Legends of wheels Part IV: Siddharth Lal

Following up on

- http://boyracer.blogspot.com/2012/04/legends-of-wheels-part-isergio.html

- http://boyracer.blogspot.com/2012/04/legends-of-wheels-part-ii-carlos-ghosn.html

- http://boyracer.blogspot.com/2012/04/legends-of-wheels-part-iii-lee-iacocca.html

We now have an icon from the motorcycling industry. The man who restored one of the oldest Motorcycle marques as a dominant force in the industry. The man is none other than Siddharth Lal.

History of Royal Enfield (From the Royal Enfield website)

The Enfield Cycle Company made motorcycles, bicycles, lawnmowers and stationary engines under the name Royal Enfield out of its works based at Redditch, Worcestershire. The legacy of weapons manufacture is reflected in the logo comprising the cannon, and the motto "Made like a gun". Use of the brand name Royal Enfield was licensed by the Crown in 1890. In 1909 Royal Enfield surprised the motorcycling world by introducing a small Motorcycle with a 2 ¼ HP V twin Motosacoche engine of Swiss origin.  In 1912 came the JAP 6 HP 770 CC V twin with a sidecar combination. It was this motorcycle which made Enfield a household name. 

At the time of the outbreak of WW I Royal Enfield supplied consignments of their 6 HP sidecar Outfit motorcycles with Stretchers to the Crown. This same motorcycle also came with a Vickers machine Gun sidecar attachment which could also be turned skywards and used against low flying aircraft. Royal Enfield supplied large numbers of motorcycles to the British War Department and also won a motorcycle contract for the Imperial Russian Government. 

During World War II, like other manufacturers of that time Royal Enfield was also called upon by the British authorities to develop and manufacture military motorcycles. One of the most well-known Enfields was the Royal Enfield WD/RE, known as the Flying Flea, a lightweight 125 cc motorcycle designed to be dropped by parachute with airborne troops. After the war the factory continued manufacturing the models developed during the war and the legendary J 2 model appeared which went on to be the ancestor of the legendary Bullet. The same motorcycle which perhaps had the honour of the being the one with the longest production run in the world.

Royal Enfield motorcycles were being sold in India ever since 1949. In 1955, the Indian government started looking for a suitable motorcycle for its police forces and the army for patrolling duties on the country's border. The Bullet 350 was chosen as the most suitable bike for the job. The Indian government ordered 800 of these 350 cc motorcycles, an enormous order for that time. Thus In 1955, the Redditch Company partnered with Madras Motors in India to form what was called 'Enfield India' to assemble these 350 cc Bullet motorcycle under licence in erstwhile madras (Now called Chennai). As per their agreement Madras Motors owned the majority (over 50%) of shares in the company. In 1957 tooling equipment was also sold to Enfield India so that they could manufacture components and start full-fledged production. The Enfield Bullet dominated the Indian highways and with each passing year its popularity kept rising.

Royal Enfield UK continued manufacturing motorcycles and came out with some more innovative and powerful machines notably the Royal Enfield Meteor, Constellation and finally the Interceptor 700, before being sold to Norton-Triumph-Villiers (NVT) in 1968. Production ceased in 1970 and the company was dissolved in 1971. Remaining tooling and equipment of the Redditch works were auctioned off. Meanwhile the Bullet 350 continued to be manufactured in India and by the 1980’s the motorcycles were even exported to Europe out of India. Even after the motorcycle manufacturing closed down the precision engineering division ran for some more time and even bicycles were produced until quite late.

In 1990, Enfield India entered into a strategic alliance with the Eicher Group, and later merged with it in 1994. It was during this merger that the name Enfield India changed to Royal Enfield.

The company sold 78, 546 motorcycles in the April-March 2011-12 period. This was from a plant constructed to manufacture 30,000 bikes only decades ago. 

Historian of Royal Enfield: Siddharth Lal

The year 2000 could have been decisive. That was when the board of directors at Eicher Motors decided to either shut down or sell off Royal Enfield - the company's Chennai-based motorcycle division, which manufactured the iconic Bullet motorbikes. For all its reputation, the sales of the bike was down to 2,000 units a month against the plant's installed capacity of 6,000; losses had been mounting for years. Though the bikes had diehard followers, there were also frequent complaints about them - of engine seizures, snapping of the accelerator or clutch cables, electrical failures and oil leakages. Many found them too heavy, difficult to maintain, with the gear lever inconveniently positioned and a daunting kick-start.

