Transcription
Cummins India Limited48th Annual GeneralMeetingJuly 29, 2009
Cummins Inc.Engine BusinessDistribution BusinessPower Generation BusinessComponents Business GroupHQHQ inin Columbus,Columbus,IndianaIndiana sincesince 1919191940,00040,000 employeesemployeesR&D:R&D: 329 329 millionmillionCummins BusinessServicesOperationsOperations inin 190190 CountriesCountries5050 manufacturingmanufacturing locationslocations500500 distributordistributor locationslocations5,2005,200 dealerdealer locationslocationsMaking people’s lives better by unleashing the Power of Cummins2
Cummins Inc. - Revenue2008 Revenue 14.34 EngineBusiness50%PowerGenerationBusiness20%3
Cummins Business Model Guiding Principles - Vision, Mission, Core Values Corporate & BU Objectives, Strategies, Initiatives,Projects -- (Goal Trees) Cummins Operating System (COS):– Ten Common Practices– Functional Excellence Framework (FE Statements, Measures,Processes, Tools, People Development)– Common Business Processes (Strategy, PerformanceManagement/People Development, New Product Development)4
Why We Are Here – Guiding PrinciplesVision/Purpose:“Making people’s lives better by unleashingthe power of Cummins”Personality: Values: IntegrityInnovationDelivering Superior ResultsCorporate ResponsibilityDiversityGlobal InvolvementDecisiveDriven To WinAgilePassionateCaringMission Motivating people to act like owners working together Exceeding customer expectations by always beingfirst to market with the best products Partnering with our customers to make sure theysucceed Demanding that everything we do leads to a cleaner,healthier, safer environment Creating wealth for all stakeholders5
COS 10 PracticesPut thecustomerfirst, andprovide realvalueSynchronizeflows (material,physical andinformation)CreatefunctionalexcellenceEstablish therightenvironmentDesign qualityin every step ofthe processTreat preferredsuppliers aspartnersInvolve people Ensure equipmentand promoteand tools areteamworkavailable andcapableFollow commonproblem solvingtechniquesUse Six Sigma asthe primary processimprovementmethod6
Ten India Functional ExcellenceAreas & Leaders1. Quality – K N Harish2. Manufacturing – Nitin Mantri3. Technical – Craig Barnes4. Supply Chain - Sandeep Chaudhry5. Purchasing - B K Bose6. Finance - Rajiv Batra7. Information Technology – TBA (Rajiv Batra acting)8. Human Resources – Nagarajan Balanaga9. Marketing and Sales - Arun Ramachandran10. Service & Support – Amit KumarGlobal Product Safety Council – Craig Barnes7
Functional Excellence Framework Functional Excellence Statements Measures & Targets Functional Processes Tools People Development8
Role of India FE leaders Support performance cells in achieving their goaltrees effectively Drive common, zero defect processes across India Share best practices to improve overallperformance People development– Identify high performer/high potential employees– Create bench strength (0 delay in case of attrition)9
One Focus. One Cummins.Convey and reinforce the Cummins Brand Promise –Dependability– Dependable people– Dependable products– Dependable servicesWe do what we say we will do10
Cummins in India InIn IndiaIndia sincesince 19621962 99 companiescompanies (4(4 JVs)JVs) CloseClose toto 13,00013,000 employeesemployees 1.6B 1.6B unconsolidatedunconsolidated salessalesEngine Value Packages (60-2700 HP)Auto, Construction, Mining,Compressors, Pumps, Marine, Rail,Oil & Gas, DefencePower GenerationGensets (15-2000 kVA), EnergyManagement, Captive Power PlantsAlternatorsComponents & ConsumablesFiltration, Exhaust Systems,Turbochargers, LubricantsServicesEngines, Gensets, IT/ITES, R&D,SourcingValvolineCumminsNew DelhiTata CumminsFleetguard FiltersJamshedpurCummins nCummins India Ltd.KPIT CumminsCummins Business ServicesIntl. Purchasing OfficeFleetguard FiltersCummins Research &Technology IndiaCummins hmednagarFleetguard FiltersHosurPune11
