Good morning, ladies and gentlemen. Welcome to Cummins India Ltd Q4 FY 2024-2025 earnings conference call. We hope you all are keeping safe and healthy. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the commentary concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Shweta Arya, Managing Director, Cummins India Ltd. Thank you, and over to you, Ms. Arya.
Thank you. Good morning, ladies and gentlemen. I hope you are all doing well and staying safe and healthy. I am Shweta Arya, Managing Director of Cummins India Ltd. Joining me on the call today is Prasad Kulkarni, the Interim CFO of Cummins India Ltd. Thank you, all of you, for joining us today on this call. I would now like to share the financial results for the year ended March 31, 2025, and for the quarter financial year 2025, quarter four. Starting with the year ended March 31, 2025, our sales at INR 10,166 crore are higher by 15% compared to INR 8,816 crore recorded in the last year. Domestic sales at INR 8,395 crore are higher by 18%. Exports at INR 1,771 crore are higher by 6%. Profit before tax at INR 2,496 crore is higher by 16% compared to the last year.
Segment-wise sales breakup: domestic power gen domestic sales at INR 3,844 crore is higher by 14% compared to last year. Distribution business sales at INR 2,687 crore is higher by 14% compared to last year. Industrial business domestic sales at INR 1,668 crore is higher by 29% compared to last year. From an exports perspective, high HOSPAR exports at INR 821 crore, higher by 1% compared to last year. Low HOSPAR exports at INR 784 crore, higher by 12% compared to last year. Now, moving to the quarter ended March 31, 2025, comparing it to the quarter last year, our sales for the quarter at INR 2,414 crore are higher by 6% in comparison to INR 2,269 crore recorded in the same quarter last year. Domestic sales are at INR 1,935 crore, higher by 1%. Exports at INR 479 crore are higher by 39%.
Profit before tax at INR 681 crore is lower by 3% compared to the same quarter last year. For the quarter ended March 31, 2025, comparing it to the previous quarter, our sales at INR 2,414 crore are lower by 21% compared to INR 3,041 crore recorded in the last quarter. Domestic sales at INR 1,935 crore are lower by 25%. Exports at INR 479 crore are higher by 3%. Profit before tax at INR 681 crore is higher by 2% compared to the last quarter. Segment-wise breakup for the quarter ended March 31, 2025. For the domestic business, power gen domestic sales were INR 874 crore, 7% lower compared to the same quarter last year, and 31% lower compared to last quarter. Distribution business sales at INR 631 crore, 5% higher compared to the same quarter last year, and 15% lower compared to last quarter.
Industrial domestic business sales at INR 379 crore, 9% higher compared to the same quarter last year, and 26% lower compared to last quarter. Exports: high HOSPAR exports at INR 218 crore are higher by 27% compared to the same quarter last year, and 8% higher compared to last quarter. Low HOSPAR exports at INR 215 crore are higher by 51% compared to last year, and flat as compared to last quarter. Going forward, we anticipate double-digit revenue growth in financial year 2025-2026, while remaining cautiously optimistic given the uncertainty from changes in global tax and trade policies, along with the geopolitical issues, which we continue to monitor very closely. I now open the session for questions. Thank you.
Thank you very much, ma'am. We will now begin with the question and answer session. Anyone who wishes to ask questions may press star and one on their touchstone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. You may please press star and one to ask questions. The first question is from the line of Parikshit Kandpal from HDFC Securities. Please go ahead.
Yeah, hi, Shweta. So my first question is on power gen. So there's a decline of 7% quarter on, sorry, YOI and 31% Q1Q. If you can help us understand a little bit more in terms of granularity, whether towards the end of Q4 you saw a decline, especially in the March month, given there was uncertainty of the tariffs coming in on 2nd April. Was there any postponement or delays in decision-making that led to this severe decline in the numbers?
Thanks for the question, Parikshit. As you mentioned, decline of 7% in power gen year on year. This is largely owing to the fact that the same quarter last year had pre-buy sales of CPCB2. This is not with respect to just this year. Last year saw higher sales because of the pre-buy. From a quarter-on-quarter perspective, we usually see that the quarter which ends on December, there is good velocity of sales where lots of inventory moves in to the GOEM and then out into the market. Also, now we are seeing full CPCB4 plus sales in the market. I think these are all the factors as we compare last year and last quarter sales in power gen.
Just to give you some more numbers on the volume, now in Q4, I mean, if I compare with CPCB2 volumes and CPCB now in full, this thing, are the volumes back to 100%? Started growing? Any initial trend on that would be helpful.
