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Cil Word
GUIDED BY FACULTY:
PROF. S.B. SUBRAMANIAM
SUBMITTED BY:
MOHIT SONY
N20222029
Company Background
In 1996 Cummins Inc. bought Kirloskar shares. Now it's Cummins Inc.
subsidiary. As of 2013, the Cummins group had revenues of over $1.5 billion,
20 factories, and 9000 employees in India. Cummins does a significant part of
its R&D in India at the Cummins Research and Technology center that was set
up in 2003. Also, Cummins is building an advanced technical centre in Pune
which will house over 2000 engineers. Cummins India has also made significant
contributions to local skill development by establishing the MKSSS's Cummins
College of Engineering for Women, a women-only engineering college in Pune.
At Cummins, during the past year, your company launched a suite of new
products for domestic and global markets, and enhanced existing product and
service offerings. We strengthened our longstanding partnerships with all our
stakeholders, including key Original Equipment Manufacturers (OEMs),
consumers across various end markets, suppliers, and our communities.
Marine and Defense Maintaining our partnership with the Indian Navy and
expanding our presence in Defense
• Your company continued to offer integrated customized solutions meeting
stringent naval standards for prestigious projects for the Indian Navy. It has
begun serial production of key industrial business applications such as armored
personnel carriers for the Indian Army.
Oil and Gas Continuing to support City Gas Distribution Infrastructure • Record
growth in the supply of compressor engines driven by rapid expansion of City
Gas Distribution Infrastructure.
Pumps Launch of certified products for global markets
• Your company successfully introduced, initiated production of FM approved
and UL listed 6B5.9 and QSB6.7 engine platforms.
Plant locations
1. Kothrud, Pune – 411 038, Maharashtra.
2. Gat No. 311/1B, at Post Kasar Amboli, Taluka Mulshi Pirangut, District Pune
– 412 111, Maharashtra.
3. MIDC Phaltan, Village Survadi, Nandal, Taluka Phaltan, Satara – 415523,
Maharashtra.
4. Survey No. 461/2C, Puzhal Village, Saidapet Taluk, Madhavaram Taluk,
Thiruvallur District, Chennai – 600 060, Tamilnadu.
Board of Directors
The year witnessed sharper than expected rebound of the economic activity in
India with GDP growth estimated at 8.9% in FY 2021-22.1 While the social
implications of the second wave in the first quarter of FY 2021-22 were severe,
economic impact was minimal and swift recovery was seen in subsequent
quarters. Momentum of economic growth is expected to continue led by
gains from the supply side reforms, credit support to MSME sector and
government expenditure on infrastructure programmes in the coming years.
Private capex cycle is expected to pick-up led by credit growth and
incentivising of capital formation through Production Linked Incentive (PLI)
Scheme. Domestic consumption is likely to pick up in the coming quarters
due to higher liquidity, widespread vaccine coverage, higher government
spending on social welfare schemes, pick up in investment cycle by corporates
and an accelerated vaccination rollout for the younger population.
The economic recovery faces headwinds from pandemic induced supply chain
disruptions, rising crude oil & commodity prices, depreciating currency, and
geopolitical risks. However, high foreign exchange reserves, sustained foreign
direct investment, and rising export earnings can mitigate some of the
downside risk. The uncertainty in the macro environment has led to downward
revision of GDP forecast for FY 2022-23 from 7.8% earlier to 7.3%, by the RBI.2
The year 2021 also witnessed India shifting its focus to greener sources of
energy to combat climate change. India has committed to become net carbon
neutral by 2070 and meet 50% of energy requirements through renewable
energy by 2030. The National Hydrogen Mission envisages to make India a hub
for Green Hydrogen by incentivising production and consumption. These
developments in the direction of sustainability and green energy are positive
for the economy.
Sources:
1. Ministry of Statistics and Programme Implementation (MOSPI)
2. Reserve Bank of India
Global Environment & its Influence
Power Generation:
FY 2021-22 witnessed robust recovery of Power Generation market to pre-
pandemic levels of FY 2019-20 driven by strong economic growth across
industries and by reopening of commercial hubs. Segments like data centres,
infrastructure, manufacturing, healthcare, and rental were responsible for
driving the growth in the market. While the average power supply deficit at
national level continues to remain less than 1%, your Company expects the
Power Generation business to follow a growth trajectory led by opportunities
arising from segments like infrastructure and manufacturing due to expected
higher capital expenditure by the Government. Rising demand in realty sector,
gearing up of healthcare facilities and investments by global and domestic
players in the data centre market also provided growth opportunities. With the
emission norms getting more stringent due to the implementation of
upcoming CPCB IV+ norms tentatively in FY 2023-24, your Company is focused
on developing and bringing best-in class products for its customers.