India Organization SnapshotCummins in IndiaCummins Entities in India1. Cummins India Ltd.2. Cummins Research & TechnologyIndia Ltd.3. Cummins Generator TechnologiesIndia Ltd.4. Cummins Technologies India Ltd.5. Cummins Exhaust India Ltd.6. Tata Cummins Ltd.7. KPIT Cummins Infosystems Ltd.8. Fleetguard Filters Pvt. Ltd.9. Valvoline Cummins Ltd.Business Units: Engine Business Automotive Industrial PSMI Power Generation Business Component Businesses Filtration Exhaust Turbo Lubricants Distribution Business (1 PDC/ 5 ZonalOffices / 21 Area Offices / 212 Dealer sites)Shared Services: CBS/R&D Centre/IPO/Internal Audit12
India ABO Leadership Team: Business LeadersAnant TalaulicarVikram Jaisinghani Arun Ramachandran Beau LintereurPower GenerationIndustrial BusinessAutomotiveBusinessBusinessNitin MantriCummins TurboTechnologiesPradeep BhargavaCumminsGeneratorTechnologiesManoj SolankiCumminsExhaust (I) Ltd.& CESSandeep SinhaPSMIRavi PanditKPITCumminsAmit KumarCSS, DistributionBusinessSadashiv PanditFleetguard FiltersPvt. Ltd.Sandeep ChaudhryTata CumminsOperationsNaveen GuptaValvolineCummins Ltd.13
India ABO Leadership Team: Functional LeadersAnant TalaulicarRajiv BatraFinance, IT,StrategyCraig BarnesCRTI &EngineeringKN HarishQualityChampionK.C. RaviGovernmentRelationsSenthil KumaranCBSJ. NilakantanInternal AuditDinesh CastellinoLegal, Facilities& HSEBijoy BosePurchasingNagarajan BalanagaHuman Resources14
Greatness – Zero Defect CompaniesCummins Values:Integrity, Delivering Superior ResultsBrand Promise:DependabilityProcess:Six SigmaZEROExcellence:Good to GreatQuality Goal:Continuous improvement towardsdefect free processes that satisfycustomer needs and achievebusiness results15
Business Strategy Domestic Market Share Leadership- Automotive, Industrial and Power Generation focus- Customer focus (market planning, segmentation,Key Account Management, marketing communications)- Customer Support Excellence- Cross-business synergies Low Cost Producer- Six Sigma- Lean manufacturing and other productivity improvementinitiatives- Supplier Partnership based value engineering- Product Uprates- Leveraging of information systems16
Business Strategy Exports- Components, Engines, Generators, Human Services Great Place to Work- Leadership excellence- Cummins OnTrack PMS/IDP/ODR- Diversity- Employee satisfaction surveys and improvement actions- Employee Communication- Compensation, Benefits and Recognition- Recruitment & Induction- Cummins Operating System- Community Involvement17
Domestic market share leadershipCustomer Support Excellence (CSE) Three ways in which we plan to accomplish CSE :- Through the Lens of the Customer (TLC)- Repair Event Cycle Time Reduction- Customer Focused Six Sigma Established our Customer Experience Philosophy and a set ofCustomer Experience Standards (Safety, Accuracy,Responsiveness, Partnership) Formulated Customer Experience Improvement Teams at eachof our businesses and functions, to help identify customerexperiences and take improvement actions18
Domestic market share leadershipCummins supported theIndian Railways’ project ofdeveloping the railroadnetwork in the J&K valley.The first speciallydeveloped train, J&KDEMU is powered by: Cummins 50 litre KTA50engine for traction purposes 14 litre NTA14RG underfloor engines for 320 kVAgenerators for heatingcoaches during winters19
Domestic market share leadershipOur Industrial Engine Businesslaunched three new products forthe domestic market: GTA855 engine fuelled by naturalgas to power 1200 SCMH gascompression packages for India 15 litre QSX15 series engines topower 9.5m3 hydraulicexcavators, dozers, snow cuttersand road miller applications20
Domestic market share leadership Our Industrialbusiness launchedthe 260 HP 6C seriesengine to our existingrange of 104 HP, 140HP & 200 HP enginesfor powering DeepSea Fishing Trawlerapplications.21
Domestic market share leadershipOur Power GenerationBusiness launched twonew products for thedomestic market: Automatic TransferSwitches (ATS) 750 kVA electronicallycontrolled QSK23 highhorsepower generatorset22
