Cummins India Ltd Management Discussions

1. Industry Structure and Developments

Economic Trends and Implications

¦ Global economy turned out to be stronger than expected in Financial Year 2023-24. As central banks across the globe continued to guide inflation towards pre-pandemic levels, economic activity grew steadily, defying warnings of stagflation and global recession. Major economies were able to support aggregate demand through expansionary budgetary spending and rising private consumption. Moderation in energy and commodity prices were able to support the nascent recovery of private capex.

¦ The Indian economy has showed resilience and emerged as the fastest growing major economy, with GDP growth rate of 7.6%¹ for FY 2023-24. Core industry output has reported a growth in FY 2023-24 driven by higher output of coal, cement, steel, and power sectors. The ratio of real Gross Fixed Capital Formation (GFCF) as percentage of GDP rose to 34.9% in FY 2023-24¹, driving the growth of the capital goods sector.

¦ Infrastructure development continues to be a focus area for the government with multiple projects being executed under the initiatives - PM Gati Shakti and the National Infrastructure Pipeline. Development of access-controlled expressways, Dedicated Freight Corridor (DFC) and Multimodal Logistics Parks (MMLPs) will significantly reduce the cost of logistics and improve the competitiveness of Indian products in global markets.

¦ Manufacturing sector has emerged as one of the key drivers of economic growth in FY 2023-24. India is emerging as a preferred destination for organizations looking to diversify their supply chains and align them with shifts in global trade and geopolitics. Efforts by government and industry partners to develop domestic capabilities across the value chain in sunrise sectors like semiconductors, defence, and electric vehicles will increase the share of manufacturing sector in the overall GDP.

¦ Sustainability and decarbonization are emerging as strategic priorities across industries as governments and organizations take necessary steps to combat the adverse effects of climate change. India added 18GW of renewable energy capacity in FY 2023-24, taking the overall installed capacity to 190GW. The uptick in capacity addition will continue as renewable energy systems become more cost efficient driven by subsidies and mandates. Adoption of Energy Storage Systems (ESS) will accelerate grid integration of large-scale renewable energy systems.

¦ Hydrogen, as a fuel, offers immense potential to decarbonize sectors like steel, refining and transportation. The Strategic Interventions for Green Hydrogen Transition (SIGHT) Programme, with an outlay of Rs.17,490 crore², seeks to establish the hydrogen ecosystem in India by offering fiscal incentives for production of Green Hydrogen and manufacturing of electrolyzers. With favourable policies and improving investment climate India, will continue to attract investments in low carbon technologies.

¦ The growth prospects face headwinds from rising geopolitical conflicts and disruption to trade and energy flows. While business sentiments have improved marginally in developed economies, inflation continues to be stubborn delaying prospects of economic revival. Increasing trade protectionism is altering flows of capital as countries look to pursue self-sufficiency and economic security.

2. Opportunities and Threats

Key Opportunities

Power Generation

¦ FY 2023-24 witnessed a robust growth for Power Generation market driven by strong business activity and economic growth across industries. Key segments driving the growth for the Power Generation market included Datacentres, Real estate, Manufacturing, and Infrastructure.

¦ Emission norms have become more stringent for the power back up industry, with the introduction of CPCBIV+, on July 01,2023 for products up to 800kW. Your Company has launched best-in class, sophisticated and emission compliant products for the customers across the range.

Industrial

¦ Railways: Indian Railways is set to achieve its ambitious target of 100% track electrification of broad-gauge network by 2024 coupled with addition of new tracks. This is driving demand for Diesel Electric Tower Cars (DETCs) that are used in the installation and maintenance of overhead electric lines. With the expansion of the railway network and dedicated freight corridors becoming operational, growth is expected in the track maintenance sector.

Indian RailwaysRs. focus on reducing dependency on diesel in the auxiliary power sub-segment is driving demand for hotel load converters. Your Company has ventured into the supply of hotel load converters which will help augment business in the auxiliary power sub-segment.

With the introduction of CPCBIV+ your Company is prepared to introduce compliant products for Powercar application.

To move towards a green economy with net zero emissions, Indian Railway is also evaluating hydrogen fuel cell solutions for the "Hydrogen for Heritage" initiative. Your Company is actively exploring ways to partner with Indian Railways on this initiative.

