FINANCIAL STATEMENT ANALYSIS

Cummins India Limited

GUIDED BY FACULTY:
PROF. S.B. SUBRAMANIAM

SUBMITTED BY:
MOHIT SONY
N20222029
 Company Background

Cummins India is the Indian subsidiary of Cummins. Cummins India is publicly

traded on the Bombay Stock Exchange (BSE) and the National Stock Exchange
of India (NSE). Cummins began its India operations on 17 February 1962 in a
joint venture with the Kirloskar Group. The ownership structure of the joint
venture was divided as follows:
Cummins - 50%
Kirloskar Group - 25.5%
Retail Investors - 24.5%

In 1996 Cummins Inc. bought Kirloskar shares. Now it's Cummins Inc.
subsidiary. As of 2013, the Cummins group had revenues of over $1.5 billion,
20 factories, and 9000 employees in India. Cummins does a significant part of
its R&D in India at the Cummins Research and Technology center that was set
up in 2003. Also, Cummins is building an advanced technical centre in Pune
which will house over 2000 engineers. Cummins India has also made significant
contributions to local skill development by establishing the MKSSS's Cummins
College of Engineering for Women, a women-only engineering college in Pune.

Cummins’ commitment to ensuring the well-being of our people was reflected

through the robust vaccination drives organized for our employees, suppliers,
business partners, and their family members. These efforts focused on
protecting our people have resulted in 99.5% of our employees vaccinated. We
also committed ourselves to caring for our communities by providing them
COVID-19 relief support in the form of oxygen cylinders, cooked meals, critical
equipment, supporting sanitization workers, and community vaccinations
impacting over 1.75 Lakh lives. We embraced new ways of working,
accelerated digitalization across our offices and sites, and renewed our
commitment to Diversity, Equity, and Inclusion.
Main Business (Products & Services) & Business Segments

At Cummins, during the past year, your company launched a suite of new
products for domestic and global markets, and enhanced existing product and
service offerings. We strengthened our longstanding partnerships with all our
stakeholders, including key Original Equipment Manufacturers (OEMs),
consumers across various end markets, suppliers, and our communities.

Railways Supporting Indian Railways (IR) in achieving Mission Electrification

• Successful completion of the first-ever ‘Make in India’ full propulsion system
of Diesel Electric Tower Cars (DETCs).
• Record growth in shipments for DETC on account of high demand from
Indian Railways to meet electrification targets by 2023.

Mining Presence across applications to support an increase in domestic coal

production
• Your company performed well in the 60T and 100T dump truck product lines
and made further inroads in the Heavy Earth Moving Machinery (HEMM). It
made advancements in other applications such as stone crushers, dozers, and
excavators.

Marine and Defense Maintaining our partnership with the Indian Navy and
expanding our presence in Defense
• Your company continued to offer integrated customized solutions meeting
stringent naval standards for prestigious projects for the Indian Navy. It has
begun serial production of key industrial business applications such as armored
personnel carriers for the Indian Army.

Oil and Gas Continuing to support City Gas Distribution Infrastructure • Record
growth in the supply of compressor engines driven by rapid expansion of City
Gas Distribution Infrastructure.
Pumps Launch of certified products for global markets
• Your company successfully introduced, initiated production of FM approved
and UL listed 6B5.9 and QSB6.7 engine platforms.

Construction Continued strengthening our presence

• Your company reinforced strong customer partnerships. The industry’s
growth potential is being limited by challenges such as increasing input prices,
especially the spiraling steel prices, and supply chain disruptions experienced
during the second wave of the pandemic.

Compressors Maintained volumes in the Water Rig sector

• In the water well drill rigs market, we witnessed volume growth on account
of a good monsoon last year

Power Generation continues to put in efforts to enhance our current product

offerings and introduce new products across all nodes to bring best-in-class
products to our customers:
• A compact, electronic variant of 250 kVA prime genset was launched,
powered by the QSB6.7 engine enhancing your company’s offering in this node
• Powered by mechanical K50 engine, new nodes of 1800kVA Prime and
2000kVA Standby launched by your company, designed to cater to customer
requirements in Commercial Realty, Infrastructure and Manufacturing sectors
at competitive pricing
 Locations of the Company

Plant locations
1. Kothrud, Pune – 411 038, Maharashtra.
2. Gat No. 311/1B, at Post Kasar Amboli, Taluka Mulshi Pirangut, District Pune
– 412 111, Maharashtra.
3. MIDC Phaltan, Village Survadi, Nandal, Taluka Phaltan, Satara – 415523,
Maharashtra.
4. Survey No. 461/2C, Puzhal Village, Saidapet Taluk, Madhavaram Taluk,
Thiruvallur District, Chennai – 600 060, Tamilnadu.
 Board of Directors

 Steven M. Chapman - Chairman

Steven M. Chapman worked with Cummins Group for 35 years. Since joining
the Group in 1985, he has held various roles across geographies including
Director – International Business Development, Vice President – Southeast Asia
and China, Vice President – International, President – International Distributor
Business, Group Vice President — Emerging Markets and Businesses, and
Group Vice President – China and Russia. He has also served on the global
Cummins Leadership Team and its predecessors since 2002. Currently, he is
also on the board of other public companies and colleges in USA.

