Cummins India

Background

Incorporated in 1962, Cummins India is a 51 per cent subsidiary of Cummins Inc. It is the largest manufacturer of non-automotive diesel engines, caters to power generators, industrial businesses, construction, marine and locomotive applications in India.

Part of a group comprising of twelve companies, Cummins India has four subsidiaries - Cummins Diesel Sales and Service (India) Ltd (CDSS), Power Systems India Ltd, Cummins Auto Services Ltd, Cummins Power Solutions Ltd (CPSL) and Cummins Infotech Ltd.

CDSS provides after- sales support in terms of service and spare parts for generating set equipments while PSIL manufactures mid-range engines for power generation and compressed natural gas buses. CPSL provides consultancy services, services for power projects, and undertakes operations and maintenance (O&M) contracts. CIL provides e-commerce and IT consulting services to engineering companies.

 

The parent

Cummins Inc. manufactures engines in the 50-3500 HP range. It caters to power generation, natural gas and filtration systems segments apart from providing engines. It is the largest manufacturer of engines above 50 HP in the world. For calendar year 2000, its revenues were largely flat over 1999 at $6.6 bn while net profit from operations fell from $160 mn to $8 mn.

Performance

After concentrating on 125-2000 horsepower (HP) engines, Cummins has now expanded its product profile to 5-5000 HP engines. It caters primarily to the industrial (paper, railways and defence which require engines for their machines) and power generation segments apart from a small presence in the marine segment.

With an installed base of around 95,000 engines, it also has a relatively steady stream of service and spare parts revenue through its subsidiary CDSS. Approximately 33 per cent of revenues is contributed by exports to its parent and to countries like Brazil and China.

Thanks to cost advantages, the Indian subsidiary is an important sourcing base for the parent. In FY01 though, export growth was subdued at 3.8 per cent due to the slowdown in the South-East Asian region.

A growing economy is vital for company growth. Due to the ebbs and flows in the country