The Directors of Cummins India Limited have pleasure in presenting the
 Fiftieth Annual Report and Audited Accounts of the Company for the year
 ended March 31, 2011.
 
 1.  FINANCIAL RESULTS:
 
 During the year under review, net sales turnover was Rs. 39,454,427
 (000) (Rs. 39,454 million) as compared to Rs. 28,448,704 (000) (Rs.
 28,449 million) during the previous year (39% higher). Exports and
 other foreign exchange earnings were Rs. 10,962,713 (000) (Rs. 10,963
 million) as compared to Rs. 5,076,277 (000) (Rs. 5,076 million) during
 the previous year (116% higher). Profit after tax was Rs. 5,909,903
 (000) (Rs. 5,910 million) as compared to Rs. 4,438,672 (000) (Rs.
 4,439 million) for the previous year (33% higher).
 
                                             2010-2011   2009-2010
                                            (Rs. 000)   (Rs.OOO)
 
 APPROPRIATION OF PROFIT:
 
 Profit before taxation                      8,023,667   6,109,147
 
 Net Profit for the year after tax but
 before tax on proposed dividend             5,909,903   4,438,672
 
 Tax on dividend                               487,161     399,213
 
 Dividend                                    2,970,000   2,376,000
 
 Transferred to General Reserve                590,991     443,867
 
 Balance carried to Balance Sheet            8,036,470   6,174,719
 
 2.  DIVIDEND:
 
 Your Directors have recommended a final dividend of Rs. 8/- per equity
 share of Rs. 2/- each fully paid-up, for the year ended March 31, 2011,
 in addition to the interim dividend of Rs. II- per share declared on
 February 3,2011, aggregating to Rs. 15/- per share for the year.
 
 3.  JOINT VENTURES:
 
 a) Cummins Exhaust India Limited (CEIL):
 
 Your Company divested its entire shareholding of 2 million equity
 shares in Cummins Exhaust India Limited (a joint venture engaged in the
 business of manufacture and sale of exhaust silencers and mufflers for
 Internal Combustion Engines), as it was no longer considered core or
 strategic to the Company. The shares were sold to MVG Acquisition
 Corp., USA on April 29, 2011 for a consideration of Rs. 534.40 million.
 
 b) Cummins Research and Technology India Limited (CRTI):
 
 The sales and other income of Cummins Research and Technology India
 Limited (CRTI), a 50:50 joint venture between Cummins Inc., U.S.A. and
 your Company, for the year ended March 31, 2011, was Rs. 467,843 (000)
 (Rs. 468 million) as compared to Rs. 409,910 (000) (Rs. 410 million)
 during the previous year (14% higher). CRTI has a Research and
 Technology Centre at Pune and is engaged in providing Information
 Technology Enabled Mechanical Engineering Development Services to
 Cummins Inc., its subsidiaries and joint ventures across the world.
 
 c) Valvoline Cummins Limited (VCL):
 
 VCL is a 50:50 joint venture with Valvoline International Inc., U.S.A.,
 a global leader in lubricants and engine oils. The net sales and other
 income of VCL for the year ended March 31, 2011 was Rs. 7,083,285
 (000) (Rs. 7,083 million) as compared to Rs. 5,821,835 (000) (Rs.
 5,822 million) during the previous year (22% higher). VCL has declared
 a dividend of Rs. 10/- per equity share of Rs. 10/- each on equity
 paid-up share capital of Rs. 190 million during the Financial Year
 2010-11.
 
 4.  INITIATIVES AT THE CUMMINS MEGASITE :
 
 Owing to continued strong demand, your Company stepped up its expansion
 initiatives at the Cummins Megasite at Phaltan with the following
 projects :
 
 - A High Horse Power Engine Rebuild centre - which has a state of the
 art facility to rebuild HHP engines, started its operations in March
 2011.
 
 - A Parts Distribution Centre (PDC) - which will undertake kitting of
 parts and components and distribution of the same from a centralized
 location to cater to the requirements of other Cummins plants as well
 as after market, is under construction. The PDC is expected to commence
 operations in the third quarter of this year.
 
 - A unit for the manufacture/assembly and upfit of B, C and L series
 engines is also being set up at the Megasite.  This facility is
 expected to commence operations by the first half of 2012, with an
 annual capacity of approx. 20,000 engines. The plant would cater to the
 requirements of engines for the construction, compressor, marine and
 fire pump markets.
 
 - A facility for the manufacture of Power Generator Sets and G-Drives
 in the low and medium horse power range is also being set up on the
 MIDC SEZ at Phaltan. This facility is expected to commence production
 by the middle of 2012 and would have a matured annual capacity of
 51,000 units by 2015, mainly for export markets.
 