¦ Mining: India achieved record coal production in FY 2023-24 at 1 billion tonnes, registering an annual growth of 12%. With increased power demand further intensifying the need to enhance domestic coal production, new coal blocks are being developed, and mining operations are being contracted to mine developers & operators and private players to enhance productivity. Growth in domestic coal production is expected to have a favourable impact on the Heavy Earth Moving Machinery (HEMM) market especially high tonnage dump trucks for which your Company is a critical technology supplier.

¦ Marine: In line with the Indian NavyRs.s fleet expansion and fleet modernization plan backed by the Rs.Atmanirbhar BharatRs. initiative, there is a strong pipeline of opportunities from defence PSU shipyards. Increased opportunities are expected in the commercial marine segment due to the Government of IndiaRs.s mandate to use indigenous vessels for inland water transport and vessels operating in government owned ports.

¦ Oil & Gas: Strong momentum in city gas distribution network expansion due to planned increase in CNG stations from 6,000 now to 17,000 by 2030. In line with this, your Company continues to expect strong demand for gas compression engines from the city gas distribution segment.

¦ Defence: Reforms by Government of India to focus on indigenous design, development, and manufacturing, along with intent to promote exports of defence equipment expected to boost domestic

production. Your Company is expecting growth in engine requirement from OEMs participating in this sector.

¦ Pumps: Your Company is looking to export of FM / UL certified pump packages to global OEMs.

¦ Construction: The construction sector is poised for rapid growth over the next decade as the pace of infrastructure creation gathers higher momentum with rising government capex. Your Company is a leading engine supplier in the Construction equipment segment and has established strong partnerships with OEMs and hence is well placed take advantage of the strong industry tailwinds,

*Sources: Ministry of Railways, IROAF - Indian railways Organization for Alternate fuels, Ministry of Coal, Ministry of Petroleum and

Natural Gas, Ministry of Defence, Ministry of Road Transport and Highways and India Investment Grid - Government of India.

Distribution

¦ Commission of Air Quality Management (CAQM) shared guideline for use of diesel-based power backup gensets in Delhi-NCR, which mandates generator to be retrofitted with Emission Control Devices (ECD). The emphasis on cleaner energy alternatives by the government will increase demand for Dual Fuel Kits (DF kits) and Retrofitted Emission Control Devices (RECDs).

¦ In addition to the broad range of CPCBIV+ complaint DG sets, your Company, also launched an extended warranty service package, Ashwasan IV+, to facilitate smooth emission transition for its customers. Growth outlook for the Powergen business is positive on the back of strong demand for uninterrupted power supply from Datacentres, healthcare, and commercial realty segments.

¦ Indian construction equipment sector is expected to record healthy double digit revenue growth in FY24, driven by governmentRs.s focus on infrastructure development, rapid urbanization, and increased construction activities. Investment in the infrastructure sector and the increasing pace of project delivery will further boost the utilization of equipment leading to the requirement of maintenance and better aftermarket revenue.

¦ Prioritizing the safety of passenger trains, Indian Railway has increased allocation for improving the safety and reliability of its rail network. This is expected to increase track maintenance activities, subsequently driving up the usage of overhead cranes and track maintenance equipment, driving demand for aftermarket services.

¦ The ongoing expansion of coal production capacity, to meet higher energy demand, is poised to fuel growth in the mining sector. This surge is anticipated to boost equipment utilization and drive demand for HEMM (High Tonnage) vehicles equipped. Moreover, there will be a growing emphasis on aftermarket services, spare parts supply, and training initiatives for both operators and maintenance staff to ensure higher uptime and improve productivity of assets.

¦ Rapidly developing domestic gas pipeline network under the City Gas Distribution (CGD) initiative in various cities and will lead to higher demand and usage for gas compressor engines and parts.

Exports

¦ Your Company continues to pursue opportunities to grow the PowerGen exports market by focussing on segments like telecom, rental, healthcare, manufacturing, and marine.

¦ Your Company is seeing moderation in demand from markets in Europe and Middle East due to economic slowdown and heightened geo-political crisis.

Key Threats

Power Generation

¦ With the domestic players expanding their product ranges and international players gaining foothold in the region, competition is intensifying in Powergen segment. As a result, pricing pressure is intensifying across the industry.

¦ Risk of cost escalation and supply constraints driven by supply chain disruption, raw material shortages and tariff wars.

