CG Power to expand capacity at Rs 400 crore, aims at increasing exports revenue to 20%

CG Power to expand capacity at Rs 400 crore, aims at increasing exports revenue to 20%

CG Power and Industrial Solutions, a company belonging to the Murugappa group, has unveiled plans to enhance its manufacturing capacity across its plants. The company intends to invest Rs 400 crore over the next two years to facilitate this expansion. By making this substantial investment, CG Power aims to strengthen its position in the market and cater to the growing demand for its products.

In addition to expanding its manufacturing capacity, CG Power is also focused on increasing its revenue contribution from exports. Currently, exports account for 5% of the company’s total revenue. However, CG Power has set an ambitious target to raise this contribution to 20% within the next four to five years. This move aligns with the company’s strategic vision to expand its global footprint and tap into international markets.

By bolstering its manufacturing capabilities and diversifying its revenue streams through increased exports, CG Power aims to drive growth and achieve greater financial stability. The planned investment will enable the company to meet the evolving needs of its customers and capitalize on emerging market opportunities.

CG Power’s expansion plans reflect its commitment to innovation, quality, and customer satisfaction. By investing in advanced manufacturing infrastructure and technology, the company aims to enhance its production efficiency and maintain its competitive edge in the industry. Furthermore, the focus on boosting exports highlights CG Power’s confidence in its products and their potential to gain traction in international markets.

Overall, CG Power’s investment in expanding its manufacturing capacity and increasing its export revenue demonstrates the company’s strategic vision and proactive approach to adapt to market demands. With these initiatives, CG Power is well-positioned to drive growth, deliver value to its stakeholders, and solidify its position as a key player in the power and industrial solutions sector.

In the annual report addressed to shareholders, Vellayan Subbiah, the Chairman of CG Power and Industrial Solutions, emphasized the company’s commitment to future growth through various strategies. Subbiah highlighted that the company’s focus lies in expanding capacity, increasing exports, and advancing technological capabilities.

According to Subbiah, CG Power has developed plans to significantly expand the capacity of its plants located in Ahmednagar, Goa, Bhopal, and Malanpur. These expansion projects are expected to require a total investment of approximately Rs 400 crore over the course of the next two years. The aim of these expansions is to meet the growing demand for CG Power’s products and to enhance the company’s production capabilities.

Subbiah’s mention of the expansion plans in the annual report signifies the company’s proactive approach in positioning itself for future growth. By increasing its production capacity, CG Power aims to cater to a larger customer base and capitalize on emerging market opportunities. This investment reflects the company’s confidence in its ability to deliver innovative solutions and maintain a competitive edge in the industry.

Furthermore, Subbiah emphasized the importance of exports in CG Power’s growth strategy. The company aims to boost its export revenue contribution from the current 5% to 20% within the next four to five years. This strategic focus on international markets aligns with CG Power’s aspiration to expand its global footprint and establish a stronger presence in key regions worldwide.

Lastly, Subbiah highlighted the significance of technological advancements in CG Power’s growth trajectory. By continuously investing in research and development, the company strives to stay at the forefront of technological innovation. This approach allows CG Power to develop cutting-edge solutions, improve product efficiency, and address the evolving needs of its customers.

Overall, Subbiah’s statement in the annual report reflects CG Power’s forward-looking approach and its commitment to pursuing growth opportunities. Through capacity expansion, increased exports, and technological advancements, CG Power aims to solidify its position as a leading player in the power and industrial solutions industry.

In the annual report, Vellayan Subbiah, Chairman of CG Power and Industrial Solutions, mentioned that the funding for the capacity expansion projects will be sourced from internal accruals. This indicates the company’s intention to utilize its own resources to support the expansion plans, highlighting its financial stability and confidence in its ability to generate sufficient funds.

Subbiah further explained that the capacity expansion aspect of their growth strategy aims not only to address existing bottlenecks and modernize the current facilities but also to introduce new capacity. This multifaceted approach reflects CG Power’s commitment to staying ahead of market demands, enhancing production capabilities, and positioning itself for future growth.

Regarding exports, Subbiah stated that CG Power is developing a comprehensive strategy that encompasses specific geographies, defines product offerings, and determines the go-to-market approach. The company is focused on expanding its presence in international markets and aims to increase the revenue contribution from exports from the current 5% to 20% within the next four to five years. This demonstrates CG Power’s determination to tap into global opportunities and leverage its products and solutions on a wider scale.

Subbiah’s remarks highlight CG Power’s proactive approach to growth by utilizing internal resources for funding, investing in capacity expansion, and devising a targeted strategy for exports. By addressing existing limitations, embracing new capacity, and expanding its global reach, CG Power aims to strengthen its market position and drive sustainable revenue growth in the coming years.

Vellayan Subbiah, Chairman of CG Power and Industrial Solutions, highlighted the significance of accelerated technological advancement as the third pillar of their growth strategy. He emphasized the company’s commitment to strengthening its research and development (R&D) efforts and exploring collaborative partnerships to complement its internal capabilities.

Although Subbiah did not provide specific details about potential partnerships, it suggests that CG Power is actively seeking external collaborations to enhance its technological capabilities.

In terms of financial performance, CG Power reported consolidated revenue of Rs 6,973 crore for FY23, reflecting a substantial growth of 27% compared to FY22. The company’s profit before tax also witnessed significant growth, reaching Rs 950 crore in FY23 compared to Rs 504 crore in the previous fiscal year.

These positive financial results were attributed to various factors, including volume growth, higher sales realization, and improved procurement efficiencies. The higher margins indicate the company’s ability to optimize its operations and generate increased profitability.

CG Power’s strong financial performance and focus on technological advancement align with its overall growth strategy. By investing in R&D and exploring collaborative partnerships, the company aims to stay at the forefront of technological innovation and deliver cutting-edge solutions to its customers.

The positive revenue growth and improved profitability further validate the effectiveness of CG Power’s strategies and highlight its ability to capitalize on market opportunities.

In addition to the strong financial performance, CG Power also demonstrated robust cash flow generation in FY23. The company reported free cash flow of Rs 802 crore, indicating its ability to generate cash from its operations after accounting for capital expenditures and other expenses. This positive cash flow provides CG Power with financial flexibility for its expansion plans and future investments.

Furthermore, CG Power achieved a significant order intake of Rs 8,451 crore in FY23, reflecting the strong demand for its products and services. This indicates the company’s ability to secure new contracts and projects, which will contribute to its future revenue growth.

Natarajan Srinivasan, Managing Director of CG Power, highlighted the company’s achievement of becoming debt-free by prepaying its remaining term loan of Rs 100 crore and redeeming the outstanding non-convertible debentures (NCDs). This debt reduction initiative strengthens CG Power’s financial position and reduces its interest burden, allowing the company to allocate more resources towards its growth initiatives.

The credit rating agency India Ratings recognized CG Power’s improved financial profile and upgraded its long-term rating to ‘AA’ and short-term rating to ‘A1+’. This upgrade reflects the agency’s confidence in the company’s ability to meet its financial obligations and signifies CG Power’s enhanced creditworthiness.

Overall, CG Power’s strong financial performance, debt reduction, positive cash flow generation, and improved credit ratings are indicative of its sound financial management and strategic decision-making. These achievements position the company well for future growth and reinforce investor confidence in its capabilities.