CG Power and Industrial Solutions, a Murugappa group company, has earmarked a capex of over Rs 500 crore for two years for capacity expansion at its manufacturing units. The company is also looking for a tie-up with a technology partner for the development of motor and controller for electric vehicles (EVs).
Natarajan Srinivasan, MD, CG Power and Industrial Solutions told an earnings call that out of the total funds, major capex is for motor capacity expansion which will be about Rs 280 crore. Similarly, for the transformer expansion, about Rs 125 crore has been budgeted.” In addition, across the divisions, the company will incur about around Rs 100 crore of normal capital expenditure. This total expenditure of more than Rs 500 crore will be spent this year and next year,” he said.
According to him, the company had a good fist quarter. Margins were higher year-on-year on account of volume growth, softening in input costs, favourable product mix and procurement efficiencies. Return on capital employed for the quarter was at 45% as against 38%. Order intake was at Rs 2,514 core, a 47% growth year-on-year and unexecuted order book stood at Rs 4,909 crore, 39% higher year-on-year. “Margins were higher year-on-year on account of volume growth, softening in input costs, favorable product mix and procurement efficiencies,” he said.
On the exports side, he said the company is running full capacity to meet the domestic demand. “If we take transformers, we are not in a position to even cater to the domestic demand. So we are not really taking so much steps to cater export market at this point of time. But always, we are in touch with customers. Similarly, in motors, there is a little bit of exports what we do every year that we continue to do. Further focus will be done gradually in such a time when you will be able to meet the export inquiries,” he said.
Srinivasan said for Vande Bharath oppurtunities, the company is talking to a few rolling-stock manufacturers to see whether it can participate as a consortium.
“Globally, there are only about 10 to 12 rolling stock manufacturers of which already, three are in India. So the remaining of them, if they are interested to join and if they are like-minded, certainly, we are talking to few of them. If it comes through, then we can participate as a consortium for these tenders,” he said.
CG Power had reported a 56% jump in its profit after tax (PAT) to Rs 192 crore for first quarter of FY24 as compared to Rs 124 crore in the corresponding quarter of last fiscal. The revenue from operations went up by 13% to Rs 1766 crore as against Rs 1,559 crore. Ebitda (including other income) stood at Rs 277 crore as against Rs 189 crore registering a growth of 47%.