The volumes in CPCB4 plus are not completely matching up to CPCB2, but every quarter we are seeing increase in the volume trend. I think another quarter or two to see the volumes crossing CPCB2 numbers, not yet.
They'll be still tracking like around 85%-90% or significantly lower? I mean, early 80s, so any sense, any color on that?
Yeah, close to 80-85% is what the tracking would be.
Okay. Any color on pricing now? I mean, given there has been some time now post-implementation of the CPCB4, are you seeing any softness in pricing, or are the prices still holding on versus the point that they were implemented? Any color on that?
Pricing is still settling down in the market, Parikshit. We have seen all competition products in the market now. We are still seeing pricing settle down. We do think that it will take another quarter or two for the pricing to completely settle down. That being said, we have been largely able to hold on to our pricing in the market, but I would say that competitive intensity has increased and pricing will settle down in another three quarters now.
Okay. Just one last question. Was there any one-off in this quarter, both on the EBITDA line as well as on the top line? Any, I mean, was there any impact of large data center orders, or was that number missing in this quarter? If you can help us understand that.
No, no one-offs like that, Parikshit.
Okay. So no major order on the data center side this quarter, which could have helped maybe slightly better growth?
No, demand across sectors and all different segments have contributed to the growth, so I won't be able to call out one particular one-off segment.
Okay. Sure, Shweta. Those were my questions. Thank you. I'll join the queue for more questions.
Thank you, Parikshit.
Thank you. The next question is from the line of Mohit Pandey from Macquarie. Please go ahead.
Yeah, ma'am. Thank you for the opportunity. Ma'am, my first question would be on gross margins. If you can give color on what has driven the strength, is it largely linked to commodity in the fourth quarter?
From a gross margin perspective, if you look at the whole year, we have done better as compared to last year. What I would say is there's a lot of effort put in in terms of our work on the direct material cost and bringing the cost of our products down. Also, as I mentioned, we are watching pricing carefully, and we have been able to hold on to pricing as well. It is a mix, and product mix also plays a part in how finally our gross margin comes up. All of those three have worked. Definitely a lot of work on our end to improve our direct material costs.
Okay, okay. So ma'am, the gross margins that we achieved this year, do you think by 2026 they're more or less sustainable?
That is our endeavor, Mohit. That is our endeavor. We continuously work on cost-related efforts so that we can improve on these. That is exactly the direction in which we are working.
Understood, ma'am. Ma'am, also, if you could share the breakup of domestic power gen that you typically do across low, medium, heavy, and high HP.
Yes, I will do that. For the financial year 2024-2025, breaking up the power gen sales, low HOSPAR is at INR 272 crore, medium range is at INR 733 crore, heavy duty is at INR 376 crore, and high HOSPAR is at INR 2,463 crore, leading to a total of INR 3,844 crore for the year.
Okay, ma'am. Ma'am, and one final question from my side with regards to data center linked gen set demand. Are you seeing any slowdown there? That would be my last question.
No, we are not seeing the slowdown there. We are actually seeing a lot of activity, inquiries, and orders coming in. We are not seeing the slowdown in the data centers in the India market yet.
Okay, ma'am. Thank you so much, and I'll come back in the queue. Yeah.
Thanks, Mohit.
Thank you. The next question is from the line of Umesh Raut from Nomura India. Please go ahead.
Hi, ma'am. Good morning. My first question is pertaining to demand outlook for gen set business as per the end-user market. In terms of residential and commercial realty, where are we currently sitting at in terms of cycle and how exactly are you seeing demand shaping up from this particular major end-user market? At the same time, how are you seeing emerging segments like data center from current base, how exactly growth would be? On the export side as well, looking at the sequential recovery in last few quarters, how are you looking at sales stabilizing in export markets?
Thanks, Umesh, for the questions. Let me start answering them. Okay. Demand outlook for the gen set going from here.
Ma'am, I'm sorry to interrupt you.
Yeah.
Umesh, I would request you to mute your line, please. Ma'am, please continue.
Yeah, thank you. Your first question around demand outlook for the gen set market. We are seeing demand, and this demand is continuing from the segments, all the segments that we serve. There is demand in residential realty, commercial realty, infra-related segments, in data centers. We are seeing all the demand there in the power gen market. There is no specific trend that I can call out. We're seeing demand across segments. Some emerging segments, as you said, the emerging segments that we are seeing is actually quick commerce. The likes of Zomato, Blinkit, when they are setting up their warehouses and fulfilling their needs. We are seeing some of order and inquiries coming from these kind of segments as well. Otherwise, across the board, we are seeing demand. In fact, power gen business does see some seasonality during the summer months.
