Home >Industry >Manufacturing >Cummins India says revival taking place, 'bullish' on India market
At present, Cummins is working at around 70% capacity of the pre-COVID level across plants
At present, Cummins is working at around 70% capacity of the pre-COVID level across plants

Cummins India says revival taking place, 'bullish' on India market

Cummins India said it expects to get back to the optimum capacity utilisation across its plants, which is on average 80-85%, by the middle of 2021

MUMBAI : Engines and power equipment maker Cummins India has said it remains bullish about the India market and expects a further improvement in demand going forward, even as the peak festive season demand may see a 50% year-on-year decline.

The company also said it expects to get back to the optimum capacity utilisation across its plants, which is on average 80-85%, by the middle of 2021.

Cummins India reported a 65% decline in consolidated profit after tax (PAT) at 53.02 crore in the April-June quarter of the current fiscal, impacted by the coronavirus pandemic, as compared to a PAT of 152.56 crore in the same period of FY20.

"The demand will be better than previous months, because we hit the bottom and we are just reviving somewhere. So while if you compare the festive season this year with our peak festive season, we may be down by 50%. But if you compare with previous (June) quarter, it will be up by 15-20%," Cummins India Managing Director Ashwath Ram told PTI.

"So we are optimistic that it will be better than the lows we have seen in the last six months," he said.

Ram said that revival is taking place from a 70-80% decline in demand from the peak level during the lockdown period (CV demand was down by that much during the lockdown), adding, "It will be be a long cycle to revive, probably till 2022 before this market fully recovers."

At present, Cummins is working at around 70% capacity of the pre-COVID level across plants.

He said the company may reach the average capacity utilisation of 80-85 per cent by the middle of next year.

The company was also impacted like all others in the industry because of the nearly two months of complete lockdown, but it was ale to come back pretty strongly, he said, adding, "overall, we are quite bullish and optimistic that things are continuing to get better," Ram said.

Various cost-saving measures in the areas of variable and fixed costs, including a 10-15 per cent reduction in the professional workforce, taken both in pre- and post-lockdown period helped the company in managing the business in times of the pandemic.

"In doing all of that, we find that we have changed our cost structure to a manner that even if the demand will take more time to come back, we will continue to grow successfully," Ram said.

He said that Cummins will continue to invest in Indian market, provided that there is an opportunity for it, besides adding new products as per demand.

He termed as quite "positive" government's recent move on electric vehicle and said since lithium-ion batteries can't be imported from China in view of the conflict and the industry will have to look at alternate resources and technology, it will drive government faster towards the fuel cell and hydrogen space which is the leading technology which Europe and America are working towards.

"In this Cummins has a lot of available technology already. So from Cummins perspective, I am feeling optimistic," Ram said.

He, however, said that there should not be any knee-jerk action and industry should be given time on this issue.

There should be a clear policy in place to attract those industries and gradually set up investments in those industries, he added.

According to Ram, the government has so far taken measures only on the supply side such as boosting liquidity but industry needs steps such as announcement of the much-awaited scrappage policy, reduction in GST to revive demand.

The government needs to aggressively boost spending in construction and infra, he added.

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