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EQUITY - MARKET SCREENER

Cummins India Ltd
Industry :  Engines
BSE Code
ISIN Demat
Book Value()
500480
INE298A01020
175.0598846
NSE Symbol
P/E(TTM)
Mar.Cap( Cr.)
CUMMINSIND
38.55
33140.65
EPS(TTM)
Face Value()
Div & Yield %
31.01
2
1.55
 

As on: Oct 02, 2022 01:38 AM

The Directors take pleasure in presenting the Sixty-first Annual Report together with inter-alia its annexures and audited financial statements (including standalone & consolidated along with respective Auditors Report thereon) for the year ended March 31,2022. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.

1. FINANCIAL RESULTS:

On Standalone basis:-

During the Financial Year 2021-22, revenue from operations increased to Rs 614,040 Lacs as compared to Rs 432,924 Lacs during the previous year (42% higher). Profit after tax increased to Rs 88,665 Lacs from Rs 61,787 Lacs recorded for the previous year (44% higher).

On Consolidated basis:-

During the Financial Year 2021-22, revenue from operations increased to Rs 617,092 Lacs as compared to Rs 436,008 Lacs during the previous year (42% higher). Profit after tax increased to Rs 93,374 Lacs from Rs 63,503 Lacs recorded for the previous year (47% higher).

Financial Summary

Standalone Consolidated
2021-22 2020-21 2021-22 2020-21
(Rs in Lacs) (Rs in Lacs) (Rs in Lacs) (Rs in Lacs)
APPROPRIATION OF PROFIT:
Profit before taxation 115,945* 80,796 120,698* 82,500
Net Profit for the year after tax 88,665 61,787 93,374 63,503
Dividend 44,352 38,808 44,352 38,808

includes Exceptional Items amounting to Rs 13,236 Lacs

2. RESERVES:

The closing balance of reserves, including retained earnings, of the Company as at March 31, 2022 was Rs 479,722 Lacs. During the Financial Year, there was no amount proposed to be transferred to the Reserves.

3. COMPANY'S RESPONSE TO COVID:

Your Company continued to focus its efforts for COVID related support and relief, especially to COVID impacted and frontline warriors. Your Company experienced intense collaboration among its teams, and it focused on safety, health and well-being of its employees including various communities. It continued several health and wellness programs for its employees and stakeholders covering various aspects of physical and emotional wellbeing, counselling, support and awareness. It also focused its efforts in providing equitable access to COVID-19 vaccination to its employees alongside Governmental efforts. Within the Company, vaccination drives were also organized to aid employees and their immediate families to voluntarily get vaccinated for the COVID-19 virus. Following all COVID safety and hygiene protocols, plants at all locations were made fully operational including re-opening of Corporate Office, for regular business for employees.

4. BUSINESS UPDATE AND STATE OF COMPANY'S AFFAIRS:

The information on Company's affairs and related aspects is provided under Management Discussion and Analysis Report, which has been prepared, inter-alia, in compliance with Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and forms part of the Annual Report.

5. DIVIDEND:

Your Directors have recommended a final dividend of Rs 10.50/- per equity share of Rs 2/- each fully paid-up share in their meeting held on May 26, 2022, in addition to the interim dividend of Rs 8/- per equity share of Rs 2/- each fully paid-up share declared on February 10, 2022, aggregating to Rs 18.50/- (i.e. 925 %) per equity share of Rs 2/- each fully paid-up share for the year ended March 31, 2022 (previous year Rs 15/- per equity share i.e. 750%). The final dividend is subject to approval of the Members at the ensuing Annual General Meeting and shall be subject to deduction of income tax at source.

6. SHARE CAPITAL:

The paid-up share capital of the Company is Rs 554,400,000/- divided into 277,200,000 equity shares of Rs 2/- each as on March 31, 2022. Your Company has not come out with any issue (public, rights or preferential) during the year. There is no change in the share capital during Financial Year 2021-22.

7. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES:

Your Board is pleased to provide details of the following subsidiary, joint ventures and associates as on March 31, 2022 : -

a) Cummins Sales & Service Private Limited (CSSPL):

CSSPL, a wholly-owned subsidiary, of the Company focuses on sales of Cummins engines, parts, accessories and providing service support to engines and generators in parts of Northern India close to the National Capital Region (NCR), Delhi. CSSPL generated a revenue of Rs 10,159 Lacs from its operations for the year ended March 31, 2022, as compared to Rs 8,672 Lacs during the previous year (17% higher).

b) Cummins Research and Technology India Private Limited (CRTI):

CRTI is a 50:50 joint venture between Cummins Inc., USA and your Company, which was formed in 2003 with an intent to provide Information Technology enabled Mechanical Engineering development services primarily to Cummins Inc., USA, its subsidiaries and joint ventures in all parts of the world. Since, April 01,2016, CRTI closed its operations and your Board of Directors decided that the activity carried out by CRTI for your Company, shall be undertaken in-house by absorbing the appropriate number of employees from CRTI in your Company.

