Cummins India’s successful cost-cutting strategy

Net sales of Cummins India Ltd. for the quarter ended September 30, 2012, at Rs. 1,068 crores remained flat as compared to the Rs. 1,067 crores recorded in the same period last year, but declined 14 per cent compared to Rs. 1,241 crores recorded in the preceding quarter. Net sales for the half year ended September 30, 2012, grew 11 per cent to Rs. 2,310 crores from Rs. 2,089 crores over the same period last year.

Net profit before tax in the second quarter grew 21 per cent to Rs. 221 crores (Rs. 182 crores) but declined 15 per cent compared to Rs. 258 crores. Net profit before tax, excluding exceptional items for the half year ended September 30, grew 28 per cent to Rs. 479 crores.

Mr. Anant J. Talaulicar, Chairman & Managing Director, Cummins India Ltd., said: “Exports declined 28 per cent sequentially due to slowing down of global demand, and domestic sales dropped 7 per cent primarily due to a slowdown in the power generation market.

Margins were however maintained sequentially despite a significant leverage loss mainly due to increased focus on improving cost efficiencies. Margins also improved by 3.6 points over the same quarter last year primarily on account of favorable mix and cost reduction.

While our growth prospects in the short term have been affected, the company continues to be strongly positioned to resume growth upon revival of the markets. The company is continuing to invest in critical technologies geared towards serving our customers dependably.”