 Your Company also identified opportunities to provide support to
 Project Affected People (land owners) by way of providing employment to
 qualified and eligible members and extending education assistance to
 others.
 
 5.  MANAGEMENT DISCUSSION & ANALYSIS / CORPORATE GOVERNANCE REPORT :
 
 As per clause 49 of the Listing Agreement with Stock Exchanges, the
 Management Discussion & Analysis Report and Corporate Governance Report
 are annexed and form part of the Directors Report.
 
 6.  CODE OF CONDUCT COMPLIANCE :
 
 A declaration signed by the Chairman and Managing Director affirming
 compliance with the Companys Code of Conduct by Directors and Senior
 Management, for the Financial Year 2010-2011, as required under Clause
 49 of the Listing Agreement with Stock Exchanges is annexed and forms
 part of the Directors Report.
 
 7.  DIRECTORS RESPONSIBILITY STATEMENT:
 
 In pursuance of the provisions of section 217 (2AA) of the Companies
 Act, 1956, your Directors make the following statement: -
 
 (i) that in the preparation of the annual accounts, all applicable
 accounting standards have been followed and there was no material
 departure from the accounting standards;
 
 (ii) that the Directors 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, 2011 and of the profit for
 the period April 1, 2010 to March 31, 2011;
 
 (iii) that the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956, for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities; and
 
 (iv) that the Directors have prepared the annual accounts on a going
 concern basis.
 
 8.  CONSERVATION OF ENERGY:
 
 Your Company continued to undertake various energy conservation
 initiatives during the year, some of which are given below :-
 
 Engine Business Unit Plants (Kothrud and Pune - Nagar Road) :-
 
 - Reduction in power consumption of KV ATPU area for lighting, cooling
 towers, and other applications.
 
 - Waste Heat Recovery from powerhouse generator set by generation of
 hot water for use in canteen.
 
 - Reduction in energy consumption of hydraulic press by machine cycle
 modification.
 
 Power Generation Business Unit Plants (Kasar Amboli and Daman) :-
 
 - Compressor AC Drive control installation.
 
 - Installation of energy efficient lights.
 
 - Compressor health check up and air leakage preventive maintenance.
 
 - Installation of LED based street lights.
 
 Distribution Business Unit, Erandawana, Pune :-
 
 - Load reduction in administration building by localized lighting at
 work stations and redesigned general lighting as well as natural
 lighting.
 
 - Use of energy efficient chokes, light fittings, lamps, push pull
 switches etc.
 
 - Improved power factor.
 
 IMPACT OF THE ABOVE MEASURES :
 
 The above initiatives resulted in savings of about Rs. 3,743 (000) in
 addition to Green House Gas (GHG) emission reduction by 490 tons during
 the year. The energy units saved during the year were about 470,492
 kWh.
 
 Cummins Megasite, Phaltan :-
 
 Your Company initiated following energy conservation initiatives at the
 Megasite :
 
 - Use of composite wall and high performance double glazing for fagade,
 thereby achieving reduction in load on the air conditioning system.
 
 - Use of sky lights on roofs to ensure minimal use of lights on the
 shop floor during day time.
 
 - Use of APFC (Automatic Power Factor Correction) panel for power
 factor correction at load side.
 
 - Use of dry type transformers to minimize loss of electricity.
 
 - Motion sensors with dimmable ballast for the IT building.
 
 - Use of motion sensors to ensure effective utilization of power.
 
 - Use of timers for alternate switching of street lights after duty
 hours.
 
 - Use of TS tubes with electronic ballast for shop floor, street and
 office area lighting.
 
 - Use of glass wool to reduce the working temperature on the shop
 floor.
 
 - Use of VRV air conditioners for the administrative buildings thereby
 achieving energy savings.
 
 9.  RESEARCH & DEVELOPMENT AND TECHNOLOGY ABSORPTION :
 
 Your Company remains committed to introducing new products and
 improving existing products which meet stringent emission norms, have
 higher levels of performance and lower life cycle costs, to satisfy
 market needs.
 
 The Technical Centre of your Company continues in its endeavour to
 indigenize components and develop the next generation of components and
 systems in collaboration with Cummins Inc., to reduce costs, improve
 fuel efficiency, performance and durability of its products. In
 addition, technical productivity enhancements are continuously pursued
 to reduce the costs associated with new product development.
 
 A.  New Product Development:
 
 The following new products were developed as part of the above
 initiatives during the year:
 
 1.  Emission recipe development to meet BS-IV emission regulations for
 Automotive ratings. Multiple Power ratings from 99 HP to 380 HP were
 developed for various applications.
 
