What do you think would be the impact of the curfew imposed by Delhi and Maharashtra governments?
I am not at all convinced that things like curfews and the kind of lockdowns which the Maharashtra government has done are the right ways of dealing with the Covid situation. I do not think that actions which stop legitimate economic activities are at all necessary to curtail the Covid pandemic. Both these steps are in a sense an overreaction in trying to deal with the problem because there does not seem to be a clear understanding of the causes of the problem and the right solution to tackle it. The curfews and lockdowns will hurt a lot of people. They might temporarily impact the spread of pandemic but I do not think it is the right solution at all.
So what is the right solution? Everybody knows that to avoid Covid, one has to use face masks, maintain social distancing and maintain social distancing. Yet everybody seems reluctant to abide with that. What is the solution according to you?
There are two ways of dealing with this. One is clearly to educate and to make people understand that by not following the protocols, they are not only hurting themselves and taking a chance of getting affected with Covid and thereby endangering themselves and their families. They are also affecting the health of a large number of other people because each affected person spreads the disease to 50-80 people. In addition, it hurts the national economy. It makes the country weaker. It hurts the poor people.
I think people need to be repeatedly told that it is not only about you, it is about everybody else. Along with this, there has to be a much stricter and more effective way of penalising those who do not follow this. For example, if somebody organises a function or has a place of entertainment of any kind and if the people are out there without following the distance and mask protocol, then the owner of that particular place or organiser of that place should be the person who gets the maximum punishment. It should not be a Rs 500 or a Rs 1,000 fine. That would not hurt anybody. Look at what happens in many countries. The fines and the punishment for violating protocol are very severe. In this country, we do not think that people should be punished for violating simple things like about wearing a mask.
When the lockdown was announced the same time last year, the economy in a sense had collapsed. It took almost two quarters for demand to come back. How do you think the supply chain would be disrupted because auto as industry relies on demand which is customer led and is also dependent on the supply chain when it comes to manufacturing?
Both sides. The supply chain means a whole lot of producers all over the country. Today Delhi and Maharashtra have introduced lockdowns. I do not know tomorrow who else will do it. And if that disrupts the supply chain, production will come to a halt. There will be consequences on employment, incomes, economic activities, tax and revenues. And all because some people are not willing to follow protocol.
The second part of it is that when you shut down business — whether in a protocol or in a lockdown — you shut down the sale pipeline. There will be no purpose of producing cars if you cannot have the sales and service outlets open. So by shutting down the sales pipeline, you are shutting down production. These things have to be understood. I am not sure if the policy makers understand what the consequences will be on the economy.
But based on what you have understood on how the lockdown would be effective in Maharashtra? Delhi does not have manufacturing set up. Haryana as of now has not announced any lockdown. How much of your supply chain is getting disturbed?
At the moment we are okay because after the experience of the last lockdown, we had started to build inventories. I have not checked with our supply chain people yet as to how long we are good for but for a few days at least I am sure we do not have a problem because of the inventory build up. But one does not know if one loses confidence in the administration because it creates a lot of uncertainty going ahead.
ET Now: Every time there is a lockdown, we have to deal with the issue of daily wage earners and migrant labourers. Maruti also has contract employees. Are you getting a bit edgy that reverse migration could start again?
RC Bhargava: Not yet because fortunately Haryana has not done any lockdown as yet. I hope they will understand that doing this is not in anybody’s interest including the state’s and there are sharper tools for dealing with the pandemic.
What you are saying is perhaps echoing the industry opinion as well. Industry captains are saying that the lockdown will murder the economy and the economic consequences could be very large. Is this something which global buyers and investors would take notice of?
They are already taking note of it if you look at what is happening in the stock market. The foreign investors are taking money out of the stock market because they have not faith left in how the industry will go on in India because they do not trust that the administration in many states will understand the importance of keeping economic activity going.
Mr Bajaj came on our channel a week ago and he said Maharashtra Government is trying to improve things in 14 days, what can they do in 14 days which they have not managed to do in 14 months? Do you think we are suffering because of this whole complacency and chalta hai attitude because the window between the first and the second wave was 8 to 9 months?
I agree with what Mr Bajaj said that there was enough evidence from the whole world that a second wave follows the first wave and it comes because when the first wave dies down, people become complacent and there is a greater disregard of all the safety protocols. The virus has also mutated. It has probably become more infectious and so a more infectious virus system coupled with a much larger body of people who feel they can brave the risks of getting Covid and the result is a big second wave like the one we have.