Domestic market share leadership Our Automotive Businesswill power the buses of allOEMs that are fulfilling theorders as per the DelhiTransport Corporation(DTC) tender for 2,500 lowfloor buses. These busseswill be powered by the 230horsepower B Gas Plusengines, powered bycompressed natural gas(CNG), manufactured byCIL.23
Domestic market share leadership Cummins was adjudged a‘Business Superbrand’second time in a row. Cummins received the‘Innovative Product/Service’Award at CII’s NationalAward for Excellence inEnergy Management 2008for its ‘Power Quality &Adequacy Analysis’24
Domestic market share leadershipContributions of our Industrial Business were recognizedby two of our leading OEMs. Telco Construction Equipment Company Limited, amarket leader in construction equipment in Indiaconferred upon us a Certificate of honour for makingsignificant contributions to “Delivery Efficiency ofProprietary Components”. ELGI EQUIPMENTS LIMITED, India’s leading supplier ofAir Compressors recognized our contributions to theirbusiness by awarding us the “Best Supplier Winner of theyear 2007 - 08”.25
Exports Revenue grew 80% Developed and launched the Tier II emission compliant50 litre HHP engine New line of generator sets based on the X3.3 engines of30 to 38 kVA at 50Hz and 30 to 35kW at 60Hz, witnessedgreat demand in the exports market Power Generation business launched the 14 litre NTCoolPac26
Low Cost ProducerSix Sigma at Cummins India Limited 400 Green Belts,20 Black Belts and5 MBBs sinceinception 248 Six Sigmaprojects completedduring the year Annualized savingsof INR 76 croresSix Sigma 2008 India ABO Black Belt Symposium27
Low Cost ProducerACE II Launched ACE brought Rs. 253crores gross accruedsavings to CIL Since the launch ofACE II, we haveachieved approximately90% of our targetreduction for the year,resulting in accruedsavings of Rs. 15 croresLaunch of ACE II28
Great Place to WorkSafety – Journey towards becoming ‘Zero Defect’ Certified four lead auditors in OHSAS-18001 and twelve lead auditors in ISO-14001Rolled out policies - Contractor Safety, Forklift Safety, Road andDriving Safety, and Near Hits & First Aid ReportingCreated greater awareness about safety practices and broughtin greater transparency with regard to reporting incidents, nearhits or first aid cases in our manufacturing facilitiesWorking towards achieving "zero discharge" at all our facilitiesby implementing systems for recycling treated effluentImplemented measures for oil and coolant reduction and GreenHouse Gas emission reduction (again using Six Sigma), acrossall our facilities29
Great Place to WorkEmployee Development Partnered with management institutes like SP Jain and theKelley School of Business at the Indiana University - 13employees were provided with the opportunity to further theireducational qualifications. Launched a new global internet based PerformanceManagement System Tool, OnTrack, for appraisals andindividual development reviews Introduced a new online Competency Management Tool,SkillTrack, to identify skill gaps and the way forward foremployee development30
Great Place to WorkDiversityExpanded ourrepresentation ofwomen from 4% in2005 to 15% in 2008Expanding our representation of women31
Great Place to WorkCorporate Responsibility Higher EducationCummins ScholarshipProgram– Awarded scholarships to30 deserving candidates in2008– Our employees individuallysponsored another 12students– Mentorship of students byCummins employeesScholars of the Cummins Scholarship Program32
Great Place to WorkCorporate Responsibility Infrastructure development- Donated a community hall tothe village of Kasarambolinear Pirangut- Helped resolve a water crisisproblem at Bhatkya VimuktJati Shikshan Sanstha, aschool for abandoned street /tribal children in Wagholi byworking on watershedmanagement alternativesInauguration of the community hall at Kasaramboli33