As we have seen in the past and every year, we are seeing that kind of inquiry generation and order generation. That is from a demand outlook from a gen set market perspective and the emerging segments. You asked about exports going forward. We have been putting in efforts to grow our exports across different markets. We have been working with our teams to specifically position our products rightly in different markets. Because we serve various different markets around the world, our initiatives for each market are very different. We started this journey some quarters ago, and we are on that journey. From our effort perspective, the work that we are doing is showing results. There is definitely uncertainty in the global markets, as you will anticipate, because of the tariff, the geopolitical situation, and how the trade deals are being negotiated.
Our efforts are definitely continuing in the direction of positioning our products rightly based on specific market requirements.
Got it. My second question is pertaining to competition, how you are seeing competition now in the data center market, and any color on markets that you have in data center? Do you also serve to export markets for data center in the market?
Data center market competition. Thanks. Thanks for putting yourself on mute, Umesh. From a data center market perspective, we do see competition, but we have been working in the data center market for a long period of time, and our product is very well accepted by the data center players. We also provide aftermarket support very specialized to the data center market. We are seeing good acceptance of our product as we combine the product and aftermarket services together for the specific needs of data center segments. That being said, yes, we do see competition, but our product is very well accepted. I won't be able to comment on the market share. From an export perspective, we do provide components that get into the gen sets that are sold in the data center market for sure.
Understood. My last question is on the bookkeeping side. If I look at Cummins Inc number, I think they reported about 11% decline in power generation sales for India, while you have reported about 7% decline for the quarter. What explains this particular difference?
Thanks, Umesh. The only difference is foreign exchange. We are reporting our numbers in INR, and they are reporting their numbers in US dollars. There is no other reconciliation between those two. It is only a dollar versus INR change.
Got it. Thank you so much, ma'am. All the very best.
Thank you, Umesh.
Thank you. We'll take the next question. Before we take the next question, ladies and gentlemen, in order to ensure that the management will be able to address questions from all the participants in the conference, kindly limit your questions to two per participant. Should you have a follow-up question, please rejoin the queue. We'll take the next question from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Hi. Good morning. Good morning, and thanks for the opportunity. My question is on the implied expense. The implied expense was lower this quarter compared to last, compared to previous quarter and prior year. Is there any one-off in that?
Thanks for the question, Mohit. From a quarter-to-quarter perspective, yes, there is some actuarial benefit impact that is there from a quarter perspective. There is also some reclassification done for better representing the results. There is that in the quarter-on-quarter numbers. If you compare year-on-year numbers from an employee cost perspective, the biggest thing over there is the efficiency improvement that we have been able to do and the leverage benefit because of the volumes that we are getting. That stays from an overall year-on-year perspective. Also, quarter-on-quarter, last quarter had the true-up of our variable pay that we did one time, which is not there this year. Those are comparisons between quarter-on-quarter and year-on-year.
Ma'am, is it possible to quantify that number?
We won't be able to quantify that number. Sorry, go ahead.
My second question on the guidance, I think you gave double-digit guidance. My question is that is it between 10-15% or 15-20%? Can you give us some color?
Mohit, I will have to say that we are maintaining double-digit guidance. While we see demand in the local market, you will appreciate that there are uncertainties in the global markets, and the impact of tariffs is not completely baked in yet. It will be very difficult to give you a very specific answer on that. Double-digit is the guidance that I can give right now.
Understood. Thank you, ma'am, and all the best. Thank you.
Thank you.
We'll take the next question from the line of Jason Swans from IDBI Capital. Please go ahead.
Yeah, ma'am. Yes, Shweta, thank you for taking the question. My question was actually just wanted to discuss what specific measurable steps we are taking to basically keep the competition at bay. I understand basically in our mainstay segment of HHP, considering how lucrative it is. I understand that every step cannot be disclosed, but I'm just saying if you could provide some color on how we are keeping the competition at bay and what steps are we taking towards this?
Thanks for the question, Jason. From what we are doing to make sure that our products are better accepted by the customer, there are a few things that we are doing. Very specifically, one of the things we are working on for the power gen segment is looking at segments and providing a full-fledged solution for the segment tailored to the segment. What do they need from a product perspective? What value adds do they need in the product? What aftermarket support we provide and how we provide? All of that guidance together is tailored to the segment. We do a lot of data and analysis from that perspective. That is one of the things that we do. We also continuously keep looking at the product and getting field data to ensure that product improvements are happening continuously from a quality perspective, from a cost perspective.
