Amid concerns from auto manufacturers about rolling out BS-IV-compliant vehicles, Rajiv Bajaj, Managing Director of Bajaj Auto, said that complying with the new emission norms were "no big deal".Speaking to CNBC-TV18, Bajaj said that his company operated in international markets where the emission norms were more stringent and severe.Last week, the Society of Indian Automobile Manufacturers, said that sluggish demand "due to demonetisation" had hit the plan to phase out non-BS-IV emission compliant vehicles by April. But Bajaj said the auto manufacturers had had enough time to clear inventory.Bajaj said it was still unclear whether the government's April 1 cut-off date was only for production of BS-III vehicles or applicable to sales as well.
Bajaj admitted that the auto industry had been badly hit by the November note ban.
On Monday, the company announced the launch of its BS-IV emission norm compliant 2017 edition of Pulsar RS200 and NS200 models priced up to Rs 1.33 lakh (ex-showroom Delhi). Below is the verbatim transcript of Rajiv Bajaj's interview to Latha Venkatesh, Sonia Shenoy & Anuj Singhal on CNBC-TV18.Sonia: Need clarity on this issue - some original equipment manufacturers (OEMs) have told us that the cut-off date is only for production and not for sale. Do you have any clarity on what exactly the norms could be here on?A: Not completely. My understanding is that originally the notification was for a production cut-off from April 1, but subsequently at some point there was talk of April 1 being a cut-off as far as sales are concerned. I would submit this from our point of view and it is different for every manufacturer. As far as the norms themselves are concerned, the BS-IV norms, I think they are no big deal. The makers are exporting all over the world including US, Europe, Japan and everywhere. We are, in many of these markets, already meeting similar or even more stringent norms. So, if someone tries to make a big deal about the norms as if its rocket science, I would say that is not true.However, in terms of time available to meet the norms irrespective of whether April 1 was notified for production or for sale, the fact is there has been enough time available. After all, we are not a niche player; we are a volume player making hundreds and thousands of vehicles a month. If we have been ready since January, I want to say this categorically that from April 1, we are in a position to sell only and exclusively BS-IV vehicles through all our dealerships in India. I do not see why anybody else should not be.Latha: I do not think the ability to manufacture was ever a question. What one is worried is whether you have a stock of old BS-III vehicles, which will be saddled with and cannot push off anywhere. How much do you have? How much does the industry have?A: Let me give a general answer first and then a specific one. In general terms, it is the norm in the industry whether you are selling cars or two-wheelers, there are typical inventory dealerships, let's say four weeks. However, to make the argument stronger, let's say there is five weeks worth of stock and because of demonetisation, on an average the industry has been down 20 percent, because it is certainly not more than that, and that means five weeks stock has become six week's stock. We are still seven weeks away from April 1. So in the worst case scenario', even if someone is carrying six week stocks at dealerships today, he still has another seven weeks to liquidate and that is an extreme situation. So first of all I do not get the math of this.Coming to your question on Bajaj Auto, our inventory - I have been saying this since September - unlike some others we have not been dumping stock ahead of retail in the market place. So we are very comfortable, in fact we are already selling some of the models out of our dealerships, so already BS-IV compliant.Sonia: Since you are a member of Society of Indian Automobile Manufacturers (SIAM) as well, what is SIAM's stance on this entire issue?
A: I am not aware of what SIAM's stance is. I guess SIAM as usual will try to find the lowest common denominator. However, I would like to make a point that I am done with all these amnesty scheme, if I may say so, every time there is a tax amnesty. I wonder why I am paying my taxes.
My problem is that with BS-IV compliant vehicles in the market place already, I am already passing on that cost between Rs 1,000 and Rs 3,000 a vehicle to the customer. So the one who is already complying is already at a price disadvantage, which is not insignificant, for several weeks already. On the other hand, somebody who is not complying and will make a noise about it will get away with that for another month or two. I feel that is not fair.
Latha: Can you tell us how the demonetisation issues have played out? Is it over and done with and is demand picking up?
A: It has hit the industry hard. I am talking particularly of motorcycles but the same is true for scooters and it is indeed very much true for two-wheelers where cash plays a very big role in terms of brokers, financing three-wheelers. So first of all the industry has been hit hard and if people are trying to kind of circumvent that issue and be nice about it, I think that is not true. However, even now the industry has not recovered, although things are better since last two-three weeks but far from having normalised.
Let me give you some statistics. We took a count of the number of people that were sacked by 81 of our major suppliers due to this and that number for Bajaj Auto supplies alone with those vendors is 2,200. So I would hazard that in my supply chain alone, my suppliers who supply to Bajaj and to other OEMs like Honda Motorcycle and Scooter India (HMSI), Yamaha etc, have sacked perhaps between 5,000 and 10,000 people - that is not a small number but the funny thing is wherever I go people do not want to talk about the effect of demonetisation; people want to talk about what will happen if I talk about the effect of demonetisation.
Anuj: When Dominar was launched, your website crashed because too many people were inquiring. Is that translating into demand on ground and what kind of numbers do you think Dominar will be able to do?
A: The crash had to do as much with curiosity as is had to do with IT issues. Having said that we have done very well. although it's still early days. But I can tell you that every single vehicle of the 3,000 we made in January was sold out. Of course at this stage we have a waiting period but that is bound to be the case at this point in the game. We are looking at about 4,000 vehicles this month and we can push production gently but cautiously to about 6,000 next month. However, remember that 6,000 a month is where Royal Enfield was in 2012. So we have caught up quite a bit.
Sonia: You had targeted 10,000 a month - that's what you told us when the bike was launched. At some point this year would you be looking at that?
A: Of course we will. We are going to build capacity in line with that. Everything I have talked about so far is only domestic. Whatever we manage to do in exports from March or April onwards will be above this and sometime maybe by June or September we should be looking at that number.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