 Ashwath Ram - Managing Director

Ashwath Ram is the Managing Director of Cummins India Limited since August
2019. He joined Cummins in Columbus, Indiana, USA initially in 1991. He then
joined India operations in 2008 and has taken up various roles and won many
accolades. He has led Business Unit Operations as well as key strategic
transformation for the Engine Business Unit and Power System Business Unit in
India, where his key focus areas of the business included strategy, sales,
profitability, operations and supply chain. Ashwath is an active member of
industry associations such as Confederation of Indian Industry (CII) and Society
of Indian Automobile Manufacturers (SIAM) and as the Chairperson of
Sustainable Mobility Group, he focuses on improving the air quality issues of
India’s metropolitan cities.

 Rajeev B. Bakshi - Independent Director

Rajeev Bakshi is a Non-Executive Independent Director of Cummins India
Limited. He has rich experience in Marketing and Supply Chain Management.
He is an alumni of Indian Institute of Management (IIM), Bangalore and a
science and economics graduate from St. Stephens College. Rajeev has served
on Boards of Marico Limited, ICICI Ventures and currently on Board of Dalmia
Bharat Sugar & Industries Limited. Rajeev has also been a member of the CII
National Council and National Council of Federation of Indian Chambers of
Commerce & Industry (FICCI).

 Priya S. Dasgupta - Independent Director

Priya Shankar Dasgupta is a Non-Executive Independent Director of Cummins
India Limited. He has been engaged in the practice of Corporate Law since
1978. He worked as a Senior Associate in a reputed solicitor & advocates firm -
M/s. J B Dadachanji & Co. for more than 15 years. He is also the Founder and
currently the Senior Partner of Asia Law Offices, Solicitor & Advocates. His
areas of practice includes conveyancing, Corporate Laws, Foreign Exchange
laws, Anti-trust and Mercantile Laws, Corporate litigations, Mergers and
Acquisitions. He is a specialist, interalia, in structuring and negotiation of Joint
Ventures and Foreign Collaborations & devising entry strategies. He also serves
on Boards of various national and multinational companies in India.

 Nasser M. Munjee - Independent Director

Nasser Munjee is a Non-Executive Independent Director of Cummins India
Limited. He holds a Master’s Degree in economics from the London School of
Economics. Nasser has held various positions, including Executive Director, at
HDFC for over 20 years. He is also on the Boards of various multinational
companies and trusts. Nasser was a technical advisor to the World Bank’s
Public Private Partnership Infrastructure and Advisory Fund. He has also been
the President of the Bombay Chamber of Commerce and Industry and has
served on numerous Government Task Forces on housing, infrastructure and
urban development

 Rama Bijapurkar - Independent Director

Rama Bijapurkar is a Non-Executive Independent Director of Cummins India
Limited. She is among India’s most respected thought leaders on market
strategy and India’s consumer economy. She has an independent market
strategy consulting practice spanning diverse sectors and businesses. She is
also a Professor of Management Practice at Indian Institute of Management,
Ahmedabad, and co-founder of People Research on India’s Consumer
Economy, a not-for-profit think-tank and fact tank. Rama has served on the
Boards of several of blue chip companies in India as well as the Governing
Council of the Banking Codes and Standards Board of India. She is a member of
the Eminent Persons Advisory Group of the Competition Commission of India.

 Norbert Nusterer - Non-Executive Director

Norbert Nusterer was appointed to the Board of Cummins India Limited in
October 2016. He is the Vice President of Cummins Inc., USA and President of
the Power Systems business, which comprises of power generation products,
large industrial engines and aftermarket activities associated with both. Most
recently, Norbert served as the Vice President of Supply Chain Operations and
Parts, where he drove a comprehensive integration of Cummins’ global supply
chain activities. Under his leadership, his team doubled the size of Cummins’
service parts and remanufacturing businesses and transformed them into a
global shared service organization supporting all four Cummins global
businesses.

