CG Power and Industrial Solutions, a Murugappa group company, is planning to expand its manufacturing capacity across its plants at an investment of Rs 400 crore over the next two years.
The company is also targeting to increase the revenue contribution from exports from 5% to 20% in next four to five years.
Vellayan Subbiah, chairman of CG Power and Industrial Solutions, told shareholders in their annual report that the capacity expansion is part of the future growth strategy.
He said the company is focusing on the expansion of capacity, exports and technological advancements.
“Plans have been drawn up to substantially expand the capacity across Ahmednagar, Goa, Bhopal and Malanpur plants. These projects will involve an aggregate outlay of around Rs 400 crore over the next two years,” he said.
He said the funding will be done through internal accruals.
He said the capacity expansion pillar of their strategy aims at not only removing bottlenecks and modernise existing facilities but also to add new capacity.
For exports, CG Power is developing a detailed strategy that lays out the specific geographies, defines product offerings and determines the go-to-market strategy. “We are confident that we can increase the revenue contribution from exports from 5% to 20% over the next four to five years,” he said.
According to him, the third pillar of their strategy is focused on accelerated technological advancement. “We continue to strengthen our R&D efforts and explore collaborative partnerships to augment our internal efforts,” he said without further elaborating on the nature of potential collaborative partnerships.
CG Power’s consolidated revenue for FY23 was higher at Rs 6,973 crore, recording a growth of 27% over FY22. Profit before tax reached Rs 950 crore as compared with Rs 504 crore and the margins were higher on account of volume growth, higher sales realisation and procurement efficiencies.
The free cash flow generated for the year was at Rs 802 crore while order intake for FY23 stood at Rs 8,451 crore.
Natarajan Srinivasan, MD, CG Power, said the company prepaid all its remaining term loan of Rs 100 crore, redeemed the NCD outstanding and became debt-free. India Ratings upgraded the company’s long-term rating to ‘AA’ and the short-term rating to ‘A1+’.