‘It’s the job of management to plan for a contingency’

Murali Gopalan Mumbai | Updated on March 24, 2020

Rajiv Bajaj, Managing Director, Bajaj Auto

Bajaj Auto chief says Covid-19 should not be a reason to extend the BS-IV deadline

Rajiv Bajaj is categorical that his company will continue to object to any extension for Bharat Stage-IV two-wheeler stocks since this “unjustly penalises those of us” who have complied with the law in “letter and spirit”.

According to the Managing Director of Bajaj Auto, defaulting companies must reimburse their dealers for “redundant BS-IV stocks, if any, on April 1”.

Hero MotoCorp has already sought the Supreme Court’s intervention to defer the BS-IV deadline to June 30 due to the havoc caused by Covid-19 across the country. Likewise, Honda Motorcycle & Scooter India has also gone on record to say that the disruption has led to surplus BS-IV stocks, implying that an extension to the deadline will definitely be a big help.

On track for April 1

It is a stand that Bajaj Auto is unwilling to accept, given that it has pulled out all the stops in preparing itself for the BS-VI emissions era. This is also true for TVS Motor, Royal Enfield and Yamaha which are on track for the April 1 kick-off point.

“It is the job of management to anticipate and plan for a contingency,” Bajaj told BusinessLine over the phone. As he put it, “if the deadline is April 1, you must plan in advance”. Clearly, it has not been a walk in the park for those manufacturers who worked 24x7 to make the transition from BS-IV to BS-VI in barely 36 months.

The key to this, said Bajaj, was to plan smartly well in advance especially when the deadline had been spelt out loud and clear. Even while the Covid-19 pandemic has spooked the general public, he maintained that industry is operating in an unpredictable world today. Be it drought, floods, legislations, geopolitical tensions etc “there is no end to these factors”.

By the end of the day, continued Bajaj, if some companies managed to meet the BS-VI deadline, it just meant that their managements did their job while others did not. The fact that BS-IV stocks were still being fed into the dealer system till February also did little to help their cause.

Even during the transition from BS-III to BS-IV in 2017, the Supreme Court had come down heavily on those manufacturers which had saddled their dealers with excess stocks. Liquidating them at the last minute proved to be a costly exercise eventually since it involved substantial discounts.

As Bajaj said, by doing the same even this time around with the BS-VI transition, some manufacturers were only asking for trouble by pushing their luck all over again. “That is absolutely wrong. It is also shameful and stupid,” he added, since the sole objective of doing this was to gain market share.

The three-month extension sought by some of these manufacturers also does not add up since it counters earlier claims that they barely had 15-day stock levels at their dealerships.

Planning to clear stocks

Interestingly, despite the Covid-19 scare, Bajaj Auto customers were queuing up to buy the more affordable BS-IV stocks. In the process, March has ended up being a brisker month than February.

“Despite the impact of Covid-19, Bajaj Auto expects to clear all of its BS-IV stocks by the end of this week,” said Bajaj. This will be done through a combination of “strong and timely” promotional interventions by the company supported “ably and equally through on-ground activation” by its dealers.

It remains to be seen if the Supreme Court will accede to the demand of those manufacturers seeking an extension to the BS-IV deadline. Going by past experience, say industry experts, this seems highly unlikely since clean air is top priority and cannot be compromised despite the Covid-19 disruption.

Published on March 24, 2020

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