 Donald Jackson - Non-Executive Director

Donald Jackson is a Non-Executive, Non-Independent Director on the Cummins
Board since 2018 and also holds the position of Vice President - Treasury & Tax
at Cummins Inc. He has 30 years of experience as a global financial risk
management professional. Since May 2015, Donald has headed the Global
Corporate Treasury function including Debt Capital Markets, Foreign Exchange
& Commodity Risk Management, Bank Relationships, Short Term Liquidity,
Corporate Credit and Pension Risk Management at Cummins Inc. Before joining
Cummins Inc., he worked with Hewlett-Packard (HP) in various Treasury areas
and as a Foreign Exchange Trader in the Capital Markets area at Grupo
Financiero Banamex-Accival (a financial institution headquartered in Mexico).
 Industry & Economic Overview

The year witnessed sharper than expected rebound of the economic activity in
India with GDP growth estimated at 8.9% in FY 2021-22.1 While the social
implications of the second wave in the first quarter of FY 2021-22 were severe,
economic impact was minimal and swift recovery was seen in subsequent
quarters.  Momentum of economic growth is expected to continue led by
gains from the supply side reforms, credit support to MSME sector and
government expenditure on infrastructure programmes in the coming years.
Private capex cycle is expected to pick-up led by credit growth and
incentivising of capital formation through Production Linked Incentive (PLI)
Scheme.  Domestic consumption is likely to pick up in the coming quarters
due to higher liquidity, widespread vaccine coverage, higher government
spending on social welfare schemes, pick up in investment cycle by corporates
and an accelerated vaccination rollout for the younger population.

The economic recovery faces headwinds from pandemic induced supply chain
disruptions, rising crude oil & commodity prices, depreciating currency, and
geopolitical risks. However, high foreign exchange reserves, sustained foreign
direct investment, and rising export earnings can mitigate some of the
downside risk. The uncertainty in the macro environment has led to downward
revision of GDP forecast for FY 2022-23 from 7.8% earlier to 7.3%, by the RBI.2
 The year 2021 also witnessed India shifting its focus to greener sources of
energy to combat climate change. India has committed to become net carbon
neutral by 2070 and meet 50% of energy requirements through renewable
energy by 2030. The National Hydrogen Mission envisages to make India a hub
for Green Hydrogen by incentivising production and consumption. These
developments in the direction of sustainability and green energy are positive
for the economy.

Sources:
1. Ministry of Statistics and Programme Implementation (MOSPI)
2. Reserve Bank of India
 Global Environment & its Influence

Power Generation:
FY 2021-22 witnessed robust recovery of Power Generation market to pre-
pandemic levels of FY 2019-20 driven by strong economic growth across
industries and by reopening of commercial hubs. Segments like data centres,
infrastructure, manufacturing, healthcare, and rental were responsible for
driving the growth in the market.  While the average power supply deficit at
national level continues to remain less than 1%, your Company expects the
Power Generation business to follow a growth trajectory led by opportunities
arising from segments like infrastructure and manufacturing due to expected
higher capital expenditure by the Government. Rising demand in realty sector,
gearing up of healthcare facilities and investments by global and domestic
players in the data centre market also provided growth opportunities. With the
emission norms getting more stringent due to the implementation of
upcoming CPCB IV+ norms tentatively in FY 2023-24, your Company is focused
on developing and bringing best-in class products for its customers.

Industrial
Railways: Indian Railways is set to achieve its ambitious target of 100% track
electrification of broad gauge network by 2023 which is driving demand for
Diesel Electric Tower Cars (DETCs) which are used in the installation and
maintenance of overhead electric lines. Your Company believes that this will
also fuel demand for the electrified propulsion industry in the long term. With
expansion of railway network and dedicated freight corridors becoming
operational, growth is expected in the track maintenance sector. As Indian
Railways transitions towards eco-friendly options for replacement of powercar
to cater to hotel load requirements of the train, your Company has ventured
into supply of hotel load converters which will help regain business in auxiliary
power sub-segment. With an objective of moving towards a green economy
with net zero emissions, Indian Railways is also evaluating hydrogen fuel cell
solutions for Diesel Electric Multiple Unit (DEMU) and other short distance
mainline applications. Cummins is actively exploring ways to partner with
Indian Railways on this initiative.
Mining: India achieved record coal production in FY 2021-22 at 777 million
tonnes, registering an annual growth of 8.6%. With global geopolitical situation
further intensifying the pressure to enhance domestic coal production,
commercial coal blocks are being offered to private players to enhance
productivity. Growth in domestic coal production is expected to have a
favourable impact on the Heavy Earth Moving Machinery (HEMM) market in
which your Company is a critical technology supplier. The market for stone
crushers is expected to grow rapidly as the Government plans to construct
25,000 kms of national highway under the PM Gati Shakti initiative. Your
Company participates in the market to power electric stone crushers.