 2.  Development of BS-III new ratings. Multiple Power ratings from 99
 HP were developed for various applications.
 
 3.  Established FTIR Ammonia slip measurement facility to meet BS-IV
 requirements.
 
 4.  Integration of Continental fuel system on GTA855 emissionised
 recipe for gas compression market.
 
 5.  Reduction in cost of ownership by integration of Champion spark
 plugs on GTA855 engines.
 
 6.  Indigenous C8.3 engine certified by IRS for marine application used
 on 120KW and 80KW Gensets.
 
 B.  Benefits derived as a result of the above activities are:
 
 a.  Significantly lower development cost ensured value addition to the
 customers.
 
 b.  On time availability of emissions compliant and fuel efficient
 products to customers.
 
 c.  More reliable, durable and performance efficient products and
 critical components were made available.
 
 d.  Component indigenisation and six sigma initiatives resulted in
 significant cost savings.
 
 e.  The above initiatives helped in securing new customers.
 
 C.  Future plans include :
 
 - Developing local solutions to meet upcoming emissions regulations and
 market needs,
 
 - Technological innovation to add value to products in the areas of
 alternative fuels and hybrid engines,
 
 - Emphasis to reduce carbon foot prints and energy efficient solutions,
 
 - Continued focus on indigenization and supplier partnership based
 waste elimination initiatives,
 
 - Alternate source development for various engine components,
 
 - Low range engine development for the Power Generation Market.
 
 D.  Your Company continues to draw benefits from Cummins Inc.s
 technical capabilities and advanced technology.  With continued support
 from Cummins Inc., U.S.A., your Company is committed to develop
 advanced fuel efficient and emissions compliant engines to comply with
 forthcoming domestic and global emissions regulations.
 
 E.  Expenditure on R & D :
 
 The total expenditure on R & D was as follows :-
 
                                2010-2011     2009-2010
 
                                (Rs. 000)    (Rs. 000)
 
 a) Capital                        50,018       314,195
 
 b) Recurring                     326,936       317,559
 
 c) Total                         376,954       631,754
 
 d) Total R&D expenditure as a
 percentage of total sales turnover 0.96%         2.22%
 
 10.  FOREIGN EXCHANGE EARNINGS AND OUTGO :
 
 During the year under review, your Company exported 9,310 engines and
 4,908 generator sets thereby achieving export earnings of Rs.
 10,604,257 (000) (Rs. 10,604 million).
 
 Foreign Exchange earnings and gross outgo (including royalty, dividend
 etc.) during the year under review were as follows :-
 
                                         2010-2011           2009-2010
 
                                          (Rs.000)           (Rs.OOO)
 
 (a) Earnings                           10,962,713           5,076,277
 
 (b) Outgo -
 
 - Raw Materials/components  5,576,732              3,134,867
 
 - Capital equipment           478,759                305,254
 
 - Others                    2,455,656              1,354,102
 
                                         8,511,147            4,794,223
 
 11.  PARTICULARS OF EMPLOYEES :
 
 Information as per Section 217(2A) of the Companies Act, 1956 (the
 Act), read with the Companies (Particulars of Employees) Rules, 1975,
 forms part of this Report. As per the provisions of Section 219(1
 )(b)(iv) of the Act, the Directors Report and Accounts are being sent
 to the Shareholders excluding the statement giving particulars of
 employees under Section 217(2A) of the Act.
 
 Any Shareholder interested in obtaining a copy of the statement, may
 write to the Assistant Company Secretary at the Registered Office of
 the Company.
 
 12.  DIRECTORS:
 
 In accordance with the provisions of the Companies Act, 1956 and the
 Articles of Association of the Company, M/s. Mark Levett, Venu
 Srinivasan and Rajeev Bakshi, Directors of the Company, retire by
 rotation and are eligible for re-appointment.
 
 13.  INDUSTRIAL RELATIONS :
 
 Industrial relations at the Companys plants continue to be cordial.
 
 14.  AUDITORS:
 
 The Auditors, Price Waterhouse, Chartered Accountants, hold office
 until the conclusion of the ensuing Annual General Meeting and are
 eligible for re-appointment.
 
 COST AUDITORS:
 
 Your Company appointed M/s. Parkhi Limaye & Co., Cost Auditors, Pune as
 its Cost Auditors for the year 2010-11. The Cost Audit report for the
 year 2009-10 was filed with the Ministry of Corporate Affairs on
 September 26, 2010, due date being September 27, 2010.
 
                                  On behalf of the Board of Directors,
 
                                                  Anant J. Talaulicar 
 
 Mumbai: May 30, 2011                    Chairman & Managing Director