That is across segments. You rightly pointed out high HOSPAR, but that work happens across segments. We keep in touch with our customers to hear their voices continuously on what they would need from a value add perspective and how they are changing their buying behaviors to align with them. Those are the very specific things that we do.
Okay. Thanks for the detailed answers, Shweta. My next question was in terms of Capex, we have FY 2025 basically invested around INR 340 crore. Just wanted to know in FY 2026 how much Capex are we looking at and what areas are we looking to augment? What areas are we looking to augment?
Yeah, Jason, if you could go on mute and I'll then answer you. From a Capex perspective, we will continue in the coming financial year in the same range. This is largely sustainance Capex, where we continue to look at our lines and upgrading them as per the requirements. This is what our Capex will go towards. It will continue almost in the same range as you saw in the current financial year.
Okay. Thanks, Shveta. Just my last question, would just want to know if you can share revenue and PBT numbers for Cummins Generator Technologies as well as Valvoline Cummins and if any outlook for both those for the associated JV?
Yeah. I'll just let Prasad answer that question.
Hi, Jason. The revenue for Cummins Generator Technologies was somewhere around INR 1,980 crore. The same for Valvoline Cummins was somewhere around INR 2,350 crore for the full year.
And PAC?
We don't share those specific numbers, Jason.
Okay. Sure. Sure. Thanks. Thanks. Those were all my questions. Thank you.
Thank you. Thanks, Jason.
Thank you. The next question is from the line of Renu Baid Pugalia from IIFL Capital Services. Please go ahead.
Yeah. Hi, good morning, team, and congratulations on strong performance. My first question is, last quarter, we have seen the transition in the industrial segment for CVDS5 range of products. If you can share market inputs in terms of how was the product acceptance, any potential share gain or loss with respect to OEMs and the pricing impact in this segment. That is the first question.
Thanks, Renu. Renu, our presence in that segment is very limited. What we have seen is there is acceptance of the product, but our presence is very limited. As compared to the remaining segments, it's a small portion of our overall sales.
Any color on the pricing impact of our solutions in this segment?
Nothing specific and no specific trend that we've observed, Renu. Just as any other emission change, pricing takes a while to settle down in every segment, and that's what's happening there. There's no specific trend or no specific information that I can share at this stage.
Sure. Secondly, if you can also share some inputs in terms of how has been the subsegment performance within the industrial bucket. On an annualized basis, how do the revenues stack up across construction, marine, mining, railways, compressors, the key categories that you operate?
Sure. From a breakup for the industrial business unit quarter, I'm talking only about the quarter four. Construction segment, we had INR 168 crore of sales. Rail, INR 114 crore. Mining, INR 14 crore. Compressor, INR 50 crore. Then the others. From a full year number perspective, we have construction segment at INR 624 crore, rail at INR 471 crore, mining at INR 131 crore, compressor segment at INR 203 crore, and then there are others. I hope that helps with the breakup.
Sure. The outlook across all of these segments, including new product introductions and devices, Jason?
Yes. From a rail market perspective, we do have orders across the power car and diesel electric power car, and the order velocity has been sustaining. We maintain a positive outlook on rail. Construction segment is continuing at a stable growth that we have been seeing in the last few quarters. Compressor business is actually a cyclical business. From our understanding perspective, we should see a dip coming in the compressor segment, which we have not cited yet. We anticipate, based on the last few years of our analysis, the compressor segment to get into the cyclical phase. Mining, we were anticipating mining order board to start building up. What we are seeing is a shift, and we have been seeing this for the last few quarters, more shift towards private miners. Coal India tenders are getting shifted out.
The tenders which were supposed to be released in these quarters have not been released. Our anticipation was better outlook for mining when we started the calendar year, but it's not turning out to be like that. We are watchful, and we are working with the private miners, but the Coal India tenders are not coming in as we anticipated. I hope that gives you a color around mining, construction, and rail, which are the larger segments.
Just follow up on this on Vande Bharat and related new products for the rail market. By when do we expect commercial orders to kick in in this segment of the market?
Yeah. We are done with field trials of one of the products that we had launched a while ago, which was called the hotel load converter. We are just on the anvil of getting regular orders for that product. As you can probably appreciate, some of these require extended field trials for more than a year or so. We are anticipating orders for the hotel load converter. We are now getting into the production work for another application of the railways, which is called the accident relief train. This will take a few years for the production and the trials to happen. After that, we will start seeing regular orders. Work ongoing.
