CG Power and Industrial Solutions, part of the Murugappa Group, intends to invest Rs 400 crore in capacity expansion across its units over the next two years, as part of its three-pronged future growth strategy.
CG Power has become debt-free and has resumed payment of dividends after a gap of seven years. It has made its first dividend pay-out since the recent change in ownership.
Its market capitalisation rose to Rs 45,821 crores as on March 31, 2023 from Rs 27,316 crore a year ago. Further, the company is in expansion mode now.
“We are initiating the implementation of three principal pillars - expansion of capacity, enhanced focus on exports, and accelerated technological advancements that we believe are complementary and will fuel the next phase of growth, said Vellayan Subbiah, Chairman, in the company’s latest annual report.
The capacity expansion pillar aims not only to de-bottleneck and modernise existing facilities, but also add new capacity. Plans have been drawn up to substantially expand capacity across the Ahmednagar, Goa, Bhopal and Malanpur plants. These projects would involve an aggregate outlay of about Rs 400 crore over the next two years. The expansion is expected to be funded through internal accruals.
For the second pillar, the company is developing a detailed strategy that lays out the specific geographies, defines the product offerings, and determines the go-to-market strategy.
“We are confident that we can increase the revenue contribution from exports from 5 per cent to 20 per cent over the next 4-5 years,” said Subbiah.
The third pillar is focused on accelerated technological advancement. Its R&D operations have actively worked on future products and technologies, and the company continues to strengthen its R&D efforts and explore collaborative partnerships to augment its internal efforts.
“A two-pronged approach would enable us to further fortify our core strengths on the one hand, while simultaneously seeding the future, said N Srinivasan, Managing Director .
The approach is backed by expanded R&D, one that intensifies our in-house research and development activities, while also exploring a collaborative approach to technology access for faster and wider access to market opportunities, including global destinations.
The Rs 6,973-crore (consolidated revenue) company said three clear enablers of positive growth include steady volume growth that would be supported by an intense export focus, sustained margin protection that would emanate from efficiency measures, continued expansion of the playing turf that would result from new initiatives being seeded towards sunrise areas such as EVs, railways and consumer durables.
The company’s majority ownership came under Tube Investments (Murugappa Group) in November 2020 and CG completed the second full year of operations in FY23.