Home Business Eicher decides to shut down its loss-making PUV joint venture with Polaris

Eicher decides to shut down its loss-making PUV joint venture with Polaris

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(G.N.S) Dt. 12
New Delhi
43-year-old Siddhartha Lal, the managing director and chief executive officer of Eicher Motors, was in his mid-twenties when he jumped into the family business to look after Royal Enfield, a loss-making unit. That was in 2000, when the Eicher board was about to decide on shutting down or selling the motorcycle business. He believed in the product and wanted to give it a shot. Within the span of a decade after Lal took charge, Royal Enfield’s gears had reversed: The low capacity utilisation of early 2000 was giving way to a capacity constraint. The pull of Royal Enfield motorcycles created the need for capacity expansion and the company opened a second manufacturing facility at the existing site in Tamil Nadu in 2013. Expanding its portfolio, Eicher introduced a new category of vehicle in June 2015, calling it the country’s first personal utility vehicle (PUV). Multix, the PUV, is being manufactured through a joint venture with US-based Polaris Industries and is targeted at independent businessmen.
The maker of Royal Enfield motorcycles, has decided to shut down with immediate effect the personal utility vehicle division that it had set up as an equal joint venture with American firm Polaris. The company had invested in the venture an amount of Rs 2.9 billion, which will now be written down. The joint venture incurred a loss of Rs 0.91 billion in FY17. Eicher Polaris, the joint venture company, had launched Multix, positioned as the country’s first personal utility vehicle in 2015. The vehicle was to target independent businessmen in smaller cities and towns.
A separate marketing network had been set up for Multix, rolled out from the Jaipur manufacturing unit. Multix initially generated significant interest from customers, the company said in a statement. “The initial interest could not be sustained and the subsequent sales performance was significantly slower than expectations. Despite several initiatives, the company’s performance could not be revived. It is in the best interest of all stakeholders to close the operations,” Eicher said. In the coming days, Eicher Polaris will engage with all its stakeholders, including customers, suppliers, employees and channel partners to implement the closure. Eicher said the company would continue to provide spares and service support for the fleet of Multix vehicles on the road. The Jaipur plant of Multix came up at the same site where Eicher had set up a Royal Enfield manufacturing unit in 1999. However, since volumes of these motorcycles were small, the company decided to shut it down and move all of its production to the Chennai unit.

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