Cummins India sees exports rising in 2010

Tue, 03 Nov 2009 11:21:21 GMT

 By Aniruddha Basu

MUMBAI - Engine maker Cummins India Ltd expects exports in 2010 to rise by up to a fifth, but will have to wait for another couple of years for exports to recover fully, a senior official said.

Exports in July-Sept slumped to 720 million rupees from 3.45 billion rupees in the same period a year ago. Its contribution to Cummins India's total sales fell to 15 percent for the period, from nearly half a year ago.

"Exports in the coming quarter may be similar or slightly better. For the next calendar year exports may increase by 10 to 20 percent-in that range-from this year's levels," Cummins India Chief Financial Officer Rajiv Batra told Reuters in an interview.

The Pune-based engine maker exports its products mostly to the developed economies such as the U.S. and Europe which have been hit by the global slowdown.

"We export to the developed part of the world. And there we have been experiencing contraction of demand for a while. It will take a couple of years for the cycle to be complete and for us to get back to where we used to be".

"This quarter (July-Sept) has probably been one of the lowest points in exports."

The firm last week reported a fall of 6.6 percent in July-Sept profit to 877.4 million rupees, as sales fell 23 percent to 6.08 billion rupees, hit by weak exports.

The company, which makes diesel and gas engines of various sizes to cater to the power, industrial and automotive market, however sees domestic demand on the uptick.

"On domestic business we are very close to our high point, and we will continue growing," Batra said. "The revival is right across."

The firm is betting on its power segment which generates more than half of its domestic sales locally and expects the business to grow sequentially as India pushes ahead with reforms in its power distribution network.

The government has launched a $10.86-billion (500 billion rupees) plan to cut power distribution losses in the country, with a fifth of the funds devoted to using information technology (IT) at state-run distribution companies.

"About 15 percent of India is in deficient mode as far as power is concerned so there are strong requirements in this sector," Batra said.

The debt-free firm- which has cash reserves of close to 7 billion rupees- will invest 1 billion rupees in calendar year 2010 for expansion, he said.

The firm is expanding capacity at a plant near Pune for its line of mechanical and electronic engines.

"Among other projects coming on line is a facility for remanufacturing high horse power products as part of our distribution business," he said.

Another plant at Kothrud in Maharashtra had been hit by a labour strike from Sept 15 due to a dispute on wages, but Batra said the firm was able to substantially restore production with the help of non-unionised employees.

(Editing by Sunil Nair)






(Reuters)

Investmentguruindia.com provides expert advice, recommendations, broking firm tips, reports, technical analysis, news and many more things for stock market, mutual fund, commodities, IPO, currency derivatives, F&O, world market.

Imp Link: BSE, NSE, Sensex, Nifty, MCX, NCDEX

Keyword: Free Tips, Recommendation, News, Stock Market, Mutual Fund, commodities, Currency Derivatives, World Market, IPO, Investment In India, investment Guru India, Technical Analysis, NSE, BSE, MCX, NCDEX, Expert Advice, F&O, Nifty, Sensex, Indian Equity Market, Indian Mutual Fund, Indian Commodities , Indian Currency Derivatives, Indian  IPO, Updates, stock market today, stock trading, online stock trading, money market, buy, sell, currency market, market forecast, share trading, online trading, options trading investment funds, stocks shares, stocks and shares, share price, insurance, financial services, morning star, day trade currency options, futures brokers