Marine: In line with the Indian Navy’s fleet expansion plan backed by
‘Atmanirbhar Bharat’ initiative, there is a strong pipeline of opportunities
expected from defence PSU shipyards till 2025. Increased opportunities are
expected in the commercial marine segment due to the Government of India’s
mandate on the use of indigenous vessels for inland water transport and
vessels operating in government ports. Fishing Boat segment is yet to recover
to pre-covid levels.

Oil & Gas: Share of natural gas in the primary energy mix has increased from
6.3% in 2020 to 6.7% in 2021 and is projected to reach 15% by 2030.
Government has planned investment of ₹1.25 lac crore for developing the
pipeline infrastructure for the 11th round of CGD network. In line with this,
your Company continues to expect strong demand for gas compression
engines from the city gas distribution segment.

Defence: Government of India’s focus on increasing capital expenditure for

equipment upgradation and ban on import of 209 defence equipment is
expected to boost production of indigenous defence equipment. Reforms by
Government to promote exports of defence equipment and encourage higher
participation by domestic players in other markets is giving a boost to product
execution capabilities for all defence entities. Your Company is strongly
pursuing these emerging growth opportunities.
Pumps: Your Company is looking to export FM / UL certified pump packages to
global Original Equipment Manufacturers (OEMs).

Construction: Under “National Infrastructure Pipeline”, government has made

an investment plan of ₹100 lac crore over five years, whereby more than 60%
of infrastructure projects are from 41 Annual Report 2021-22 construction
intensive sectors like Roads, Railways, Irrigation, Urban infrastructure, and
Ports. Under PM Gati Shakti National Master Plan, 25,000 kms of National
Highways are planned in FY 2022-23. The same can already be seen in action as
the road project awards has increased by 16% in FY 2021-22 & 23% in FY 2020-
21.

Distribution: Growth is expected in DBU’s Powergen line of business on the

back of strong demand for maintenance of Data centres and commercial realty
as businesses are reviving. Your Company expects to maintain its position in
the aftermarket for infrastructure sector as utilization of equipment is
expected to increase on the back of increased government spending, foreign
investments, and product change with the implementation of CEV BSIV
emission norms. Change in emission norms for off-highway equipment to CEV
BSIV is triggering a change in-service support model from OEMs making them
prefer Cummins products which result in more aftermarket opportunities.
Aggressive coal production targets to meet energy needs is driving the growth
in mining sector. Private sector participation is expected to increase after 100%
FDI was approved by government. This will lead to higher utilization of
equipment and demand for HEMM (High Tonnage) vehicles with high
horsepower Q Series engines. Execution of Dedicated Freight Corridor (DFC)
project by Railways and strengthening of track network across the country will
lead to higher usage of overhead cranes and track maintenance equipment
driving demand for aftermarket services. Rapidly developing domestic gas
pipeline network under the City Gas Distribution (CGD) initiative in various
cities will lead to higher demand and usage for gas compressor engines and
parts. Focus on the substitution of diesel with natural gas will result in growth
of market for dual fuel gas kits for Powergen, On-highway, and Mining
segments. Your Company is working towards tapping the opportunities in the
emerging space.
 Key Macro Economic Factors

Power Generation: With the domestic players expanding their product ranges
and international players gaining foothold in the region, competition is rising in
the Powergen segment. Pricing pressure is intensifying across the industry as
the products are witnessing significant cost increases driven by rise in
commodity prices, geopolitical conflict, and supply constraints. Industrial 
Railways: COVID-19 induced travel restrictions for the public has adversely
affected the demand for power car and Diesel Electric Multiple Unit (DEMU).
Timely allocation of projects to rail manufacturing units and close coordination
of activities by Indian Railways is critical for your Company to execute
propulsion system solution for Distributed Power Rolling Stock (DPRS).
Mining: Timely allocation of coal blocks to private players and ramping up of
coal production is critical to boost demand for mining equipment.
Oil & Gas: Timely execution of pipeline infrastructure projects is critical for
setup of CNG stations in geographical areas of city gas distribution network
thereby driving demand for gas engines.
Construction: Your Company is ready and excited to launch best in class
products for expected Construction, Earthmoving, Material Handling and
Mining Equipment (CEMM) BS IV emission norms. Delay in clarity in norms’
implementation timeline could defer the launch of these products.
Distribution: Growing environment concerns leading to bans on the use of DG
sets in Non – Attainment Cities (NACs) and better availability and quality of grid
power could result in lower utilization of DG sets. Target of 100% Rail
electrification by 2023 will limit usage of diesel engines to Diesel Electric
Multiple Units (DEMUs) and Power Car applications which will reduce
maintenance requirements from customers.
Exports: IMF has projected Global GDP growth to slow down from an
estimated 6.1% in 2021 to 3.6% in 2022 and 2023. Despite expected strong
demand, there may be volatility due to rising geopolitical uncertainty, supply
chain disruption, logistics challenges, and rising commodity prices. Economic
implications from the war in Ukraine will contribute to a significant slowdown
in European Region in 2022 and will add to inflation.
 GDP Growth & Impact to the Business

