KPIT Cummins denies talk of Cummins increasing stake in co

There has also been market buzz about Cummins looking to hike its stake in the company. US-based Cummins currently hold 15% in the company and accounts for 25% of KPIT's revenues.

In an interview with CNBC-TV18, Kishore Patil, MD & CEO, KPIT Cummins Infosystems spoke on the business prospects of the company and the buzz on Cummins proposing a stake hike.

Q: There is a lot of talk that Cummins of the US which holds around 15% in the company might be looking to hike its stake in the company, could you confirm or deny that for us?

A: Yes certainly. There are no such proposals on the table at all and we continue to do our business with Cummins as always. But there is no talk of any increase in the stake by Cummins.

Q: You have divided your businesses into four-five SBUs. Can you give me an idea of what is the percentage revenue contribution of each of these automotive integrated enterprise solutions SAP and semiconductor solutions?

A: Basically we have three business units. So the SAP1 which accounts for almost one-third of our business right now which has been the acquisition of Sparta got substantially strengthened. Basically that is our SAP business unit.

The second is what we had earlier in manufacturing, IT plus BPO for manufacturing industries and the third is the engineering. So these are the three business units. Roughly, manufacturing IT is about 40% and the other two are 30% each.

Q: Is there any conversation at all with Cummins? Is there an indication that some time later on Cummins will look at increasing its hold on the Indian unit?

A: Certainly that is not the discussion at all. I guess if you ask me about why there could be certain areas, why there could be movement, I think KPIT Cummins had this kind of a valuation two years back before the downturn started and after that the key concerns, which the industry had was on the revival of automotive business and that along with our announcement on the JV with Bharat Forge and the German acquisition and the performance of our Sparta JV, I think that has got us back on track after two years along with Q1 results.

Q: Can you elaborate a little more on the JV, when we last spoke you said you expect the revenues to be between 300 and 500 crore in the second year of operation, can you give us a little more clarity on what kind of revenues you are expecting this year from the JV, next year and the year after?

A: As we have said, this year has been no impact because we will start manufacturing in next six months so the revenues will start later on and that is the reason we had said that these revenues will come in next two years. So currently we are in the phase which is to deliver on samples and get ready for the mass manufacturing in next six months.