The volatility in the yen has put Maruti Suzuki in the spotlight at the bourses. In an interview to Bloomberg TV India, Maruti Suzuki Chairman RC Bhargava said he is not worried over the recent volatility in the yen as royalty payments for new models will be in rupee terms. Lack of clarity on a diesel ban is affecting the future expansion plan of the auto industry, he added.

With the yen seeing unprecedented fluctuation, what impact do you foresee on the operations of your company?

The yen has never been a currency that has remained steady for any length of time. It has always fluctuated. But the value of the yen today is still not as high as it was some time ago. We have seen the yen at 80 to a dollar. Today, it is still at about 108 or 109. So it is a big difference from 80. So while it will not be as good for us as it was when the yen was 120, it is still not anyway a very serious concern to us.

In terms of royalty payment for a particular model, do you see the currency fluctuation coming in as a bit of a hindrance? And also, as far as the new models are concerned, will that royalty payment be made in rupee or will that also be made in yen?

The payments on the older models are all made in yen. Also, we have seen in the past that with the change in the value of the yen, the amount of royalty paid in rupees keeps functioning. That is why a decision was taken that all new agreements relating to royalty would be signed in rupee terms. And that has come into force. The first agreement on that basis is for the Brezza.

On the diesel ban, do you see it as a positive move for your company? And from the industry perspective…can you share some insights?

The diesel ban by the Supreme Court is not good for the automobile industry as a whole because the whole concept of bans on certain models is not going to help in the growth of the automobile industry.

And we believe that for reducing pollution in Delhi, it would be far more effective to try and remove the older and far more polluting diesel vehicles from the NCR region than to ban the entry of new cars, which are far cleaner. So if you look at what is happening, you are not letting cleaner cars come into the market. But you are allowing the older cars, which are at least five-six times more polluting, to continue in this area.

Will you be reworking your product strategy according to the Supreme Court decision? Are you also looking to rework on any particular investment plans you have in mind?

Investments in the car industry are long-term ones. And we don’t know what the long-term policy is going to be because the ban is till the next hearing. The next hearing may be by the end of this month.

So how do we shape policy on a few weeks’ notice? It can’t be done.