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Home >Companies >Cummins India Q2 profit drops 22.3% to Rs152.9 crore

Cummins India Ltd on Thursday reported a 22.3% year-on-year drop in profit to Rs152.9 crore in the quarter ended September on the back of 15.2% drop in revenue to Rs1,118.4 crore and a minor compression in earnings before interest, taxes, depreciation and amortization (Ebitda) margin to 14.52%.

The company attributed the drop in revenue in the September quarter to the implementation of the goods and services tax (GST) and the fact that it was net of the tax, while that of the corresponding period was inclusive of duty, and hence the two were not strictly comparable.

“The decline in domestic sales during the current quarter was mostly driven by GST implementation and lack of readiness challenges faced by some of our major customers. We also faced unforeseen supply constraints from the supplier base," said Anant Talaulicar, Cummins’ chairman and managing director.

Talaulicar, however, added that the company is confident of its sales bouncing in the subsequent quarters. “While a revolutionary change such as GST is bound to have some unforeseen, negative consequences, I am optimistic about the longer term positive impacts on our business and country. I do believe the worst of the teething GST issues is behind us. We believe that for the most part the sales decline would be recovered in subsequent quarters this fiscal year once the GST implementation and supply issues are resolved," he added.

The drop in the company’s profit during the quarter was also a function of a 22.5% drop in its other income to Rs53.6 crore.

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