The Shareholders of CRTI, in their Extra-ordinary General Meeting held on April 01, 2022, passed a resolution to initiate voluntary winding-up of the CRTI under Companies Act, 2013 and Insolvency and Bankruptcy Code, 2016. Accordingly, the control over and the operations of CRTI are handed over to a registered Insolvency Professional effective from April 01, 2022 in accordance with the applicable statutory provisions.

c) Valvoline Cummins Private Limited (VCPL):

VCPL, a 50:50 joint venture between Valvoline International Inc., USA, a global leader in lubricants and engine oils, and your Company, VCPL generated a revenue of Rs 169,488 Lacs from its operations for the year ended March 31, 2022, as compared to Rs 134,104 Lacs during the previous year (26% higher).

d) Cummins Generator Technologies India Private Limited (CGT):

Your Company owns 48.54% shareholding in the Associate Company namely CGT which is in the business of design, manufacturing, marketing, sales and service of alternators and related spare parts. CGT generated revenue of Rs 169,488 Lacs from its operations for the year ended March 31, 2022, as compared to Rs 75,339 Lacs during the previous year (59% higher).

The Shareholders of CGT at their Extra-ordinary General Meeting held on March 17, 2022, approved a scheme of reduction of the issued, subscribed and paid-up share capital of the Company (the 'Scheme') from Rs 16,070,010 consisting of 1,607,001 equity shares of Rs 10/- each to Rs 15,995,680 consisting of 1,599,568 equity shares of Rs 10/- each by paying off, cancelling and extinguishing, in aggregate, 7,433 equity shares of the Company ('Capital Reduction') as recommended by the Board of Directors in their meeting held on February 11, 2022. The Company has filed a petition with Hon'ble National Company Law Tribunal ('NCLT'), Mumbai Bench, seeking approval on the said Scheme of Capital Reduction on April 07, 2022. No effect of the scheme of reduction has been given in CGT financial statements as at and for the year ended March 31,2022, pending approval from NCLT.

As required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, consolidated financial statements of the Company, its subsidiary, joint ventures and associate companies, prepared in accordance with the applicable Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended, form part of the Annual Report and are reflected in the consolidated financial statements of the Company.

Further, a statement containing the salient features of the financial statement of subsidiaries, associate companies and joint ventures in the prescribed Form AOC-1 is appended as Annexure ‘1' which forms part of this Report.

The Company will make the said financial statements and related detailed information of CSSPL available upon the request by any Member of the Company. These financial statements will also be kept open for inspection by any Member at the Registered Office of the Company and of CSSPL. Pursuant to the provisions of Section 136 of the Companies Act, 2013, the financial statements of the Company, consolidated financial statements along with relevant documents and separate financial statements in respect of CSSPL, are available on the website of the Company.

8. CHANGE IN THE NATURE OF THE BUSINESS:

During the year under review, there was no change in the nature of the business pursuant to inter-alia Section 134 of the Companies Act, 2013 and Companies (Accounts) Rules, 2014.

9. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

No loan or guarantee was given, or investment was made by your Company during the Financial Year 2021-22 pursuant to Section 186 of the Companies Act, 2013.

10. DEPOSITS:

Your Company has not accepted any Public Deposits under Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 during the Financial Year 2021-22.

11. FUND RAISING BY ISSUANCE OF DEBT SECURITIES, IF ANY

Pursuance to SEBI Circular No. SEBI/HO/DDHS/CIR/P/2018/144 dated November 26, 2018, your Directors confirm that the Company is not defined as a "Large Corporate" as per the framework provided in the said Circular. Moreover, your Company has not raised any fund by issuance of debt securities.

12. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

During Financial Year 2021-22, no materially significant related party transactions were entered into by the Company, that may have potential conflict with the interests of Company, at large.

Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013 in the prescribed Form AOC-2 is appended as Annexure ‘2' which forms part of this Report.

