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‘You cannot flip decisions’, says Ashok Leyland MD on SC’s BS-III vehicles ban

LiveMint logoLiveMint 24-04-2017 Amrit Raj

New Delhi: Vinod K. Dasari, managing director of India’s second largest commercial vehicle firm Ashok Leyland Ltd, is an outspoken man. He might be good friends with Bajaj Auto Ltd’s managing director Rajiv Bajaj, but the latter’s approach to the unfolding drama over BS-III vehicles, hasn’t gone down well with Dasari.

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Bajaj, along with a few European commercial vehicle firms, was vocally in support of the ban on sale of BS-III vehicles (those that meet the so-called Bharat Stage III emission standards). Taking a jibe at Bajaj, Dasari said emission levels of two-wheelers are three-to-five times higher than that of four-wheelers and challenged Bajaj to match them. In an interview, Dasari dubbed the BS-III verdict of the Supreme Court “unfortunate” (the court on 29 March ruled no BS-III vehicles could be sold after 31 March) and said anyone adhering to the laws should not be questioned or penalized. Edited excerpts:

What’s the impact of the BS-III issue on Ashok Leyland?

We are launching a brand new, world first, intelligent EGR (exhaust gas reduction) to achieve BS-IV levels. We were the only ones in the world who were achieving BS-III with a mechanical fuel pump. So, this is Indian innovation at its best. I could not say this till now when people were asking what is the impact on Ashok Leyland? Since it is an inter-linked EGR system, I can easily take the BS-III engine and put a BS-IV engine. It is as simple as that. I can take the BS-III engine out and sell it in the aftermarket. When everybody was saying there would be thousands of crores of impact, I have no impact (on my firm). But I could not talk about it till I showcased this intelligent EGR. There are only two ways to meet norms: selective catalytic reduction (SCR) and exhaust gas reduction. Everybody uses SCR and nobody uses EGR.

So, how will it work?

All the vehicles are with us. Dealer inventory is near zero. So, I will take this (BS-III) engine out and put the new engine in. There will be some replacement costs in terms of rubber pad, battery costs, labour costs, etc.

What’s your inventory like?

10,664 units. We did not panic. I wrote to our dealers immediately and told them “we have got you covered”.

But, you also spoke about the ban. While I understand you also head the industry lobby group...

Industry had a lot of problems. How can you have 750,000 two-wheelers one day and 7,000 two wheelers by the end (of the deadline). Obviously, huge discounts were offered (to push sales). That discount came from somewhere. Somebody lost money.

The way it unfolded, it gave a feeling industry is not together on this.

Rajiv (Bajaj) is a very good friend. He was doing this because he believes in the spirit of it. But, since he is a friend, he challenged all of us and now I am challenging him. Take all your two-wheelers and three-wheelers and make them achieve four-wheeler levels of BS-IV emissions. They generate three-to-five times more emissions than BS-IV four-wheelers.

Two days before (the deadline), you tell me I can’t sell the balance 10,000 units (of BS-III vehicles I have). For seven years, I have had the capability of making BS-IV vehicles, but I did not have fuel. If you really wanted BS-IV, why did you not ask BS-IV to come sooner? Why did you not provide the fuel sooner?

So, we will respect Supreme Court’s decision, but it is very unfortunate. Auto industry works on a long gestation, you cannot flip decisions. I am meeting the law and to question me or to penalize me who is meeting the law as a citizen is wrong.

There are some firms that are seeing this issue as a competitive gambit.

There are commercial vehicles players who have said this also. They could not compete with me on BS-III and they thought they could beat me on BS-IV; so (they said) let us move everything to BS-IV, so that they can get an unfair advantage. But I will compete on BS-IV.

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