Annual Report Summary 2023
About the company:
Formed in 1962, it is the largest entity of Cummins in India, Cummins India Limited is the country’s leading manufacturer of diesel and natural gas engines. It comprises three business units - Engine, Power Systems, and Distribution.
The Engine Business manufactures engines from 60 HP for low, medium and heavy-duty on-highway commercial vehicle markets and off-highway commercial equipment industry spanning construction and compressor.
The Power Systems Business designs and manufactures high horsepower engines from 700 HP to 4500 HP for marine, railways, defence and mining applications as well as power generation systems comprising integrated generator sets in the range of 7.5 kVA to 3750 kVA including transfer switches, paralleling switchgear and controls for use in standby, prime and continuous rated systems.
The Distribution Business provides products, packages, services and solutions for the uptime of Cummins equipment. Through its country-wide network of over 120 dealership branch offices and 450 service touch points, the business provides parts, new and rebuilt engines, batteries, services and customer support solutions to products manufactured by Cummins.
This network offers a strong team of more than 3500 company trained engineers and technicians who handle service events of 5,25,000 engines on the field, serving over 2,00,000 customers across various markets in India, Nepal and Bhutan in off-highway segments.
Serves markets in India, Nepal and Bhutan and exports its products to various countries across the globe with the USA, Europe, Mexico, Africa, the Middle East and China being the top destinations.
2022-23 Highlights of different sectors of the business:
Industrial Business:
Railways:
Secured order from Indian Railways for the design and development of the ‘Make in India’ Hotel Load Converter for auxiliary power.
Mining:
The Company maintained its position in the 60T dump trucks and heavy line excavator market while onboarding new OEMs to bolster its presence in the mobile crusher business segment.
Marine and Defence:
A strong relationship with Indian Army and Indian Navy. The Company got its first order for a submarine genset application. The Company successfully ramped up the engine production for wheeled defence applications for domestic and export requirements.
The company has successfully delivered the largest genset of 1 MW for Hindustan Shipyard Ltd. (HSL) Diving Support Vessel for the Indian Navy. DG sets >1 MW for Commercial marine applications have also been supplied.
The production ramp-up of critical applications such as Missile Carrier Vehicles, Armoured personnel carriers, and Towed Artillery Guns is driving demand for engines >400HP.
Pumps:
To increase its presence in the fire pump market globally, the company continued to expand the product portfolio of FM-approved and UL-listed engines.
Oil and Gas:
The company witnessed record growth in the supply of gas engines due to increased government impetus and transition toward the City Gas Distribution Infrastructure.
Construction:
Capitalizing on global experience, solid technological know-how, and strong partnerships with major equipment manufacturers, the company introduced two new engines (4-cylinder and 6-cylinder engine platforms) to strengthen its market presence.
Powering a Cleaner India :
With a strong commitment to advancing a cleaner India, the new-generation electronic 4-cylinder and 6-cylinder engines (from mechanical) are ready to meet the Construction Equipment Vehicle (CEV) Bharat Stage IV/V emission norms for CEV applications across Off-Highway Wheeled and Tracked categories.
Power Generation:
The 2000 kVA Prime Genset powered by the rugged K50 engine was launched to provide superior power density and optimized total cost of ownership to their customers.
By fulfilling High Horsepower genset orders for major hyper-scale data centres in India, the company demonstrated its commitment to delivering robust, innovative and dependable products.
The Central Pollution Control Board (CPCB) of India has announced the implementation of CPCBIV+ emission norms for Power Generation (up to 800kW), effective from July 1, 2023. The company – through its technology leadership – is preparing for the same and is well-equipped to meet the new emission norms.
Exports:
The company’s growth in exports revenue in FY 2022-23 was primarily driven by an increase in:
- Low Horsepower products: Q-Series and 6B Gensets and Coolpacs driving sales across markets.
- High Horsepower Powergen engines: K50 Engines driving sales to intercompany plants.
The company has undertaken several product improvement initiatives to strengthen its position in the Powergen markets. This includes enhancements to existing products along with cost optimization, called Fit for Market (FFM) products.
Launched new Series of Fit for Market Gensets powered by B3.3, 6B, QSB7 and QSL9 Engines for unregulated markets - Africa Middle East, Asia Pacific and Latin America.
The company witnessed record sales for exports driven by LHP Products, Powergen and Industrial Engines Exports.
The company saw strong demand for Industrial Marine Engines in the Asia Pacific and North America markets.
Distribution:
Logged a number of service calls, reaching a record-breaking 7.2 Lakh during FY 2022-23, with the highest monthly calls ever recorded at 72,657 in December 2022. Over 80% of these calls were related to preventive maintenance.
Product Launches:
The Retrofit Emission Control Kit (RECD):
It employs filter-less technology and electrostatic precipitation fundamentals to significantly enhance air quality and achieve a Particulate Matter (PM) capture efficiency of over 70%. This solution, launched in collaboration with PI Green Innovations Pvt. Ltd., enables customers to comply with National Green Tribunal (NGT) guidelines for operating Diesel Gensets.
Cummins Brake Lining:
Part of the on Highway allied product portfolio, the Brake Lining range is manufactured from an asbestos-free, ecological friction material with efficient braking and good wear characteristics, and caters to a wide range of applications like trucks, trailers, buses, coaches, etc.
New range of Clutches:
Available to the On and Off-Highway markets, the newly improved range of Clutches offers diverse applications across commercial vehicles, tractors, cranes, forklifts, and more.
