BESS launched as new product narrative.

Parent's commentary said the September quarter was a record for power generation order intake globally; how do you see order intake for India business in power generation during the quarter and inquiries for the ongoing quarter?

From a parent perspective, the record power gen orders relate to data center markets, especially in the U.S. and Europe. From an India perspective our power gen order intake is more diversified, continues quarter-on-quarter and there is no specific change anticipated in the coming quarters, with good backup power gen demand across different segments.

Any pricing action in power generation and how are volumes shaping up vs the CPCB IV+ era, especially in medium HP and low HP segments? Also, contribution from mission-critical applications like data centers and hospitals to power gen growth.

Across the power gen range, volumes are now back to pre CPCB IV+ era levels (almost back to CPCB II annual volumes). Pricing has settled down with ongoing competitive pressures. Power gen growth was broad-based across LHP, medium and high horsepower with better growth in low horsepower, and very strong execution on data center demand drove high growth in that segment this quarter.

Industrial segment saw a Y-o-Y decline; was it a particular subsegment or impact of the extended monsoon?

The largest impact came from the construction segment due to extended monsoon, which saw degrowth both Y-o-Y and sequentially. Mining was also weak with not many tenders opening from Coal India. Those were the two biggest contributors.

On a normalised ex-data-center basis, what is the growth in the core power gen side?

On the core power gen side, excluding data centers, we have grown 20% as compared to the same quarter last year.

Channel partners cited tariff impositions and supply chain challenges in some nodes as headwinds - is that correct, and would the numbers have been better otherwise?

Not really - those were not the challenges. Tariff uncertainty makes some customers globally hold on to their own capital investments, but that did not cause any specific issues for us in this particular quarter.

Exports are at near 3-year highs; do you expect this trend to continue or are we peaking out?

Exports growth came from both HHP and LHP, especially Europe for HHP and Europe and Middle East for LHP, helped by channel development and product placement. We are seeing a little softening of order intake on exports going into the last quarter, largely due to inventory correction in our channel space.

On the BES solution and aeroderivatives launched by some players in data centers - have we won new orders, and do these pose long-term threat to power gen in data centers?

On BES, there is a lot of market interest with many live inquiries, but it's a new product and it takes time - we don't have a good order board yet. On aeroderivatives, turbines solve a very different problem and operate in a different range; our data center business operates in 2,000 to 3,000 megawatt range so we don't see competition emerging from that space yet.

Do you see export opportunities on the data center side opening up for Cummins India, or will those largely go through the CTI entity?

Data center engines and gensets are very heavy and the strategy is to produce close to the market because shipping is logistically difficult. Since the U.S. is the fastest-growing market, some of that production for us is in the U.S.

Industrial segment moderated both Y-o-Y and Q-o-Q - can you share subsegment numbers and which buckets slowed (construction, compressors, railways)?

Construction was at INR121 crores, Rail INR120 crores, mining INR17 crores, compressor INR56 crores. Construction did not pick up due to extended monsoon, rail was a good story with strong execution, and mining was weak as Coal India production slowed and few tenders came in.

Beyond load converter, what is the new product pipeline in railways and what kind of contributions over next 3-5 years?

Growth is currently coming from traditional products like power car and diesel electric tower car segments. The hotel load converter just got approved for serial production last quarter and sales will start coming in. We anticipate demand for power car and DETC products to continue, with newer products in development to be discussed in due course.

On aftermarket, what kind of incremental margin do you expect from CPCB IV+ products vs prior generations and is your service network equipped?

Our service network was equipped before the CPCB IV+ launch (work began before 1st of July 2023). Aftermarket revenues come from many segments - CPCB II, CPCB IV+ power gen, railways, mining, marine, defense, construction, data center - so it is not right to attribute incremental margin specifically to CPCB IV+.

Why call data centers a one-off chunky order when 40% of power gen came from there - why not see this growth sustaining?

Big data center orders are from hyperscalers (Microsoft, Amazon, Google) which are not well spread across the year, while colo player orders are. This quarter, hyperscaler site clearances and our execution capability came together well, but it's not necessary that this happens every quarter. Announcement-to-execution can take 1-2 years, so we'll see how new India announcements fructify.

If those India data centers come through, what capability building is needed, or can we import some from the network?

We are prepared to execute those orders today. It does not matter where we build the products because our supply chain is very agile, and we are actually capable of executing those orders if they fructify even today.

Is this competitive pressure limited to HHP or also a broader-based portfolio level problem?

This is very broad-based, very high competition specifically in low horsepower and medium-range segment, but very broad-based overall.

On global OEM distribution-related export opportunities mentioned in the annual report - any color on substantial export opportunities in distribution?

Distribution for us across the world is very localized - it exists to serve the assets on the ground in each market. Largely it is to serve what we have in India; we do not really look at this business for heavy export opportunities.

Could you give the split in power gen across HHP, MHP, LHP for the quarter?

In power gen this quarter, low horsepower was about INR100 crores, medium range about INR250 crores, heavy duty about INR100 crores, and the remaining was high horsepower and projects business.

Despite the tariff issue, exports grew 24%. What is the arrangement with parent on tariff burden?

Our exports go to many countries - largely Africa, Middle East, Europe, Asia Pacific, Latin America. U.S. exports are not a very significant contributor and only U.S. exports are impacted by tariffs, not the others. Growth came from Europe, Middle East and Latin America.

If 40% was DC revenue in power gen this quarter, what would it be in 1H FY26?

Overall data center contribution in 1H FY26 would be closer to between 25% to 30%.

On CPCB IV warranty (2-year comprehensive + 5-year critical parts), are you still providing it and how should warranty expenses move forward?

We provide 2-year comprehensive warranty on all our products and the customer can choose to buy a 5-year extended warranty - many do. Warranty expense depends on how well our products perform on the ground - CPCB IV+ launch has been very good with strong customer acceptance, so warranty expenses are under control.

If competition is willing to work with lower margins and ROEs, will that pull down your ROCEs and margins over time?

We deal with this kind of competition not just in India but around the world. Our value proposition is technology, innovation and reliability - a backup genset has to work on the day it is needed. We endeavour to provide that value differentiation through technology and reliability rather than worrying about how competition plays.

Is the 20-21% growth in distribution sustainable, and are you seeing increased competitive intensity from third-party providers?

Our distribution maintains assets on the ground, and assets have grown over recent years thanks to strong engine and genset sales, so DBU focuses on coverage, penetration and parts availability. If economic activity continues, distribution will continue to grow. On third parties, will-fit operators have existed for a long time and continue to operate - no higher intensity than before.

Are there other neighbouring markets where you could tap data center exports?

Other markets are not growing at that pace in data centers - U.S. is fueling all the growth around the world, plus China and Europe. If opportunities arise we will look at them, but our real opportunity is the India market reaching the growth numbers seen in U.S., Europe and China - that would create domestic boost.

How is competition in the data center market - colo and hyperscalers?

There are a few players in the data center market because these are very complex project executions with stringent demands. Players who work with both colo and hyperscalers in India are largely big MNCs that can fulfill the technology, commissioning and stringent requirements.

Is competition increasing or remaining within the same 2-3 players?

Largely remains within them, with more intensity from some Chinese players for sure, but largely the same set.