Power Generation:
Focusing on customer needs, significant steps were taken to improve the
power density of products to reduce the total cost of ownership, lower the
maintenance cost and provide the benefit of a smaller installation footprint. In
the pursuit of continuous improvement of the service and reach of products,
your Company expanded its reach with the appointment of 10 new dealerships
across the country. The new Power Generation emission norms CPCB IV+ (for
<=800kW) is expected to be implemented from July 01, 2023, by Central
Pollution Control Board (CPCB) of India. These emissions standards
recommended by CPCB would enforce, ~ 90 % reduction in Particulate Matter
(PM), Nitrous oxide and carbon monoxide content in the exhaust as compared
to the current CPCB-II norms. In certain kVA nodes, these norms would be
stricter than the Tier IV norms prevalent in global markets and hence these
emissions standards have been titled CPCB IV+ (CPCB IV plus). The new
emission norms are one of the most stringent emission norms across the world
for Diesel Genset market. Through its well-established technology leadership -
is preparing for the same and is well equipped to meet the new emission
norms.

Industrial
Railways: Your Company has succeeded in design, development, validation,
and supply of the first ever ‘Made in India’ propulsion system for Diesel Electric
Tower Cars (DETCs) to Indian Railways.
Marine: Your Company has successfully delivered an integrated marine DG set
package for Indian Navy’s Survey Vessel Large and Shallow Watercraft project.
These are customised solutions to meet stringent norms of shock, noise, and
vibrations.
Mining: Your Company continues to innovate and develop fit-for-market
products to expand its presence in the stone crusher, dozer, and excavator
segments.
Pumps: Your Company has successfully introduced and started supply of new
FM / UL certified 6B5.9 and QSB6.7 products for global pumps segment in FY
2021-22.
Defence: Your Company continues to develop fit for market products for India
and partnering with OEMs for export orders for wheeled vehicle equipment for
defence applications.
Construction: Your Company has launched BSIV certified electronic 4-cylinder
and 6-cylinder engine platforms to address the upcoming CEV BSIV emission
norms for the Off-highway Wheeled segment in India. The Company is working
with key Off-Highway OEMs in India to offer the new 4-cylinder and 6-cylinder
engines.

Distribution:
Company has introduced “PowerCoins” Scheme, an umbrella program for
schemes, rewards, and pay-outs for Dealer Channel to incentivize their efforts
to sell the New and ReCon parts. Company launched a scheme for employees
for the Lithium-Ion batteries for Inverter and UPS applications with several
benefits such as 60-70% lighter weight, compact design, wall mount feature,
faster charging, and 2-3 times higher useful life. Company launched Dual Fuel
Kits for Powergen segment. “ConSol”, an SFDC (Sales Force Dot Com) based
Sales & Service Contract automation tool was launched for service solutions
bringing several capabilities together on a single platform. With web 45 Annual
Report 2021-22 and mobile versions, built-in analytics, it offers a single click
solution for end-to-end visibility of service contracts, 3600 customer view,
leads and opportunities management, service quote and cost sheets
generation. It also contributes to Planet 2050 goals by eliminating the use of
~160K papers annually
 Vertical Analysis
Common Size Balance Sheet
All Figues in lakhs
Particulars As at 31-03-2022 As at 31-03-2021 As at 31-03-2020 As at 31-03-2019 As at 31-03-2018
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 16.95 19.94 20.07 21.91 23.19
Capital work-in-progress (including investment property in progress) 0.89 1.39 1.34 2.71 0.69
Right-of-use assets 0.44 0.50 0.51 - -
Investment properties 14.39 17.90 17.41 12.44 13.22
Intangible assets 0.61 0.01 0.03 0.04 0.10
Intangible assets under development 0.01 0.84 - - -
Financial Assets
Investments in a subsidiary, joint ventures and an associate 0.55 0.66 0.63 0.64 0.68
Other investments #VALUE! 0.09 0.09 0.09 0.10
Other non-current financial assets 0.15 0.24 0.48 0.32 0.08
Income tax assets (net) 0.57 0.74 1.87 1.59 1.61
Other Non-Current Assets 0.93 0.95 1.11 2.05 2.32
35.48 43.27 43.55 41.78 41.97
CURRENT ASSETS
Inventories 10.71 9.79 9.62 10.68 9.72
Financial Assets
(i) Investments 8.49 5.73 13.12 4.15 9.15
(ii) Loan
(iii) Trade Receivables 18.33 18.86 19.01 21.74 23.98
(iv) Cash and Cash Equivalents 2.61 2.13 3.05 3.34 2.75
(v) Bank Balances [other than (ii) above] 18.36 14.81 4.58 9.27 5.76
(vi) Others 3.74 2.42 3.63 6.14 1.27
Other Current Assets 2.26
Assets held for sale 0.03 0.35 0.24 0.07 0.07
64.52 56.73 56.45 58.22 58.03
TOTAL ASSETS 100.00 100.00 100.00 100.00 100.00

