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Cummins India Ltd.

BSE: 500480 Sector: Engineering
NSE: CUMMINSIND ISIN Code: INE298A01020
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OPEN 922.90
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VOLUME 43638
52-Week high 1065.00
52-Week low 552.90
P/E 33.04
Mkt Cap.(Rs cr) 25,543
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Sell Price 0.00
Sell Qty 0.00
OPEN 922.90
CLOSE 919.85
VOLUME 43638
52-Week high 1065.00
52-Week low 552.90
P/E 33.04
Mkt Cap.(Rs cr) 25,543
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Cummins India Ltd. (CUMMINSIND) - Director Report

Company director report

The Directors take pleasure in presenting the Sixtieth Annual Report together with inter-aliaits annexures and audited financial statements for the year ended March 31 2021. Theconsolidated performance of the Company and its subsidiaries has been referred to whereverrequired.

1. FINANCIAL RESULTS:

On Standalone basis:-

During the Financial Year 2020-21 revenue from operations was f 432924 Lacs ascompared to f 515773 Lacs during the previous year (16.06% lower). Profit after taxdecreased to f 61787 Lacs from f 62934 Lacs recorded for the previous year (1.82%lower).

On Consolidated basis:-

During the Financial Year 2020-21 revenue from operations was f 436008 Lacs ascompared to f 519145 Lacs during the previous year (16.01% lower). Profit after taxdecreased to f 63503 Lacs from f 70561 Lacs recorded for the previous year (10.00%lower).

Financial Summary

S t a n d a l o n e

C o n s o l i d a t e d

2 0 2 0 - 2 1 2019-20 2 0 2 0 - 2 1 2019-20
(f in Lacs) (f in Lacs) (f in Lacs) (f in Lacs)
APPROPRIATION OF PROFIT:
Profit before taxation 8 0 7 9 6 75906 8 2 5 0 0 80748
Net Profit for the year after tax 6 1 7 8 7 62934 6 3 5 0 3 70561
Tax on dividend - 9687 - 9687
Dividend 3 8 8 0 8 47124 3 8 8 0 8 47124

2. RESERVES:

The closing balance of reserves including retained earnings of the Company as atMarch 31 2021 was f 435133 Lacs.

3. COVID-19:

The outbreak of COVID-19 turned into a global pandemic and impacted the ability to dobusiness starting in the quarter ending June 2020. Consequent lockdowns announced acrossIndia resulted in temporary suspension of operations and temporary closure of offices andplants/manufacturing facilities of the Company in line with the government/localauthorities' directions. During the lockdown your Company continued to provide support tocustomers who were providing essential services. Your Company as a part of its safetypolicies ensured that its employees are working from home and necessary facilities asfeasible were provided. As the restrictions eased during the year your Company resumedits operations following safety guidelines at all its plant locations. The corporateoffice(s) continued to remain closed. The Company continues to closely monitor the secondwave of COVID 19 for any future impact on the operations of the Company. The Company isalso monitoring the situation in the communities where it operates and focusing its CSRactivities on COVID-19 pandemic related support and relief.

Your Company during the Financial Year has made disclosures on impact of COVID-19 onthe operations of the Company pursuance to SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 read with SEBI Advisory dated May 20 2020. Thedisclosures are available on the website of the Company at the linkhttps://www.cummins.com/en/in/investors/india-investors-notices.

4. BUSINESS UPDATE AND STATE OF COMPANY'S AFFAIRS:

The information on Company's affairs and related aspects is provided under ManagementDiscussion and Analysis Report which has been prepared inter-alia in compliance withRegulation 34 of Listing Regulations and forms part of the Annual Report.

5. DIVIDEND:

Your Directors have recommended a final dividend of f 8 /- per equity share of f 2/-each fully paid-up share in their meeting held on May 26 2021 in addition to the interimdividend of f 7/- per equity share of f 2/- each fully paid-up share declared on January28 2021 aggregating to f 15/- (i.e. 750 %) per equity share of f 2/- each fully paid-upshare for the year ended March 31 2021 (previous year f 14/- per equity share i.e. 700%).The final dividend is subject to approval of the Members at the ensuing Annual GeneralMeeting and shall be subject to deduction of income tax at source.

6. SHARE CAPITAL:

The paid-up share capital of the Company is f 554400000/- divided into 277200000equity shares of f 2/- each as on March 31 2021. Your Company has not come out with anyissue (public rights or preferential) during the year. There is no change in the sharecapital during financial year 2020-21.