Industrial

¦ Railways: With rail electrification work nearing the 100% target, demand for DETC is expected to soften going ahead.

¦ Mining: Timely allocation of coal blocks to private players and ramping up of coal production is critical to boost demand for mining equipment.

¦ Construction: Delay in notification of CEMM (Tracked/Excavator) Emission norms is delaying the adoption of clean diesel technology in Excavator segment. Your Company is ready and excited to launch best in class products for expected Construction, Earthmoving, Material Handling and Mining Equipment (CEMM) BS IV emission norms.

Distribution

¦ Aggressive pricing in LHP and MHP segments is resulting in intense competition for new genset sales to the banking, commercial, and residential segments.

¦ Increasing Rail electrification will restrict usage of diesel engines to Diesel Electric Multiple Units (DEMUs) and Power Car applications which will reduce maintenance requirements from customers.

¦ The growing competition amongst Manning Contracts for railways is eroding margins for the industry thereby limiting scope for participation.

Exports

¦ Your Company anticipates volatility in demand due to economic slowdown in key markets, ongoing geopolitical conflict, and supply chain disruptions.

¦ Your Company is experiencing strong competitive activity in the Powergen segment. Global OEMs as well as Genset assemblers are driving increased competition in the market.

3. Product-wise Performance

Power Generation

¦ Your Company launched CPCBIV+ compliant products across the range up to 800kW, with sophisticated technology and indigenous components for the Power Generation market.

¦ In FY2023-24, your Company has successfully installed and commissioned 2000+ units of CPCBIV+ gensets across India, with higher traction in Delhi NCR.

Industrial

¦ Railways: Your Company has strengthened its market presence and partnership with Indian Railways through the supply of complete DETC propulsion packages, CPCB IV+ compliant diesel alternator sets and Hotel Load Convertor (HLC).

¦ Marine: Your Company has successfully delivered the largest genset of 1.5 MW for INS Vikramaditya of Indian Navy. DG sets >1 MW for Commercial marine applications have also been supplied to reputed shipbuilders. 2.3 MW propulsion engines delivered to Larsen & Toubro for use in multipurpose vessels of Indian Navy.

¦ Defence: Production ramp up of key applications such as Missile Carrier Vehicles, Armored personnel carriers, Towed Artillery Guns is driving demand of engines >400HP. Successful proto engine delivered for Light tank Rs.ZORAWARRs. project of Indian Army.

¦ Construction: Your Company continues to be one of the market leaders in excavator segment and has successfully completed certification of QSB4.5 and QSB6.7 to address CEV BS V much ahead of the product launch.

Distribution

¦ Robust sales of DF Kits and RECD in the year driven by regulatory push from CAQM mandates to use Emission Control Devices (ECDs) on operational DG sets. Your Company has launched an inhouse developed RECD and undertaken pilot installations.

¦ To cater to the high-growth On-highway segment, your Company launched a new range of brake linings, clutches, Crankcase Ventilation Manager, and Fuel Quality checking Kits.

¦ Diesel Exhaust Fluid (DEF), Intermediate Bulk Container (IBC) launched last year gaining traction amongst end-customers through direct fleet connect. Strong pull seen from the market for the CompanyRs.s product.

¦ Rolled out a new range of Service Products such as, Rust Guardian, Hand CleanX, and Clean Master in 2023.

Exports

¦ Lower demand for PowerGen products from Europe, Middle East and Asia Pacific markets resulted in the decline of Exports revenue of your Company during the year.

4. New Business initiatives for Financial Year 2023-24

Power Generation

¦ Focusing on customer needs, significant steps were taken to improve the power density of products to reduce the total cost of ownership, lower the maintenance cost and provide the benefit of a smaller installation footprint.

¦ CAQM released a notification in October 2023, for improved emission norms for gensets >800kW, expecting a reduction in PM, CO and NOx for existing and new gensets in the NCR region. Your Company with its well-established technology leadership, is meticulously developing technology for the products in this range, that comply with the new emission standards.

Industrial

¦ Railways: Your Company has succeeded in testing and shipment of CPCBIV+ compliant diesel alternator set for powercar, track recording car and a Hotel Load Convertor to meet the requirements of the auxiliary power sub-segment of Indian Railways.

¦ Marine: Your Company has strong order board for commercial marine and has successfully onboarded new customers.

