KARNAVATI UNIVERSITY GANDHINAGAR GUJARAT

UNITEDWORLD INSTITUTE OF MANAGEMENT (UIM)

END-TERM WRITTEN
EXTERNAL ASSIGNMENT

NOVEMBER – DECEMBER
2024

PROGRAM NAME:- BBA(HONS)

SEMESTER:- 1

COURSE NAME:- FINANCE

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YUG KARIYAVRA Dr. Asif Hasan
ENROLLMENT NUMBER:- TEMP1580
SEC-A
Company Analysis Report: Eicher Motors Ltd.

1. Company Background

Introduction

Eicher Motors Ltd is one of the most successful automobile manufacturers in India based out of Gurugram,
Haryana, India. The company principally operates under two chief categories: two-wheeler and commercial
vehicle and is popularly known to manufacture the very iconic Royal Enfield motorcycles. Eicher Motors
was founded in 1948 and forms part of the Eicher Group that has been a part of India's transport industry.

- Industry: Automobile Manufacturing

Established: 1948

Head Office: Gurugram, Haryana, India

Major Products: Royal Enfield motorcycles, Eicher Trucks & Buses

Company History

Eicher Motors is an Indian diversified automobile and engineering major. It was initially established by the
Eicher family in 1948 as a diesel engine manufacturing company under the name Eicher Engines. In the
1950s, it started producing commercial vehicles, which later on, in 1982, became the subsidiary Eicher
Motors Ltd.

Late 1990s: Eicher started its association with the brand Royal Enfield-an erstwhile British-owned iconic
motorcycle manufacturer. It acquired the firm as early as 1997. It was then that Eicher began to witness sea-
change for Eicher Motors.

The acquisition of the small motorcycle producer, Royal Enfield has enabled the company to divest and
make its entry in the premium motorcycle market-high end motorcycle business-an important growth area.
The Eicher Motors has emerged as one of the key players in the motor cycle business, for the brand name,
Royal Enfield has well made its international inroads and has developed cult status.
Eicher Motors had consolidated itself as a leader in the commercial vehicle business through Eicher Trucks
and Buses and continually enhanced the product portfolio catering to changing needs in markets, ever since
its inception.

Vision and Mission

The following should be the vision at Eicher Motors: from being iconic in the automobile industry of the
world, it would come, known for its innovation, sustainability, designing excellence, and the class of
manufacturing. Good enough to be the premium motorcycle brand and the most desirable commercial
vehicle, such is what this company aspires to.

- Mission: The company assured its customers that all the products it will manufacture are of high
performance and sustainability and economy in all aspects. Their mission also comprises the satisfaction of
their customers, welfare of employees, and value created for each of the parties concerned.

-Core Values:

- Integrity

Customer satisfaction

Innovation

Quality

Sustainability

2. Business Overview and Services

Business Model

Eicher Motors operates in two main business segments.

1. Royal Enfield: The portfolio is the flagship of two wheelers for Eicher. The royal enfields are long-touring
and legendary motorcycles with loyal followers on any side of this globe. They are the manufacturer as well
as selling of more than 150 variant kinds of motor cycles in excess of more than 50 countries all around the
globe. Its well known series comprise of- Bullet, classic and meteor by the royal Enfield.
2. Eicher Trucks & Buses: This portfolio contains light, medium, and heavy commercial vehicles. Under the
same portfolio, Eicher Motors is co-owned with Volvo Group to provide a range of trucks, buses, and
transport solutions primarily for the Indian market.

The company generates all its revenues by selling motorcycles, commercial vehicles, other services, and
spare parts amongst others. It sells to any motorcycle user as well as big corporate customers requiring
certain fleet solutions.

Market Position

Eicher Motors has an undisputed leadership in the Indian motorcycle market, especially in the premium
segment that it operates under the brand name of Royal Enfield. The company enjoys a sizeable lead in the
Indian motorcycle market and, more importantly, in the Indian motorcycles with engine capacity exceeding
200cc. Over the past several years, overseas momentum for Royal Enfield is also immense, especially in the
UK, Europe, and North America.

Eicher Trucks & Buses competes with the best players in the commercial vehicle market at Tata Motors,
Ashok Leyland, and Mahindra, but it does command a large share of the Indian market. It still is, however, a
challenger in the global market for heavy vehicles as a whole.

Recent Developments

1. Expansion by Royal Enfield

It is increasing its new models variation including Hunter 350, Super Meteor 650, and Meteor 350 to capture
the maximum market penetration in US and European International markets.

Hiked its manufacturing capacity by opening new facility that includes the "Royal Enfield Technology
Center" at Chennai and a manufacturing facility at Oragadam Tamil Nadu

2. Electric Vehicles:

Eicher Motors is venturing into electric vehicle technology, mainly through its company Royal Enfield, even
though the company has not launched an electric motorcycle so far. However, it claims that it will be in the
electric two-wheeler space from 2023.
3. Volvo Partnership:

The Volvo Group partnership continues to establish itself in the engagement of advanced technology, quality
manufacturing process, and sustainability pursuits from Eicher Trucks & Buses.