7. SUBSIDIARIES JOINT VENTURES AND ASSOCIATES:

Your Board is pleased to provide details of the following subsidiary joint venturesand associates as on March 31 2021 : -

a) Cummins Sales & Service Private Limited (CSSPL):

CSSPL a wholly-owned subsidiary of the Company focuses on sales of Cummins enginesparts accessories and providing service support to engines and generators in parts ofNorthern India close to the National Capital Region (NCR). CSSPL generated a revenue of f8672 Lacs from its operations for the year ended March 31 2021 as compared to f 10549Lacs during the previous year (17.79% lower).

b) Cummins Research and Technology India Private Limited (CRTI):

CRTI is a 50:50 joint venture between Cummins Inc. USA and your Company which wasformed in 2003 with an intent to provide Information Technology enabled MechanicalEngineering development services primarily to Cummins Inc. USA its subsidiaries andjoint ventures in all parts of the world. Since April 01 2016 CRTI closed itsoperations and your Board of Directors decided that the activity carried out by CRTI foryour Company shall be undertaken in-house by absorbing the appropriate number ofemployees from CRTI in your Company. The revenue from operations for the year ended March31 2021 and for the previous year was Nil.

c) Valvoline Cummins Private Limited (VCPL):

VCPL a 50:50 joint venture between Valvoline International Inc. USA a global leaderin lubricants and engine oils and your Company VCPL generated a revenue of f 134104Lacs from its operations for the year ended March 31 2021 as compared to f 129544 Lacsduring the previous year (3.52% higher).

d) Cummins Generator Technologies India Private Limited (CGT):

Your Company owns 48.54% shareholding in the Associate Company namely CGT which is inthe business of design manufacturing marketing sales and service of alternators andrelated spare parts. CGT generated revenue of f 75339 Lacs from its operations for theyear ended March 31 2021 as compared to f 79089 Lacs during the previous year (4.74%lower).

As required under the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 consolidated financial statements of the Company its subsidiary jointventures and associate companies prepared in accordance with the applicable IndianAccounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards)Rules 2015 as amended form part of the Annual Report and are reflected in theconsolidated financial statements of the Company.

Further a statement containing the salient features of the financial statement ofsubsidiaries associate companies and joint ventures in the prescribed Form AOC-1 isappended as Annexure ‘1' which forms part of this Report.

The Company will make the said financial statements and related detailed information ofCSSPL available upon the request by any Member of the Company. These financial statementswill also be kept open for inspection by any Member at the Registered Office of theCompany and of CSSPL. Pursuant to the provisions of Section 136 of the Companies Act2013 the financial statements of the Company consolidated financial statements alongwith relevant documents and separate financial statements in respect of CSSPL areavailable on the website of the Company.

8. CHANGE IN THE NATURE OF THE BUSINESS

During the year under review there was no change in the nature of the businesspursuant to inter-alia Section 134 of the Companies Act 2013 and Companies (Accounts)Rules 2014.

9. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:

No loan or guarantee was given or investment was made by your Company during theFinancial Year 2020-21 pursuant to Section 186 of the Companies Act 2013.

10. DEPOSITS:

Your Company has not accepted any Public Deposits under Chapter V of the Companies Act2013 during the Financial Year 2020-21.

11. FUND RAISING BY ISSUANCE OF DEBT SECURITIES IF ANY

Pursuance to SEBI Circular No. SEBI/HO/DDHS/CIR/P/2018/144 dated November 26 2018 theDirectors confirm that the Company is not defined as a "Large Corporate" as perthe framework provided in the said Circular. Moreover your Company has not raised anyfund by issuance of debt securities.

12. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

During Financial Year 2020-21 no materially significant related party transactionswere entered into by the Company that may have potential conflict with the interests ofCompany at large.

Particulars of contracts or arrangements with related parties referred to in Section188(1) of the Companies Act 2013 in the prescribed Form AOC-2 is appended as Annexure‘2' which forms part of this Report.

The Policy on materiality of related party transactions as approved by the Board may beaccessed on the Company's website at the link:https://www.cummins.com/en/in/investors/india-corporate-governance

As required under SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 related party transactions have been disclosed under significant accounting policiesand notes forming part of the Financial Statements in accordance with relevant accountingstandards.

13. CONSERVATION OF ENERGY:

During the Financial Year 2020-21 your Company has strived to imbibe energyconservation principles and initiatives across all its facilities.

