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High-return Business

The power deficit provides an immense opportunity for Cummins India, but weak domestic demand is a cause of concern

Why invest?
Cummins India is the country's largest engine manufacturer and also produces gensets, internal combustion engines and spares which in itself constitutes a big market. Lack of essential power addition has resulted in a power deficit of 7-8 per cent which is likely to stay in the immediate term. In the scenario of a power deficient nation; Cummins comes into the picture with its gensets.

Long term investors will take comfort that US based Cummins Inc. is developing India as the global hub for low-HP engines. The power generation business unit will have a capacity of 23,000 gensets per annum with an estimated 3000 low-HP gensets expected to be manufactured `in FY14.

  • Market leader in high horse-power engines
  • Parent focusing on making India the global low-HP engine hub
  • Consistently high-return business
  • Power deficit provides for immense opportunity

Caution: Watch out for domestic demand weakness. Primary client industries such as construction and real estate, collectively account for around 50 per cent of revenues have been hit hard. An extended slowdown here is a possibility. The stricter CPCB II environmental norms promised to throw up opportunities. That has not happened on speculation that CPCB II could be postponed beyond the July 2014 deadline.