Cummins India Q1 PAT tumbles 65% to Rs 53 cr

Cummins India's consolidated net profit slumped 65.24% to Rs 53.02 crore on 63.11% decrease in revenue from operations to Rs 488.74 crore in Q1 June 2020 over Q1 June 2019.

Consolidated profit before tax (PBT) declined 66.23% to Rs 71.06 crore in Q1 June 2020 as against Rs 210.47 crore in Q1 June 2019. Total tax expense for the quarter tanked 68.85% to Rs 18.04 crore as against Rs 57.91 crore in Q1 June 2019. The Q1 result was declared post trading hours yesterday, 12 August 2020.

The outbreak of COVID-19 pandemic and consequent lockdown impacted regular business operations. Gradually the operations have started attaining normalcy. The group has assessed the impact of COVID-19 on its assets, including property, plant and equipments, receivables, inventories, etc. and it was concluded that the impact is not significant. However, the estimate of the impact of COVID-19 may differ from the same ascertained up to the date of approval of these financial results by the board, based on how the COVID-19 situation evolves over a period of time.

Domestic sales in the current quarter at Rs 358 crore declined by 64% as compared to Rs 990 crore recorded during the same quarter last year and declined by 54% as compared to Rs 775 crore recorded during preceding quarter.

Exports for the current quarter at Rs 126 crore declined 61% as compared to Rs 326 crore recorded in the same quarter last year and lower by 51% as compared to Rs 257 Cr recorded in the preceding quarter.

Commenting on Q1 earnings, Ashwath Ram, the managing director (MD) of Cummins India, has stated that: "Nationwide lockdown for most of the quarter and other containment/precautionary measures have resulted into drop in demand in India and around the world as well as unprecedented disruptions to the supply chain and dispatches to customers. The company resumed partial operations from second week of May' 20 in a gradual manner in compliance with the guidelines issued by State and local government authorities. Anticipating potential disruptions, the company took some proactive actions to minimize supply chain disruptions and stabilize operations by end of June."

"As the company operations were significantly impacted in April and May, operations for the quarter to that extent may be viewed accordingly. The company continues to take actions to prudently manage cost as well as to conserve cash. The company has a strong balance sheet and believes it can manage the ongoing business slow down effectively. The company continues to monitor the situation closely and is taking all actions to ensure the safety and security of its employees and facilities. The company continues to serve customers and other stakeholders in these difficult business conditions," he added.

Cummins India said it expects gradual recovery of demand in coming months. However, there remains significant uncertainty around how COVID-19 will impact market demand as well as customer and supplier operations. Due to this uncertainty the company is not providing a full year revenue guidance for FY 2021.

Cummins India is the manufacturer of diesel and natural gas engines for power generation, industrial and automotive markets.

Shares of Cummins India advanced 3.59% to Rs 438.10 on BSE. The stock hovered in the range of Rs 415 to Rs 448.25 so far.

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