Industrial
Railways: Indian Railways is set to achieve its ambitious target of 100% track
electrification of broad gauge network by 2023 which is driving demand for
Diesel Electric Tower Cars (DETCs) which are used in the installation and
maintenance of overhead electric lines. Your Company believes that this will
also fuel demand for the electrified propulsion industry in the long term. With
expansion of railway network and dedicated freight corridors becoming
operational, growth is expected in the track maintenance sector. As Indian
Railways transitions towards eco-friendly options for replacement of powercar
to cater to hotel load requirements of the train, your Company has ventured
into supply of hotel load converters which will help regain business in auxiliary
power sub-segment. With an objective of moving towards a green economy
with net zero emissions, Indian Railways is also evaluating hydrogen fuel cell
solutions for Diesel Electric Multiple Unit (DEMU) and other short distance
mainline applications. Cummins is actively exploring ways to partner with
Indian Railways on this initiative.
Mining: India achieved record coal production in FY 2021-22 at 777 million
tonnes, registering an annual growth of 8.6%. With global geopolitical situation
further intensifying the pressure to enhance domestic coal production,
commercial coal blocks are being offered to private players to enhance
productivity. Growth in domestic coal production is expected to have a
favourable impact on the Heavy Earth Moving Machinery (HEMM) market in
which your Company is a critical technology supplier. The market for stone
crushers is expected to grow rapidly as the Government plans to construct
25,000 kms of national highway under the PM Gati Shakti initiative. Your
Company participates in the market to power electric stone crushers.
Marine: In line with the Indian Navy’s fleet expansion plan backed by
‘Atmanirbhar Bharat’ initiative, there is a strong pipeline of opportunities
expected from defence PSU shipyards till 2025. Increased opportunities are
expected in the commercial marine segment due to the Government of India’s
mandate on the use of indigenous vessels for inland water transport and
vessels operating in government ports. Fishing Boat segment is yet to recover
to pre-covid levels.
Oil & Gas: Share of natural gas in the primary energy mix has increased from
6.3% in 2020 to 6.7% in 2021 and is projected to reach 15% by 2030.
Government has planned investment of ₹1.25 lac crore for developing the
pipeline infrastructure for the 11th round of CGD network. In line with this,
your Company continues to expect strong demand for gas compression
engines from the city gas distribution segment.
Power Generation: With the domestic players expanding their product ranges
and international players gaining foothold in the region, competition is rising in
the Powergen segment. Pricing pressure is intensifying across the industry as
the products are witnessing significant cost increases driven by rise in
commodity prices, geopolitical conflict, and supply constraints. Industrial
Railways: COVID-19 induced travel restrictions for the public has adversely
affected the demand for power car and Diesel Electric Multiple Unit (DEMU).
Timely allocation of projects to rail manufacturing units and close coordination
of activities by Indian Railways is critical for your Company to execute
propulsion system solution for Distributed Power Rolling Stock (DPRS).
Mining: Timely allocation of coal blocks to private players and ramping up of
coal production is critical to boost demand for mining equipment.
Oil & Gas: Timely execution of pipeline infrastructure projects is critical for
setup of CNG stations in geographical areas of city gas distribution network
thereby driving demand for gas engines.
Construction: Your Company is ready and excited to launch best in class
products for expected Construction, Earthmoving, Material Handling and
Mining Equipment (CEMM) BS IV emission norms. Delay in clarity in norms’
implementation timeline could defer the launch of these products.
Distribution: Growing environment concerns leading to bans on the use of DG
sets in Non – Attainment Cities (NACs) and better availability and quality of grid
power could result in lower utilization of DG sets. Target of 100% Rail
electrification by 2023 will limit usage of diesel engines to Diesel Electric
Multiple Units (DEMUs) and Power Car applications which will reduce
maintenance requirements from customers.
Exports: IMF has projected Global GDP growth to slow down from an
estimated 6.1% in 2021 to 3.6% in 2022 and 2023. Despite expected strong
demand, there may be volatility due to rising geopolitical uncertainty, supply
chain disruption, logistics challenges, and rising commodity prices. Economic
implications from the war in Ukraine will contribute to a significant slowdown
in European Region in 2022 and will add to inflation.