The Policy on materiality of related party transactions as approved by the Board may be accessed on the Company's website at the link: https://www.cummins.com/en/in/investors/india-corporate-governance

As required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, related party transactions have been disclosed under significant accounting policies and notes forming part of the Financial Statements in accordance with relevant accounting standards.

13. CONSERVATION OF ENERGY:

During the Financial Year 2021-22 your Company has strived to imbibe energy conservation principles and initiatives across all its facilities.

During the year, the Company at its Kothrud Engine Plant (KEP) has installed Solar Photovoltaic (PV) and started the operation of 1250 KWp in December 2021,550 KWp in March 2022 & 1020 KWp in 2020, which has resulted in generation of 18.74 lacs Units of electricity. HHP Rebuild Centre has generated 7.10 lac units of electricity from their 625 KWp Solar Photovoltaic (PV) Plant installed in 2017. CPG SEZ Phaltan has generated 5.15 lac units of electricity from their 150 KWp Solar Photovoltaic (PV) Plant installed in 2017. The Solar PV Plant installed at Pirangut Power Systems Plant in 2020 has generated 1.78 lacs units of electricity in Financial Year 2021-22.

The Company has generated 32.86 Lacs units of electricity in Financial Year 2021-22 from onsite Solar installation.

The other key initiatives across multiple areas are highlighted below -

Heating Ventilation and Air Conditioning (HVAC) - Your Company has undertaken initiatives such as Installation of Variable Frequency Drive (VFD) with solenoid valves for Compressor cooling water system, HVLs fans, replacement of non-efficient motor with energy efficient motors, new energy efficient equipment for effective utilization of compressed air and induction heater for piston heaters.

Lighting - Similar to last year, your Company has continued the initiative to replace old lighting fittings with new-age energy efficient LED fittings within and outside some of our facilities. Also, installation of motion sensors at various locations has helped to reduce the energy consumption at sites.

Awareness Generation - This included improving awareness amongst employees to switch off major energy consuming equipment or units when idle as well as employing an energy review tool and energy balance tool to identify projects. The sites also conduct the unplugged challenge to switch off the equipment on holidays or non-production days, Compressed Air management program and leakages arrest drive.

These key initiatives resulted in annual energy savings of approximately 4.43 Lacs units of electricity in Financial Year 2021-22.

14. RESEARCH & DEVELOPMENT AND TECHNOLOGY ABSORPTION:

Your Company is committed to introducing new products and improving existing products to have better performance levels, lower life cycle costs, excellent safety, recyclability characteristics and meet stringent emission norms tailored for the specific needs of the Indian industry.

Your Company continues this endeavour by developing the next generation of systems in collaboration with the parent company - Cummins Inc., USA.

Improved technical productivity, through new methodologies and technologies, is being continuously pursued to reduce the costs associated with new product development and customer support. An example of this is the further enhanced use of analysis-led design through computer models that help minimize hardware testing and therefore accelerate product development cycle times with reduced product testing.

A. New Product Development: -

The following new Products were developed as part of the above initiatives during the year: -

1. Rail engine product families to support the growing Rail Business;

2. Marine engine product families to support the increasing commercial Marine Business;

3. Further enhancements of non-diesel product development capability such as use of alternative fuels are being explored in India;

4. Telematics and Analytics capabilities have been developed to improve uptime and fuel efficiency performance of our products; and

5. To enhance the position of Cummins in the Low kVA segment, your Company has introduced a 40 kVA genset with X2.7 litre engine.

Further, your Company continues to strengthen its channel presence through its GOEM partners who have added 12 number of additional sales dealers across various geographies.

B. Benefits derived as a result of the above activities are:-

1. Enhanced product and service capabilities through use of electronic tools and simulation software to deliver improved engine performance;

2. Enhanced capability to tailor engine designs to improve value proposition for customers through delivering superior power output, fuel economy, transient response and reduced emissions;

3. Enhanced product and service capabilities through use of electronic tools and simulation software to control the engine performance and combustion process;

4. Enhanced capability to tailor engine designs to improve the value proposition for customers through delivering superior power output, fuel economy, transient response and reduced emissions;

5. Product and component availability to meet the new emission norms ahead of implementation;

6. Safer, recyclable, reliable, durable and performance-efficient products and critical components;

7. Component indigenization capability was improved through enhanced test capability, rig test and flow bench development and availability; and

8. Significant enhancements in measurement capability were made to pursue business opportunities in non- diesel applications to serve both the rural and international communities.