Cummins Funnel Fuel Filter :
It is a new heavy-duty, fast-flow filter in a funnel that effectively separates damaging free water and contaminates from gasoline, diesel, heating oil and kerosene. It is suitable for applications where fuel is not directly used from the dispensing units but is stored and handled at sites.
Power Booster Kit :
It is a combination of filters, engine oil and service required to carry out basic maintenance activity for the diesel gensets. It is a comprehensive and cost-effective solution for customers seeking a single-point hassle-free service for their genset.
Opportunities
Power Generation
FY 2022-23 witnessed robust growth for the Power Generation market. Key segments driving the growth of the Power Generation market included Datacentres, Real estate, Manufacturing, and Infrastructure.
While the average power supply deficit at the national level continues to remain less than 1%, the company expects the Power Generation business to follow a growth trajectory led by opportunities arising from segments like infrastructure and manufacturing due to higher capital expenditure by the Government and private sector companies.
The emission norms are getting more stringent for the power backup industry, with the implementation of CPCBIV+, effective from 1st July 2023, the company has said they expect to comply with them with innovative products.
Industrial:
Railways:
Indian Railways is set to achieve its target of 100% track electrification of the broad-gauge network by 2023 which is driving demand for Diesel Electric Tower Cars (DETCs) that are used in the installation and maintenance of overhead electric lines. The company believes that this will also fuel demand for the electrified propulsion industry in the long term.
With the expansion of the railway network and dedicated freight corridors becoming operational, growth is expected in the track maintenance sector.
Indian Railways’ focus on reducing dependency on diesel in the auxiliary power sub-segment is driving demand for hotel load converters. The company has ventured into the supply of hotel load converters which will help regain business in the auxiliary power sub-segment.
To move towards a green economy with net zero emissions, Indian Railway is also evaluating hydrogen fuel cell solutions for the “Hydrogen for Heritage” initiative. The company is actively exploring ways to partner with Indian Railways on this initiative.
Mining:
India achieved record coal production in FY 2022-23 at 892 million tonnes, registering an annual growth of 14.65%. Growth in domestic coal production is expected to have a favourable impact on the Heavy Earth Moving Machinery (HEMM) market in which the company is a critical technology supplier.
Marine:
In line with the Indian Navy’s fleet expansion and fleet modernization plan backed by the ‘Atmanirbhar Bharat’ initiative, there is a strong pipeline of opportunities from defence PSU shipyards. Increased opportunities are expected in the commercial marine segment due to the Government of India’s mandate to use indigenous vessels for inland water transport and vessels operating in government ports.
Oil & Gas:
An investment of ₹ 1.25 lac crore has been planned for developing the pipeline infrastructure for the 11th round of the CGD network. In line with this, the company continues to expect strong demand for gas compression engines from the city gas distribution segment.
Defence:
Reforms by the Government of India to focus on indigenous design, development, and manufacturing, along with an intent to promote exports of defence equipment expected to boost domestic production. The company is expecting growth in engine requirements from Original Equipment Manufacturers (OEMs) participating in this sector.
Pumps:
The company is looking to export FM / UL certified pump packages to global OEMs.
Construction:
Under the “National Infrastructure Pipeline”, the government has made an investment plan of ₹ 100 lac crore over five years, whereby more than 60% of infrastructure projects are from construction-intensive sectors like Roads, Railways, Airports, Irrigation, Urban infrastructure, and Ports. The company is a leading engine supplier in the Construction equipment segment.
Exports :
Strong demand for Powergen segments is expected from Latin America, and Middle East regions. Telecom, rental, healthcare, manufacturing, and marine segments are driving growth in these markets. The company is also tapping into opportunities available in Industrial segments such as rail and marine in regions such as Latin America, Africa, and Asia Pacific, building upon its existing presence in the region.
Threats
Power Generation
With the domestic players expanding their product ranges and international players gaining a foothold in the region, competition is rising in the Powergen segment. As a result, pricing pressure is intensifying across the industry. The products are also witnessing significant cost increases driven by the rise in commodity prices, geopolitical conflict, and supply constraints.
Industrial :
Railways:
With rail electrification work nearing the 100% target by the end of 2023, demand for DETC is expected to soften from FY 2023-24.
Mining:
Timely allocation of coal blocks to private players and ramping up of coal production is critical to boosting demand for mining equipment.
Oil & Gas:
Due to the Covid-19 extension granted to CGD players, a lack of infrastructure readiness is delaying the release of tenders for compressor packages, thereby impacting short–term demand.
Construction:
The company is ready and excited to launch products for expected Construction, Earthmoving, Material Handling and Mining Equipment (CEMM) BS IV emission norms. A delay in clarity in the norms’ implementation timeline could defer the launch of these products.
Distribution:
Growing environmental 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.
The target of 100% Rail electrification by the year 2023 will limit restrict usage of diesel engines to Diesel Electric Multiple Units (DEMUs) and Power Car applications which will reduce maintenance requirements from customers.
Exports:
The company anticipates volatility in demand due to economic slowdown in advanced economies, ongoing geopolitical conflict, and the tightening of monetary policies by central banks of all major economies.
The company is experiencing strong competitive activity in the Powergen segment. Global OEMs and Genset assemblers are driving increased competition in the market.
About supply chain
Electronic component supply chain issues are not going away until at least mid-2024. The majority of all gensets sold in data centres are being produced in India, but some larger products are imported from the US due to the significant investment required to produce them.
Cummins is in advanced negotiations to tie up with big partners for energy transition projects.
It will participate in the solid oxide fuel cells market directly if it becomes an increasing part of the consumption pattern.
Demand in Europe is not dropping, and Africa has actually increased, while Asia-Pacific and Latin America have seen the largest drops in exports.
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