GDP Growth & Impact to the Business
Power Generation:
Focusing on customer needs, significant steps were taken to improve the
power density of products to reduce the total cost of ownership, lower the
maintenance cost and provide the benefit of a smaller installation footprint. In
the pursuit of continuous improvement of the service and reach of products,
your Company expanded its reach with the appointment of 10 new dealerships
across the country. The new Power Generation emission norms CPCB IV+ (for
<=800kW) is expected to be implemented from July 01, 2023, by Central
Pollution Control Board (CPCB) of India. These emissions standards
recommended by CPCB would enforce, ~ 90 % reduction in Particulate Matter
(PM), Nitrous oxide and carbon monoxide content in the exhaust as compared
to the current CPCB-II norms. In certain kVA nodes, these norms would be
stricter than the Tier IV norms prevalent in global markets and hence these
emissions standards have been titled CPCB IV+ (CPCB IV plus). The new
emission norms are one of the most stringent emission norms across the world
for Diesel Genset market. Through its well-established technology leadership -
is preparing for the same and is well equipped to meet the new emission
norms.
Industrial
Railways: Your Company has succeeded in design, development, validation,
and supply of the first ever ‘Made in India’ propulsion system for Diesel Electric
Tower Cars (DETCs) to Indian Railways.
Marine: Your Company has successfully delivered an integrated marine DG set
package for Indian Navy’s Survey Vessel Large and Shallow Watercraft project.
These are customised solutions to meet stringent norms of shock, noise, and
vibrations.
Mining: Your Company continues to innovate and develop fit-for-market
products to expand its presence in the stone crusher, dozer, and excavator
segments.
Pumps: Your Company has successfully introduced and started supply of new
FM / UL certified 6B5.9 and QSB6.7 products for global pumps segment in FY
2021-22.
Defence: Your Company continues to develop fit for market products for India
and partnering with OEMs for export orders for wheeled vehicle equipment for
defence applications.
Construction: Your Company has launched BSIV certified electronic 4-cylinder
and 6-cylinder engine platforms to address the upcoming CEV BSIV emission
norms for the Off-highway Wheeled segment in India. The Company is working
with key Off-Highway OEMs in India to offer the new 4-cylinder and 6-cylinder
engines.
Distribution:
Company has introduced “PowerCoins” Scheme, an umbrella program for
schemes, rewards, and pay-outs for Dealer Channel to incentivize their efforts
to sell the New and ReCon parts. Company launched a scheme for employees
for the Lithium-Ion batteries for Inverter and UPS applications with several
benefits such as 60-70% lighter weight, compact design, wall mount feature,
faster charging, and 2-3 times higher useful life. Company launched Dual Fuel
Kits for Powergen segment. “ConSol”, an SFDC (Sales Force Dot Com) based
Sales & Service Contract automation tool was launched for service solutions
bringing several capabilities together on a single platform. With web 45 Annual
Report 2021-22 and mobile versions, built-in analytics, it offers a single click
solution for end-to-end visibility of service contracts, 3600 customer view,
leads and opportunities management, service quote and cost sheets
generation. It also contributes to Planet 2050 goals by eliminating the use of
~160K papers annually
Vertical Analysis
Common Size Balance Sheet
All Figues in lakhs
Particulars As at 31-03-2022 As at 31-03-2021 As at 31-03-2020 As at 31-03-2019 As at 31-03-2018
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 16.95 19.94 20.07 21.91 23.19
Capital work-in-progress (including investment property in progress) 0.89 1.39 1.34 2.71 0.69
Right-of-use assets 0.44 0.50 0.51 - -
Investment properties 14.39 17.90 17.41 12.44 13.22
Intangible assets 0.61 0.01 0.03 0.04 0.10
Intangible assets under development 0.01 0.84 - - -
Financial Assets
Investments in a subsidiary, joint ventures and an associate 0.55 0.66 0.63 0.64 0.68
Other investments #VALUE! 0.09 0.09 0.09 0.10
Other non-current financial assets 0.15 0.24 0.48 0.32 0.08
Income tax assets (net) 0.57 0.74 1.87 1.59 1.61
Other Non-Current Assets 0.93 0.95 1.11 2.05 2.32
35.48 43.27 43.55 41.78 41.97
CURRENT ASSETS
Inventories 10.71 9.79 9.62 10.68 9.72
Financial Assets
(i) Investments 8.49 5.73 13.12 4.15 9.15
(ii) Loan
(iii) Trade Receivables 18.33 18.86 19.01 21.74 23.98
(iv) Cash and Cash Equivalents 2.61 2.13 3.05 3.34 2.75
(v) Bank Balances [other than (ii) above] 18.36 14.81 4.58 9.27 5.76
(vi) Others 3.74 2.42 3.63 6.14 1.27
Other Current Assets 2.26
Assets held for sale 0.03 0.35 0.24 0.07 0.07
64.52 56.73 56.45 58.22 58.03
TOTAL ASSETS 100.00 100.00 100.00 100.00 100.00
● Revenues from Operations: During the year ended 31st March, 2022,
Cummins India Limited registered revenue from operations of 4,511
crore against 4,479 crore in the previous year 2020-21. Revenue of
Electronic Consumer Durables (ECD) segment constituting Fans, Pumps
and Appliances, stood at 3,389 crore in 2021-22 delivering growth of 5%
over previous year. Lighting segments’ revenue clocked 1,131 crores in
2021-22 versus 1,265 crore in 2020-21.