¦ Mining: Your Company continues to innovate and develop fit-for-market products to expand its presence in the HEMM segments.

¦ Pumps: Your Company has successfully expanded its product portfolio with high-speed ratings of FM / UL certified engines for the global pumps segment.

¦ Defence: Your Company has secured new orders for the wheeled Troop carrier vehicles and Artillery Guns from Defence OEMs.

¦ Construction: Your Company will continue to focus on expanding its product portfolio with unregulated and electronic engines for higher tonnage excavators, which continues to offer excellent value proposition to our partners.

Your Company continues to develop advanced engines on fuel - agnostic platform with best in class power density and efficiency for the compressor & construction segment.

Distribution

¦ Your Company launched Ashwasan IV+, an extended warranty service package for new range of CPCBIV+ compliant gensets. This extended warranty provides customers with hassle free maintenance and further demonstrates our commitment to reliability and dependability.

¦ Your Company partnered with Repos Energy to launch DATUM range of products at ExconRs.23. DATUM is an IoT enabled fuel storage device integrated to a doorstep delivery ecosystem. This solution integrates the end-to-end requirement of fuel management for our customers.

¦ Your Company supplied two HHP marine engines for repowering of Diesel Alternator sets for a strategic customer.

¦ To improve customer support, your Company established a Command Centre for Telematics and Rapid Response Team (RRT) Technical support at its India Office Campus. This team will support real-time monitoring and quick issue resolution for new CPCB IV+ compliant Gensets installed with Telematics devices.

¦ Your Company introduced OPTIMUS, a cutting-edge sales and service application for our Distribution Network. OPTIMUS has replaced the existing Cummins Dealer Operating System (CDOS) by implementing Salesforce CRM, with the goal of maximizing the potential of business for the Company and its channel partners.

¦ Your Company has reinforced the Rs.MITWA Mechanics Loyalty ProgramRs. for Components, Engines, Filters, and Allied parts, encompassing broad range of parts. The program aims to boost sales, expand product range sales, raise awareness about Genuine parts, and enhance brand loyalty among Mechanics.

¦ Your Company organized All India Aftermarket Conference (AIAC), bringing together Aftermarket Leadership, Sales teams, and dealers under one roof for the first time. Cummins India Leadership

Team acknowledged the exceptional performance of the business in the previous year, and charted a strategic roadmap with aspirational goals, for the upcoming year.

Exports

¦ Your Company introduced low kVA Gensets targeted towards unregulated markets, in line with the Fit-for-market strategy. The Company has also invested in release of Low kVA emissionized products for specific markets globally.

¦ Along with the improvements in products and processes, your Company is leveraging channel synergy to improve understanding of customer requirements and improve sales.

5. Achievements

Power Generation

¦ Your Company achieved volumes of nearly 26,000+ generator sets in FY 2023-24, providing nearly 6,700 MW power to customers across India.

¦ Your CompanyRs.s efforts to improve their product accessibility for their customers in the Powergen market continues with the expansion of the dealer channel with the GOEMs, from 86 dealers in FY 2022-23 to 113 dealers in FY 2023-24.

¦ In FY 2023-24, your Company successfully sold 500+ units of high performance HHP products, primarily catering to key segments such as Datacentre, Manufacturing & Commercial Realty.

¦ In the high horsepower segment, your Company successfully executed the orders for a large hyperscale datacenter coming up in India. Hyperscale datacentres present a huge business potential and with this prestigious win your Company is well positioned to expand its presence in this segment and meet the stringent customer requirements.

Industrial

¦ Railways: Your Company maintains a strong partnership with Indian Railways and was able to secure orders as approved source for Diesel Electric Tower Cars (DETCs).

¦ Marine: Your Company recorded the highest ever annual sales driven by robust execution of government and commercial marine orders.

¦ Mining: Your Company has made further inroads in Heavy Earth Moving Machinery (HEMM) market by securing orders from key OEMs.

¦ Defence: Successful delivery of proto engine for Light tank Rs.ZORAWARRs. project of Indian Army.

¦ Construction: With strong customer focus, your Company has won businesses from new and existing customers in both tracked & wheeled equipment categories in unregulated electronic engines which offers excellent value proposition.

Distribution

¦ DBU achieved Net Promoter Score (NPS) of 90% which is the testimony of customer loyalty towards the Company, and its service support.