The Company at its SEZ and Pirangut locations has installed and started the operationof 400 KWp and 150 KWp solar PV plant in April 20 and July 20 which has resulted ingeneration of 2.36 lacs and 1.33 lacs of unit electricity. HHP Rebuild Centre hasgenerated 7.67 lac units of electricity from their 625 KWp Solar Photovoltaic (PV) Plantinstalled in 2017. The Solar PV Plant installed last year at Kothrud has generated around12.6 lacs units of electricity.

The other key initiatives across multiple areas are highlighted below –

Heating Ventilation and Air Conditioning (HVAC) – Your Company has undertakeninitiatives such as Installation of Variable Frequency Drive (VFD) with solenoid valvesfor Compressor cooling water system new efficient equipment for effective utilization ofcompressed air and induction heater for piston heaters.

Lighting – Similar to last year your Company has continued the initiative toreplace old lighting fittings with new-age energy efficient LED fittings within andoutside some of our facilities. Also installation of motion sensors at various locationshas helped to reduce the energy consumption at sites.

Awareness Generation – This included improving awareness amongst employees toswitch off major energy consuming equipment or units when idle as well as employing anenergy review tool and energy balance tool to identify projects. The sites also conductthe unplugged challenge to switch off the equipment on holidays or non-production days

These key initiatives resulted in annual energy savings of approximately 5.78 Lacsunits of electricity.

14. RESEARCH & DEVELOPMENT AND TECHNOLOGY ABSORPTION:

Your Company is committed to introducing new products and improving existing productsto have better performance levels lower life cycle costs excellent safety recyclabilitycharacteristics and meet stringent emission norms tailored for the specific needs of theIndian industry.

Your Company continues this endeavour by developing the next generation of systems incollaboration with the parent company - Cummins Inc. USA.

Improved technical productivity through new methodologies and technologies is beingcontinuously pursued to reduce the costs associated with new product development andcustomer support. An example of this is the further enhanced use of analysis-led designthrough computer models that help minimize hardware testing and therefore accelerateproduct development cycle times with reduced product testing.

A. New Product Development: -

The following new Products were developed as part of the above initiatives during theyear: -

1. Rail engine product families to support the growing Rail Business;

2. Marine engine product families to support the increasing commercial Marine Business;

3. Further enhancements of non-diesel product development capability such as use ofalternative fuels are being explored in India;

4. Telematics and Analytics capabilities have been developed to improve uptime and fuelefficiency performance of our products;

5. To enhance the position of Cummins in the Low kVA segment your Company hasintroduced a new 40 kVA genset with X2.7 litre engine; and

6. Your Company continues to strengthen its channel presence through its GOEM partnerswho have added 12 number of additional sales dealers across various geographies.

B. Benefits derived as a result of the above activities are:-

1. Enhanced product and service capabilities through use of electronic tools andsimulation software to deliver improved engine performance;

2. Enhanced capability to tailor engine designs to improve value proposition forcustomers through delivering superior power output fuel economy transient response andreduced emissions;

3. Enhanced product and service capabilities through use of electronic tools andsimulation software to control the engine performance and combustion process;

4. Enhanced capability to tailor engine designs to improve the value proposition forcustomers through delivering superior power output fuel economy transient response andreduced emissions;

5. Product and component availability to meet the new emission norms ahead ofimplementation;

6. Safer recyclable reliable durable and performance-efficient products and criticalcomponents;

7. Component indigenization capability was improved through enhanced test capabilityrig test and flow bench development and availability; and

8. Significant enhancements in measurement capability were made to pursue businessopportunities in non-diesel applications to serve both the rural and internationalcommunities.

C. Future plans include:-

1. Developing local ‘fit-for-market' solutions to meet upcoming emissionregulations and market needs on commercial off-highway and power generation segments;

2. Technological innovation to add value to products in the areas of alternate fuelsfuel cells power electronics hybrid engines and recycle / re-use;

3. Continued expansion of the product range to serve the needs of both local and globalmarket;

4. Continued focus on indigenization and partnering with suppliers for wasteelimination initiatives; and

5. Focused engine development for the Power Generation segment for the upcomingemissions norms.

D. Your Company continues to draw benefits from Cummins Inc.'s technology advancedengineering and research.

With this support your Company is committed to develop advanced fuel-efficient andemission-compliant products that use a variety of energy sources and comply with futuredomestic emissions and carbon dioxide targets. These help to reduce Greenhouse Gasemissions and improve Air Quality whilst also enabling the products to deliver superiorperformance reliability durability and recyclability.