EQUITY AND LIABILITIES

EQUITY
Equity Share Capital 0.81 0.97 0.93 0.95 1.00
Other equity
Retained earnings 53.49 56.12 49.83 49.96 50.30
Other reserves 17.01 20.27 19.35 19.66 20.77
Total Equity 71.31 77.35 70.12 70.56 72.06
LIABILITIES
NON-CURRENT LIABILITIES
Financial Liabilities
(i) Lease liabilities 0.22 0.26 - -
(ii) Other Financial Liabilities 0.36 0.44 0.59 0.46 0.51
Provisions 1.17 1.26 1.54 1.24 0.78
Deferred Tax Liabilities (Net) 1.43 1.45 1.34 1.69 0.54
Other non-current liabilities (Net) 0.05 0.05 0.02 0.04 0.04
3.23 3.43 3.76 3.42 1.87
CURRENT LIABILITIES
Financial Liabilities
(i) Borrowings 5.78 0.27 8.15 5.28 4.55
(ii) Trade Payables - - -
- Total outstanding dues of micro enterprises and small enterprises 0.62 0.75
- Total outstanding dues of creditors other than micro enterprises and small enterprises 14.03 12.06
(iii) Lease liabilities 0.06
(iv) Other Financial Liabilities 1.22 2.03 2.79 2.72 4.05
Other Current Liabilities 1.60 1.44 0.80 1.01 1.01
Provisions 2.14 2.60 2.63 2.91 2.75
25.46 19.21 26.12 26.02 26.07
TOTAL LIABILITIES 28.69 22.65 29.88 29.44 27.94
TOTAL EQUITY AND LIABILITIES 100.00 100.00 100.00 100.00 100.00
 Cummins’ total current assets have increased from 46% to 63% in the
last 5 years which on the other hand has led to a sharp decrease in the
total non–current assets from 54% to 37% as a part of the Total Assets.
 In the liabilities section, the total non-current liabilities reduced
drastically from 36% to 16% and on the contrary has led to an increase in
total current liabilities from 64% to 84%.
 The amount of total equity has increased more than 4 times than it was
in the previous 5 years from being 12% to getting around 53%.
 Overall, the company has been able to keep its current assets in check
with the current liabilities resulting in a profitable working capital.
 Horizontal Analysis
Balance Sheet Indexed Analysis
All Figues in lakhs
Particulars As at 31-03-2022 As at 31-03-2021 As at 31-03-2020 As at 31-03-2019 As at 31-03-2018
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 89.93 88.57 93.18 99.96 100.00
Capital work-in-progress (including investment property in progress) 4.71 6.19 6.24 12.36 100.00
Right-of-use assets 2.34 2.22 2.38 - #DIV/0!
Investment properties 76.32 79.51 80.81 56.75 100.00
Intangible assets 3.26 0.05 0.15 0.19 100.00
Intangible assets under development 0.03 3.75 - - #DIV/0!
Financial Assets
Investments in a subsidiary, joint ventures and an associate 2.91 2.91 2.91 2.91 100.00
Other investments #VALUE! 0.40 0.40 0.41 100.00
Other non-current financial assets 0.77 1.06 2.24 1.47 100.00
Income tax assets (net) 3.00 3.29 8.67 7.23 100.00
Other Non-Current Assets 4.94 4.21 5.16 9.35 100.00
188.21 192.18 202.14 190.64 100.00
CURRENT ASSETS
Inventories 56.81 43.49 44.66 48.75 100.00
Financial Assets
(i) Investments 45.02 25.47 60.92 18.92 100.00
(ii) Loan
(iii) Trade Receivables 97.23 83.76 88.22 99.22 100.00
(iv) Cash and Cash Equivalents 13.83 9.47 14.14 15.23 100.00
(v) Bank Balances [other than (ii) above] 97.39 65.77 21.24 42.30 100.00
(vi) Others 19.86 10.76 16.84 28.03 100.00
Other Current Assets 11.98
Assets held for sale 0.16 1.55 1.13 0.30 100.00
342.30 251.93 262.02 265.69 100.00
TOTAL ASSETS 530.51 444.12 464.16 456.33 100.00