C. Future plans include:-

1. Developing local ‘fit-for-market' solutions to meet upcoming emission regulations and market needs on commercial off-highway and power generation segments;

2. Technological innovation to add value to products in the areas of alternate fuels, fuel cells, power electronics, hybrid engines and recycle / re-use;

3. Continued expansion of the product range to serve the needs of both local and global market;

4. Continued focus on indigenization and partnering with suppliers for waste elimination initiatives; and

5. Focused engine development for the Power Generation segment for the upcoming emissions norms.

D. Your Company continues to draw benefits from Cummins Inc.'s technology, advanced engineering and research. With this support your Company is committed to develop advanced fuel-efficient and emission-compliant products that use a variety of energy sources and comply with future domestic emissions and carbon dioxide targets. These help to reduce Greenhouse Gas emissions and improve Air Quality, whilst also enabling the products to deliver superior performance, reliability, durability and recyclability.

E. Expenditure on Research & Development (R&D):-

The total expenditure on R & D was as follows:-

Particulars FY 2021-22 FY 2020-21
(Rs in Lacs) (Rs in Lacs)
Capital 2,093 1,677
Recurring 4,451 5,749
Total 6,544 7,426
Total R&D expenditure as a percentage of total sales turnover 1.07% 1.72%

15. FOREIGN EXCHANGE EARNINGS AND OUTGO:

Your Company continues to be Net Foreign Exchange Earner. During the year under review, your Company exported 8759 engines and 7167 generator sets. Foreign exchange earned in terms of actual inflows during the year 2021-22 and foreign exchange outgo in terms of actual outflows during the year 2021-22 were as follows:-

Particulars FY 2021-22 FY 2020-21
(Rs in Lacs) (Rs in Lacs)
Foreign exchange earnings* 249,011 134,025
Foreign exchange outgo* 97,380 106,376

*Equivalent value of various currencies

16. MANAGEMENT DISCUSSION & ANALYSIS AND CORPORATE GOVERNANCE REPORT:

The Management Discussion and Analysis Report and the Corporate Governance Report which forms part of this Report are appended as Annexure ‘3' and ‘4' respectively.

The Company has obtained a Certificate from Practicing Company Secretary confirming compliance with conditions of the Code of Corporate Governance as stipulated in Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (including amendments thereof) and the same is appended as Annexure ‘6' which forms part of this Report.

The Company has received a Certificate from Practicing Company Secretary confirming that none of the Directors on the Board of the Company have been debarred or disqualified by MCA or SEBI or any such statutory authority from being appointed / continuing as Director and the same is appended as Annexure ‘7' which forms part of this Report.

17. ANNUAL RETURN:

As per the requirement under Section 92(3) of the Companies Act, 2013, the draft Annual Return for Financial Year 2021-22 is available on the website of the Company at the link: https://www.cummins.com/ en/in/investors/india-annual-reports. Since the Annual General Meeting is proposed to be held on August 10, 2022, the Company shall upload a copy of Annual Return for Financial Year 2021-22 as soon it has filed the said Annual Return with Registrar of Companies.

18. RISK MANAGEMENT:

Business Risk Evaluation and Management is an ongoing process within the Organization. The Company has a robust Enterprise Risk Management Framework to identify, monitor and minimize risks. As a process, the risks associated with the business are identified and prioritized based on impact, probability of occurrence, organization's risk management capability and velocity of risk. Such risks are reviewed by the Senior Management, Risk Management Committee and the Board periodically. Risk Owners are identified for each risk and metrics are developed for monitoring and reviewing the risk mitigation. The established comprehensive Risk Management Framework ensures that risk areas having a potential impact on Company's continued existence as a going concern and to its development are identified and addressed on timely basis.

The Risk Management Committee of the Board of Directors of your Company assists the Board in (a) overseeing and approving the Company's enterprise wide risk management framework including the risk management processes, systems and practices of the Company; (b) overseeing that all the existing risks and potential risks that the organization faces including cyber security risks have been identified and assessed, and (c) overseeing that there are adequate of Company's resources to perform risk management responsibilities and achieve its objectives. Further details on Risk Management Committee are included in the Corporate Governance Report.

The details and process of Enterprise Risk Management implemented by the Company through Risk Management Policy, are included in the Management Discussion and Analysis, which forms part of Annual Report.

19. INTERNAL FINANCIAL CONTROL:

Your Company has established adequate internal financial controls for ensuring orderly and efficient conduct of its business, including adherence to Company's policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

Details of internal financial control and its adequacy are included in the Management Discussion and Analysis Report which is appended as Annexure ‘3' and forms part of Annual Report.

