Siddhartha Lal, executive chairman of Eicher Motors , has made a public appeal for a uniform 18% Goods and Services Tax (GST) rate across all two-wheelers in India. The appeal comes ahead of the upcoming GST Council meeting scheduled for September 3-4, where potential restructuring of tax slabs will be discussed.

Lal's Argument for Uniform GST

In a recent Instagram post, Lal emphasized the importance of maintaining India's competitive edge in the global two-wheeler market. He argued that a common GST rate for all two-wheelers would be crucial in achieving this goal.

Concerns Over Punitive GST Rates

Lal expressed particular concern over the potential implementation of punitive GST rates on motorcycles above 350cc. He warned that such a move could have several negative consequences:

• Limiting Indian brands to smaller capacity vehicles
• Undermining their ability to build strong dealer networks
• Hampering the development of brand equity internationally

Proposed GST Restructuring

The Group of Ministers (GoM) has put forward a proposal to restructure the current GST slabs. The key points of this proposal include:

• Reduction to only two main slabs: 5% and 18%
• Elimination of the current 12% and 28% slabs
• Introduction of an additional 40% slab for luxury goods, potentially including two-wheelers above 350cc

Potential Impact on the Industry

Lal highlighted the potential negative impacts of differential GST rates on the two-wheeler industry:

• Shrinkage of the domestic above 350cc segment
• Reduction in investment necessary for global competitiveness
• Risk of losing market share to international rivals from countries without such tax distortions

Implications for Eicher Motors

As the parent company of Royal Enfield, known for its popular motorcycles in the above 350cc segment, Eicher Motors could be significantly impacted by the proposed GST changes. The company's ability to compete in both domestic and international markets may be affected if higher tax rates are imposed on their key product lines.

The outcome of the upcoming GST Council meeting will be crucial for Eicher Motors and the broader two-wheeler industry in India. Stakeholders will be closely watching for any decisions regarding the proposed tax slab restructuring and its potential impact on different segments of the two-wheeler market.

Eicher Motors , the parent company of Royal Enfield, has kicked off the fiscal year with a robust financial performance in the first quarter. The company reported a 14.8% year-on-year increase in revenue, reaching a record Q1 figure of INR 5,042.00 crores, up from INR 4,393.00 crores in the same period last year.

Strong Financial Performance

The company's Profit After Tax (PAT) saw a healthy 9.4% growth, rising to INR 1,205.00 crores from INR 1,101.00 crores in Q1 of the previous fiscal year. This includes a share of profit from VE Commercial Vehicles (VECV) amounting to INR 157.00 crores.

Royal Enfield's Impressive Sales Growth

Royal Enfield, the company's flagship motorcycle brand, witnessed significant growth in both domestic and international markets:

The company maintained its dominance in the middleweight motorcycle segment with an 87.3% market share.

International Market Expansion

Royal Enfield's international presence continues to strengthen, with notable performances in key markets:

• Brazil: Established a second CKD (Completely Knocked Down) facility to enhance product availability and responsiveness.
• SAARC region: Strong performance in Nepal and Bangladesh, with a new Classic 350 model produced exclusively at the CKD facility in Nepal.

Product Updates and Launches

The company introduced several product updates and new offerings during the quarter:

• Launched the refreshed Hunter 350 with new color options and enhanced features.
• Introduced the Flying Flea, Royal Enfield's first electric motorcycle, showcased in Delhi, Mumbai, and Bangalore.
• Launched the Classic 650, which has received positive reception in both domestic and international markets.

VECV Performance

VE Commercial Vehicles (VECV) also reported strong results:

• Record quarterly sales of 21,610 units
• Revenue: INR 5,671.00 crores (up from INR 5,070.00 crores in Q1 of the previous fiscal year)
• EBITDA: INR 511.00 crores (33% higher than INR 385.00 crores in Q1 of the previous fiscal year)
• EBITDA margin: 9% (up from 7.6% in Q1 of the previous fiscal year)

Future Outlook and Strategy

Eicher Motors remains focused on growth, with plans for aggressive marketing activations and new product launches ahead of the festive season. The company is optimistic about the upcoming festive period and is preparing to capitalize on the expected increase in demand.

B. Govindarajan, Managing Director of Eicher Motors Limited and CEO of Royal Enfield, commented on the results: "We began the new financial year on an equally promising note, delivering strong volumes and healthy growth. It has been a quarter of meaningful progress across both Royal Enfield and VE Commercial Vehicles."

As Eicher Motors continues to prioritize growth and expand its presence in both domestic and international markets, the company appears well-positioned to maintain its momentum in the coming quarters.

Sustainability Efforts

Eicher Motors has also made significant strides in its sustainability initiatives:

• 84% of operational electricity is now sourced from renewable sources, a 2.4x increase from the previous year.
• Reduced emission intensity by 51% from 0.06 to 0.03 metric tons of CO2 equivalent per motorcycle over the last year.
• Maintained water positivity with a water positivity index of 4.3, replenishing 4x the water consumed.

These efforts underscore the company's commitment to environmental responsibility alongside its business growth.