It is not an easy task to revive a motorcycle brand. Things  down further when we are talking of a legacy that is more than 100 years old. Such was the task at hand for the directors at Eicher who took over Royal Enfield India in 1994. The Royal Enfield Bullet is now the oldest selling motorcycle nameplate in the world and the Bullet is the motorcycle model which has withstood the longest timeline of any models in the world.

When the decision was being taken on Royal Enfield, just one person stood up to the board, insisting Royal Enfield should get another chance. He was Siddhartha Lal, a third generation member of the Delhi-based Lal family, promoters of the Eicher group of companies. Eicher Motors was set up by Vikram Lal, Siddharth’s father. Lal, then 26, was an unabashed Bullet fan: he even rode a red coloured Bullet while leading the baraat (procession) to his wedding venue, instead of the traditional horse. "The board agreed to give me a chance," says Lal. "It was not because of its confidence in me, but because the business was doing so badly it could hardly get any worse."

Retaining the bikes' rugged looks was a given, including the build, the design of the head lamp and the petrol tank. But should the gears be shifted close to the rider's left foot - as in most bikes - or retained on the right side? The question gave Lal and his team many sleepless nights, since long time users were dead opposed to the change. The engine was another thorny question. The old cast iron engine was a relic of the past. Its separate gear box and oil sump design made it prone to oil leaks and it seized up very often. Its ability to meet increasingly strict emission norms was also suspect. A modern aluminium engine would eliminate these problems, but it would lack the old engine's pronounced vibrations and beat - which Royal Enfield customers loved. Laws of physics made it impossible to replicate these with the new engine.

There are many global examples of auto companies going under following a radical change in the engine of their products. Yet Lal and his team proceeded to both alter the position of the gears and design a new engine. "We retained many of the old engine's characteristics - the long stroke, the single cylinder, the high capacity with push rod mechanism," says Ravichandran, the man who made Bajaj and TVS tick before joining Royal Enfield. But the new engine, unlike the old, had hydraulic tappets, a new engine arrangement, new metal and fewer moving parts. Obviously, it did not produce the vibrations and the beat of the old, but international experts were consulted and sound mapping carried out for over 1,000 hours to ensure it produced the maximum rhythmic vibrations possible and a beat, which was 70 per cent of the amplitude of the original.

The new engine had 30 per cent fewer parts and produced 30 per cent more power than the old, with better fuel efficiency. By 2010, all Royal Enfield models had begun to use the new engine. Two other problems needed to be addressed: the quality of some of the components Royal Enfield bikes were using, and the sales experience. To tackle the first, shop floor processes were fine tuned, while suppliers were exhorted to improve quality levels. Royal Enfield also embarked on a large scale internal exercise to tone up performance. "We declared 2006 as the year of getting back to the basics," says Ravichandran. "We also formed a field quality rapid action force to bridge the gap between customer expectations and the reality."

 Slowly, the tide turned. Engine related problems and oil leakages in Royal Enfield products almost disappeared. By 2008 dealers were reporting lower workloads. Warranty claims fell sharply too. Malfunctioning of the sprag clutch, on which the electric starter depends, declined, for instance, from five per cent in 2005/06 to 0.2 per cent in 2010/11. Royal Enfield also began conducting marquee rides to promote leisure biking. "Such steps removed the fears about our products' reliability some customers may have had," says Venki Padmanabhan, who succeeded Ravichandran as CEO earlier this year after Ravichandran was elevated to the board of Eicher Motors. To improve sales experience new company-owned showrooms were launched and dealerships expanded.

Closing the new Jaipur plant was also plant of the revival process. The company started giving motorcycles to potential buyers for an overnight test instead of the traditional 10 mins test by other motorcycles.

In October 2008, Royal Enfield launched in Germany its newly designed 500cc Classic model - inspired by J2, a 1950 model Bullet - with the new engine. It was a success, admired for its performance and fuel economy.

The Company: Today

Today, Royal Enfield's problems are of a different kind. How should it scale up without diluting brand equity? It also faces challenges from iconic global brands such as Harley-Davidson which has entered the Indian market. With other options available, will its customers continue to sit out the six-month period it takes to provide deliveries?

Driving change when the chips are down is easy: there is no other option. In Royal Enfield's case the change worked for it. But can Siddhartha Lal and his team do the same when the going is good?