20. VIGIL MECHANISM/ WHISTLE BLOWER POLICY:

Your Company's leadership culture is to inspire and encourage all employees to reach their full potential. A great leadership culture begins with outstanding leaders who create an outstanding place to work, inspiring and encouraging all employees to achieve their full potential. Leaders connect people and their work to the vision, mission, values, brand promise and strategies of the company, motivating them and giving them a higher sense of purpose. Leaders also build trust in our teams and in our organizations and align on key goals and priorities. Leaders foster open communications and offer various opportunities to employees to express their feedback through several ways.

Your Company has a 'Vigil Mechanism Policy' which inter-alia provides adequate safeguards against victimization of persons who may blow the whistle. Vigil Mechanism Policy may be accessed on the Company's website at the link: https://www.cummins.com/en/in/investors/india-corporate-governance.

In addition, your Company has complied with provisions relating to constitution of an Internal Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and also has a stabilized well governed ethics investigations process. Regular workshops and awareness programmes against sexual harassment are conducted across the organization. During the year under review, no complaints pertaining to sexual harassment of woman employee was reported to the Committee and therefore no complaints remained unresolved as on March 31, 2022.

The Company is committed to the highest possible standards of openness, integrity and accountability in all its affairs and to providing a workplace conducive to open discussion of its business practices. Your Company has laid out infrastructures and policy through which the employees can voice their concerns about suspected unethical or improper practice, or violation of Cummins Code of Business Conduct or complaints regarding accounting, auditing, internal controls or disclosure practices of the Company. Protected disclosures can be made by a whistle blower through an email or dedicated telephone line or letter to the Managing Director of the Company or Letter to the Chairman of Audit Committee or via the Ethics helpline/ Webpage, details of which are available on website www.cumminsindia.com.

21. COMPLIANCE WITH THE CODE OF CONDUCT:

All Directors on the Board and Senior Management have affirmed compliance to the Code of Conduct(s) for the Financial Year 2021-22. A declaration signed by the Managing Director affirming compliance with the Company's Code of Conduct by the Board of Directors and Senior Management for the Financial Year 2021-22 as required under Regulation 26(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is included in the Corporate Governance Report which is appended as Annexure ‘4' and forms part of this Report.

22. DIRECTORS' RESPONSIBILITY STATEMENT:

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost and secretarial auditors and external consultant(s) including audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company's internal financial controls were adequate and effective during the Financial Year 2021-22.

Accordingly, pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:

(i) in the preparation of the annual accounts for the year ended March 31, 2022, the applicable accounting standards have been followed and there was no material departure from the same;

(ii) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31,2022 and of the profit for the period April 01,2021 to March 31, 2022;

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) they have prepared the annual accounts on a going concern basis;

(v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively during the year; and

(vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

23. DIRECTORS:

a) Changes in the composition of the Board of Directors:

Appointments and Re-appointments

Mr. Steven Chapman (DIN:00496000) was regularized as Director (Non-Executive and Non- Independent) of the Company in the 60th Annual General Meeting of the Company held on August 12, 2021. Mr. Chapman continued to be Chairman of the Board, as appointed by the Board, effective October 01, 2020.

Mr. Ashwath Ram (DIN: 00149501), was appointed as a Director designated as Managing Director and Key Managerial Personnel, in the 59th Annual General Meeting of the Company held on August 25, 2020, effective August 17, 2019 for term of three years. On recommendation of the Nomination and Remuneration Committee, the Board of Directors have proposed re-appointment of Mr. Ashwath Ram as Managing Director of the Company for a period of three years effective from August 17, 2022. A resolution seeking shareholder's approval for his re-appointment forms part of the Notice.

In accordance with the Companies Act, 2013 and Articles of Association of the Company, Mr. Norbert Nusterer (DIN: 07640359), Director (Non-Executive and Non-Independent) of the Company, retires by rotation and is eligible for re-appointment. The proposal seeking shareholder's approval for his re- appointment forms part of the Notice, which is also approved by the Board on the recommendation of Nomination and Remuneration Committee.

As required under Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial Standard 2, particulars of Directors seeking appointment/re- appointment at this Annual General Meeting are given in the Annexure to the Notice and the Board recommends the respective resolutions to the Members for approval.

