Kick off Meeting

Brief of the power generation market:

Cummins is a market leader in Power Generation Equipment production. In the
6500 crore market Cummins holds nearly 3500 4000 crore of the market.
The Power Generation equipment market provides products to several industries
which includes residential, hospitability, reality etc.
Small DG sets of 7.5 KVA go upto 2 lac.
Places where these DG sets are used include places where the DG set is very
critical equipment (manufacturing plants) or residential locations.
Ideally life of these equipment is around 15 years and since the consumer is
indifferent to whether the DG set is new or old dealers have started reselling DG
sets. DG is not at all an aspirational product for the consumers. Currently if we
look at the second hand market we would have the following analysis:
Market occupied by local dealers distributed across the country who sell second
hand DG sets
Some DG sets are also sold through avenues like olx.com

The project is about finding out the market size, identifying the people
involved in the market and feasibility for Cummins to tap into the
market.
Identifying the market of second hand DG sets, identifying the size and how is it
functioning
Profiling of the buyers and sellers in the market and identifying who all are
involved in the market
Identifying attributes that buyers look for in this market and what are their
evaluating options
Identifying how pricing works in this unorganised market
Feasibility study of whether Cummins should get into this market and if yes then
how

25-08-2014
1. Status of Project
a. The project has been approved by the HR and Sponsor
b. Approval from the Vice President is still pending.
c. The mentors for the project would be
i. Mr. Chirag Puri
ii. Mr. Sachin Kondejkar (Head Sales and Marketing, Power
Products)
d. There would be no remuneration and commitment of PPI/PPO
2. Recon Gensets
a. These are re-configured and re-manufactured gensets (Not in India)
b. Mostly moving parts of the machines which gets worn-out are
removed and replaced
c. 1 year additional warranty is provided
d. Makes economic sense for big gensets (above 14 litres/320 KVA)
costing Rs. 15 lakhs upwards

e. Reseller market 90% demand from cities

f. Rental DG sets providers interested in 2nd Hand retailers also
because efficiency not a major concern for them
g. Capital Gains Tax a major factor for consideration during
purchase/sale of DG sets
3. Some
a.
b.
c.

Project Planning
Project Deadline: Mid-March
Team to share month-by-month understanding
CRM data to be shared

03-09-2014
1. Walkthrough of CRM Data
a. CRM was started in April 2013
b. Data provided by OEM Sales dealers
c. Understanding of various fields
d. At present, there is only one model for a given KVA rating
e. Lead dropped and lead lost are inter-changeably used during data
entry and hence must not be taken at face value
2. Understanding of sales process
a. Most inquiries come through inbound calls or direct reference from
OEMs/existing clients
b. Touch Point Hierarchy: Customers can approach any level of
hierarchy

Cummi
ns

OEM 1

OEM 2

Dealer
1

OEM 3

Dealer
n

c. Cummins directly doesnt sell to customers. It directs inquiry to the

respective OEM local to the customer who in turn executes the sale.
d. Cummins provides after sales service
3. Sales Cycle
a. Cycle length depends on range (KVA )
LHP:1-2 months
MHP: 1.5-2 Years (Budgeting process takes almost a year)
1000 KVA: >2 years
4. Pricing

a. Pricing is competition and geographically determined (10-12%

higher in North India)
b. List price is initially quoted to the customer, post which negotiation
happens and final price is decided upon. This price can be as low as
15-20% below the list price.
c. Pricing is done by OEMs based on their margins. Cummins doesnt
interfere with the pricing unless it affects their market share
d. After sales service forms a small part of TCO. Diesel accounts nearly
80% of operating costs
e. Need to evaluate the importance of pricing on sales
5. Production
a. Majority Made-to-stock. However, Made-to-order in case of
customized products
b. Standard scope provided e.g. engine, alternator like components
remain same
c. Customization for special parts like controller
6. Recon
a. Recon from Cummins perspective is second hand DG with Cummins
branding
b. Cummins engineer goes to site and evaluates the DG on 5 Cs
c. Brought to Cummins factory for refurbishment and then sold
7. Marketing activities
a. Newsletters to key accounts
b. Communication through consultants who are major influencers
c. Presently no communication with
8. Exchange Offer Possibility
a. Supply chain a major limitation for execution
b. Can be evaluated as part of project
c. CAT (Caterpillar) has a rental based model which can be studied and
explored as an option
9. Knowledge Sharing
a. More data and industry overview will be provided when the Team
visits Pune