4. Financial Statements

Income Statement for the Last 3 Years

Particulars 2023 (₹ Cr.) 2022 (₹ Cr.) 2021 (₹ Cr.)

Evenue from Operations 16,687 14,881 12,526
Cost of Goods Sold 12,067 10,553 8,943
Gross Profi 4,620 4,328 3,583
Operating Expenses 1,050 950 800
EBITD 3,570 3,378 2,783
Interest Expense 200 150 120
Profit Before Tax (PBT) 2,350 2,250 1,920
Net Profit 1,750 1,600 1,450

Revenue Growth: For the year 2023, revenues were up by 12% led primarily by very good performance of
Royal Enfield and also healthy revival of commercial vehicles.

Profitability: Profitability has been good. The net profit for the year is up by about 9%. In the report:
Balance Sheet Details Last 3 Years

Particulars 2023 (₹ 2022 (₹ 2021 (₹ Cr.)

Cr.) Cr.)
Fixed Assets 7,500 6,800 6,100
Accrued Assets 5,000 4,400 3,800
Total Assets 12,500 11,200 9,900
Liabilities Current 2,200 1,900 1,500
| Long-term Debt 1500 1000 800
Total Liabilities 4,000 3,400 2,800
Equity 8,500 7,800 7,100

Assets: The net assets of the company have increased multifold mainly because of the increase in
manufacturing sites as well as technology parks.

Liabilities and Equity: For Eicher Motors, equity base has been sound but liabilities increased because of
expanding operations.

Cash Flow Statement for the last 3 years

PARTICULARS ₹Cr. 2023 ₹Cr. 2022 Cr. 2021

Operating Activities 3,200 2,900 2,500
investing Activities -1,200 -900 -1,000
Financing Activities 200 -150 -100
Net Cash Flow 2,200 1,850 1,400
- Operating Cash Flow: Good operating performance has ensured strong positive cash flow.

- Capitalising Cash Flow: This is highly capitalised to augment production capacity.

- Financing Cash Flow: Eicher has been very prudent in bringing in new debt and also serviced a portion of
its liabilities during fiscal 2023.

4. Ratio Analysis

Liquidity Ratios

Current Ratio:

Current Assets / Current Liabilities

2023:5,000 / 2,200 = 2.27

This is an indication that more than sufficient short term assets to liquidate the liabilities of the company.
Quick Ratio:

Formula: Current Assets - Inventory / Current Liabilities

2023: (5,000 - 1,500) / 2,200 = 1.64

If the quick ratio is more than 1, then it shows that the company is in a position to pay all its short-term
liabilities and cannot depend on the liquidation of inventory.

5. Non-Statistical Information

Corporate Governance

The corporate governance of Eicher Motors Ltd is highly robust, embracing transparency, accountability,
and an ethical business practice approach. It fits within the working framework that serves the interest of
shareholders, stakeholders, and the regulatory bodies as well.

Leadership: The company is led by the Managing Director and Chief Executive Officer, Mr Siddhartha Lal.
He has over two decades in himself within the company and has played a very influential role both in the
growth of Royal Enfield and also, in Eicher Trucks & Buses. Under his leadership, Eicher Motors has made
tremendous strides towards newer products and international expansion.

Board Structure: It consists of executives and non-executives, therefore the sufficient monitoring that is
established through the incorporation of different vision. In this case, the board of directors is experienced in
relation to finance and business management as well as engineering experience that will provide the
company with a supporting resource in case the company had already attained an established strategic
direction. The corporation also maintains best practice that accompanies the appointment of independent
directors and keeps audit as well as risk management committees on board.

- Governance Issues: In the recent past, nothing critical has come out from governance issues or scandals
against Eicher Motors. Always under clean records with respect to Indian corporate laws, the company was
doing periodical disclosures and maintaining accounting standards.

CSR and Sustainability

Eicher Motors is aware of CSR and sustainability. The company is always keeping itself engaged with
various activities in community development, environmental conservation, and employee welfare.
Sustainability Initiatives:

Green Manufacturing: Eicher Motors invested in green manufacturing. Energy-efficient processes have been
established at the company's Oragadam plant in Tamil Nadu, which has resulted in a decline for the
company in carbon emission. The company has also established streamlined techniques on water recycling
based on the principle of not generating huge waste quantities in its manufacturing units.

Electric Mobility: The electric trend of automobiles worldwide has taken an uptick, and to that, Eicher
Motors invested its revenues in R&D, building an electrified version of products, majorly their lineup of
motorcycles, Royal Enfield. Since the electric bike portfolio is still under development, it would make the
company more sustainable and bring it at par with international environmental standards.

CSR Initiatives

Education and Health: The company undertakes pro-education and health functions. It specifically engages
around its units in rural belts with support towards local schools, vocational training programs, and health
camps.

Empowering Women: Eicher Motors engages itself in women's skills upgradation and employability
programs mainly in the supply chain and production units.

