If SC says no more domestic sales of BS-III vehicles, I am for it: Rajiv Bajaj

In the final hearing on the unsold BS-III inventory, the Supreme Court today will decide whether auto manufacturers will be able to register vehicles under BS-III norms beyond April 1.

What will be the impact of the judgement on the auto firms? Speaking to CNBC-TV18, Rajiv Bajaj of Bajaj Auto said that the impact depends on quantum of stocks each company has. For example, Toyota has no such stocks as they changed long time ago and Bajaj will have zero stocks of BS-III vehicles by April 1, he said.

He also added that there is a problem of data integrity as manufacturers are revising the inventory data frequently.

Lashing out at auto companies, Bajaj said that the sector needs to come out of the complaining mode and not drag its feet when the industry is looking at change.

He pointed out that the emission norm date was split into two different dates for a gradual shift.

Below is the verbatim transcript of the interview.

Sonia: You have been, in the past, backing for moving to BS-IV swiftly and you have even talked about this deadline extension being quite illogical but if the Supreme Court announces that BS-III vehicles will not be allowed to register beyond April 1. What kind of damage would this do to the industry as a whole?

A: It is hard to say because it depends on stocks that each manufacturer has. I believe some people like Toyota has no such stocks of BS-III vehicles because they change over long time back. There are others like us who will end up having very marginal stocks and then the whole bunch of people in between with varying levels of stocks.

I am told for example, in the hearing yesterday some manufacturers have revised their stock figure compared with the data that they gave the Supreme Court four days ago. So this data integrity is also a big issue. It is difficult to say. However, I can speak for Bajaj; by April 1 I expect stocks of our three-wheelers BS-III three-wheelers to be zero practically.

On motorcycles, may be a week to ten days worth of stocks basically in the commuter segment, we can talk about that in detail, if you wish. And from my point of view since we are such a big exporter, if the Supreme Court says no more domestic sales of BS-III vehicles, which is something I am fully for. We would simply divert that stock into some of our overseas market over the next month or two. So, we have no issue with that.

Anuj: Your biggest competitor has about 300,000 inventories. The industry argument is this inventory won't have too much damage from environment point of view. We have sold so much in the last one-two years, so let this inventory be sold out as well? Would you agree with that view from industry point of view?

A: Yes, as somebody said one death is a tragedy and a million is a statistic. If you want to go by that then yes, it's just numbers but my point goes far beyond that.

Let me start with factual thinkers. Everybody is very conveniently talking about how the notification specifies date of production of April 1, 2017 and which has always been the case for the last 25 years - that is absolutely true but what people are very conveniently ignoring is the fact that for the first time ever in this country the emission norm date is a split date, for the first time ever we have been told that from April 1 last year we have to introduce new products only if they meet BS-IV and from April 1, 2017 that is to be applicable to all existing production and products also.

What does that imply when somebody splits the date for the first time? It means that starting with new production from April 1, 2016 you have to gradually move to cover your entire production by March 31, 2017; they are missing the woods for the trees. To look at only one part of the notification selectively, conveniently and find a loophole, I do not think this befits the industry that is so large.

Anuj: For those who have spent more in producing these vehicles, BS-IV compliant vehicles much earlier, it would be unfair if these inventories allowed selling in open market now?

A: Yes, but I would say that is not my point. Some people in the industry have alleged that Bajaj Auto is doing this to hurt them. What hurt will I cause them. Let's say tomorrow if the Supreme Court enforces some penalty of Rs 20-40-60-80 crore, it is not a lot of money for these companies and that is what my purpose.

What I am trying to say is that as a industry -- why should India be known by IT companies across the world. Why should our Prime Minister talk about IT across the world and why not a small car, a motorcycle, three-wheeler, four-wheeler of which we are the largest producer in the world. Today I read a statement by my friend Vinod Dasari in Hindu Business Line, I believe, saying the industry is a favourite whipping boy, I don't know why.

I would like to tell Vinod it is because we are always dragging our feet, we are always reluctant, we are always complaining. Why don't we take a proactive step and do the right thing. People will applaud us. In this world better is always better.

Sonia: You were telling us about how this unsold BS-III inventory, if you have you would push it into export market. What the other guys are planning to do who do not have such a big export market. Is it possible to convert the BS-III engines to BS-IV cost effectively, will there be higher incentives given to dealers to push this inventory?

A: It is very hard for me to day. Technically of course you can build a car or a bike out of thin air. Of course you can convert it but the issue as you say what time, what cost, what effort. Anuj talked about Hero having 300,000 vehicles in inventory.

However, for example I am told and I hope my information is correct; the same Hero said on March 20 that their inventory was 297,000 has apparently yesterday put out a figure of 324,000. So if you don't even know what the exact numbers are, it becomes difficult for the Supreme Court to take a call and which is why perhaps why they have scheduled it this afternoon.

Anuj: Moving to another topic, I was told that the Dominar sales are doing well and last month was at par with Royal Enfield. Would that be right or was that information wrong?

A: I think that would be a case of celebrating too soon. However, it is true that in production and in terms of sales also in the month of February the numbers for Dominar are greater than those for the corresponding Royal Enfield vehicles in 350-500cc range.

Having said that I think and I suspect that Enfield was going through a process of changeover from BS-III to BS-IV because of which their output would have been on the lower side. I would love it to be true but it seems too good to be true it usually is. You cannot come in two months ago and take on such a tall leader so easily. It doesn't happen like that.

Sonia: What is the run rate per month currently?

A: We are going to try and make about 4,000 vehicles this month. We should push it up a bit every month. However, from next month we start exports as well, so that is good. I think slowly and steadily as I said somewhere around 10,000 vehicles by September is certainly possible and that would be remarkable.