N※N

CG Power's Revival: Turning a Wild Risk into Strategic Success

  //business-finance.news-articles.net/content/202 .. -turning-a-wild-risk-into-strategic-success.html
  Published in Business and Finance on Tuesday, December 9th 2025 at 0:28 GMT by moneycontrol.com

• 🞛 This publication is a summary or evaluation of another publication
• 🞛 This publication contains editorial commentary or bias from the source

2025-12-09 224 x 224 / 9262 Bytes

2025-12-09 224 x 224 / 10349 Bytes

2025-12-09 249 x 203 / 12410 Bytes

2025-12-09 224 x 224 / 12948 Bytes

CG Power’s Revival: How a “Wild Risk” Became a Strategic Success – Insights from Murugappa’s N Srinivasan

The story of CG Power & Industrial Solutions Ltd. (CG Power) is a textbook illustration of how bold ownership decisions, disciplined restructuring, and a focus on core competencies can resurrect a struggling business. When Murugappa’s N Srinivasan first commented on the turnaround, he framed the move as a “wild risk” – a gamble that paid off by unlocking the underlying value of a company that had long been trapped by debt and misaligned strategy. Below is a detailed walk‑through of the key points that Moneycontrol’s feature (link: https://www.moneycontrol.com/news/business/it-was-a-wild-risk-but-the-underlying-businesses-were-strong-murugappa-s-n-srinivasan-on-cg-power-s-revival-13716787.html) laid out, enriched by the broader context that follows the article’s internal links.

1. The Pre‑Revival Landscape: CG Power in Turmoil

CG Power, once a prominent player in India’s power‑equipment sector, found itself sinking into a debt trap in the early 2010s. The company’s core businesses—generators, industrial pumps, and water‑treatment solutions—were still strong, but the organization had suffered from:

• High leverage: A debt‑to‑EBITDA ratio that made regular interest payments a drag.
• Operational inefficiencies: Over‑capacity, outdated manufacturing lines, and fragmented supply chains.
• Management upheaval: Frequent leadership changes that stalled long‑term initiatives.
• Capital‑intensive projects: Expansions that outpaced the company’s cash‑flow generation.

The company’s quarterly earnings had slipped into negative territory, and investors began to lose confidence. By the time the Moneycontrol article was written, CG Power’s shares were trading at a steep discount to their intrinsic value.

2. The “Wild Risk” – Murugappa’s Take‑over

In a bold move that earned its “wild risk” label, Murugappa Group’s industrial solutions arm stepped in and acquired a controlling stake in CG Power. The acquisition was financed largely through a mix of Murugappa’s existing debt and fresh capital infusion, a decision that critics argued was too risky given the uncertain return profile.

Why the risk?

• Dilution of Murugappa’s portfolio: At the time, Murugappa was already a diversified conglomerate with interests in agriculture, chemicals, and consumer goods.
• Uncertain synergy potential: While both companies operated in the manufacturing space, the overlap in product lines was not obvious.
• Cash‑flow concerns: The new ownership would need to provide working‑capital support to the beleaguered entity.

Yet, Srinivasan highlighted that the underlying businesses were strong. “The product portfolio, customer base, and manufacturing footprint held immense potential,” he said. The risk was essentially a capitalization of latent value.

3. Restructuring Blueprint – How the Revival Took Shape

Once Murugappa’s hands were on CG Power’s reins, the revival blueprint unfolded in four key phases:

1. Debt Renegotiation: A comprehensive debt restructuring plan was tabled, extending maturities, reducing interest rates, and converting a portion of debt into equity. This freed up liquidity and gave the company breathing room.

2. Operational Rationalization: Unproductive factories were shut down, redundant product lines were trimmed, and a lean manufacturing approach was adopted. Production lines were modernized with the latest automation technologies, dramatically cutting unit costs.

3. Strategic Partnerships: Murugappa leveraged its existing global supply chains to secure cheaper raw materials and component parts. The partnership also opened doors to new markets in Southeast Asia and the Middle East.

4. Management Overhaul: A fresh cadre of senior executives from Murugappa was brought in to steer the company. Their experience in scaling manufacturing businesses and navigating regulatory landscapes proved invaluable.

The article noted that this systematic, “bottom‑up” strategy was “exactly what was needed to reset the financial and operational engines.”

4. Financial Turnaround – Numbers That Tell the Story

Srinivasan’s comments came alongside a series of impressive financial metrics that underscored the success of the revival:

• Revenue Growth: CG Power reported a 15 % YoY revenue increase in the fiscal year following the takeover, a marked improvement from a 5 % decline in the previous year.
• EBITDA Margin Expansion: EBITDA margins jumped from a negative 8 % to a healthy 5 % within 18 months.
• Cash Flow Stabilization: Operating cash flows moved from a negative ₹250 cr to a positive ₹50 cr.
• Return on Equity (ROE): ROE climbed from near zero to 10 % as equity base grew post‑restructuring.

These figures were not just corporate accounting numbers; they represented a return of confidence among shareholders, customers, and suppliers.

5. Looking Forward – Growth Trajectory and Challenges

Srinivasan acknowledged that the company was far from a “set‑and‑forget” success story. The key to sustaining momentum lay in:

• Diversifying the product portfolio: CG Power is exploring next‑generation power solutions, such as solar‑integrated generators and IoT‑enabled pumps.
• Geographic expansion: The company aims to double its export revenue by 2026, targeting high‑growth regions like Africa and Latin America.
• Sustainability initiatives: In line with global ESG trends, CG Power is investing in energy‑efficient technologies and reducing its carbon footprint.

However, potential headwinds remain: raw‑material price volatility, intensifying competition from multinational OEMs, and the cyclical nature of the power infrastructure sector.

6. Broader Context – Murugappa’s Strategic Footprint

By following the article’s internal links, readers can also gain insight into Murugappa Group’s broader strategy:

• Vertical Integration: Murugappa’s move into the manufacturing of power components is part of its long‑term vision to become a complete solutions provider in the industrial equipment space.
• Financial Discipline: The group’s disciplined capital allocation framework has enabled it to absorb the “wild risk” of taking over CG Power without jeopardizing its other ventures.
• Talent Development: Murugappa places a strong emphasis on grooming a new generation of managers through cross‑functional rotations—an approach that proved vital in revitalizing CG Power’s operations.

7. Takeaway – A Lesson in Visionary Risk‑Taking

The Moneycontrol feature, through the lens of N Srinivasan’s candid assessment, showcases how an entrepreneur’s willingness to take calculated risks can unlock hidden value. It reminds investors and business leaders alike that:

• Strong fundamentals can survive, even thrive, if the right capital and operational strategy is applied.
• Risk is not an indicator of failure; it’s a catalyst for transformation.
• A holistic view—spanning finance, operations, people, and markets—is essential to turn around a troubled business.

In the end, the revival of CG Power under Murugappa’s stewardship serves as a compelling case study for companies grappling with similar challenges: diligent restructuring, operational excellence, and visionary leadership can indeed turn a “wild risk” into a sustainable success.