¦ Indian Space Research Organization (ISRO) recognized your Company as a valuable partner, appreciating the dedicated power backup support for the successful launch of Chandrayaan-3 and Aditya L1 space missions.

¦ Integral Coach Factory (ICF) entered into a contract with your Company for maintenance and servicing of DEMU engines.

¦ In 2023, wheeled applications in the agriculture segment, moved from TREM III to TREM IV emission norms. Your Company assisted Agri DOEMs by conducting equipment trials and homologation thereby reinforcing its brand promise of innovation and dependability.

¦ Your Company helped to power the worldRs.s largest hockey stadium in Rourkela with two 750kVA and two 600kVA Gensets.

¦ Contract for part supplies to Coal India through Company depots was renewed and is expected to drive sales growth in the coming year.

¦ Your CompanyRs.s service team was appreciated by many customers for promptly assisting them amidst Cyclone Michaung in Chennai last year. Most of the DG sets were submerged due to heavy flooding in and around Chennai. The service team promptly attended to customer complaints and restored the DG sets for emergency stand-by power.

Exports

¦ Your Company introduced 38L electronic engine to cater to North America and Central America markets in the last financial year.

¦ The Low kVA Fit-for-Market 2.0 products are gaining traction in the unregulated markets of Latin America, Africa, Middle East, and Asia Pacific.

6. Outlook and Initiatives for the Current Year and Thereafter

Power Generation

¦ Your Company will focus on enhancing current products particularly in high horsepower range and developing value added offerings for the customers.

¦ With greater focus on more stringent environmental norms in the future, your Company is positioned favourably as a pioneer in producing engines with cleaner technology.

¦ Power back-up solutions operating on alternate energy sources are expected to enter the power generation landscape in the coming years. Your Company sees these technologies as opportunities to serve customers since they become more viable.

Industrial

¦ Your Company is investing to offer locally built products to customers and support the Government of IndiaRs.s "Make in India" and "Atmanirbhar Bharat" initiative.

¦ Railways: With continued efforts towards achieving 100% electrification of broad-gauge network, your Company is looking to pursue growth opportunities in electrified propulsion system solutions.

¦ Marine: Your Company aims to maintain its relationship with the Indian Navy, Coast Guard as well as major shipyards to offer integrated propulsion and genset packages for upcoming projects.

¦ Mining: Your Company continues to invest in new technologies in mining segment for higher capacity equipment and future emission regulations (CEMM).

¦ Defence: Your Company is well placed to address emerging opportunities resulting from Govt. of IndiaRs.s focus on giving boost to domestic defense manufacturing industry and increasing share of indigenous content in defence equipment.

¦ Construction: construction segment in India is expected to witness healthy growth driven by increased momentum in implementation of infrastructure projects.

Distribution

¦ On-highway Aftermarket efforts have started creating pull in the market with various initiatives like Loyalty programs and fleet engagement programs. The Company expects to strengthen its position in the On-highway segment through fit-for-market product and service offerings, improved last mile reach and enhanced brand recall.

¦ In response to the growing focus on Environmental, Social, and Governance (ESG) priorities among its customers, your Company plans to expand its emission-controlling product portfolio to new business segments and applications. This strategic move is further amplified by the increased focus on reconditioning engines, which promotes sustainability through product life extension.

¦ The Company proactively establishing channels in key regions across the globe to leverage potential synergies by aligning products with market demands for future growth.

Exports

¦ Your Company is focused on increasing the exports of its products and is positioned strongly in the marketplace across key geographies.

¦ Focusing on customer needs, your Company has taken significant steps to improve engagement with customer and consultants from Latin America, Asia pacific, Africa and Middle East regions.

7. Risks and Concerns the Management Perceives

¦ Your CompanyRs.s export growth hinges on the increase in demand in key geographies across the globe partner countries. The Company continues to be cautious about exports business performance due to the ongoing economic uncertainty and aftereffects of the pandemic in partner countries. Because of our international business presence, we are exposed to foreign currency exchange rate risks.

¦ Capital investment in the private sector has been lagging even though the countryRs.s attractiveness for investment has been well established. Coupled with inflation being on the higher side along with high interest rates, delayed capital investment plans could have downside risk for domestic demand.