E. Expenditure on Research & Development (R&D):-

The total expenditure on R & D was as follows:-

2 0 2 0 - 2 1 2019-20
(f Lacs) (f Lacs)
Capital 1 6 7 7 14534
Recurring 5 7 4 9 4470
Total 7 4 2 6 19004
Total R&D expenditure as a percentage of total sales turnover 1.72% 3.68%

15. FOREIGN EXCHANGE EARNINGS AND OUTGO:

Your Company continues to be Net Foreign Exchange Earner. During the year under reviewyour Company exported 6176 engines and 4027 generator sets. Foreign exchange earned interms of actual inflows during the year 2020-21 and foreign exchange outgo in terms ofactual outflows during the year 2020-21 were as follows:-

Particulars FY 2020-21 FY 2019-20
(f Lacs) (f Lacs)
Foreign exchange earnings* 1 3 4 0 2 5 155025
Foreign exchange outgo* 1 0 6 3 7 6 103391

* Equivalent value of various currencies

16. MANAGEMENT DISCUSSION & ANALYSIS AND CORPORATE GOVERNANCE REPORT:

The Management Discussion and Analysis Report and the Corporate Governance Report whichforms part of this Report are appended as Annexure ‘3' and ‘4'respectively.

The Company has obtained a Certificate from Practicing Company Secretary confirmingcompliance with conditions of the Code of Corporate Governance as stipulated in Schedule Vof the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (includingamendments thereof) and the same is appended as Annexure ‘5' which forms partof this Report.

The Company has received a Certificate from Practicing Company Secretary confirmingthat none of the Directors on the Board of the Company have been debarred or disqualifiedby MCA or SEBI or any such statutory authority from being appointed / continuing asDirector and the same is appended as Annexure ‘6' which forms part of thisReport.

17. EXTRACT OF THE ANNUAL RETURN:

As per the requirement under Section 92(3) of the Companies Act 2013 the draft AnnualReturn for FY 2020-21 is available on the website of the Company at the link:https://www.cummins.com/en/in/investors/india-annual-reports. Since the Annual GeneralMeeting is proposed to be held on August 12 2021 the Company shall upload a copy ofAnnual Return for Financial Year 2020-21 as soon it has filed the said Annual Return withRegistrar of Companies."

18. RISK MANAGEMENT:

Business Risk Evaluation and Management is an ongoing process within the Organization.The Company has a robust risk management framework to identify monitor and minimize risksand also to identify business opportunities. As a process the risks associated with thebusiness are identified and prioritized based on severity likelihood and effectiveness ofcurrent detection. Such risks are reviewed by the Senior Management on a quarterly basis.Process owners are identified for each risk and metrics are developed for monitoring andreviewing the risk mitigation through Six Sigma Projects.

Risk Management Committee of the Board of Directors of your Company assists the Boardin (a) overseeing and approving the Company's enterprise wide risk management frameworkincluding the risk management processes and practices of the Company; and (b) overseeingthat all the existing risks and potential risks that the organization faces includingcyber security risks have been identified and assessed and (c) overseeing that there areadequate of Company's resources to perform risk management responsibilities and achieveits objectives. Further details on Risk Management Committee is included in the CorporateGovernance Report.

The development and implementation of risk management policy has been covered in theManagement Discussion and Analysis which forms part of Annual Report.

19. INTERNAL FINANCIAL CONTROL:

Your Company has established adequate internal financial controls for ensuring orderlyand efficient conduct of its business including adherence to Company's policiessafeguarding of its assets prevention and detection of frauds and errors accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation.

Details of internal financial control and its adequacy are included in the ManagementDiscussion and Analysis Report which is appended as Annexure ‘3' and formspart of Annual Report.

20. VIGIL MECHANISM/ WHISTLE BLOWER POLICY:

Your Company's leadership culture is to inspire and encourage all employees to reachtheir full potential. A great leadership culture begins with outstanding leaders whocreate an outstanding place to work inspiring and encouraging all employees to achievetheir full potential. Leaders connect people and their work to the vision missionvalues brand promise and strategies of the company motivating them and giving them ahigher sense of purpose. Leaders also build trust in our teams and in our organizationsand align on key goals and priorities. Leaders foster open communications and offervarious opportunities to employees to express their feedback through several ways.

