Eicher Motors Ltd

Dear Shareholders,

I hope you and your families are doing well.

As the pandemic continues to wane globally, humanity and businesses have learnt invaluable lessons over the last couple of years, and have also developed skills and competencies to survive and thrive despite the impact of the pandemic. The last couple of years were testing for the industry and for us at Eicher Motors Ltd., but we were able to weather the challenges and have continued to progress on our vision under the able leadership of B Govinda-rajan at Royal Enfield and Vinod Aggarwal at VE Commercial Vehicles, backed by the resilience and commitment of our teams.

At Eicher Motors Ltd., our clear priority, apart from ensuring the safety and wellbe-ing of our employees and partners, was to sustain the momentum and the exponential growth and success that we have been able to achieve over the last several years.

In addition to building some of the world’s most recognized and awarded personal and commercial transportation solutions, we have successfully worked towards nurturing organizations and cultures that are reflective of our vision, and communities that reflect the guiding philosophies and principles of our brands.

We have significantly grown beyond Indian shores with the expansion of our manufacturing and allied units across the world, growth and global successes of our product portfolio, and expansion of our markets and retail network. We have seen inclusive and comprehensive growth across our businesses in India and in international markets, and across business divisions.

While this success and scale has created exceptional opportunities for us, it has also brought upon us greater responsibilities. We’ve reflected on our journey as a brand that has withstood the test of time over centuries and took some conscious steps to shape the next stage of growth for the company.

As a niche brand over the years, or as a successful global organization today, we have always stayed true to our core values and have maintained a challenger brand approach. We have remained committed to ensuring better value, and bigger and better pure motorcycling experiences. But in addition to pursuing excellence in productivity and profitability, companies such as ours have always served a greater social purpose. As the global society today tackles an ever-increasing series of environmental, health and geopolitical crises, we stand committed to being part of the solution rather than part of the problem.

As the world urgently evaluates how we can ensure a brighter future for generations to come, it is now clear that we at EML need to recalibrate and renew our mission so that we can continue to make a significant contribution to society – not just as a corporation, but as a force for good. This, combined with our razor sharp business strategy, including key focus areas like electric vehicles both at VECV and Royal Enfield, will fuse together to form a holistic mission for Eicher Motors Ltd.

Our philosophy of Pure Motorcycling has always been about a constant search for balance between man, machine and terrain. Today, in a world out of sync with itself, we must extend this quest to our business – so that we can restore equilibrium between commercial objectives, community goals and the collective ecosystem that we all inhabit; realign our priorities to sit at the intersection of business performance and social purpose

To mark this phase of our evolution, our 2022-25 strategic vision will elevate our greater socio-economic purpose over our business priorities, so we have a singular clarion call to ride towards, as we navigate constantly shifting sands of global commerce. With a strong and robust business model, led by pure motorcycling, we will now adopt a larger purpose to REBALANCE - balance profit and profitability, balance social and commercial objectives, balance the existing product portfolio of internal combustion engines and the future with electric vehicles, balance a strong brand-led customer experience

MOTORCYCLES AT RS. 10,298 CRORES IN FY22. YOUR COMPANY’S EBITDA WAS RS. 2,172 CRORES, UP BY 22.0% AS COMPARED TO RS. 1,781 CRORES IN FY21, AND PROFIT AFTER TAX WAS RECORDED AT RS. 1,677 CRORES, UP BY 24.5% AS COMPARED TO RS. 1,347 CRORES FOR THE SAME PERIOD LAST YEAR- UNDERSCORING OUR STRONG BUSINESS FUNDAMENTALS THAT HAVE SEEN US THROUGH TWO YEARS OF PANDEMIC INDUCED UNCERTAINTIES.

This year, we made concerted efforts towards becoming a premium, global player - with an ambition to sustainably grow our overseas presence and business, and with a focus on some of the toughest motorcycle markets in the world. I am happy to state that we recorded tremendous success on this front over the last year.

Our international business focus has been driven by our long-term strategy - a carefully mapped approach wherein the intent has been not merely to grow retail presence, but to actually create a brandled pure motorcycling ecosystem within markets.