Cessation

During the year, Mr. Prakash Telang (DIN:00012562) ceased to be Director (Non-Executive and Independent) of the Company effective December 08, 2021 on account of his unfortunate demise.

Ms. Lorraine Alyn Meyer (DIN:08567527) resigned as Director (Non-Executive and Non- Independent) of the Company effective February 15, 2022 on account of retirement from Cummins Group and other personal reasons. She had confirmed that there were no other material reasons for her resignation.

The Board places on record its appreciation for the ceased Directors' invaluable contribution and guidance during their tenure.

The details of Board composition, number of meetings held, details of directorships of Directors etc. are provided in the Corporate Governance Report which is appended as Annexure ‘4' and forms part of this Report.

b) Committees of the Board:

The Board of Directors have constituted following Committees in order to effectively cater its duties towards diversified role under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:-

¦ Audit Committee;

¦ Stakeholders Relationship Committee;

¦ Nomination and Remuneration Committee;

¦ Corporate Social Responsibility Committee; and

¦ Risk Management Committee

Details of the constitution, broad terms of references of each Committee and number of meetings attended by individual Director etc. are provided in the Corporate Governance Report which is appended as Annexure ‘4' and forms part of this Report.

c) Policy on Director's Appointment and Remuneration:

The Policy of the Company on Director's Appointment and Remuneration, including criteria for determining qualifications, positive attributes, independence of the Directors and other matters provided under Section 178 (3) of the Companies Act, 2013, adopted by the Board viz. Nomination and Remuneration Policy, is appended as Annexure ‘8' which forms part of this Report.

Details of the remuneration paid to the Board of Directors are provided in the Corporate Governance Report. It is affirmed that the remuneration paid to the Directors is as per the terms laid down in the Nomination and Remuneration Policy of the Company.

d) Board Performance Evaluation Mechanism:

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out the annual performance evaluation of its own performance and the Directors, Chairman individually, as well as the evaluation of the working of its Committees. Details of the evaluation mechanism is provided in the Corporate Governance Report which is appended as Annexure ‘4' and forms part of this Report.

e) Inter-se relationships between the Directors:

There are no relationships between the Directors inter-se.

f) Familiarization Programme for Independent Directors:

During the year, various documents, presentations, background notes etc. were shared with to Independent Directors to have a better insight in to state of affairs of the Company.

The Chairman and/or the Managing Director also have periodic discussions with the newly appointed Directors to provide them, details of initiatives of the Company for better understanding of the Company, its business and the regulatory framework in which the Company operates and equip him/ her to effectively fulfil his/ her role and responsibilities as a Director of the Company.

The details of familiarization programmes imparted are available at https://www.cummins.com/en/in/ investors/india-corporate-governance.

g) Declarations from the Independent Directors:

Pursuant to the provisions of Section 149 of the Companies Act, 2013 read along with Rules framed thereunder and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time, the Independent Directors have submitted inter- alia declarations that each of them meets the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and the SEBI Listing Regulations. The Independent Directors during the year, have also re-submitted inter-alia declarations under the revised Regulation 16(1)(b) Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2021, effective from January 01, 2022.

Further, the Independent Directors have also confirmed that there has been no change in the circumstances affecting their status as Independent Directors of the Company. The said certificates(s) were taken on record by Board after their requisite assessments.

24. NUMBER OF MEETINGS OF THE BOARD:

Five meetings of the Board of Directors were held during the year. The details of the meetings held and attendance there at are provided in the Corporate Governance Report which is appended as Annexure ‘4' and forms part of this Report. The maximum interval between any two meetings did not exceed 120 days, as prescribed by the Companies Act, 2013.

25. KEY MANAGERIAL PERSONNEL:

There were no changes in the Key Managerial Personnel(s) during the Financial Year.

26. PARTICULARS OF EMPLOYEES:

The details in accordance with the provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, is appended as Annexure ‘10' which forms part of this Report. Any shareholder interested in obtaining a copy of the statement, may write to the Company Secretary at the Registered Office address of the Company.