EQUITY AND LIABILITIES

EQUITY
Equity Share Capital 4.32 4.32 4.32 4.32 100.00
Other equity
Retained earnings 283.76 249.22 231.32 227.98 100.00
Other reserves 90.22 90.00 89.83 89.69 100.00
Total Equity 378.30 343.54 325.47 322.00 100.00
LIABILITIES
NON-CURRENT LIABILITIES
Financial Liabilities
(i) Lease liabilities 1.18 1.23 - #DIV/0!
(ii) Other Financial Liabilities 1.92 1.96 2.75 2.09 100.00
Provisions 6.23 5.59 7.16 5.67 100.00
Deferred Tax Liabilities (Net) 7.57 6.42 6.24 7.70 100.00
Other non-current liabilities (Net) 0.25 0.21 0.08 0.16 100.00
17.15 15.24 17.46 15.61 100.00
CURRENT LIABILITIES
Financial Liabilities
(i) Borrowings 30.66 1.22 37.84 24.10 100.00
(ii) Trade Payables - - #DIV/0!
- Total outstanding dues of micro enterprises and small enterprises 3.30 3.31
- Total outstanding dues of creditors other than micro enterprises and small enterprises 74.45 53.54
(iii) Lease liabilities 0.31
(iv) Other Financial Liabilities 6.46 9.04 12.96 12.43 100.00
Other Current Liabilities 8.51 6.41 3.72 4.59 100.00
Provisions 11.37 11.55 12.23 13.27 100.00
135.06 85.33 121.23 118.72 100.00
TOTAL LIABILITIES 152.21 100.58 138.69 134.33 100.00
TOTAL EQUITY AND LIABILITIES 530.51 444.12 464.16 456.33 100.00
 There has been a slow increase in terms of total non–current assets in
the last 5 years which from 2% to 6% whereas for the total current
assets there was a high increase which then began decreasing on a YOY
basis.
 The total non–current liabilities was stagnant for a period after which it
began decreasing for the last 2 years mostly due to the long-term
borrowings that the company took.
 The total current liabilities was also quite volatile in nature due to the
other financial liabilities which had a high impact on the total outcome.
 Despite this the total assets were healthy when compared with the total
equity which in turn improved their financial leverage and risk taking
ability.
 Income Statement Analysis
Profit & Loss Statement
All Figues in lakhs
Particulars As at 31-03-2022 As at 31-03-2021 As at 31-03-2020 As at 31-03-2019 As at 31-03-2018
Revenue from Operations 6,14,040.00 4,32,924.00 5,15,773.00 5,65,900.00 5,16,106.00
Other Income 28,750.00 37,015.00 33,154.00 29,277.00 22,847.00
(A) TOTAL REVENUE 6,42,790.00 4,69,939.00 5,48,927.00 5,95,177.00 5,38,953.00
EXPENSES
Cost of Materials Consumed 3,59,462.00 2,34,455.00 2,61,255.00 2,70,601.00 2,53,136.00
Purchases of Stock-in-Trade 54,838.00 43,466.00 72,186.00 94,687.00 68,673.00
Changes in inventories of Finished Goods, Stockin-Trade and Work-in-Progress (3,621.00) (1,862.00) 3344 (3,942.00) 4001
Excise Duty - - - - 7,856.00
Employee Benefits Expense 59,562.00 49,263.00 56,018.00 54,580.00 49,791.00
Finance Costs 1,150.00 1,617.00 2,025.00 1,620.00 1,483.00
Depreciation and Amortisation Expense 13,402.00 12,552.00 11,866.00 11,032.00 9,379.00
Other Expenses 55,288.00 49,652.00 64,342.00 63,564.00 59,404.00
(B) TOTAL EXPENSES 5,40,081.00 3,89,143.00 4,71,036.00 4,92,142.00 4,53,723.00
(C) PROFIT BEFORE Exceptional item(A-B) 1,02,709.00 80,796.00 77,891.00 1,03,035.00 85,230.00
(D)Exceptional item 13,236.00 - (1,985.00) - 5,612.00
(E) PROFIT BEFORE TAX (C-D) 1,15,945.00 80,796.00 75,906.00 1,03,035.00 90,842.00
Tax Expense:
Current Tax 26,102.00 18,775.00 14,253.00 29,384.00 18,874.00
Deferred Tax 1,476.00 234.00 (1,281.00) 1,394.00 921.00
Tax for earlier years (298.00)
(298) -- - - 200.00
(F) TOTAL TAX EXPENSES 27,280.00 19,009.00 12,972.00 30,778.00 19,995.00
(G) PROFIT FOR THE YEAR (E-F) 88,665.00 61,787.00 62,934.00 72,257.00 70,847.00
Other Comprehensive Income (net of tax)
(i) Items that will not be reclassified to profit or loss (8.00) (20.00) -2348 (1,844.00) 190.00
(ii) Income tax relating to items that will not be reclassified to profit or loss 2 5 591.00 644 (67.00)
(i) Items that will be reclassified to profit or loss 0 0 0 0 0
(ii) Income tax relating to items that will be reclassified to profit or loss 0 0 0 0 0
(F) RE-MEASUREMENT LOSS/(GAIN) ON DEFINED BENEFIT PLAN (NET OF TAX) (6.00) (15.00) (1,757.00) (1,200.00) 123.00
(G) TOTAL COMPREHENSIVE INCOME (G-H) 88,659.00 61,772.00 61,177.00 71,057.00 70,970.00
Basic 31.99 22.29 22.70 26.07 25.56

