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We’re prepared for the change - Vinod Dasari
Regulatory disruptions are proving to be a major challenge for the automobile industry across the world, next only to the fast-paced technological developments like autonomous vehicles. The scenario for the sector in India is no different.

Responding to changes in laws requires the industry to be competent in change management: a set of scientific and structured ways to anticipate and respond to changes. 

A case in point is the ruling on 29 March 2017, at the Supreme Court that vehicles that are not compliant with Bharat Stage IV (BS IV) emission standards cannot be registered after 31 March. At the time of the verdict, there were over 8 lakh BS-IV non-compliant vehicles, either with the manufacturers or dealers. One estimate puts the value of this stock at Rs 20,000 crore. Many manufacturers and dealers sold as many cars as possible at steep discounts within the available time. But otherwise, the industry had no option but to take back the stock and fit the vehicles with BS-IV engines. It also had to dispose of the inventory of non-compliant components for a loss. 

When the industry complained that the move of banning BS-III vehicles was ‘unexpected and unprecedented,’ the Apex court asked: “why did the industry sit back and not take proactive steps?” citing that the deadline for the roll out of BS-IV was fixed in 2010. “It was entirely at their cost and peril that some manufacturers refused to switch over to BS-IV despite having the technology to do so,” the Court observed.

However, organisations that embraced change management saw the writing on the wall and began the homework. One such player was Ashok Leyland. When the ban was announced, its Managing Director, Vinod Dasari, said:  “the net financial impact on us because of the BS-III ban will be minimal.” 

 

Came up with iEGR...

How did Leyland weather the storm with minimal fiscal impact? The moment the deadline came to be known in 2010, the company allocated 200 engineers for the R&D work on developing indigenous BS-IV compliant technologies. The company could come up with an original technology called iEGR, “a simple, innovative solution for BS-IV fuel norms.” 

Dasari claimed that this “allowed us to slot a new engine in place of the old one. It is like taking a torch-light, replacing the batteries, and putting new ones.” At the time of the ban, Ashok Leyland had about 10,000 BS-III vehicles, but all of them were in its factories and not with the dealers. The company will be able to upgrade the engines of those vehicles using its home-grown technology. The cost of fitting iEGR technology will be just around Rs 20,000 per engine. These engines will also be sold in the market at a premium!

The BS-III ban sends a clear message that “what got the Indian automobile industry here will not take it the next level.” It is process-excellence that helped the industry to carve a niche for itself. Indian companies in this sector are well-known for their quality. Out of the 22 Indian outfits that have won the coveted Deming Award (as of 2016), 16 belong to the automobile sector. 

However, as India shifts gears, the industry needs to hone its change management and project management capabilities. The future belongs to those who create it. Experts say that futuristic organisations at any given point of time allocate at least 25 per cent of its resources for projects as part of imagining, and responding to the future. 


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