September 07, 2008

Cummins India sees steel price hurting 2008-09 profit

Reuters reported that Cummins India Limited has forecast a capital expenditure of more than INR 1 billion for 2008-09 but said that profit will be hurt by rising commodity prices.

Mr Anant Talaulicar CMD of Cummins India said that "There will be a slower rate of profit growth as compared to revenue growth in 2008-09 due to a continuing hike we are seeing in pig iron, steel and certain alloys."

Mr Talaulicar said that "The currency impact is behind us at least for the time being. There is no evidence of any slowdown that we are seeing right now. So our outlook is positive from top line perspective."

Cummins India, which is a 51% subsidiary of Cummins Inc, makes engines for power generation, industrial and automotive markets. However it does not see the rupee having a similar impact in the current financial year. Cummins, which earns 30% of its revenue from exports, does not see any impact due to slowdown in the US markets, helped by increased sourcing by its parent company.