27. INDUSTRIAL RELATIONS:

Industrial relations at all the plants of the Company continue to be cordial during Financial Year 2021- 22. Multiple initiatives have been rolled out for our shop, office and field technician employees under 'Advancing our workforce Strategy' (AWS) at all sites across the globe. Key purpose of AWS is to inspire and encourage 'All Employees' to reach their full potential by implementing similar Talent Management policies and processes for all the shop, office and field technician employees like those implemented for our managerial employees. We have introduced a Performance Management System for our Shop, Office & Technician employees. It will help us to reward better performance, help employees to create Individual Development Plans which will help them to grow in the organization. Your Company is also enhancing right environment by creating right spans of control so that it helps manager to spend quality time on employees' developmental needs. We are taking right steps to provide them access to technology with which employees can leverage our online systems. Your Company have also introduced an internal job posting system for all new positions across organization which helps us to grow talent from non- exempt category. In addition, your Company have revised our Domestic Relocation Policy thus enabling seamless movement of talent across all categories encouraging them to take more learning opportunities. All these are steps in the right direction on our journey to help employees reach their full potential.

Your Company had announced a Voluntary Retirement Scheme at its Kothrud Engine Plant, Pune, on May 16, 2022. The Voluntary Retirement Scheme (herein referred to as "Scheme") was applicable to individual employees meeting all the eligibility criteria as stated in (a), (b) and (c) cumulatively -

a) Permanent employees of the Company who are working in Kothrud Engine Plant in the shopfloor and office category;

b) Employees who are above 45 years of age and less than 57 years of age as on May 16, 2022;

c) Employees who are on the permanent rolls of the Company for 10 years and more as on May 16, 2022.

Your Company believed that Scheme upon implementation will help in optimizing the fixed cost structures, build resilient supply chains and increase focus on manufacturing excellence. Intimation pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, regarding implementation of this Scheme was filed with BSE Limited (‘BSE') and National Stock Exchange of India Limited (‘NSE') on May 16, 2022. Further, an update on the financial impact of the Scheme will also filed with BSE and NSE on conclusion of the Scheme.

28. AUDITORS:

STATUTORY AUDITORS:

At the 60th Annual General Meeting held on August 12, 2021, M/s. Price Waterhouse & Co., Chartered Accountants LLP, Chartered Accountants (Firm Registration No.: 304026E/E-300009) ("PWC"), was appointed as Statutory Auditor of the Company to hold office till the conclusion of 65th Annual General Meeting.

There are no qualifications, reservations, adverse remarks or disclaimers made by the auditors in the Audit Report for the Financial Year 2021-22.

In terms of the Section 139(1) of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, the appointment of Statutory Auditors does not require ratification by the shareholders in Annual General Meeting. Accordingly, the Board noted the continued appointment of PWC as the Statutory Auditors of the Company for the Financial Year 2022-23 in its meeting held on May 26, 2022. PWC has informed the Company that their appointment is within the limits prescribed under Section 141 of the Companies Act, 2013.

SECRETARIAL AUDITOR:

M/s Pramod Shah & Associates, (FCS 334), was appointed to conduct the secretarial audit of the Company for the Financial Year 2021-22, as required under Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The Secretarial Audit Report in Form MR-3 and Secretarial Audit Report pursuant to Regulation 24A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 for Financial Year 2021-22 is appended as Annexure ‘5' which forms part of this Report. Both the reports do not contain any qualification, reservation or adverse remark.

The Annual Secretarial Compliance Report has been submitted to the stock exchanges as required under Regulation 24A of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015.

The Board on the recommendation of the Audit Committee has re-appointed M/s Pramod Shah & Associates to conduct the secretarial audit of the Company for the Financial Year 2022-23 in its meeting held on May 26, 2022.

Further, during the Financial Year 2021-22 and two previous financial years, no penalties, strictures were imposed on the Company by stock exchange(s) or SEBI or any statutory authority, on any matter related to capital markets.

COST AUDITORS:

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, as amended from time to time, the cost audit records maintained by the Company in respect of its manufacturing activity is required to be audited. Your Directors, on the recommendation of the Audit Committee, had appointed M/s. C S Adawadkar & Co., Cost Accountants (Firm Registration Number: 100401), to audit the cost accounts of the Company for the Financial Year 2021-22 at a remuneration of Rs 950,000/- plus taxes as applicable and re-imbursement of out of pocket expenses. The remuneration was ratified by shareholders in the 60th Annual General Meeting held on August 12, 2021.

Pursuant to recommendation of the Audit Committee, the Board in its meeting held on May 26, 2022 has appointed M/s C S Adawadkar & Co. (Firm Registration No.: 101542), to audit the cost accounts of the Company for the Financial Year 2022-23 at a remuneration of Rs 950,000/- plus taxes as applicable and re-imbursement of out of pocket expenses. As required under the Companies Act, 2013, the shareholders ratification for the remuneration payable to M/s. C S Adawadkar & Co, Cost Auditors, is being sought at the ensuing Annual General Meeting.