But however nostalgic that may sound, Royal Enfield was in Dire straits. When Hero Honda Launched the fun killer fuel efficient CD100, it had meant corrupted a lot of middle class Indian hearts. Bikes like the Jawa 350 and Yamaha RD350 ultimately died a premature death. Engine capacities locked in at 100cc and power was limited to extract 70 kmpl. History is proof that whenever a 'Gandhi' has come to power, country has gone down the drain and Fuel prices have gone up. Royal Enfield too was affected.

Another major reason was also the fact that due to lack of innovation at the company. Even the employees were contempt in making limited motorcycles for the Indian army. Retail models lack Frugality and reliability that would shame a 100 year old waterpump. 

It wasn't till 2001 that Lal took charge, and he quickly realised that running Royal Enfield called for more than just selling a few motorcycles every year. Royal Enfield had barely survived the onslaught of the Japanese bikes, and Lal saw that nostalgia and heritage could take Bullet only that far. "Let common sense prevail, not legacy ," was the mantra that Lal wanted to ingrain as he and his team went about over hauling Royal Enfield.

Over the last seven years, changes have been effected to get out of the mental rut. "We had to experiment continuously, never mind the failures ." Traditionally, Royal Enfield bikes had the gearshift to the right, even as the world over, gearshifts had moved to left. Lal knew that if the gears were moved from the right to the left, ardent Bullet followers would feel cheated. After all, that was one of the things that set the Bullet — and by extension, them — apart from the rest. "We are defined by the right gearshift," Lal says.

But in the quest for numbers, there are some temptations that Lal and Enfield resisted.

"Small bikes and mass bikes have been avoided like plague. We are focused on the place we want," explains Lal, adding that the proposition of Royal Enfield isn't just about commuting but also for passion-biking and leisure. Even as it was consolidating Bullet's position, the company knew that the burgeoning youth segment was an opportunity it had to tap into.  RL Ravichandran, CEO, Royal Enfield Motors, says the only way youngsters could be attracted to try models like the Bullet Machismo 500, the Bullet Electra and Thunderbird was to assure them of the quality. "Features like ease of start, disc brakes, and fit-and-finish were looked into," explains Ravichandran.

 

While the payoff has been in the past three years, for Lal it began at a board meeting in 2000, when the then 27-year old Lal asked his father for two years’ time to turn Royal Enfield around. He was as good as his word: between 2000 and 2004, he made it profitable again. The icing on the cake was recreating the cult status of the legendary Royal Enfield, which we all know as the Bullet.

Eicher is setting up a new plant to make 150,000 bikes a year. He shrugs off the flattering statistic that the bike is sold in 30 countries. What he really wants is to establish a global leisure-motorcycle business over the next six-eight years. Realising that vision is going to be one hell of a ride.

Going Forward

The foundation for leisure biking was laid at Royal Enfield a little over a decade ago when Mr Lal and his team were trying to figure out what the company was all about. They looked at commuters, different sizes/categories of bikes and finally realised that there was no point competing with the (then) Indo-Japanese bikes but, instead, creating an individual space for Enfield.  

There have also been some interesting trends in the sales pattern. Earlier, the company was dependent upon semi-urban markets such as Punjab or Kerala, which dominated sales. Today, in the last six-eight years, while volumes continue to be strong in these two States, 60-80 per cent of sales come from the cities, including tier-2 metros. also, the Royal Enfield customer base is a lot more youthful today than what it has been in the recent past when middle-aged men were in the driver's seat. 

According to him, some of the recent riding initiatives such as the Himalayan rally have been huge brand-building efforts. “It gets people to really enjoy the type of motorcycling which is part of our culture. This is the starting point of our branding efforts, which is all about rides,” he says.  Now Royal Enfield Dealers nationwide hold about 10 rides every 3-4 months including short 2 hour rides to long 10 day rides. 

“We do not have sports personalities or actors to endorse our bikes. I would rather flush my head down a loo than have someone who does not know how to ride a bike pose for my motorcycle. We do not want to build our brand this way,” Mr Lal reiterates.

Thanks to its new-found popularity, the waiting time for an Enfield can now stretch up to nine months and the company recently announced it would invest Rs. 200 crore to double capacity in the next two years. Since it addressed the safety concerns of its consumers (for example, traditionally brakes were always located on the “wrong” side; starting it once required incredible patience), Lal says, there’s been an explosion in the number of 18- to 21-year-old Enfield buyers. Café Racer, the next new model, is due at the end of 2012 and new launches will follow every two-three years.

“At Rs. 500 crore revenue, it’s not a huge brand, but it’s got this whole aura which we’re trying to build on,” he says.