Siddhartha Lal turned around a struggling, loss-making company that was on the verge of closure when he took over in 1999.
Siddhartha Lal’s carefree demeanour hides a hardnosed entrepreneur who knows how to combine his passion and business.
It was November 2017. Goa was warming up for holidaymakers. Beer bottle in hand, wearing his trademark carefree look, Siddhartha Lal, 48, made a surprise appearance on the Vagator hilltop. The managing director of Royal Enfield (RE) was there to unveil his two new bikes — Interceptor INT 650 and Continental GT 650.
Away from five-star hotels, this was a community unveil, out in the open on a makeshift stage, amid diehard RE fans giving thunderous applause. Goa was the last stop for RE’s highly popular Rider Mania where aficionados from across the country rode down for some adrenaline rush. Reportedly, 10,000-odd RE fans had congregated. India’s motorman was playing both host and brand ambassador for RE, the country’s iconic bikemaker with a cult following.
Lal’s carefree demeanour hides a hardnosed entrepreneur who knows how to combine his passion and business. Under his watch, Royal Enfield has had a dream run. Its sales have surged — from under 50,000 units in 2010 to about 7.53 lakh in 2017. Even better, he has turned around a struggling, loss-making company that was on the verge of closure when he took over in 1999.
In 2016-17, Royal Enfield chipped in over 80% of the Rs 1,667 crore net profit of Eicher Motors, which had a revenue of Rs 7,033 crore. On the back of its impressive growth, Eicher Motors’ stock (including the commercial vehicle joint venture with Volvo) has sizzled on the bourses, rising from around Rs 600 on NSE in early 2010 to Rs 27,300 today.
Royal Enfield, however, is now facing up to competition. Indian consumers, which were focused on sub 120 cc bikes, are thinking bigger. Mid-sized bikes (250-750 cc), a niche dominated by RE, is getting all-round attention from buyers and manufacturers.
Bajaj Auto, which launched Dominar 400 in 2016, is partnering with British bike maker Triumph Motorcycle to focus on this segment. Hero MotoCorp has identified this segment as a priority. TVS, in partnership with BMW Motorrad, is launching bikes in this segment.
"Growth in premium and executive segments of motorcycles will outperform the economy. Most launches are happening there," says Binaifer F Jehani, director, CRISIL Research.
Already, RE’s 25-30% monthly sales growth has moderated to 17-20%. Analysts are re-rating the company that has had a fantastic ride over the last decade.
"Pricing power that RE enjoys may not be there in the future," says Bharat Gianani, research analyst, Sharekhan.
Before his rivals catch up, Lal knows RE has to shift gears, change the playing field and find a bigger game to keep the vroom factor intact. "In the world of motorcycle, we see an enormous gap. And we see a huge goalpost. We want to create and lead the middle weight (bikes in the 250-750 cc category) market globally, which does not exist. We want to be the global leader," he says.
He is quick to add: "I am a reluctant entrepreneur. I would rather do one thing very well then be mediocre at 100 different businesses." That has been the leitmotif of his journey at Royal Enfield. Even as a young boy, he was passionate about bicycles and motorcycles. When he became the MD of the Eicher Group in 2006, it had 15 "mediocre" businesses. He got rid of most of them, including its core tractor business.
"For entrepreneurs, revenue and market share run their ego. I was happy to shrink my business, run a Rs 350 crore great company rather than a Rs 10,000 crore mediocre one," he says.
London Ride Lal is now readying RE for its future ride from his spartan home-cum-office in London. He shifted base in 2015, following Royal Enfield’s acquisition of sports product specialist Harris Performance, a UK-based firm that designed and manufactured race bikes for Grand Prix and World Superbike and had customers like Yamaha and Suzuki.
At that time, Lal was suffering from a prolonged period of ill health — a bout of dengue and typhoid, among others — and London offered him an opportunity to shake things up. "I don’t really love day-to-day operations. I get bored easily. I have to make my job interesting," he says.
London allows him just that — to move away from daily operations, give elbow room to his India team and focus on crafting RE’s future trajectory. "This way, I can do my passion projects and focus on areas like technology, culture and hiring where I can add value," he says.
RE now has a world-class tech centre in the UK, which works closely with the India team to develop new products. Meanwhile, Lal, who travels to India about eight times a year, is scouring global markets to expand RE’s horizon. Why did he choose London? Globally, he says, all big consumer brands are the exclusive domain of rich countries in Europe, US and Japan.
"They know something about building consumer brands. I thought London would be a good base to learn the nuances." It has also helped shift his focus of thinking. "My world view is not that India-centric anymore. Once outside, you are forced to think global." London has helped him build a global perspective around product development and strategy.
