CG Power and Industrial Solutions has identified areas of synergy with Tube Investments of India and Murugappa Group to fuel growth in the next three to five years. Electric vehicles (EVs), fast-moving electrical goods (FMEGs), railways, steel, agriculture, pharma, defence, cement and renewable energy are some of the sectors in which the company is working to offer world-class products.
Vellayan Subbiah, chairman, CG Power and Industrial Solutions, said the Murugappa Group has successfully turned around the company in the first full year of operations. “About 18 months ago, when we welcomed CG Power as a subsidiary of Tube Investments of India, we decided to focus on bringing back the glory of the company,” he told shareholders in the company’s annual report.
He said the company has managed to resolve many legacy issues and achieved a complete operational and financial turnaround in FY22.
“All our businesses have performed to their potential with highest-ever sales reported by motor, railways, and transformer divisions. On a standalone basis, the total sales for the year were at Rs 5,159 crore, recording a growth of 104% y-o-y. Free cash flow generated for the year was at Rs 392 crore. CG is bouncing back – stronger, bigger and hungrier…,” Subbiah said.
On taking over the company, Murugappa Group initiated several steps to revive operations. All vendors’ payments were settled and need-based working capital funds were provided without any interruption, Natarajan Srinivasan, MD, CG Power and Industrial Solutions, said.
The company has prepaid debt of Rs 650 crore in 2021-22, utilising the sale proceeds from one of its properties along with the operational free cash flows generated.
With this, the company’s aggregate debt outstanding as on March 31, 2022, decreased to Rs 302 crore from Rs 945 crore, in the previous year.
During the year, the company has settled its obligations aggregating to Rs 1,406 crore, arising out of the guarantees extended to secure loans given to its subsidiaries.
Tube Investments of India had completed the acquisition of CG Power some 18 months ago.
The previous management had entered into an agreement in 2015 to sell property at Kanjurmarg in Mumbai, but the sale was not completed. “This was pursued, the dispute settled, the sale completed in December 2021, and the company realised proceeds of Rs 402 crore,” Srinivasan said.
On the outlook, he said all businesses of the company have multiple opportunities for growth. Sustained organic growth is expected in the industrial business, given the massive investments in the infrastructure sector and the start of the capex cycle. The EV segment is another big opportunity to cater to for the next several years, he said.