Cummins India (KKC)’s balance sheet has seen a stark change in the past 5 years, with increased allocation to investment properties and current investments, leading to a 150% rise in interest and rental income vs. a 12% decline in EBITDA over the same period. Other key takeaways from the annual report are: a) management increased focus on the industrial division through bundled offerings and new product introductions to capture a larger share of railways, mining, defence and construction (new emission norms from CY20) as power gen/export sales growth remain muted, b) it maintained tight control on expenses and trimmed its overall employee strength, but onboarding of engineers for its new Tech Centre led to a sharp increase in average remuneration by 20% vs. a median increase of 15%, c) the free cash flow yield improved to 3.7% in FY17-18 vs. 0.9% in FY14-16 as capital expenditure dipped, but RoIC declined to 16% vs. an average of 37% over the past 10 years, d) rental income jumped 33% on the commissioning of a new Tech Centre in Pune and is expected to cross INR 1bn in FY19 and e) group companies’ performances was muted, resulting in flat growth in dividend income.
Source: moneycontrol.com