Got it. Thanks much and best wishes to you. Thank you.
Thank you.
Thank you. The next question is from the line of Amit Anwani from PL Capital. Please go ahead.
Hi. Thanks for taking my question. My first question is on export. Despite this quarter was quite strong relatively, and we have been talking about the cautious stance on export. I wanted to have more color which geographies, geography-wise, if you could highlight which geographies we are expecting to decline or improve over the next 12 to 15 months. Any color on contribution of geographies in export this year?
Yeah. Thanks for the question, Amit. From an exports perspective for this year that went by, I can share with you that Latin America and Europe did really well for us, have continuously been doing well for us. We provide our products around the world. It is difficult to say that in the next financial year which particular geography will continue to grow for us. We have seen definitely that Europe and Latin America have consistently been growing in the past every quarter for us. Will that continue in the future is a difficult question to answer. Like I said, there is uncertainty in the global environment. The different trade deals and now the tariff impact in the U.S. are still being worked out. Geopolitical situation is still not absolutely normal. Our efforts to position the right products continue for every market at this point in time.
Very difficult to tell you which segments we anticipate growth from.
Right. Second question, again on the margins. We did a great job with respect to the, as I said, a lot of efforts went into with respect to value add products and the contributions and the gross margin has been improving from past two to three years. Wanted to understand, is there further scope of improvement and can these margins sustain at current level since we are focusing on more value add products? Some color on directionally what we are looking for next two years.
Thanks, Amit. Amit, we have been working, as I mentioned, on cost reduction efforts of our products and providing value add to the customers. That endeavor continues, and that is what is exactly where we can put in our efforts. Other things that impact our gross margin are the product mix and how the pricing plays out in the market. We continue to watch that. Our endeavor is definitely to sustain or better these margins, and our cost optimization efforts are ongoing. That's the best I can share at this point in time.
Yeah. What's the current capacity utilization?
Current capacity utilization would be very close to 65%.
Yeah. Thank you so much for answering my questions. Thanks.
Thanks, Amit.
Thank you. The next question is from the line of Sumanta Khan from Edelweiss Mutual Fund. Please go ahead.
Good morning. Thanks a lot for the opportunity. Now, I understand that the pricing on the CPCB4 or gen sets could stabilize probably to meet another quarter or two. Don't you think it's quite a good outcome that you've still been able to hold on to the pricing? I think it's been almost six months that we are only selling CPCB4 now.
Yes, Sumanta, I can. I mean, that's what our endeavor is. Definitely, it will take another quarter or two to settle down, and we are watchful. Like I mentioned earlier, our focus is to go segment-wise in power gen and provide the right product, the right services segment-wise. We do not look at pricing across the board in one particular way. We go and do deeper analysis segment by segment on what the segment needs, what their buying behavior is, what are the value adds they need. That is how we define our pricing. That is probably one reason why we've been able to hold on and provide the right value to the customer for which they are ready to pay those kind of prices, right? It is a very, very nuanced strategy that we are following.
Thank you. My second question is on the exports. Now, as I understand correctly, if I'm wrong, there are certain lower emission non-products, I think CPCB2 and probably below. You are one of the few manufacturing units in Cummins Global who still manufacture them. So my question is that, are you seeing demand? Have you seen Latam is doing well? Is it this segment which is helping you and the fact that probably you are one of the few entities which continue to manufacture these products?
That is right. We continue to be the place from which we provide these products. Also, I did share that it is our effort to position ourselves rightly in those markets. If you look at Europe, Europe by itself is many markets. Italy behaves differently from France, differently to another country. We have gone down into those kinds of details, done an assessment of how we place our products at what price point, what is competition doing, what are the products they need. We have done a lot of that effort as well. Similarly, for Latin America, every market behaves differently. Chile would behave differently from Peru to Colombia. There are market-based efforts. Yes, you are right. There are these non-emissionized products, and we are the ones supplying those in these markets.
Thank you. Thanks a lot for the opportunity.
Thank you. The next question is from the line of Uttam Kumar from Evendis Park. Please go ahead.
Good morning. Thank you for taking my question. The first question is with regards to some clarity on the employee cost. I mean, two things you had highlighted in your insulin logs. One was on the reclassification which was done, and the other one was on the variable pay component. Could this be more color? Is it reclassification from the employee to the other cost line item where we are seeing almost a 40% increase on a variable basis? The other one is with regards to the variable pay which you stated. Just want to understand, is it in the base year which you're talking about? Is it in the FY2024? That's the first question.
