Cummins to cart in global gensets capacity

Keen to make India a single source supplier of low horsepower (LHP) generators for most of its global markets, engine maker Cummins Inc will shift the genset production capacity from its global facilities to the country, said a senior official from Cummins India.

Cummins has one plant each in China, Brazil, Singapore, the UK and the US.

The company makes generators with a capacity range of 7.5 kVA (kilovolt-ampere) to 3,000 kVA. LHP gensets (less than 500 hours a year) have a capacity of up to 160 kVA and find application in residences, commercial establishments and clinics, among others.

Indiana, US-headquartered parent of Cummins India is looking to source low LHP gensets from India for all but one of its markets, Beau Lintereur, vice-president, power generation business, Cummins India, told DNA over telephone.

“North America is a very specialised market and will be catered to by the US facility,” he stated.

On the rationale behind making India the primary source for LHP gensets, Lintereur counted the highly skilled workforce in the country, availability of components and the low cost of manufacturing among factors that tipped the scales in the country’s favour.

All the five overseas plants combined make 60,000 LHP gensets a year. According to Lintereur, 15-20% of the gensets made at these facilities will be moved to a new plant Cummins India is putting up at a special economic zone adjacent to the Cummins Megasite at Phaltan near Pune. The plant, which will cater to exports, will be able to roll out 40,000 gensets of 200 kVA and below every year from 2014.

Cummins India has three operational plants, two in Daman and one at Pirangut, also near Pune, which is dedicated to exports and produces 14,000 units per annum.

Cummins plans to add two more facilities at the SEZ but the capacities of those are yet undecided. Lintereur said the second unit will come up more than five years from now.

“Cummins’ LHP business in Europe, Africa, Middle East and Latin America are growing rapidly and the need for “fit for market” products in those regions will be driving demand to use up the SEZ capacity,” he stated.

Exports and domestic sales contribute equally to Cummins India’s power generation business. “But in the next 2-3 years, it could be 70:30,” Lintereur said.

All the components for its LHP gensets made in India are sourced from within the country. “We import some part of the engines for the 2,000 kVA and 3,000 kVA generators,” he added.

Most of the company’s generators are diesel-run, while some are powered by natural gas. Cummins is also working on engines powered by biomass and bio-diesel, said Lintereur.

According to a March 11 report by Edelweiss Securities, while the company has been generating over 90% of its generator revenues from the primary market (over 500 hours/annum) and the rest from the standby market, the company expects a strong shift towards the latter in the coming years.