Your Company has a ‘Vigil Mechanism Policy' which inter-alia providesadequate safeguards against victimization of persons who may blow the whistle. VigilMechanism Policy may be accessed on the Company's website at the link:https://www.cummins.com/en/in/investors/india-corporate-governance

In addition your Company has complied with provisions relating to constitution of anInternal Committee under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and has a stabilized well governed ethicsinvestigations process. Regular workshops and awareness programmes against sexualharassment are conducted across the organization. During the year under review twocomplaints pertaining to sexual harassment of woman employee were reported to theCommittee and the same were investigated in accordance with the procedures prescribed andresolved accordingly. No complaints were pending as on March 31 2021.

The Company is committed to the highest possible standards of openness integrity andaccountability in all its affairs and to providing a workplace conducive to opendiscussion of its business practices. Your Company has laid out infrastructures and policythrough which the employees can voice their concerns about suspected unethical or improperpractice or violation of Cummins Code of Conduct or complaints regarding accountingauditing internal controls or disclosure practices of the Company. Protected disclosurescan be made by a whistle blower through an email or dedicated telephone line or letter tothe Managing Director of the Company or Letter to the Chairman of Audit Committee or viathe Ethics helpline/ Webpage details of which are available on websitewww.cumminsindia.com.

21. COMPLIANCE WITH THE CODE OF CONDUCT:

All Directors on the Board and Senior Management have affirmed compliance to the Codeof Conduct for the Financial Year 2020-21. A declaration signed by the Managing Directoraffirming compliance with the Company's Code of Conduct by the Board of Directors andSenior Management for the Financial Year 2020-21 as required under Regulation 26(3) of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is included inthe Corporate Governance Report which is appended as Annexure ‘4' and formspart of this Report.

22. DIRECTORS' RESPONSIBILITY STATEMENT:

Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory costand secretarial auditors and external consultant(s) including audit of internal financialcontrols over financial reporting by the statutory auditors and the reviews performed byManagement and the relevant Board Committees including the Audit Committee the Board isof the opinion that the Company's internal financial controls were adequate and effectiveduring the Financial Year 2020-21.

Accordingly pursuant to Section 134(5) of the Companies Act 2013 the Board ofDirectors to the best of their knowledge and ability confirm that:

(i) in the preparation of the annual accounts for the year ended March 31 2021the applicable accounting standards have been followed and there was no material departurefrom the same;

(ii) they have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as on March 31 2021 and of the profit for theperiod April 01 2020 to March 31 2021;

(iii) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

(iv) they have prepared the annual accounts on a going concern basis;

(v) they have laid down internal financial controls to be followed by the Companyand that such internal financial controls are adequate and were operating effectivelyduring the year; and

(vi) they have devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

23. DIRECTORS:

a) Changes in the composition of the Board of Directors: Appointments andRe-appointments

Ms. Rama Bijapurkar (DIN: 00001835) was appointed as Director (Non-Executive andIndependent) of the Company for her first term of five consecutive years at the 59thAnnual General Meeting effective June 17 2020.

Mr. Ashwath Ram (DIN: 00149501) was appointed as a Director designated as ManagingDirector of the Company in the 59th Annual General Meeting of the Company heldon August 25 2020 effective August 17 2019 for term of three years.

Ms. Lorraine Alyn Meyer (DIN: 08567527) was appointed as a Director (Non-Executive andNon-Independent) of the Company in the 59th Annual General Meeting of theCompany held on August 25 2020 effective October 01 2019.

Mr. Steven Chapman (DIN: 00496000) was appointed as Additional Director and Chairman ofthe Board of Directors effective October 01 2020. On recommendation of the Nomination andRemuneration Committee the Board of Directors have proposed appointment of Mr. StevenChapman as a Director (Non-Executive and Non-Independent) and Chairman of the Boardliable to retire by rotation. A resolution seeking shareholder's approval for hisappointment forms part of the Notice.

In accordance with the Companies Act 2013 and Articles of Association of the CompanyMr. Donald Jackson (DIN: 08261104) Director (Non-Executive and Non-Independent) of theCompany retires by rotation and is eligible for re-appointment. The proposal seekingshareholder's approval for his re-appointment forms part of the Notice.

As required under Regulation 36(3) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 and Secretarial Standard 2 particulars of Directorsseeking appointment/re-appointment at this Annual General Meeting are given in theAnnexure to the Notice and the Board recommends the respective resolutions to the Membersfor approval.

Cessation

During the year Ms. Anjuly Chib Duggal (DIN: 05264033) resigned as Director(Non-Executive and Independent) of the Company effective April 06 2020 on account ofpersonal reasons. She had confirmed that there were no other material reasons for herresignation.