Okay. Uttam, reclassification, just like you said, it is a reclassification between employee cost and other expenses. You are right. From a variable pay perspective, in quarter three of financial year, the last financial year, we had this impact of the overall variable pay throughout, which is not there in the quarter four of this financial year. That is the difference.
Okay. This 3Q number you're talking is FY2024, am I right?
Sorry, I didn't get that question, Uttam.
This variable pay component of 3Q which you said, this is of FY24?
FY25. FY25.
FY25. Okay. Got it. All right. The next question is with regards to the power gen, again, hopping on the pricing trend. Just want to understand, I mean, you had already cited that your spacing actions are more segment related. You go into specific products and then take a call on that. On a blended basis, if we have to talk about FY25 on the CPCB4 plus rated products, is there any color on what is the percentage of price increases which you have taken or any corrections which you have taken in the last year?
I'm sorry, your voice wasn't clear. I'm going to ask you if this is what you asked. Did you ask that in the last year, did we take a pricing increase? Is that what you asked me?
Yes. Any price increase in the power gen segment? If so, to what level or what quantum was the price increase in the power gen?
No price increase. No price increase. We've just held on to our pricing that we had introduced when we had introduced CPCB4 plus product largely.
Got it. Thank you.
Thank you.
Thank you. The next question is from the line of Subramaniam Yadav from SBI Life Insurance. Please go ahead.
Thank you, ma'am. Ma'am, you have mentioned a double-digit growth for next year. If you could give some color on whether what is driving it, whether domestic and specifically within power gen, which segment would be driving the double-digit growth?
Yeah. So from a growth outlook perspective, we are expecting power generation segment to grow across the board in the different low horsepower, medium horsepower segments. Our distribution business continues to grow. And from an industrial business perspective, there are certain segments like railways and construction segment holding on to its growth. We are definitely looking at demand in the domestic market across power gen, industrial, and distribution business, and we anticipate double-digit growth. From an export perspective, it's a little uncertain at this point in time. While our endeavor is to get that kind of growth in exports, the tariff impact not being fully evaluated is still uncertain. We are more certain about the domestic demand at this point in time than exports.
Okay, ma'am. Ma'am, but the power gen base has been very high for last year, and we have seen that impact in this quarter also. Still, we believe that this segment would be growing about 10% next year.
Power gen continues to grow in the country at that pace, Subramaniam. There is nothing different that we are seeing this year. I'm sorry if I didn't get your question. If you can repeat it once more.
No, ma'am. Because in this quarter, you mentioned that there was pre-buying in Q4 last year, right, which has impacted our domestic number. So already the base for FY2025 is higher. I am expecting whether the similar base effect would impact our power gen in FY2026.
No, no, no. No. Actually, I mentioned in one of the answers earlier that CPCB4 volumes are still not all the way up to what we had seen as CPCB2 volumes. I do not think there is a base effect. In fact, we anticipate the volumes to grow.
Okay. Thanks. Ma'am, if you can highlight any project revenue in this quarter and for full year also?
There's nothing specific to note there, Subramaniam. It continues. It comes in certain quarters. It doesn't come. It's based on project execution. Overall, from a year perspective, there's nothing specific to share from a project business perspective.
Lastly, ma'am, if you can, how do we read into this LHP in export? Because that has been growing last quarter and this quarter. How does that impact our margin? Is the margin in LHP also very high in the export market?
It's a blend. I won't be able to exactly say, Subramaniam, but it's a blend. Since we serve the entire world and these are priced differently in different markets, it won't be easy to say that.
Okay. Thank you very much, ma'am. Yeah.
Thank you. The next question is from the line of Srinidhi Karlekar from HSBC. Please go ahead.
Yeah. Hi. Thank you for the opportunity. My first question is related to a slowdown in the growth rate for the distribution segment. It used to grow at quite significantly higher number compared to 5% that we reported. Would it be possible to throw some light on this?
You're looking at the quarter on quarter number. If you look at the whole year number, the distribution business has grown 14%. Quarter on quarter, there are different things that can happen, Srinidhi. The December quarter does tend to be a very high volume quarter for the distribution business for various reasons. I would suggest you look at the year-on-year number, and the distribution business continues to grow at a very healthy rate, 14% full year growth as compared to the last year.
Isn't this quarter also YoY is 5%? Did I note that correctly? YoY growth in this quarter?
Yes. You are right as compared to the last year. Yes. Yeah. But don't worry.
Okay. So this number, ma'am, I was wondering, we were even adjusted for seasonality because I'm considering YoY number. It has been.