Over the last few years, we have sharply focused on growing strong and empowered teams in global markets in addition to growing our infrastructure capabilities. We have invested hugely in growing our distributor and retail network, strategically setting up subsidiaries and assembly units and optimizing supply chain infrastructure in critical geographies. From the approach of single store in a nodal city,we today have over 160 exclusive stores and more than 675 multi-brand outlets with unique retail identity, in over 60 countries around the world.

We now have greater collaboration with distributors, with many of them willing to partner with us across entire regions. Understanding the criticality of building greater accessibility and time to market, we set up assembly units in Thailand and Colombia this year, in addition to Argentina, with plans to set up one more in Brazil.

Over and above building world-class motorcycles targeted at global motorcycling enthusiasts, we have sharply focused on increasing brand awareness and resonance, and have nurtured distinct riding cultures and communities.

Our carefully crafted strategy in international markets has borne excellent results as we recorded a more than 100% year-on-year increase in export volumes. Today, over 12% of our overall volumes come from international markets, and Royal Enfield ranks among the top-3 best selling brands in the mid-size segment in markets like Europe, New Zealand, and Thailand, over and above leading the Indian mid-segment market.

As we continue our strategic focus in global markets, we strongly believe that our journey has only just begun; our international business is at an in-ection point. Our understanding of these markets and consumers gives us the confidence that there is considerable headroom for sustained growth in the future.

At home in India, we continue to define the middleweight segment, and perform consistently as compared to the industry.

MOTORCYCLE SEGMENT, AND CLOSED Q4 AT 7%. WE INCREASED OUR MARKET SHARE IN THE MORE THAN 125CC SEGMENT BY 2.8% DURING THE YEAR, TO 28.7%, AS WE CONTINUE TO DOMINATE THE SEGMENT ABOVE 250CC SEGMENT WITH AROUND 90% MARKET SHARE. OUR PREMIUM DOMESTIC DEALER NETWORK DURING THE YEAR EXPANDED TO OVER 2100 RETAIL TOUCHPOINTS, AS WE CONTINUE TO GROW WHAT IS THE MOST PREMIUM GLOBAL DISTRIBUTION NETWORK IN THE SEGMENT.

As the overall supply chain seems to be stabilizing, there is a sharp increase in inflation and interest rates. Despite this, in a market driven by aspiration and premiumization, we strongly believe that our distinct, world-class product portfolio combined with strong brand resonance will help us further grow.

This year,we re-envisioned our most loved and iconic motorcycle, the Classic, with the launch of the all-new Royal Enfield Classic 350. The Classic has been a huge catalyst in growing and expanding the middleweight segment across the globe, while also being instrumental in unlocking a thriving sub-culture of leisure riding among young and experienced riders across the world. The all-new Classic 350 carries forward this legacy, and is built to reflect the familiar timeless design language, with a completely modern and reimagined ride experience. Retaining the retro appeal in entirety, the new Classic 350 aims to take the legacy of its predecessor forward. Since its launch, the motorcycle has won a slew of awards across diverse geographies. We believe that the all new Classic 350 will galvanize the riding spirit amongst modern riders and redefine the mid-size motorcycling segment globally.

Creating niche riding cultures has been a key focus for us. With the Himalayan we were able to successfully build a unique subculture of accessible adventure touring across global communities. Its pure and unique design and well-rounded capability, made it among Royal Enfield’s best selling motorcycles across the world. Cementing that proposition and in an effort to further build in-roads into the adventure category, we launched a new subspecies - the Scram 411, our first ADV crossover motorcycle this year. The Scram 411 is a capable street scrambler, with the heart of an adventure motorcycle. We believe the Scram 411 will unlock a new segment of riders for us.

To further catalyse the growth of motorcycling subcultures, we marked our maiden foray into motorsports this year, with the first edition of the

Continental GT Cup 2021. The GT Cup sits at the intersection of increasing interest in motorcycle track racing, and the need for accessible forms of racing and training in India. The first racing season was completed to resounding response from young racers across India. To further encourage young motorsports talent in the country, we intend to introduce racetrack schools with an intent to provide professional training access to eager enthusiasts.