Mr. Antonio Leitao (DIN: 05336740) resigned as Director (Non-Executive andNon-Independent) of the Company effective September 01 2020 on account of personalreasons. Further there were no other material reasons for the resignation.

Mr. Venu Srinivasan (DIN: 00051523) resigned as Director (Non-Executive and IndependentDirector) of the Company effective September 01 2020 on account of personal reasons. Hehad confirmed that there were no other material reasons for his resignation.

Mr. Mark Levett (DIN: 00368287) resigned as Director (Non-Executive andNon-Independent) of the Company and Chairman of the Board effective September 30 2020 onaccount of time constraints arising out of preoccupancy and personal reasons. Furtherthere were no other material reasons for the resignation.

The Board places on record its appreciation for their invaluable contribution andguidance during their tenure.

The details of Board composition number of meetings held details of directorships ofDirectors etc. are provided in the Corporate Governance Report which is appended as Annexure‘4' and forms part of this Report. b) Committees of the Board:

The Board of Directors have constituted following Committees in order to effectivelycater its duties towards diversified role under the Companies Act 2013 and the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015:-

Audit Committee;

Stakeholders Relationship Committee; Nomination and Remuneration Committee; CorporateSocial Responsibility Committee; and Risk Management Committee

Details of the constitution broad terms of references of each Committee and number ofmeetings attended by individual Director etc. are provided in the Corporate GovernanceReport which is appended as Annexure ‘4' and forms part of this Report.

c) Policy on Director's Appointment and Remuneration:

The Policy of the Company on Director's Appointment and Remuneration includingcriteria for determining qualifications positive attributes independence of theDirectors and other matters provided under Section 178(3) of the Companies Act 2013adopted by the Board viz. Nomination and Remuneration Policy is appended as Annexure‘7' which forms part of this Report.

Details of the remuneration paid to the Board of Directors are provided in theCorporate Governance Report. It is affirmed that the remuneration paid to the Directors isas per the terms laid down in the Nomination and Remuneration Policy of the Company.

d) Board Performance Evaluation Mechanism:

Pursuant to the provisions of the Companies Act 2013 and Regulation 17 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board has carriedout the annual performance evaluation of its own performance and the Directors Chairmanindividually as well as the evaluation of the working of its Committees. Details of theevaluation mechanism is provided in the Corporate Governance Report which is appended as Annexure‘4' and forms part of this Report.

e) Inter-se relationships between the Directors

There are no relationships between the Directors inter-se.

f) Familiarization Programme for Independent Directors:

During the year various documents background notes etc. were shared with toIndependent Directors to have a better insight in to state of affairs of the Company

The Chairman and/or the Managing Director also have periodic discussions with the newlyappointed Directors to provide them details of initiatives of the Company for betterunderstanding of the Company its business and the regulatory framework in which theCompany operates and equip him/ her to effectively fulfil his/ her role andresponsibilities as a Director of the Company.

The details of familiarization programmes imparted are available athttps://www.cummins.com/en/in/investors/ india-corporate-governance

g) Declarations from the Independent Directors:

Pursuant to the provisions of Section 149 of the Companies Act 2013 the IndependentDirectors have submitted declarations that each of them meets the criteria of independenceas provided in Section 149(6) of the Companies

Act 2013 along with Rules framed thereunder and Regulation 16(1)(b) of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 and adherence toSchedule IV of the Companies Act 2013. Further the Independent Directors have alsoconfirmed that there has been no change in the circumstances affecting their status asIndependent Directors of the Company. The said Certificate(s) were taken on record by theBoard after requisite assessment.

24. NUMBER OF MEETINGS OF THE BOARD:

Seven meetings of the Board of Directors were held during the year. The details of themeetings held and attendance there at are provided in the Corporate Governance Reportwhich is appended as Annexure ‘4' and forms part of this Report. The maximuminterval between any two meetings did not exceed 120 days as prescribed by the CompaniesAct 2013.

25. KEY MANAGERIAL PERSONNEL:

Mr. Ashwath Ram (DIN: 00149501) was appointed as a Director designated as ManagingDirector and Key Managerial Personnel of the Company in the 59th Annual GeneralMeeting of the Company held on August 25 2020 effective August 17 2019 for term ofthree years.

Mr. Ajay S. Patil was appointed as the Chief Financial Officer and Key ManagerialPersonnel of the Company effective April 01 2020.