● Other Income: Other income primarily constitutes Interest income,
Investment Income and other miscellaneous income. Interest from
customers, investments and tax refund are the main constituents of
Interest Income.
● Material Costs: Material Costs comprises consumption of raw material,
semi-finished goods, purchase of finished goods for re-sale and increase
or decrease in the stock of finished goods and work in progress.
● Employee Costs: During the year under review, employee cost stood at
311 crore as compared to 292 crore in 2020-21. Increase was mainly on
account of increments and headcount addition.
● Depreciation: Depreciation and Amortisation expense were higher
mainly on account of adoption of Ind AS 116, wherein rent has been
reclassified into Depreciation and Amortisation expense. The same has
no additional charge on financials.
● Finance Cost: Finance charges reduced from 59 crore in 2020-21 to ` 40
crore in 2021-22, mainly on account of repayment of debentures worth
300 crore in Q1 2021-22.
● Direct Tax and PAT: On account of reduction in corporate tax rates by
Government during the year, the Company’s applicable tax rate has
reduced from 34.94% in 2020-21 to 25.17% in 2021-22. Total profits
during the year under review stood at 496 crore registering 24% growth
over 2020-21.
Ratio Analysis
● Talking about the Profitability Ratios, the gross profit ratio has remained
stable during the past 5 years fluctuating between 0.77 to 0.79. The Net
Profit Ratio on the other hand increased on a YOY basis from being 0.056
during 2018 to getting to 0.109 during 2022.
● The Return on Assets also increased on a good note mostly due to the
stable increase in the Total Assets that the Company acquired on their
forefront. The Return on Equity ratio somewhat decreased despite being
high during the initial years since the shareholders’ equity didn’t
increase that much as compared to the increase in Net Income that took
place in their profits.
● In terms of the liquidity ratios, the current ratio has been above 1 since
the past 4 years mainly due to reduced borrowings that the company
has undertaken. The cash ratio also has been quite well off since the
company makes sure to replenish their inventories and goods as quickly
as possible which allows them to take in more risks compared to others.
● In the Leverage Ratios, the total Debt to Equity ratio reduced drastically
in the past 5 years due to the same fact of the owners’ equity not
increasing that much as compared to the increase in the total liabilities.
But the Equity ratio had a stable increase due to the well - maintained
total assets of the company.
Prospective Analysis
From an investor’s analysis point of view, the company is doing and performing
very well in their particular sector by grabbing the potential opportunities and
expanding their market share slowly with the evolving consumer needs.
With long-term prospects being bright for India’s GDP, rise in consumer’s
disposable income will lead to shift towards premiumisation/value added
products coupled with cultural shift towards nuclear families present bright
prospects for ECD and Lighting business. COVID-19 global pandemic is a
defining event of FY22 and it will have implications on across various sectors. It
also reflects change in consumer buying behaviour. E-Commerce will be a vital
channel and an economic driver for both domestic growth and international
trade. New Generation Technology and Introduction of new products through
advancement in technology will improve core customer experience. Rapid
adoption of Smart and IoT-connected solutions shall be an enabler to drive
business growth.