Pune, August 12: The Reserve Bank of India (RBI) clearance for the US-based Cummins Engine Company Inc's application to hike its stake by 1 per cent in Kirloskar Cummins Ltd (KCL) to 51 per cent has cleared the way for the change of name of the domestic company and for the Kirloskar group directors on the KCL board to step down.

Announcing this at the company's annual general meeting here on Tuesday, Kirloskar Cummins chairman RL Moore said the RBI clearance for the change in stake was received on August 6; the Foreign Investment Promotion Board (FIPB) had cleared the change over one month ago.

It may be recalled that the Kirloskar Oil Engines Ltd (KOEL) balance sheet for 1996-97 has reflected the sale of stake in its `other income'.

KCL's extraordinary general meeting (EGM) had on May 6 already approved the change of name to Cummins India Ltd. This was the last AGM of Kirloskar Cummins.

Moore announced that the company would go for the higher megawatt and horsepower engine range for the captive power sector.The company , cuurently, manufactures engines up to 1mw/2,500 hp.

This is expected to increase to 1.5mw by 1998-99 with the company planing to increase this range up to 3.5mw.

Among the higher horsepower and megawatt engines that Kirloskar Cummins plans to introduce will be products from Cummins' two joint ventures in the country, one with Komatsu and the other with Wartsila.

Moore also announced that over the next few years, the capital expenditure of the company would average Rs 50 crore per annum which would include widening and upgrading the existing product range as well as increasing capacities.

The company , which declared its highest ever dividend of 35 per cent, has a `strong' order book position for the first quarter of the current year, Moore said. Declining to reveal figures for the first quarter, he said the company's performance in this period is comparable with that of the corresponding period for the previous year.

Since the final clearances for Cummins USA to hike its stake having come through before the annual general meeting , the three Kirloskar group directors who would have been eligible for re-appointment as directors on the board, are considered to have stepped down.

Kirloskar Cummins managing director for the past three years, MF Dodsworth, will join Cummins USA's wholly owned subsidiary, Fleetguard, as vice-president and general manager in Europe with effect from September 1.

The resolution regarding his emoluments was therefore not taken up. Kirloskar Cummins' performance during 1996-97 witnessed a 22 per cent rise in turnover over the previous year at Rs 800 crore, export earnings were Rs 126 crore, a 21 per cent increase, and profit after tax Rs 78.65 crore. Interest costs were lower in 1996-97, at Rs 9.37 crore, against Rs 11.29 crore in the previous year. Overheads, however, rose to Rs 108.95 crore (Rs. 85.95 crore in the previous).

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.