M/s. C S Adawadkar & Co, Cost Auditors, under Section 139(1) of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, have furnished a certificate of their eligibility and consent for appointment.

29. CORPORATE SOCIAL RESPONSIBILITY POLICY AND ITS REPORT:

Your Company is an early adopter of the Corporate Social Responsibility (CSR) initiatives. Corporate Social Responsibility continues to be of vital importance to your Company embedded in the core value of caring, which focuses on 'serving and improving the communities in which we live'. Your Company works with 'Cummins India Foundation' towards three broad focus areas viz. Higher Education, Energy and Environment and Equality of Opportunity. Additionally, your Company also carries out other strategic CSR initiatives predominantly through its implementing agency.

In the ongoing crisis of COVID-19, your Company undertook series of immediate and emergency interventions to address urgent and evolving needs of the communities and various stakeholders. The relief and support initiatives included but were not limited to partnerships with State, Central, Local Government Bodies, donation of life saving equipments, support to frontline COVID warriors and working with Organizations to provide immediate relief etc.

Details about the CSR Policy and initiatives taken by the Company during the year are available on the website at link : https://www.cummins.com/en/in/investors/india-corporate-governance. The Annual Report on CSR Activities is appended as Annexure ‘11' which forms part of this Report.

30. BUSINESS RESPONSIBILITY REPORT:

As stipulated under the Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Business Responsibility Report describes the initiatives taken by the Company from environmental, social and governance perspective, which forms part of the Annual Report and is included after Financial Statements section.

The Company has key policies in place with respect to Environment, Social and Governance (ESG) areas which are made disclosed under the Business Responsibility Report. Your Company also contributes to global sustainability goals of Cummins Inc. (CMI), its Holding Company.

Your Company is further striving towards strengthening its ESG related procedures/polices considering introduction of Business Responsibility and Sustainability Report (BRSR) as a statutory requirement under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, effective Financial Year 2022-23. Accordingly, comprehensive BRSR will form part of subsequent year(s) Annual Report of the Company, as per applicable laws as amended from time to time.

31. SECRETARIAL STANDARDS:

The Company is in compliance with applicable Secretarial Standards issued by the Institute of Company Secretaries of India, specifically Secretarial Standards on Meetings of the Board of Directors (SS-1) and Secretarial Standards on General Meetings (SS-2).

32. DIVIDEND DISTRIBUTION POLICY:

The Board of Directors of the Company have formulated a Dividend Distribution Policy pursuant to Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, which is appended as Annexure ‘9' and forms part of this Report. The policy is also available on our website https://www.cummins.com/en/in/investors/india-corporate-governance.

33. INVESTOR EDUCATION AND PROTECTION FUND (IEPF):

Pursuant to Section 124 and Section 125 of Companies Act, 2013 and IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, during the year under review, the Company has transferred the following unclaimed and unpaid dividend and corresponding shares to IEPF, upon completion of period of seven years:

Date of Declaration Type of Dividend Amount transferred No of equity shares transferred
August 01, 2014 Final Equity Dividend 9,109,752 294,714
September 10, 2014 Interim Equity Dividend 5,410,340 5,269

Please refer Note no 18 of AGM Notice for further details pertaining to IEPF.

34. GENERAL:

Further, your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions or applicability with respect to these items during the year under review:

a. Issue of equity shares with differential rights as to dividend, voting or otherwise;

b. Issue of shares (including sweat equity shares) by the Company to its employees;

c. The Managing Director of the Company did not receive any remuneration or commission from any of its subsidiaries. Further, the Company had not appointed any other Whole-time Director except the Managing Director;

d. No frauds were reported by Auditors under Section 143(12) of the Companies Act, 2013 and rules frame thereunder;

e. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations However, Members' attention is drawn to the Statement on Contingent Liabilities, commitments in the notes forming part of the Financial Statement; and

f. No material changes and commitments occurred during April 01, 2022 till the date of this Report which would affect the financial position of your Company.

ACKNOWLEDGEMENT:

Your Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company's executives, staff and associates.

For and on behalf of the Board of Directors,

Steven Chapman Ashwath Ram
Place : Pune Chairman Managing Director
Date : May 26, 2022 DIN:00496000 DIN: 00149501

Note: AH the Annexures referred in the Directors' Report form an integral part of the same. The entire Annual Report along with the Notice convening the AGM and Financial Statements (Standalone and Consolidated along with respective Audit Reports) shall be read together.