Cummins faces outage

Cummins India is not having too much of a good day today. In fact, its consecutive two sessions, Friday and today that the stock has been falling and has lost over 13.5%. Today, the stock fell 7% to Rs.359. Its LC is at 10% and for today at Rs.346.75.

The company had a conference call on Friday with analysts and during that call, the company said that the impact of the virus is longer lasting. It said that for the company to recover from the disruptions will take at least 6-12 months. With pace of nomalisation depending on the suppliers, the company said that it did not know how long that would take. The company said that its Indian power generation business would likely to the last to recover.

In the call, the company also said that implementation of the new  Central Pollution Control Board (CPCB) norms, expected to come into effect from 2021, will be deferred by a few months.  This will be some relief as new pollution norms always means rise in manufacturing costs. The company imports these higher-end equipments needed for the gensets from its parent and then localizes it over a period of time. So initially, this could gnaw away the profit margins and in the present scenario, passing it on to the customer might not work.