¦ As your Company readies for scaling up sales of CPCB-IV+ compliant products, there is expected to be some downside risk to the demand of the products given pre-buy in the months leading to the change. These shifts in demand have been considered in our plans and your Company will be closely tracking the movement of the market and ensure necessary actions are taken to mitigate the risks arising from the change.

¦ Further, the Company has identified certain sustainability issues pertaining to environmental and social matters that present a risk or an opportunity to the CompanyRs.s business which includes Climate

action, Cybersecurity, Product innovation and emission compliance, Human capital management, Sustainable water supplies, etc. The detailed information is provided in the Business Responsibility and Sustainability Report which is appended as Annexure 12 and forms part of this Report.

Measures to Mitigate Risks

¦ To counter the slowdown in global economic growth and demand, it was imperative to maintain focus in the domestic market. New product and market development, overall portfolio diversification and better regional penetration for existing products was and will continue to be the focus areas for your Company.

¦ Various restructuring projects combined with cost reduction programs, which leverage Six Sigma approach, such as Rs.Accelerated Cost EfficiencyRs. (ACE) V, Accelerated Move towards Zero Defects (AMaZE), Accelerated Supply Chain Excellence and Transformation (ASCENT) have had a significant positive influence on your CompanyRs.s profitability. Continued focus on these efforts will help your Company to maintain cost leadership in the domestic market and will remain the preferred source for exports.

¦ Your Company is actively working on its Supply Chain for further improvements. Dual sourcing adjusted payment terms with financially weaker suppliers, Price revisions, Supplier Agreements, Inventory building (areas wherever necessary) are some of the measures that your Company is taking to make the supply chain more agile and resilient against disruption.

8. Internal Control Systems and its Adequacy

Your Company has established adequate internal control procedures, commensurate with the nature of its business and size of its operations. These controls have been designed to provide a reasonable assurance regarding maintenance of proper accounting controls for ensuring orderly and efficient conduct of its business, monitoring of operations, reliability of financial reporting, accuracy and completeness of the accounting records, the timely preparation of reliable financial information, protecting assets from unauthorized use or losses, prevention and detection of frauds and errors, and compliances with regulations. Your Company has continued its efforts to align all its processes and controls with global best practices.

To provide reasonable assurance that assets are safeguarded against loss or damage and that accounting records are reliable for preparing financial statements, the Management maintains a system of accounting and controls, including an internal audit process. Internal controls are evaluated by the Internal Audit department and supported by the Management reviews. All audit observations and follow up actions thereon are tracked for resolution by the Internal Control function and reported to the Audit and Compliance Committee. As an ongoing program, for the reinforcement of the Cummins Code of Conduct is prevalent across the organization. The Code covers transparency in financial reports, ethical conduct, regulatory compliance, conflicts of interests review and reporting of concerns. Anti-fraud programs including whistle blower mechanisms are operative across the Company.

The Board and the Risk Management Committee takes responsibility for the overall process of risk management throughout the organization. Through an Enterprise Risk Management program, the CompanyRs.s business units and corporate functions address opportunities and the attendant risks through an institutionalized approach aligned to the CompanyRs.s objectives. The business risk is managed through cross functional involvement and communication across businesses. The results of the risk assessment and residual risks are presented to the Senior Management. The Risk Management Committee reviews business risk areas and business continuity plans inter-alia covering leadership excellence, customer centricity, technical capability and capacity, VPI execution, legal & environmental compliances, data security, product quality and product planning.

9. Key Financial Ratios

i) Details of changes in key financial ratios including significant changes i.e. change of 25% or more as compared to the immediately previous financial year along with detailed explanations:

Particulars	FY 2023-24	FY 2022-23	Explanation for significant change
Debtor Turnover	4.88	5.45	Not Applicable
Inventory Turnover	6.33	6.48	Not Applicable
Interest Coverage Ratio (Debt Service Coverage Ratio)	79.09	74.38	Not Applicable
Current Ratio	2.90	2.70	Not Applicable
Debt Equity Ratio	0.02	0.07	During the year, shareholdersRs. funds have increased on account of profits during the year. Borrowings have gone down on account of repayments.
Operating Profit Margin (%)	28.8%	22.2%	During the year, the Company could achieve higher revenue from operations and higher profits resulting in better Return on Equity Ratio.
Net profit Margin (%)	18.56%	14.77%	During the year, the Company could achieve higher revenue from operations and higher profits resulting in better Net Profit Ratio.