You're talking about the YoY number. I understand that. There can be shifting of demand between quarters. There are large rebuild orders sometimes that we get, which get executed in one quarter versus the other, and they can switch the revenues. There is nothing from an overall market or demand perspective I would request you to read into this. This is really based on some large order executions.
Understood. That is very clear. My second question is related to U.K. end market. As you understand, it is one of the large end markets for Cummins India. Wondering, does this whole free trade agreement between U.K. and India, does that help or it doesn't help much?
Srinidhi, I would call out and say Europe. Overall, Europe is a large market for us. It is not specific to the U.K. So does the trade agreement impact us as much? It is not such a huge contributor to the overall Europe. Mainland Europe contributes more to our revenues.
Understood. Okay. Those were my questions. Thank you for asking that.
Thank you.
Thank you. The next question is from the line of Aditya Mongia from Kotak Securities. Please go ahead.
Yeah. Thank you for the opportunity. I'll go ahead with my questions. The first one, you talked about the current run rate in power gen being 80-85% of the usual number. Could you give us a sense of what has been the full year number in this context? And I'm assuming this is only applicable to the CPCB4 portion of power gen. Could you also give us that number for the full year?
I won't be able to give you that number. That was my estimate that around 85% of CPCB2 volumes is where CPCB4 plus has reached. Given that the market is comprised of both CPCB2 and CPCB4 plus, I won't be able to give you that exact number, Aditya.
Yeah. Suffice to say, this should help you grow your power gen portfolio well into next year, right? Because.
Absolutely.
You would want to assume that in the first half, it felt the normalization is complete and maybe some growth incrementally. Sure. The second part of my question was, there has been some chatter of return of scrappage policy for 15 years plus kind of gen sets. Could you comment on any views on the same and whether that can happen in this year sometime and the benefit?
Return of scrappage policy as a policy document has existed for a few years. Different states need to implement this. There are certain states which have actually put this into effect. You will probably understand that unlike the automotive segment, there is no registration of gen sets centrally happening anywhere. In order to, while the policy might exist, in order to implement that policy, that is where different states struggle. As of now, all states have not implemented the scrappage policy. Some have, but even there, the implementation is not exactly the way it could be. I would say the policy has existed, and we continue to advocate for those scrappage policies to be implemented. It has not happened yet.
Sure. That helps. The last part would be on distribution. It would be useful, as it's become a large segment for us in terms of contribution. If you could, in some ways, help us kind of understand the breakup of the same and the key drivers inside would help us then think through growth in a slightly better manner. Any color on this thing. Thank you.
Distribution business serves our power generation segment and industrial segment. In the industrial segment, these are long-term contracts with our customers. In power gen as well, there are contracts that we enter into with our customers, also provide services like extended warranty. There has been a lot of effort we have been putting on penetration in the power gen market that has yielded results. There are a lot of rebuild engine orders that come to us from the industrial market, also from power gen, but largely from the industrial market. Those are the specific things that are helping us. Along with that, the distribution business focuses on new product launches which are value adds to the customer. How can the retrofit emission control devices, the dual fuel kits, the Cummins retrofit devices, all of these are efforts that the distribution business made.
These are the things that have contributed to the growth in the distribution business segment.
Just on this point, why I ask this question to you is that obviously your predecessor used to talk about, Ashwath used to talk about a five-year runway to growth. Is that something that you kind of see happening from here on, or should one be having a lower time frame of growth and then reassess? Just trying to get a sense of the penetration gains and whether that can hold this segment and go to shared over a long term.
If you're asking me very specifically the question on distribution business and its growth outlook, we are very positive on the growth outlook, and it will also grow at double digit or better. That is the growth path we have seen. We have seen the business grow across all these segments that I spoke about, and the efforts are yielding results. We are positive about the distribution business growth.
Thank you so much. Those were my questions. Thank you.
Thank you.
Thank you. The next question is from the line of Saurabh from Oakland Capital. Please go ahead.
Yeah. Hi. Am I audible?
Yes.
Yes.
Yeah. Hi. Hi, ma'am. My question, the first is we all know that data center demand is pretty strong. What I want to understand is, are we constrained by capacity in terms of servicing this demand? What are your thoughts there? Second, last year, we said that we categorically want to increase our market share in LHP and MHP. You said that you have kept your prices firm, and competition is pretty high. Have we been able to gain share in that or not? Thank you.