At the EICMA Motor Show this year, we unveiled a stunning new concept motorcycle - the Royal Enfield SG650 Concept. The motorcycle is a glimpse into our engineering and contemporary design prowess, while being truly representative of our rich legacy of custom motorcycles. A neo-retro interpretation that pushes the boundaries of what a Royal Enfield motorcycle could look like, the SG650 was hugely appreciated at the global motor show held in Milan.

As Royal Enfield completed 120 years in 2021, we also showcased a major centerpiece of our anniversary celebration at the EICMA, with the unveiling of ‘Project Origin’, a faithful working replica of the brand’s very first ‘motor-bicycle’. This was the very machine that built the foundations upon which we have created the enduring legacy of pure motorcycling.

The enduring 120-year old legacy of the brand is nothing without the community, and so to pay an ode to all Enfielders who’ve dared to explore beyond the ordinary, the company undertook 90? South - a first-of-its-kind motorcycle expedition that dared to go where no brand has gone before - the South Pole. We successfully completed this quest on December 16 last year, as two of our riders reached the geographic South Pole after an arduous, but historical 15-day ride from the Ross Ice Shelf.

In commemoration of 120 years of pure motorcycling, we also launched special Anniversary Edition models of the Interceptor and Continental GT 650 motorcycles. With a stunning black-chrome colour scheme and hand-made brass tank badges, these motorcycles were unveiled at EICMA with an exclusive, limited run of just 480 units for global markets. We also launched an exclusive range of bespoke, limited-edition helmets, consisting of 12 designs - one for each decade of the brand’s legacy.

Royal Enfield has been committed and making consistent efforts to foster a pure motorcycling ecosystem for enthusiasts globally. Our robust plans for both apparel and accessories business continue to enable options for self expression and personalization for our consumers and yield impressive business results for the company. In 2021, our focused initiatives resulted in a 45% year-on-year growth in our non-motorcycling business backed by razor sharp focus on growing service and spares business, as well as our motorcycle apparel and accessories business.

As we move forward, we remain focused on creating a strong business vision, a robust product portfolio and experiences that stay true to our philosophy of pure motorcycling and also tie back into our larger mission to REBALANCE.

VECV

Despite the challenges posed by two waves of the Covid pandemic, supply chain disruptions caused by lockdowns and the situation in Ukraine, VECV registered handsome growth both in volumes as well as total income. Sales of our trucks and buses grew by 38.3% to 57,077 units during FY22. Despite the pandemic, we also brought on-line the Industry 4.0 compliant Bhopal Plant with a total capacity of 40000 vehicles per annum.

VECV also continued on our journey to become a whole-hearted customer-centric organization - something we started in 2018. Customer- centricity is taking deep roots within VECV and we note initial recognition by our customers and dealers as demonstrated by being Ranked No.1 in Dealer Satisfaction Survey 2021 by the Federation of Automobile Dealer Associations, India. We treat this as just the beginning and it remains our constant endeavor to consistently keep improving our partnership with dealers and customers and to set new benchmarks in the industry. Our initiatives of Retail Excellence, Uptime, Network development backed by a strong industry infrastructure, a strong product line up, and an efficient digital backbone provides us with a strong foundation in our journey towards being a truly customer-centric organization.

As part of our quest of becoming an

Uptime company and No.1 in customer satisfaction we have also focused on creating a very agile and efficient dealer network. Last year alone we added close to 150 new touch points with state-of-the-art facilities for enhanced customer experience across the country. Majority of our workshops are now Uptime Certified delivering remote diagnostics and predictive maintenance to our 100% connected truck and bus fleet by linking these in real-time to our Uptime Center.

VECV is also happy to share that digitalization has taken firm roots within the company with the industry leading My Eicher App launch in FY22 being the latest in a series of initiatives being taken.

