Cummins India (CIL), formerly Kirloskar Cummins, has decided to promote a new company to venture into the internal combustion engines business.
Cummins proposes to create the new firm jointly with Cummins Diesel Sales and Service (India) (CDS&S), a wholly-owned subsidiary.
CIL plans to make an initial investment of Rs 50 lakh or up to 50 per cent of the subscribed equity share capital, whichever is lower, in the new company. Since the proposed investment in the capital of the new firm, along with Cummins Diesel Sales and Service (India), may be in excess of the limit prescribed in the Companies Act, CIL has decided to seek shareholder-approval by moving a special resolution at its 37th annual general meeting to be held at Pune. The company will subsequently apply to the central government for its consent.
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Kirloskar Cummins changed its name to Cummins India with effect from September 10, 1997, after Cummins Engine Company, Inc, USA (Cummins) increased its shareholding from 50 per cent to 51 per cent of the paid-up equity share capital by acquiring one per cent from Kirloskar Oil Engines. This resulted in the resignation of Sanjay C Kirloskar, Vijay R Kirloskar and Vikram S Kirloskar, among others from the board. During the year, CDS&S invested Rs 1.5 crore in the paid-up equity share capital of Valvoline Cummins, to the extent of 49 per cent of its paid-up capital.
CDS&S reported a turnover of Rs 249 crore for the year ended March 31. In 1997-98, the first year after the change in equity holding, CIL posted a lower turnover of Rs 743 crore against Rs 800 crore the previous year. However, it has slightly upped its profit to Rs 82.27 crore against Rs 80.38 crore.
The company said the weak demand in the international market and the downturn in the Asian markets, were the reason for the slump.
CIL plans to introduce two new versions of engine models in the domestic market during 1998. These will be high horsepower 'Quantum' engines which will increase CIL's horsepower range up to 2700HP. In the generating sets segment, it plans to introduce 6BT powered generator sets to address the below 100 KVA power generation market. CIL intends to make use of its ongoing technical support from Cummins Engine, US, for its indigenisation and upgradation plans to meet future emission regulations and higher levels of performance.