Ms. Hemiksha Bhojwani (ACS 22170) resigned as the Company Secretary and Key ManagerialPersonnel of the Company effective May 11 2020. Consequent to resignation of Ms.Bhojwani Ms. Vinaya A. Joshi (ACS 25096) was appointed as the Company Secretary and KeyManagerial Personnel of the Company effective June 17 2020.

26. PARTICULARS OF EMPLOYEES:

The details in accordance with the provisions of Section 197(12) of the Companies Act2013 read with Rule 5 of the Companies (Appointment and Remuneration of ManagerialPersonnel) Amendment Rules 2016 is appended as Annexure ‘9' which forms partof this Report. Any shareholder interested in obtaining a copy of the statement may writeto the Company Secretary at the Registered Office of the Company.

27. INDUSTRIAL RELATIONS:

Industrial relations at all the plants of the Company continue to be cordial. Multipleinitiatives have been rolled out for shop office and field technician employees under‘Advancing our workforce Strategy' (AWS) for its establishments across the globe. Keypurpose of AWS is to inspire and encourage ‘All Employees' to reach their fullpotential by implementing talent management policies and processes for all the shopoffice and field technician employees similar to that implemented for our managerialemployees. Implementation of different initiatives under this strategy are in progress. Inorder to create performance culture we are in process of implementing performancemanagement system for the unionized Associates of the Company also.

28. AUDITORS:

STATUTORY AUDITORS:

At the 55th Annual General Meeting held on August 04 2016 M/s. S R B C& Co. LLP (Firm Registration No. 324982E) were appointed as Statutory Auditors of theCompany to hold office till the conclusion of 60th Annual General Meeting. Interms of the Section 139(1) of the Companies Act 2013 the appointment of statutoryauditors does not require ratification by the shareholders in Annual General MeetingAccordingly the Board noted the continued appointment of M/s. S. R. B. C. & Co. LLPas the Statutory Auditors of the Company for the Financial Year 2020-21. The CompanyAuditors M/s. S R B C & Co. LLP have completed 5 years as Statutory Auditors of theCompany.

There are no qualifications reservations adverse remarks or disclaimers made by theauditors in the Audit Report for the Financial Year 2020-21.

In view of the provisions of Section 139 of the Companies Act 2013 read with theCompanies (Audit and Auditors) Rules 2014 and on the recommendation of the AuditCommittee it is proposed to appoint M/s. Price Waterhouse & Co

Chartered Accountants LLP Chartered Accountants (Firm Registration No.304026E/E-300009) ("PWC") from the conclusion of this Annual General Meetingtill the conclusion of 60th Annual General Meeting. PWC have informed theCompany vide letter dated May 13 2021 that their appointment if made would be withinthe limits prescribed under Section 141 of the Companies Act 2013.

PWC have confirmed that they have subjected themselves to the peer review process ofInstitute of Chartered Accountants of India (ICAI) and hold valid certificate issued bythe Peer Review Board of the ICAI.

SECRETARIAL AUDITOR:

M/s Pramod Shah & Associates (FCS 334) was appointed to conduct the secretarialaudit of the Company for the Financial Year 2020-21 as required under Section 204 of theCompanies Act 2013 and the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014. The Secretarial Audit Report in Form MR-3 and Secretarial AuditReport pursuant to Regulation 24A of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 for Financial Year 2019-20 is appended as Annexure‘10' which forms part of this Report. Both the reports do not contain anyqualification reservation or adverse remark.

The Annual Secretarial Compliance Report has been submitted to the stock exchanges asrequired under Regulation 24A of SESI (Listing Obligation and Disclosure Requirements)Regulations 2015.

The Board on the recommendation of the Audit Committee has re-appointed M/s Pramod Shah& Associates to conduct the secretarial audit of the Company for the Financial Year2021-22.

Further during the FY 2020-21 and two previous financial years no penaltiesstrictures were imposed on the Company by stock exchange(s) or SEBI or any statutoryauthority on any matter related to capital markets.

COST AUDITORS:

Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Rules 2014 as amended from time to time the cost audit recordsmaintained by the Company in respect of its manufacturing activity is required to beaudited. Your Directors on the recommendation of the Audit Committee had appointed M/s.Ajay Joshi & Associates (Firm Registration No. 101542) Pune to audit the costaccounts of the Company for the Financial Year 2020-21 at a remuneration of f 950000 plustaxes as applicable and re-imbursement of out of pocket expenses. The remuneration wasratified by shareholders in the 59th Annual General Meeting held on August 252020.