Note: The disclosed financial ratios are in alignment with Schedule III of Companies Act, 2013, as amended and as per guidance note on Rs.Division II - IND AS Schedule III to the Companies Act, 2013Rs. (Revised in January 2022) issued by Institute of Chartered Accountants of India. Please refer to Note no. 45 of Standalone Financial Statements for additional disclosure.

ii) Details of any change in Return on Net Worth as compared to the immediately previous financial year:

Particulars	Standalone		Consolidated
	2023-24	2022-23	2023-24	2022-23
Return on Net Worth (%)	28.83%	22.39%	27.84%	22.79%

Return on net worth is computed as net profit by average net worth. The details for change in return on net worth are explained in relevant sections above.

10. Human Resources Development and Industrial Relations

The total number of employees including the contractual employees stands at 3,930 as on March 31,2024.

Leadership Excellence

Your Company focuses on investing and building capabilities in leaders at all levels through various initiatives to develop Rs.Future ReadyRs. Leaders and build leadership talent for future needs.

In line with our Rs.Hire to DevelopRs. philosophy, we continue to invest in our Company sponsorship programs and leadership development programs. Details are following:

• 86 employees applied for education assistance to pursue higher education programs using the Global Education Assistance Policy (GEAP).

• Employee External Development Policy (EEDP) was launched in July 2023. 27 applications were received.

• Leadership Development Program - New cohort of before Building Success in You (BSY) was launched in July 2023 and 504 leaders were nominated to complete the program.

• Global Leadership Development Program (GLDP) sessions continued with 23 leaders as participants.

• 70 leaders were nominated to complete Building Success in Others (BSO) program.

• 93 employees continue pursuing the Company sponsored B.Tech and M.Tech Programs during financial year 2023-24.

Hire-To-Develop and Seamless Talent Deployment

Your Company is continuing with the important initiative of hire-to-develop that presents growth opportunities to employees for self-development by taking up responsibilities across functions and businesses. At least 183 professional employees have moved into different roles or functions within the organization. There were 6% of professional employees who were promoted to the next salary grade due to change in their job profiles and relative advancement in career growth.

As your Company continues to grow and expand, getting visibility to talent insights becomes increasingly important. By standardizing, integrating, and automating talent management processes. Your Company has provided Leaders with an efficient technology-based process called Integrated Talent Management (ITM). ITM touches the key stakeholders - employees, managers, and businesses and enables all to work together to achieve their goals and helps employees reach their full potential with two-way communication and feedback.

Your Company is working on the following strategic initiatives - Reimagine the HR function to meet evolving needs, deliver predictive and prescriptive talent analytics, and empower the workforce through technologies. Under these initiatives, leaders will have more autonomy and accountability to deliver talent management strategies. They will have greater real-time access to talent intelligence by which they can make more informed and proactive decisions. At every level, leaders will have the capability and capacity to deliver on their leadership responsibilities. Your Company is working towards making talent processes, tools, and approaches to be largely harmonized, allowing HR employees to consult more seamlessly across the organization.

Recruitment

Continuing the focus around employing the right and diverse talent at both entry and experienced level and developing them for future roles within the organization, this year, your Company hired a total of 863 professionals with 118 entry-level exempt professionals supplemented with 333 experienced exempt professionals and 412 non-exempt professionals.

The Company hired 88 (75%) female candidates at exempt entry-level in addition to 151 (45%) female candidates at exempt experienced level. This elevated our overall female representation in external hiring to 53%, thus showcasing our commitment towards improving gender equality. Your Company has increased its focus on diversity beyond gender by hiring a workforce from diverse backgrounds like People with Disabilities, LGBTQ & North-East region of India.

In partnership with the Business & Function Leaders, the Company is now successfully running the Rs.Partnership and EngagementRs. programs with premier B-Schools & Engineering Institutes to hire top Managerial & Engineering talent thereby continuing our focus on Rs.Hire to DevelopRs. philosophy at an early career.

This year again your Company continued its focus on increasing brand presence on social media platforms viz. LinkedIn, Facebook, and Instagram and will continue to focus on improving this engagement with the digital media.

