Cummins India Limited will be investing an estimated $29 million in its plants in Pune to enhance capacity in the mid-range horse power engines to include electronically-controlled ignition engines and in setting up an assembly line for its KV series high horse-power in Pune.
The company is already investing $60 million at its Jamshedpur plant where it manufactures low horse power engines that primarily serve the automotive industry.
At present, more than 75 per cent of CIL's revenue come from the segment that predominantly serves sectors like power generation, mining, railways, defence, oil and gas and construction.
The company, therefore, has plans of setting up a new production line for its KV-series that include engines ranging between 2,000 HP and 2,500 HP. The company will invest $ 11 million in 2007 in this project, while production of these engines is expected to increase to 22 a day by 2011.
This year production of KV engines have gone up from six to 11 and is further expected to increase to 14 by next year, bringing up the count of the entire HHP range from 40 to 44 in the process, said Vikram Jaisinghani, vice-president of the industrial engine business of CIL.
CIL is also expanding capacity at its plant in Kothrud for MHP range of engines or those with power capacity of less than 600 HP.
The company will manufacture electronically-controlled ignition engines at this plant, the first lot expected to be rolled out in early 2009.
The investment contemplated for this purpose is $18 million, Jaisinghani said, adding that by end of 2008, when the expansion is expected to be complete, 60 per cent of the engines produced would be electronic and the remaining regular models.
Production of MHP engines have already gone up from six to 15 in the last year and is further expected to go up to 18 by 2008.
"With increased activity in the power, infrastructure, mining and construction industries in the country, the demand for engines have risen sharply.
We do a fair bit of business with the Indian railways as well and direct and indirect business with the defence industry is also on a rise. A good portion of business also come from the mid to heavy, on-highway vehicle segment. While in the last two years, we have clocked a growth of 15 per cent, this year we expect to clock a 30 per cent growth and hope to maintain that trend in coming years," said Jaisinghani.
CIL's turnover from its engines business was Rs 1,400 crore (Rs 14 billion) in 2005-06, with 40 per cent coming from exports. The company spends two per cent of its turnover on research and development.