Pursuant to recommendation of the Audit Committee the Board in its meeting held on May26 2021 has appointed M/s C S Adawadkar & Co. (Firm Registration No. 100401) Pune toaudit the cost accounts of the Company for the Financial Year 2021-22 at a remuneration of950000 plus taxes as applicable and re-imbursement of out of pocket expenses. As requiredunder the Companies Act 2013 the shareholders ratification for the remuneration payableto M/s. C S Adawadkar & Co Cost Auditors is being sought at the ensuing AnnualGeneral Meeting.

M/s. C S Adawadkar & Co Cost Auditors under Section 139(1) of the Companies Act2013 and the Rules framed thereunder have furnished a certificate of their eligibilityand consent for appointment.

29. CORPORATE SOCIAL RESPONSIBILITY POLICY AND ITS REPORT:

Your Company is an early adopter of the Corporate Social Responsibility (CSR)initiatives. Corporate Social Responsibility continues to be the core value of yourCompany embedded in the core value of caring which focuses on ‘serving and improvingthe communities in which we live'. Your Company works with ‘Cummins India Foundation'towards three broad focus areas viz. Higher Education Energy and Environment and Equalityof Opportunity. Additionally Company also carries out other strategic initiatives.

In the ongoing crisis of COVID-19 your Company undertook a series of immediate andemergency interventions to address urgent and evolving needs of the communities andvarious stakeholders. The relief and support initiatives included but were not limited topartnerships with State Central Local Government Bodies donation of life savingequipments support to frontline COVID warriors and working with Organizations to provideimmediate relief etc.

Details about the CSR Policy and initiatives taken by the Company during the year areavailable on our websitehttps://www.cummins.com/en/in/investors/india-corporate-governance. The Annual Report onour CSR Activities is appended as Annexure ‘11' which forms part of thisReport.

30. BUSINESS RESPONSIBILITY REPORT:

As stipulated under the Regulation 34 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Business Responsibility Report describes theinitiatives taken by the Company from environmental social and governance perspectivewhich forms part of the Annual Report and is included after Financial Statements section.

31. SECRETARIAL STANDARDS:

The Company is in compliance with the Secretarial Standards on Meetings of the Board ofDirectors (SS-1) and Secretarial Standards on General Meetings (SS-2) issued by theInstitute of Company Secretaries of India.

32. DIVIDEND DISTRIBUTION POLICY:

The Board of Directors of the Company have formulated a Dividend Distribution Policywhich is appended as Annexure ‘8' and forms part of this Report. The policy isalso available on our website https://www.cummins.com/en/in/investors/india-corporate-governance

33. INVESTOR EDUCATION AND PROTECTION FUND (IEPF):

Pursuant to Section 124 and Section 125 of Companies Act 2013 and IEPF Authority(Accounting Audit Transfer and Refund) Rules 2016 during the year under review theCompany has transferred the following unclaimed and unpaid dividend and correspondingshares to IEPF upon completion of period of seven years:

Date of Declaration Type of Dividend A m o u n t transferred (f) No of equity s h a r e s transferred
August 01 2013 Final Equity Dividend 8740008 3290
February 04 2014 Interim Equity Dividend 5567870 2905

34. GENERAL:

Further your Directors state that no disclosure or reporting is required in respect ofthe following items as there were no transactions or applicability with respect to theseitems during the year under review:

a. Issue of equity shares with differential rights as to dividend voting or otherwise;b. Issue of shares (including sweat equity shares) by the Company to its employees; c.Neither the Managing Director nor the Whole-time Directors of the Company received anyremuneration or commission from any of its subsidiaries; d. No frauds were reported byAuditors under Section 143(12) of the Companies Act 2013; e. No significant or materialorders were passed by the Regulators or Courts or Tribunals which impact the going concernstatus and Company's operations However Members attention is drawn to the Statement onContingent Liabilities commitments in the notes forming part of the Financial Statement;and f. No material changes and commitments occurred during April 01 2021 till the date ofthis Report which would affect the financial position of your Company.

ACKNOWLEDGEMENT:

Your Directors would like to express their sincere appreciation for the assistance andco-operation received from the financial institutions banks government authoritiescustomers vendors and members during the year under review. Your Directors also wish toplace on record their deep sense of appreciation for the committed services by theCompany's executives staff and associates.

On behalf of the Board of Directors

Steven Chapman Ashwath Ram
Chairman Managing Director
DIN: 00496000 DIN: 00149501

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