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Turning adversity into opportunity

Murali Gopalan | Updated on June 04, 2020 Published on June 04, 2020

Cummins to boost global business from India

Even while Covid-19 has wreaked havoc across the world, Ashwath Ram insists that there is a silver lining in the cloud.

“When there is this kind of a crisis, it helps companies like ours significantly,” says the Managing Director of Cummins India. In his view, it forces the hand of companies which would otherwise make investments, even for small volumes or limited markets, to talk to “people like us” who have global scale.

This is what will help make entities like Cummins stronger, says Ram. “The mid- to long-term outlook is actually better for companies like us.” Additionally, there has been a relentless focus on this part of the world, where Cummins looks at itself as an Indian multinational.

Today, India is one of its three key global hubs with the others being the US and China. In the process, geopolitical tensions end up working to its advantage.

“Even in the past, when trade wars were happening between the US and China, with more likely to happen, it is beneficial for Cummins in India,” explains Ram. This is because it can be a supply partner to both those markets.

For instance, when China was virtually down and out during Covid-19 three months ago, Cummins was able to export products from India and helped out in the process. “This is a very rare thing and we did this because of capacity and great quality coupled with a cost advantage,” continues the Cummins India chief.

As a result, if protectionist practices actually gain ground worldwide, “it puts us in a very strong position to be an even larger supplier to the rest of the world”. This is particularly significant, says Ram, since Indian markets are going to take “anywhere between 15-24 months” to recover from the current setback.

Even now, China has given some good export orders to India. Yet, while it has bounced back, not everyone is that lucky. “The US is going through a severe downturn and Europe, Latin America and the Middle East will also go through pain,” says Ram. It is in this backdrop that Cummins India will now focus on areas where earlier “we would not waste time and energy in pushing products”. The objective is to offer a better cost advantage and leverage that to gain market share in a shrinking pie. This will be a key lever at a time when global competition is “severely stressed”.

New areas of interest

Some of these new areas could be in the power generation space where the need for data centres and key infrastructure areas has gone up significantly. Cummins is also seeing opportunities in some niche areas in construction and agriculture, where “we will look at some inorganic opportunities”.

Similarly, there are some new opportunities in the area of fuel cells, where the company has some leading technologies which can be implemented at a faster rate. “There are quite a few different areas, market segments and strategies which we will apply both organically and inorganically to get more growth going at this time,” says Ram.

Published on June 04, 2020
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