We continued to have a granular and immersive go to market approach with the introduction of several new products in different segments. To address the growing demand of CNG trucks we launched India’s biggest CNG truck, Pro 2114XP and industry’s first 11.5T GVW CNG truck- Pro 2095XP ‘PLUS’ CNG. We also created a new segment with the first 17.5TGVW truck, Pro 3015XP, a hallmark of our customer centric product planning. First fruits or synergy with Volvo Bus were delivered with Eicher front engine Intercity Coach and Sleeper buses.

We also successfully launched the all new range of Volvo Trucks’ of FM & FMX Range. These new range of trucks have the most modern features optimally designed to push the limits of productivity and uptime.

And just as the financial year was ending, we received further recognition that our Volvo 9400 B8R won Coach of the Year, Eicher Skyline Pro Staff 3010 L CNG won the L&ICV People Hover of the Year and Eicher Pro 2114XP CNG has won both the ICV Cargo Carrier of the Year, and the Apollo CV of the Year

I am also happy to share that VECV is accelerating focus on Electric Vehicles and alternate fuels. We have won our first tender for electric buses from the prestigious City of Chandigarh and this transformation towards sustainable operations and products will continue as part of our roadmap to protect the world for future generations.

Above all, appreciable efforts are being made to bring down cost and improving value delivered to our customers in the face of a fiercely competitive market. This has resulted in excellent performance whereby we have been the only major Indian CV manufacturer to remain profitable through the pandemic and as well as improve our customer and dealer satisfaction scores. We also continue to expand our footprint in international markets and in FY 22 achieved highest ever sales in Africa and Middle East while also adding new export markets. We have also recorded performances in our components (EEC) and Non-Automotive Engine Business.

All signs indicate that the Indian economy and CV industry will grow at a rapid pace in the coming few years. Based on the strong foundation, high degree of customer-orientation, and excellent execution VECV is well positioned to realize our vision to be recognized as the Industry Leader driving modernization in commercial transportation in India and the developing world.

Looking ahead we are committed to take forward our journey of making VECV a customer- centric organization with consistent progress in network development, retail excellence, superior uptime, and digitalization initiatives. We are also gearing up for the future by addressing sustainability in all aspects of our business and evolving the right products, services, business models, people and capabilities

LOOKING AHEAD

We introduced our first Integrated Report last year on the back of renewed commitment to focus on Environment, Social and Governance (ESG) performance parameters. Over the last few years, we have not only established a strong and resilient business model, but also made critical strides to deliver positive results towards our ESG vision. In recognition of these efforts, Dow Jones ranked EML as one among only ten global automotive companies to feature on its elite list of Dow Jones Sustainability Indices 2021 (DJSI) in the Emerging Markets category. Also in December last year, Royal Enfield was recognized with the ‘Challengers Award’ in the Mega Large Automotive Business category at the Frost & Sullivan and TERI Sustainability 4.0 Awards 2021.

Moving forward we will continue to sharpen our overarching Environmental, Social and Governance (ESG) vision with a firm focus on REBALANCE. All aspects of business at EML will be developed and driven with REBalance at its very heart.

We will continue our efforts to create motorcycles that are loved and revered by motorcycling enthusiasts across the world. Our electric vehicle plans will form a critical part of our product development process moving forward, while we continue our work on the internal combustion engine offerings. Our focus on EV will be driven by our ethos of creating modern classic motorcycles accessible and appealing to consumers of today.

Riding ahead towards new horizons and challenges, I am confident that our teams will power the Company on this new journey as we realize the long term market potential for both Royal Enfield and VECV. At Royal Enfield, we are at the cusp of incrementally scaling up our international business, and turning a new chapter in India as well. To further fuel this plan in a strategic direction, we have created a new empowered, multicultural, cross-functional management team structure that will work with Govindarajan and me to push forward on the next growth journey.

EML draws its success from its numerous stakeholders including its people, business partners, and communities. I would like to extend my sincere gratitude to each and every one of them and their families for their support and faith and for always inspiring us to step up to challenges and explore our potential to scale newer heights.