All these months, the government should have made sure that people understood the dangers of Covid not only to themselves but to everybody else and strictly followed enforcement protocols to see that everybody wears masks and keeps distances. They should have avoided crowds of people and places. I understand that certain kinds of entertainment places would probably go under without crowds but that is the area where there is a big risk. If you cannot have an entertainment place where masks cannot be worn, then you cannot have that entertainment place frankly.
Are you preparing your manufacturing units in Haryana for a second lockdown? Have you started putting some work into motion already?
No, I am hoping that Haryana will not do that. I believe the Haryana administration has a better understanding of what is required to be done. I really think that Haryana will not follow the example of Delhi or Maharashtra.
I distinctly remember that the same time last year we had a conversation where you said Maruti is an engineering company and we are ready to develop a ventilator. What is the update on that?
We did our job. The orders which were placed with the company were completed. The company was fully equipped with the vendors and everything else to go ahead with production. The other day I saw a message from the managing director of this ventilator company writing to the government seeking help that half of the ventilators which they had prepared have not yet been lifted by anybody else despite orders being placed for them. So it looks like the demand for ventilators is not high. I can understand that but I think it is a huge setback for entrepreneurs in this country if people are given orders and after the production takes place, there is no demand for them. People worked overtime to get these ventilators made and changes were made to meet the requirements of the medical profession and now 500 odd ventilators are still lying in stock.
Has the consumer sentiment suffered? Has the number of footfalls, number of enquiries, number of cars being sold, started coming down?
I do not have state-wise figures with me. But the all India figures both of enquiries as well as for orders so far have not shown any downward trend.
But if this thing continues, if more states adopt lockdowns — whether it is partial or weekend — do you see the numbers starting to come down?
If a lot of states do this, certainly the numbers will come down, no question about that. It is not as if we are in a very robust growth story. The demand and the sale figures are still below what it was in 2018-19.
During the first wave, there was a lot of fear and the number of cases were low. Right now there is fear but understanding though the numbers are high. If I look at the numbers which will impact sentiment, behaviour and other aspects, I see a difference there. what is your sense?
The numbers are certainly large. They are at record high but that is inevitable if a larger number of people are going out and exposing themselves. It is certainly affecting sentiment for investors. As I said, the stock market which was going pretty bullish at one time, in the last few days, has started going with the way. There is a great deal of nervousness amongst investors.
When things started normalising, the pent up demand did make a comeback. You had said that Covid in a sense is a reminder for everybody that we need to focus on personal mobility and not use public transport. Do you see a similar situation happening now?
I think that situation is very much still there and that is one of the factors driving demand. I think there is still a great deal of requirement for people wanting personal transport.
At what point in time do you think the current wave will start having an impact on sentiment, demand and also the auto sector per se?
I am hoping that a lot of people in government realise that they have to now get the protocols implemented much more strictly. I hope a number of state governments will understand this and make a serious effort both at educating the people as well as tightening the enforcement system. If that happens, we will see the Covid-19 spurt tapering off quite fast. It is not something which is not controllable.
There are a number of countries which have managed to almost finish having the disease and these are smaller countries too. But the principle remains the same; whether it is a large country or a small country, the action has to be done on a localised level. At each local level, the enforcement has to be as good as it is anywhere else and if you enforce this and educate people, so that there is not too much coercion, then Covid will come under control very quickly.
Can I say that you are in favour of not complete lockdowns but maybe micro containment zones?
No, that is only to prevent people from areas which have high infection rates from going out and infecting others. Unlike last time the containment areas are very small containment areas. Certainly one of the ways of controlling the spread of Covid is to see that people who are infected or likely to have been infected are quarantined and do not go out. That is what containment does but simultaneously it stops people from collecting at places, having functions, not wearing masks, not following the distance protocol. Why we cannot stop that, I do not understand. What big thing will happen in India if for a couple of months, people stop this kind of socialising?
Last time you indicated that you are prepared to come out with a ventilator. Anything else which Maruti is planning to come out with on the medical front this time?
The ventilator design and architecture was of the entrepreneur who had set up this company. What we helped was in getting the component supplies made in the right kind of volumes and setting up the systems for the assembly, testing so that from making one or two ventilators a day he could step up and do a few hundred ventilators a day. Our skill was in mass production, we are not designers of ventilators.
