Hindustan Powerplus had wiped out its accumulated losses in 1995-96. "The short-term and medium-term future is bleak," managing director EH Kohutek told The Financial Express after the company's recently held annual general meeting. However, the long term prospects appear to be good, he said. With the company's capacity touching 3,000 engines from 2,000 on account of the recent expansion, the distribution network is to be hiked from 30 to 100.

About 77 per cent of the capital expenditure planned during Hindustan Powerplus's Rs 45-crore rights issue last year has been completed. Six out of nine machines planned have been installed and theremaining will be acquired in line with the capacity build up. The company has also acquired plant and machinery on lease (to the extent of Rs 10 crore) which was found to be a more economical measure. It is also working to get its inventories reduced. Its CKD imports rose 19 per cent last fiscal locking up its rights issue proceeds in stock.

A warehouse has also been built with the intention of supplying spares within 24 hours of order placement. Hindustan Powerplus also plans to introduce two new competitively priced products (one having a new air water cooled engine) with a technological edge into the market. The take over of the German-based Mak and the UK-based Perkins by Caterpillar Inc is bound to augur well for the company on new products and innovations.

Hindustan Powerplus sold 1,501 diesel engines last fiscal, a fall from the 2,060 diesel engines the previous year. For the first five months this fiscal, the company sold 431 engines (558) and earned Rs 39.1 crore (Rs 46 crore). However, spareparts sales increased to Rs 15.2 crore (Rs 12.6 crore). The turnover last year was Rs 174 crore.

Discount wars led by market leader Cummins India have eaten into Hindustan Powerplus's margins, but the latter has stopped offering discounts which were prevalent till last year.