He also finds time to read, reflect and "go on long walks with my dog". He also gets a lot of family time. He is home when his children, aged 11 and 8, return from school. Lal is a hands-on dad and the good cop between the two parents. Some parenting tip? "What do kids in such fortunate situations need?" he exclaims, before answering, "Right manners and values like perseverance so that they don’t give up easily." "I want them to play, have fun, have feelings and relationships, get let down by friends.
It’s a good thing. They should learn to manage life and emotions," he says.
Lal also keeps his worldview updated. "I frequently get obsessed about things. Right now, it is connectivity," he says. So, he reads everything he can on connectivity. Earlier, he deep-dived on business models of companies like Red Bull. "I don’t idolise anyone. I don’t have many friends in business. But there are slivers and aspects of people that are impressive," says Lal, who likes the approach of Wilmot Reed Hastings Jr, Netflix cofounder, in managing people.
Road Ahead Has the other businesses — VECV Ltd (Volvo Eicher Commercial Vehicle) and Eicher-Polaris JV — suffered because of Lal’s single-minded focus on RE? "If RE wasn’t there, VECV would have been enormously successful. We have grown multi-fold. But the best is yet to come," he retorts.
He thinks the real pivot for VECV will be in 2020 when Euro VI norms kick in. The Eicher-Polaris personal mobility business has been a bit of a struggle, but Lal is giving it a fresh shot with a new CEO and a tweak in business thrust towards a full-people carrier.
RE is, evidently, his favourite child. His strategy to make it the global leader in midweight motorcycle rests on three legs. One, he has to tap into its R&D capabilities in London and India to build a compelling product pipeline while tackling quality niggles. Besides the Classic 350 and Bullet 350, it has the café racer Continental GT, the highway cruiser Thunderbird and the adventure bike Himalayan even as it readies the Twins (twin-cylinder bikes) Continental GT and Interceptor for a global rollout.
Experts flag product quality issues and Lal is aware. Even as he pushes his team to tackle such worries, he says, "A product delayed by a couple of months (to fix issues) doesn't matter. Think of it 10-15 years from now. Would that matter?"
Two, he is exploring new markets, especially emerging economies in Southeast Asia and South America, to scale up exports. RE already exports small numbers to over 50 countries and set up operations in the US, home of Harley-Davidson, in 2015. His USP?
"With India scale, we can produce and sell mid-weight bikes globally at a compelling price," he says. With early experiments in Thailand and Indonesia, RE is ready to scale up its operations with the Twins even as it helps protect its turf in India. "The rivals have to contend with a player that has scale and a compelling brand proposition," says Ashwin Kumar, program manager (mobility), Frost & Sullivan.
Finally, Lal wants to build an entire ecosystem of products, brands, services and experiences to build a sticky customer relationship. "It is not just about price and scale. We also have the sensibilities and capabilities to build a brand and motorcycle for the world," he says.
In the digital era, products are increasingly about experiences and Lal is building that ecosystem. A range of initiatives has been rolled out - retail stores like Garage Cafe in Goa, interesting rides like the Rider Mania and creation of a tight-knit community. As part of its CSR engagement, RE worked closely with an NGO to organise a trip for its riding community. They drove down to light up a remote village in Leh with solar panels that they carried with them.
"We are not trying to be fashionable. This is who we are. But these things also differentiate us in a market that is increasingly getting commoditised," says Lal.
We want to be the global leader in the mid-weight segment: Siddhartha Lal, MD of Royal Enfield
On Royal Enfield’s future We are a super focused company. We do a few things but we put all our might behind them to do them well. We want to create and be the global leader in the mid-weight segment.
On shifting overseas Sceptical about default options in life, shifting overseas helped me pull out of day-to-day operations and gave me think time to focus on crafting our next phase of growth.
On London as a base All big global brands are the exclusive domain of rich countries. They know something about it. As we try to build a global brand, this is a good base to have.
On Rajiv Bajaj & rivals I don’t look at them as competitors but extended circle of friends and colleagues. At a personal level, Rajiv and I are close, the kind of friendship you can have with very few.
On parenting What kids in fortunate situations need are exposure, values like perseverance so that they don’t give up. The should be polite and caring. Have fun, feelings and relationships and learn to manage life.
On updating his world view Every few weeks or months, I get obsessed about certain topics or projects. It could be Red Bull’s money-making strategy or Formula 1 business model. This season, I am obsessed about connectivity. And I have been reading up on everything I possibly could on the subject.
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