Talking to Royal Enfield CEO Govindarajan Balakrishnan – Interview

Govindarajan Balakrishnan
Royal Enfield CEO Interview

Govindarajan Balakrishnan, 55, has a long history with Royal Enfield. He served as COO from 2013 to 2021, when he briefly served as CEO. He was then appointed as an Executive Director along with Wholetime Director duties on the board of EML (Eicher Motors Limited) in May 2022.

Hailing from Chennai, he is a Mechanical Engineer with a Post Graduate Diploma in Materials Management. He joined Royal Enfield as a manager and rose through the ranks, sharing a straight-to-the-point attitude as he explained that he believes problems should be solved, not just discussed. It focuses on agility and listening to customers.

BGR, as he is known for short, also serves as a director of EML on Stark Future’s board of directors. EML acquired a €50 million stake in Stark at the end of 2022.

BGR’s roles have included setting up technology centers in India and the UK and being a driving force behind expanding their global footprint, including setting up four subsidiaries and five CKD plants (complete knockdown kits sent for assembly elsewhere in the world).

For motorcycles in particular, he was involved in the development of the Himalayan, Interceptor and Continental GT 650 twins, as well as the Super Meteor 650, alongside the J platform, including the Hunter, Meteor, Classic and Bullet models.

Trev recently met Govindarajan Balakrishnan at the opening displays a new Royal Enfield dealer in Sydney, Moto Machine.

Trevor Hedge: Did you ever imagine that Royal Enfield would have achieved the success it has in Australia? The brand has really reached new heights since Urban Moto Imports took over distribution in 2016. I should imagine the sales figures have exceeded your expectations both here and in New Zealand.

B. Govindarajan:Yeah, I think about eight, nine years ago, UMI distributor, we signed up with them and they’ve been good partners for us, and now they’re aggressively looking at expanding the retail network. Which is very good. I have visited the entire retail network in the last few days and it is coming out very well.

“In terms of the market, I think the market hasn’t grown in recent years, but with all the new products coming in and with the macroeconomic sentiment opening up in Australia and New Zealand, I’m very confident that the numbers are going. to climb in time for Royal Enfield.

“Currently, I am happy to tell you that we are among the top three in the Australian market (in the 250-750 cmc segment), and we are currently the number one selling motorcycle in New Zealand and the Himalaya is the best selling motorcycle in NZ.”

Trev: I saw this firsthand in New Zealand. I was there with my partner on holiday last year and we were in Queenstown. I’m like, there’s a Royal Enfield, there’s a Royal Enfield, there’s a Royal Enfield, so I’ve definitely seen your success in New Zealand. How do Australia and NZ rank in global sales for Royal Enfield?

B. Govindarajan: “Australia is also a top strategic market for us and for us. The UK, US and Australia are very important markets and with the current range of bikes we have we feel the Australian market will also open up for us in time.

“Basically the Himalayan, the new Himalayan that came out – because Australia is a motorcycle market that likes adventure bikes – the Himalayan is a perfect bike for people who love adventure riding and that’s why I’m very confident that in Australia. in the market, Royal Enfield will gain more and more market share.”

Trev: Royal Enfield’s three-year warranty and roadside assistance package is 12 months more generous than most other brands in this market. Was it run by Joe and Urban Moto or HQ in India?

B. Govindarajan:I think fundamentally, Royal Enfield believes that we should give people peace of mind when they buy Royal Enfield. He should just enjoy the motorcycle. They should not be worried about any of the problems that may arise. So we always feel that you are part of us, you should enjoy riding the bike and we are here to support you and take care of you. Go, sit on a Royal Enfield saddle, enjoy the bike.

“It is a fundamental thing that leads us to take this decision. It is not a tactical decision. It’s fundamentally the love of motorcycling and the connection we wanted to have with the consumer, enjoying the motorcycle like that. That’s the decision point for us.”

Trev: But again, was this driven from Urban Moto here in Australia or driven from India?

B. Govindarajan:I think across the globe, Royal Enfield has started to do it. That’s what we’re looking at now on a market-by-market basis.”

Trev: As part of the Eicher Group, the owners of Royal Enfield, of which you are a director, and Eicher have a stake in Starkvarg. How big is Eicher’s stake in Stark and is this part of a larger vision of a cross-pollination between Stark and Royal Enfield? How will Stark’s expertise ultimately help lead Royal Enfield into the EV space? Is there a rough timeline for what you think this might come to fruition somewhere?

B. Govindarajan: “So Stark is a start-up from Spain and they have a similar thought process to Royal Enfield. They are good in modular design, compact design and lightweight materials. These are all areas and it is largely a different bike; they are motocross bikes; we are not in motocross.

“But what Royal Enfield brings to the table for Stark is about supply chain efficiency, growth, which are the problems they can solve and scaling, which they struggle with as a start-up. So we help them with that. We will probably make some components for them from India. And they will do some design for us from their office in Spain and Croatia.

“So because the thought process is similar, we’ve invested in Stark, and right now, it’s just at the technical collaboration level and we’ll see how it progresses. Any investment has to be built on a relationship basis and it only lasts a year, the relationship is positive and building and we’ll see how it goes over a period of time.”

Trev: But Eicher has a financial investment in Stark? Do they have some equity?

B. Govindarajan: “Yes, I invested in Stark. It’s about 10 percent.”

Trev: And some of the things that Stark is doing as well, not only in terms of the end product, but also in terms of how they market their products at retail, are pretty revolutionary. Not only in the way customers order and option the bikes, but their parts are made through the same process on the site and the rest. Do you see that part of what they’re doing in that approach could ultimately be where the majority of the motorcycle market could go towards that model eventually?

B. Govindarajan: “It’s too early to tell because consumer preferences are changing. So direct to consumer, D2C, is the issue today, everyone is talking about it. So Stark has already adopted it and what Royal Enfield is doing is we are piloting all these things. We’re going to create a playbook of what it means for D2C and what it means for different retail formats and all that stuff. In fact, we are surveying for the future.

“All of these things will create a playbook, we’ll pilot it, we’ll test it, and then we’ll be ready if the market is ready to accept those things, at that point, we’ll move. We are currently not changing the structure.”

Trev: Thanks for your time. I hope you see more of Australia while you are here and when you come back again. Congratulations on the success of your brand both here and in New Zealand.

B. Govindarajan: “Thank you Trevor. It was great talking to you.”