Diversity, Equity, and Inclusion (DE&I)

Diversity, Equity, and Inclusion is in the DNA of your Company. Reiterating Mr. J Irwin MillerRs.s (Cummins Inc. Chairman, 1951-1977) famous quote "Character, ability and intelligence are not concentrated in one sex over the other, nor in persons with certain accents or in certain races or in persons holding degrees from universities", your Company has five Employee Resource Groups (ERGs) focusing on the primary dimensions of diversity namely: Gender, Generation, Culture, Person with Disability (PwD), and LGBTQ+. Promoting the organisationRs.s Diversity, Equity and Inclusion agenda, these ERGs work on initiatives that contribute to making organisationRs.s environment Rs.InclusiveRs. enabling employees to bring in their full potential at workplace. Initiatives undertaken by these ERGs include revisiting internal policies and processes, introducing new policy or guidelines to support a diverse dimension, rolling out effective workshops and awareness events, conducting audits and recommending workplace adjustments amongst others.

The Company continue to focus on increasing our gender (female) diversified talent, which is today at 31%. As the next step, your Company is working to achieve gender parity in our workforce, by moving the needle to 40% representation of female talent in next few years. In this journey, the WE Network (Women Empowerment Network) ERG will continue to be a strong partner with the business. As the Company continue to hire primarily through our campus and lateral hiring, it is also focusing on the pool of talent who have taken a career break but are now all geared up to restart their career.

Rs.WingsRs., Employee Resource Group, focused on hiring and providing a conducive environment to Persons with Disability, celebrated International Day of Persons with Disabilities (IDPWD) inviting senior India and global leaders to address the audience and had persons with disabilities share their success stories which inspired many. The Company also prioritising how it can create a safe and inclusive environment in the Company to also attract the LGBTQ+ talent. Rs.India PrideRs., ERG for LGBTQ+ community worked on creating more awareness, promoting Pride Ally program, and holding training sessions on bursting myths and sensitizing employees. The gender reassignment policy launched this year is also one step in making Your Company a safe and inclusive place to work for diverse employees. Another key area of focus is under-represented regions of our country in the workforce i.e., talent from Northeast India. Our ERG, Rs.EkamRs., is concentrating on spreading more awareness about different regions, cuisines, cultures etc through events, webinars, and competitions. In addition, your Company has an ERG, Rs.NeXusRs., focused on generation awareness and is also aspiring to improve the representation of "veterans" in our workforce.

Your Company is being successful in consistently delivering on its commitment to provide an inclusive environment to a diverse workforce, senior leaderRs.s commitment to lead, to advocate and to advise on issues related to diversity and inclusion are critical.

Megasite Update

At Cummins Megasite, Phaltan, living up to the spirit of Rs.One CumminsRs., your Company continues to move talent seamlessly within all the plants based on employee and business needs. Your Company believes in "Hire to Develop" and acts by providing internal opportunities as well as recruitment of fresh

talent through campus recruitment. Right talent balance is achieved through hiring special skills from outside to meet business talent needs.

At Cummins Megasite, your Company has achieved 19.1% female representation amongst the shop- floor employees and 15.7% female representation amongst the professional employees. The Company is actively working on implementing a broad plan to ensure retention & engagement of employees at Megasite, part of which has already been implemented.

Right Environment

Your Company is committed to fostering a physically and psychologically safe, integrity based, respectful, inclusive, high-performance culture that breaks down hierarchies and organizational boundaries while engaging the full talent of our diverse employees to delight all our stakeholders consistently. Your CompanyRs.s efforts to drive awareness and commitment amongst employees towards Rs.Cummins Code of Business ConductRs., Rs.Treatment of Each Other at WorkRs. Policy and other Ethics and Compliance policies continue year on year through various communication platforms, trainings, emailers, portals, posters etc. which helps in creating and sustaining the right environment for all the stakeholders, both internal and external to the organization. Every year, your Company utilizes its learnings via various speak up channels and ensures to upgrade all relevant policies to help its employees unleash their full potential. In addition to the other policy awareness and trainings, the Company also focuses its efforts on creating awareness, through training, posters, email communications etc. on "Prevention of Sexual Harassment" under the Prevention of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("POSH Act").

11. Cautionary Statement

Statements in the Management Discussion and Analysis describing the CompanyRs.s objective, projections, estimates and expectations may be Rs.forward-looking statementsRs. within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company operations include, among others, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in government regulations, tax laws and other statutes and incidental factors.