBITDA margin also increased to 26.2% in 2023-24 from 23.8% in 2022-23. Amidst sustained increase in commodity prices in the first half of FY 2023-24, your Company delivered improvement in the profitability on the back of a healthy product mix coupled with strong focus on cost reduction and value engineering helped offset the impact of higher costs.

Consolidated Net Profit After Tax (PAT) increased by 36.4% to Rs. 4,001 Crores in FY 2023-24 from Rs. 2,914 Crores in FY 2022-23. An increase in Revenue, EBITDA, and higher contribution from your Companys JV with Volvo AB - Volvo Eicher Commercial Vehicles have uplifted the profit growth over last year. As a result, Eicher Motors consolidated EPS (Basic) for the year increased by 37% to Rs. 146 / share.

Your Companys financial position remains robust with total cash and cash equivalents, and investments (other than in subsidiaries and Joint Ventures) of Rs. 13,536 Crores. It generated a healthy cash flow from operations at Rs. 3,744 Crores and continued to invest in its future - which includes new product development activities (both ICE and EVs) and setting up operation facilities along with a special focus on growing its digital capabilities. The total capital investment for the year stood at Rs. 828.6 Crores.

Key Financial Ratios

In accordance with SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 (Amendment) Regulation, 2018, the Company is required to give details of significant changes (change of 25% or more as compared to the immediate previous financial year). Your Company has been reporting the following key financial ratios:

		Standalone		Consolidated
Particulars	UOM	2023-24	2022-23	2023-24	2022-23
Inventory Turnover Ratio	Times	9.1	9.3	6.9	7.0
Current Ratio	Times	1.2	1.1	1.2	1.1
Trade Payables Turnover Ratio	Times	4.5	4.6	4.4	4.5
Net Capital Turnover Ratio	Times	31.1	30.9	29.8	32.2
Operating Profit Margin	%	23.8%	20.5%	22.6%	20.2%
Net Profit Margin	%	23.3%	18.6%	24.2%	20.2%
Return on Equity	%	26.2%	22.2%	24.1%	21.2%
Return on Capital Employed	%	30.5%	26.4%	25.4%	22.7%
Earnings per share (basic)	Rs.	136.9	95.9	146.2	106.6
Earnings per share (diluted)	Rs.	136.7	95.7	145.9	106.4

JV UPDATE - VE COMMERCIAL VEHICLES

VE Commercial Vehicles Limited (VECV), celebrates 16 years of collaboration between the Volvo Group and Eicher Motors Limited, built on the shared values of trust, mutual respect and win-win. Over these years, VECV has repeatedly delivered best-in-class products and solutions that seamlessly integrate cutting-edge technology into modern truck and bus based solutions that are relevant for India and other rapidly-developing markets. Today, VECV is acknowledged as an industry leader in pioneering modernisation in the commercial vehicle industry in India and the developing world. The Company has fortified its reputation through its focus on retail excellence, optimised front-end processes, and a commitment to Uptime, all backed by proficiency in operations. With an expanded retail network comprising almost 1,000 touchpoints nationwide, VECV has maintained its leading position in the dealer satisfaction survey conducted by FADA for a third successive year. The operations of VECV includes production, sales and service of the complete range of Eicher branded trucks and buses in India and 40 other countries, production, sales and service of Volvo Buses in India, exclusive distribution of Volvo Trucks in India, engine manufacturing and exports to Volvo Group brands globally, Eicher Power Solutions and Eicher Engineering Components.

Commercial Vehicle Industry

The total domestic Commercial Vehicle (CV) industry grew by 0.6%, reaching 9,67,878 units in FY 2023-24. The marginal growth was despite a shift towards higher tonnage trucks which created higher payload capacity reflecting the strong performance of the Indian economy. During recent years, we have seen a gradual adoption of electromobility in segments like buses and small commercial vehicles, the rising importance of connected solutions and the emergence of new business models offering bus/truck as a service (BAAS/TAAS).

VECV Performance - A Record Year : Ahead of the Industry

In the Financial Year 2023-24, VECV grew 7.5% over the previous year, gaining market share and registering sales of 85,560 units, the Companys highest ever sales. This achievement stems from a steadfast commitment to Customer-Centricity, underpinned by an expanded Product Range, investments in Industrial Infrastructure, enhanced Service Network, advanced Technology Initiatives, and a focus on Customer Satisfaction. This growth in domestic sales overcame weakness in exports markets which saw a decline of 24.6% owing to geo-political tensions, supply chain disruptions, commodity inflation and global market slowdown.

Eicher Trucks & Buses

In FY 2023-24, the Company achieved its highest ever Eicher Trucks and Buses (ETB) sales of 83,088 units for the financial year exceeding the previous best of 77,760 units in FY 2022-23.

Light & Medium Duty (LMD) Trucks: In the LMD trucks segment, the Company has sold 40,559 units (previous peak of 38,938 units in FY 2022-23) gaining a market share of 34.6% in the segment.

Global unveil: Small Commercial Vehicle at

Bharat Mobility 2024

VECV unveiled a Small Commercial Vehicle (SCV) truck at the Bharat Mobility Expo 2024, thereby solidifying its position as a full-range CV player. The product is developed to expand solutions for sustainable last-mile delivery and near-city distribution, and spans from 2 tonnes to 3.5 tonnes gross vehicle weight (GVW).

The truck is scheduled for customer trials in April 2024 followed by a commercial rollout. Eicher will be introducing the electric variant first, followed by clean CNG and diesel variants.

Volvo Trucks India: In the financial year 2023-24, Volvo Trucks India achieved record sales of 2,131 units, capturing a strong 94% market share in the premium European trucks (400+ hp) segment.

Buses: VECV sold 17,620 units in FY 2023-24 (previous peak of 15,077 units in FY 2022-23) and has maintained its place as the 3rd largest player in the segment with 21.6% market share.

As per market share

International Business: VECV exported 3,721 trucks and buses in FY 2023-24, compared to 4,933 in FY 2022-23. Additional details of VECV are in subsidiary performance section.

Financial Review

In the financial year 2023-24, VECVs revenue from operations was Rs. 21,868 Crores in FY 2023-24, up by 15.4% over the previous years revenue of Rs. 18,952 Crores. EBITDA for the year was at Rs. 1,715 Crores, 23.6% higher than Rs. 1,387 Crores last year and the EBITDA Margin was at 8% against 7.5% last year. Profit after tax stood at Rs. 823 Crores up 42% from Rs. 579 Crores last year. The main business segments of the Company showed good growth in the year with the Company registering its highest-ever sales in the Eicher trucks and buses and highest ever Volvo Trucks sales. The other business segments have also achieved their highest ever revenues with significant growth in FY 2023-24, with Eicher parts achieving its highest-ever sales at Rs. 1,382 Crores and Volvo parts registering sales of Rs. 737 Crores in FY 2023-24. Eicher Engineering Components business also achieved its highest ever sales of Rs. 1,623 Crores in FY 2023-24.

Cautionary Statement

The Management Discussion and Analysis may contain some statements describing the Companys views of the industry, objectives, projections, estimates or expectations, which may be ‘forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ substantially or materially from those either expressed or implied in the Statement depending on the factors that could affect the Companys operations such as supply and demand situation, input prices and their availability, changes in government regulations, tax policies and other factors such as Industrial relations and economic developments, etc. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Investors should bear the above in mind.