Great Place to WorkCorporate Responsibility Energy and environment- Undertook to support the Village Energy Security Program of thegovernment aimed at electrifying villages by 2012 Others- Every Employee Every Community (EEEC) program - 346 employeesdedicated 5,769 hours towards various meaningful communityimprovement opportunities identified by the Company- Donated Rs. 539,900 to the World Vision Fund towards the Chinaearthquake, Rs. 208,050 to Red Cross and Bartholomew County inIndiana and a sum of Rs. 2,821,870 to the Tata Relief Committeetowards the flood affected victims in Bihar34
Cummins India Limited 47 years of successful operation Over 2,500 employees FY 2009 net sales – INR 28,611 million (excludingCSS & CASL)35
Downturn Management Actions Taken ToEmerge StrongerRings of defense Increased Six Sigma focus on productivity & cost Accelerated Cost Efficiency II – 20% TCO reductionin direct materials over three years 30% reduction in indirect material spend over threeyears Discretionary spending cuts Working capital reduction Salary freeze Workforce reduction – contract, regular36
Cummins India LimitedFinancial Performance 2008-09Rs. In CrsCIL Legal Entity08-0907-08ConsolidatedB/ ( W )08-0907-08B/ ( W )IncomeSalesOther IncomeShare in Associated PATTotalPBT (after Exceptional Items)PBT 746517%32540%51%8%54%-32% #32%37%4%42%37
Consistently Profitable 001,5001,00050004-0505-0606-0707-0808-09Profit After Tax 7-0832%CAGR08-0938
Gross Material Cost ReductionG ro ss Sav in g s (R s C 0.02005200620072008YTD June 0939
Strong Cash Flow GenerationFree cash in CrFree cash flow04-05(35)05-0613806-079007-0822108-0917040
Strong ROE Return on 726.0%07-0825.5%08-0931.3%41
Share Price AppreciationShare Price ar 04Mar 05Mar 06Mar 07Mar 08Mar 09Jul 09Total returns @ 19% compounded annually mar ‘04-mar ‘0942
Financial Performance Q1 09-10Rs. In Crs.Financial Performance - April to June 2009Apr09-Jun 09Apr08-Jun 08Including CSSExcluding CSSB/ ( W )Net Sales626707-11.5%PBT1251213.0%19.9%17.1%PBT %PAT9088101.6%Notes : In view of the CSS/CASL merger, above results for Q1 09-10include CSS/CASL results but do not for Q1 07-08Hence revenue is not comparable although PBT is43
Financial Performance Q1 09-10Rs. In Crs.Financial Performance - April to June 2009Apr09-Jun 09Apr08-Jun 08Excluding CSSNet SalesPBTPBT %Excluding CSSB/ ( W )507707-28.3%94121-22.2%18.6%17.1%Note : Above results exclude CSS/CASLHence revenue is comparable, but PBT is not44
Financial Performance Q1 09-10Financial Performance - Apr -Jun 2009 Vs Jan - Mar 09Rs. In Crs.Net SalesPBTPBT %Apr09-Jun 09Jan 09 Mar 09Excluding CSSExcluding CSSB/ ( W )507615-17.6%94904.0%18.6%14.7% INR 212 cr. or approx. 75% decline in exports quarter to quarter INR 104 cr. or 32% growth in domestic business quarter to quarter INR 255 cr. free cash flow generated in the quarter45
CIL Positioned Strongly Values based performance ethicStrong balance sheetZero debtRespectable cash reservesStrong customer and supplier partnershipsAccess to global ‘cutting edge’ technology with significantlocalization capabilitiesCustomer support capabilitiesSustaining business strategyExperienced management teamDiverse, talented workforce46
Outlook & Conclusion Positive domestically and tough for exports Well positioned to weather any storm and will emergestronger We remain steadfast:– Guiding Principles (Vision, Mission, Values, Personality)– Objectives, Four-fold strategy– Cummins Business Model / Cummins Operating System– Inclusiveness based performance ethic Grateful for your unstinting faith47
Cummins Inc. HQ in Columbus, Indiana since 1919 HQ in Columbus, Indiana since 1919 Operations in 190 CountriesOperations in 190 Countries 40,000 employees40,000 employees R&D: 329 millionR&D: 329 million Power Generation Business Engine Business Cummins Business Services 50 manufacturing locations50 manufacturing locations 500 distributor .