I'll answer your data center question first. Are we capacity constrained? No. We are not capacity constrained. We have capacity. Our product is very well accepted in the market. We are well positioned to cater to the needs of the data center segment. As far as growth in the LHP and MHP, our endeavor is to grow across segments, not just LHP and MHP. There are different efforts that go in growing in LHP, MHP, and HHP. We have gone even beyond that to get into customer segments and define what our growth and strategies are for different customer segments. We are looking at growth across these segments if I were to put it across.
What about that specific comment which was made in last few calls that we want to increase our share in LHP and MHP? How should we read that?
No. I don't think we have ever made a specific comment of just we definitely want to grow in the low horsepower segment. That goes without saying that we also have aspirations to grow in the MHP and the HHP segment.
Fair enough. Yeah. Sure. Thank you. Thank you, ma'am. Thank you very much.
Thank you.
Thank you. The next question is from the line of Amit Mahavar from UBS. Please go ahead.
Yeah. Ashwath, congratulations on a great fiscal 2025, especially in managing the competition very well. Ma'am, fiscal 2026, because in fiscal 2025, we enjoyed a lot of benefits. We had pre-buy, a very strong high KVA growth, a lot of cost adjustments that we could manage to counter the price impact of new nodes that competition is launching. Distribution grew 14% plus. We had data center which did very well. Fiscal 2025, what is the market share that we have of CPCB4 plus for the full year for Cummins? Second question is, how do you see these levers changing in 2026? Can the industry TAM, right, which is growing in maybe double digit for you, can the industry EBITDA pool grow in double digits? These are the two questions, ma'am. Thank you.
I won't be able to comment on the CPCB4 plus market share, but from an outlook of the market perspective, if we are specifically talking power gen, because that's what you mentioned.
Yes. Yes.
For now, we do see demand, Amit, across segments coming in. Some of this demand will be fulfilled in this quarter, some in the next quarter. We have not cited any trend as of now which would worry us. We are seeing demand. That's the best I can share with you today. There are decent inquiries and decent orders being generated across segments, and we have not cited any particular signs which would worry us.
Okay. Ashwath, thank you and good luck.
Thank you.
Thank you. The next question is from the line of Ashish from MLB. Please go ahead.
Hi, Ashwath. Can you hear me?
Yes.
Hello. Yeah. Sorry. For the distribution business, now with the new CPCB engines coming with a higher warranty, should we expect the growth in the distribution business to moderate, or that would not really matter?
Ashish, with the CPCB4 plus coming in, the warranty period is still the same. What we offer is extended warranty, which we have packaged in a product called Ashwath, which the customer has the choice to buy. We actually anticipate our penetration to grow because a few quarters ago, we had launched the Ashwath product, and now it is available for even the CPCB4 plus range. We actually anticipate our penetration to get better.
Understood. How do we classify this? This is a part of gen set or this income comes as distribution?
Distribution.
That was an addition. Okay. Just one small question on price. Understood. Just one last question on pricing. How should we think about pricing settling down over the next couple of quarters? Like any range? Are we talking about 2-5% decline or more than that? Any rough idea could be very helpful.
I won't be able to give you that kind of an assessment, Ashish. We are analyzing the market, and we don't have that kind of number specific that I can give you.
Okay. In our guidance, when we give a double digit, we would have some idea of how much is the pricing impact and how much volume we are expecting to grow. Anything around that would be very helpful.
That's our endeavor, Ashish. It is across the kind of penetration we want in the distribution business, the tenders that we anticipate winning in the industrial business segment and in the power gen segment across LHP, MHP, HHP. Yes, there is some amount of anticipation across the board on product mix, on pricing built in there. How it plays out is very difficult to share at this point in time or predict.
Sure. Thank you so much for the opportunity.
Thanks, Ashish.
Thank you. Ladies and gentlemen, we'll take that as the last question for today. I now hand the conference again over to Ms. Shweta Arya for closing comments. Thank you and over to you, ma'am.
Thank you. Thank you so much, everyone, for your active participation and engagement during the call today. Cummins India maintains a stable economic outlook as Indian markets continue to be resilient. India's GDP is projected to grow by 6.5% in financial year 2026. Although some uncertainties remain regarding changes in global trade policies, Indian reforms are focused on deepening economic cooperation and prioritizing infrastructure development. Backed by a strong balance sheet, world-class manufacturing infrastructure, and top-tier talent, the company's growth trajectory remains strong. With this, I close this call. Thank you so much, everyone.
Thank you, members of the management. On behalf of Cummins India Ltd and the leadership team, we would like to thank you for joining us today and making it an engaging session. We are ending the conference now, and you may disconnect your lines. Thank you.