● Revenues from Operations: During the year ended 31st March, 2022,
Cummins India Limited registered revenue from operations of 4,511
crore against 4,479 crore in the previous year 2020-21. Revenue of
Electronic Consumer Durables (ECD) segment constituting Fans, Pumps
and Appliances, stood at 3,389 crore in 2021-22 delivering growth of 5%
over previous year. Lighting segments’ revenue clocked 1,131 crores in
2021-22 versus 1,265 crore in 2020-21.
● Other Income: Other income primarily constitutes Interest income,
Investment Income and other miscellaneous income. Interest from
customers, investments and tax refund are the main constituents of
Interest Income.
● Material Costs: Material Costs comprises consumption of raw material,
semi-finished goods, purchase of finished goods for re-sale and increase
or decrease in the stock of finished goods and work in progress.
● Employee Costs: During the year under review, employee cost stood at
311 crore as compared to 292 crore in 2020-21. Increase was mainly on
account of increments and headcount addition.
● Depreciation: Depreciation and Amortisation expense were higher
mainly on account of adoption of Ind AS 116, wherein rent has been
reclassified into Depreciation and Amortisation expense. The same has
no additional charge on financials.
● Finance Cost: Finance charges reduced from 59 crore in 2020-21 to ` 40
crore in 2021-22, mainly on account of repayment of debentures worth
300 crore in Q1 2021-22.
● Direct Tax and PAT: On account of reduction in corporate tax rates by
Government during the year, the Company’s applicable tax rate has
reduced from 34.94% in 2020-21 to 25.17% in 2021-22. Total profits
during the year under review stood at 496 crore registering 24% growth
over 2020-21.
 Ratio Analysis

● Talking about the Profitability Ratios, the gross profit ratio has remained
stable during the past 5 years fluctuating between 0.77 to 0.79. The Net
Profit Ratio on the other hand increased on a YOY basis from being 0.056
during 2018 to getting to 0.109 during 2022.

● The Return on Assets also increased on a good note mostly due to the
stable increase in the Total Assets that the Company acquired on their
forefront. The Return on Equity ratio somewhat decreased despite being
high during the initial years since the shareholders’ equity didn’t
increase that much as compared to the increase in Net Income that took
place in their profits.

● In terms of the liquidity ratios, the current ratio has been above 1 since
the past 4 years mainly due to reduced borrowings that the company
has undertaken. The cash ratio also has been quite well off since the
company makes sure to replenish their inventories and goods as quickly
as possible which allows them to take in more risks compared to others.

● In the Leverage Ratios, the total Debt to Equity ratio reduced drastically
in the past 5 years due to the same fact of the owners’ equity not
increasing that much as compared to the increase in the total liabilities.
But the Equity ratio had a stable increase due to the well - maintained
total assets of the company.
 Prospective Analysis

From an investor’s analysis point of view, the company is doing and performing
very well in their particular sector by grabbing the potential opportunities and
expanding their market share slowly with the evolving consumer needs.

The Government’s infrastructure push by various initiatives augments well for

long term growth of the business. Government’s renewed focus to push solar
power in agriculture sector is positive and opens new opportunity in solar
pumps business. Government’s thrust on “Affordable Housing” and “Housing
for All” augur well for the long-term growth of electricals consumer segment.
Continued focus of Government to improve electrification in rural areas
through initiatives are creating new markets for electrical products.

With long-term prospects being bright for India’s GDP, rise in consumer’s
disposable income will lead to shift towards premiumisation/value added
products coupled with cultural shift towards nuclear families present bright
prospects for ECD and Lighting business. COVID-19 global pandemic is a
defining event of FY22 and it will have implications on across various sectors. It
also reflects change in consumer buying behaviour. E-Commerce will be a vital
channel and an economic driver for both domestic growth and international
trade. New Generation Technology and Introduction of new products through
advancement in technology will improve core customer experience. Rapid
adoption of Smart and IoT-connected solutions shall be an enabler to drive
business growth.