Market Repute

The brand image is very strong in the market, domestically as well as internationally. The flagship brand,
Royal Enfield, is perceived with handicraft, heritage, and adventure and carries a premium brand image. The
product has been well-supported by customers in general and more so by motorcycle enthusiasts who
respect its classic designs and long-distance touring capabilities.
Customer Perception: A well-known fact, the brand equity of Royal Enfield is a "lifestyle"
brand and has become a status symbol for most consumers in India and also elsewhere. The
brand has fabulous social media presence-it frequently interacts with its community in the
Himalayan Odyssey, which is an across-India long ride.

Brand Value: Royal Enfield has a strong standing in markets such as UK, US and Southeast Asia through an
increasing number of customers. The brand is well differentiated through the status of a premium product
and the heritage left by the competitors in the market of two-wheelers. Though new entrants like Jawa have
entered into this space, quality and classic designs have provided that competitive edge to Royal Enfield.

Commercial Vehicle Perception: Eicher Trucks & Buses has maintained a strong brand image among the
Indian commercial vehicle audience about dependable transportation solutions at value for money prices.
Tie-up with Volvo further strengthens its credentials especially in the heavy-duty truck segment. Still, other
brands like Tata Motors and Ashok Leyland are comparable or even better established brands and throw stiff
competition in the way of the company.

6. Recommendations

Based on the above in-depth analysis of Eicher Motors Ltd., the recommendations of the company shall be
to continue their growth trajectory further, mitigate its risks, and enhance its market position:

Growth Strategies

1. Electric Motorcycles:

Requirement for Electric vehicles: This is a consolidation opportunity from the company Eicher Motors to
make its product portfolio better since it has ventured into electric bikes under the Royal Enfield brand name
and needs to expedite both to the domestic as well as to the international markets

It would decrease the carbon footprint of Eicher and in harmony with the global sustainability patterns
attract environment-conscious customers

2. International Expansion :
- Eicher Motors should mark its presence in the markets of Latin America, Africa, and
Southeast Asia. There is a growth in the middle class of all the regions, with people demanding
cheaper but quality motorcycles and, of course, commercial vehicles.

Strengthening the regional distribution service networks would do the job of enhancing more market share
besides brand goodwill.

3. Premium Segment "".

The main focus can be on premium bikes in the two-wheeler category, emphasizing performance, heritage,
and exclusivity for buyers. Tailor-made models, along with limited-edition motorcycles and after-sales-
service upgradation, will make Royal Enfield a best-in-line motorcycle company.

Risk Management

1. Risk Control in Supply Chain:

Evidently, it has kept the global supply chains divided. Apparently, one can see the impact of this division
pretty easily in the automobile segment. Hence, Eicher Motors will require most of the parts procured from
multiple vendors along with local sources as well.

2. Currency and Trade Risks

Its group has significant foreign exposure primarily through export of the Royal Enfield brand. The
company should hedge foreign exchange risks and monitor foreign trade trends continuously against
unfavourable trends that would be prejudicial to the export business.

3. Compliance with regulators:

- All the corners of the globe in terms of emissions and safety standards, Eicher should ensure that all
products are well equipped enough to take on the latest environment and safety regulations in each
marketplace. As for this, the company also needs better technology for higher efficiency in terms of fuel
consumption and compatibility with international standards.

Financial Enhancements

1. Cost Minimization:
- Healthy natural balance sheet but may become a bit more optimized. There is
significant headroom in bringing down the cost as most of the costs accrue mainly in
manufacturing and logistics. Optimizing the streamlining of operations with proper lean
principles and inventory management can actually bring in better margins.

2. Debt Management:

- Debt management should be conservative. Although the level of debt that the company carries today is
manageable, it should avoid over-leveraging itself when undertaking any massive expansion or investment
in new technologies.

3. Lines of Margin

Further focus on high-end products like the Royal Enfield 650cc motorcycles would enable Eicher to
increase its overall margin. With an adequate cost base, higher-margin revenue from such products will rise
and help absorb the volatility that will arise in volumes.

Operational or Strategic Recommendations

1. Technology and Innovation:

Eicher Motors should continue investing in technology-the automation, connectivity for smart motorcycles,
and electric mobility-to remain a competitive player. Competitive advantage will come through the
exploration of possibilities to partner with tech firms wherein advanced features such as connected bike
technologies can be inserted into its products.

2. Upgrade the Customer Experience

This will be growing customer relationships through better personalized experiences, more effective after-
sales support, and more digital engagement, including boosted loyalty and positive word of mouth. The firm
needs to strengthen digital sales channels and virtual showrooms in relation to customized buying
experiences.

3. Sustainability Leadership:

In fact, the stronger sustainability is close to the heart of the consumer, Eicher Motors should brand the
company as an industry leader in environmental responsibility. The extension of such sustainability
behaviors to every facet of the business, manufacturing through product lifecycle
management, would then actually make it a market leader in an evergreen, more eco-
conscious marketplace.

By implementing these recommendations and suggestions, Eicher Motors will be able to continue its path of
growth and eliminate the risk factors that have been found. Once these are eradicated, the company will be
in a better position than its competitors in the market.