Fortune Scrip     

Published: June 30, 2025
Updated: June 30, 2025

C.G. Power and Industrial Solutions

88-year-old king of comebacks : Worst of times, now best of times!

This time we have picked as our fortnightly Fortune Scrip a unique corporate entity which has a highly interesting history spanning around 150 years! The company has performed under various names and different managements. It has passed through several rises and falls. At one time, it was even on the verge of extinction. But like a phoenix, it has risen from the ashes! The name: CG Power and Industrial Solutions – all of 88 years old!

Its earliest avatar was as REF Crompton and Co, set up in 1878 by an Englishman, Col Crompton. After 47 years, in 1927 it was merged with FA Parkins and the name of the company was changed to Crompton Parkinson Ltd. Then, it was changed to Greaves Cotton and Company when James Greaves was appointed as the company’s concessionaire. In 1937, Crompton Parkinson Ltd set up a wholly owned Indian subsidiary, styled Crompton Parkinson Works Ltd.

After Independence in 1947, the Indian business group of Karamchand Thapar acquired the British company and renamed it Crompton Greaves. As it happened, Mr Thapar’s children could not manage the company in the face of serious challenges. In 2014, it was demerged, with its consumer goods business separated and sold to Advent International and Temasek Holdings for Rs 2,000 crore. The separated company was named Crompton Greaves Consumer Electricals Ltd, and the remaining company was known as CG Power and Industrial Solutions Ltd. Subsequently, this remaining company was acquired by the Murugappa group, a leading industrial house of south India.

An engineering conglomerate, CG Power is a leader in the electrical engineering sector and offers an impressive and diverse portfolio of products, solutions and services for power and indus trial equipment, catering to myriad needs across varied industries in India and globally.

SECTOR LEADER

Since its inception, the company has been a pioneer and has retained its leadership position in the management and application of electrical energy. Enjoying a reputation of stature for almost nine decades, CG Power, which originated in India, has transformed itself into a global corporation with world-class manufacturing facilities across 9 locations in India and one in Sweden, and a pan-India network of 5 regional and 14 branch offices with over 3,113 employees.

The company’s unique and diverse portfolio includes induction motors, drives, transformers, switchgears and other allied products for the industrial and power sectors, as well traction motors’ propulsion systems, signalling relays, etc., for the Indian railways. The company has also made a foray into electrical goods such as fans, pumps and water heaters.

Very recently, it entered the highly lucrative space of semiconductors. The company has joined hands with Renesas Electronics of Thailand for setting up a state-of-the-art facility at Sanand in Gujarat, with a capacity to manufacture 15 million semiconductors per day. CG Power will have the lion’s share of 92.3 per cent, with Renesas holding 6.8 per cent and Stars Micro Electronics of Thailand having the balance of 0.9 per cent. The total investment in the Sanand plant will be to the tune of Rs 7,600 crore, spread over a period of five years.

MIXED FORTUNES

The company has faced fluctuating fortunes, alternating between robust finances at one time and plunging into the red at another. Mirroring its mixed fortunes, its stock price ruled at a sky-high level of Rs 3,000 (31-03-1992) and remained untouched at a throwaway price of Rs 4.69 (13-03 2020).

During the last 12 years, its financial performance has undergone tremendous fluctuations. Sales turnover slumped from Rs 13,632 crore in fiscal 2014 to Rs 2,964 crore in 2021, when the Murugappa group acquired the company. What is more, operating profit slumped from Rs 612 crore in fiscal 2014 to Rs 88 crore in 2016, and then plunged into the red in 2017 with a loss Rs 128 crore. It turned the corner subsequently, but its profit in fiscal 2020 was only Rs 31 crore, and at the net level it incurred a loss of Rs 1,331 crore.

Vellayan Subbiah, who headed the Murugappa group and was appointed Chairman of CG Power, selected Natarajan Srinivasan as ‘corporate doctor’ to bring the company out of the woods and back on the growth path. Mr Srinivasan resorted to imaginative and effective measures to stage an impressive turnaround. The sales turnover shot up to Rs 9,909 crore in fiscal 2025, with operating profit shooting up to Rs 1,305 crore and net profit of Rs 973 crore.

FORAY IN ‘CHIPS’

However, we have selected this company as our Fortune Scrip not only because it staged a turn around. It is now set to make rapid strides with its foray in the lucrative space of semiconductors. While there is a severe shortage of semiconductors globally, demand is galloping. In India itself, indigenous production currently meets only 10 per cent of domestic requirements and the country has to import the remaining 90 per cent from leading manufacturers like Taiwan, South Korea, China and the US. The entry into semiconductors will prove to be a game changer for CG Power on account of its size, stature and character, as well as the tremendous scope for semiconductors going ahead. Consider:

• CG Power has entered into a joint venture with Renesas Electronic Corporation of Japan and Stars Micro Electronics of Thailand for setting up a state-of-the-art manufacturing facility at Sanand in Gujarat with a capacity of 15 million semiconductors per day. CG Power’s wholly owned subsidiary Axiro Semiconductors will hold the lion’s share of 92.3 per cent in the equity capital, while Renesas will hold 6.8 per cent and Stars will have the balance 0.9 per cent. Today, there is a huge gap between demand and supply of semiconductor chips globally. As there are only half a dozen countries engaged in the manufacturer of semiconductors, the prospects for CG Power are immense. In fact, its entry into this lucrative space will change the stature of the company, transform ing it from a well-managed one to a blue chip entity. What is more, Axiro has recently inaugurated a design lab in Bengaluru which marks not only a corporate milestone but also a rare move by an Indian industrial heavyweight into the core of semiconductor value creation.
• Axiro’s design lab will focus on developing integrated circuits for high- growth sectors includ ing telecommunications, defence, satellite communications and industrial IoT applications. Its ‘fabless’ model, centred on design and IP development while leveraging global foundries for fabrication, offers a nimble and scalable approach. The company has already secured interest from global clients like Ericsson, Nokia, Hughes and Siemens, underscoring the commercial relevance of its work.

AIMING HIGH

• With successful implementation of the revival plan by ‘turnaround expert’ Natarajan Srinivasan, almost all the existing businesses of the company started doing very well. With rising demand for its products, the company embarked on an ambitious programme to double the size of its motor business from 1 lakh to 2 lakh motors per month, and to almost double the size of its transformer manufacturing capacity from 17,000 MVA (mega volt amperes) to 33,000 MVA. The company received a green signal from the government to set up an OSAT (outsourced semiconduc tor assembly and testing) facility.
• The company’s railway products business has also started doing extremely well. Recently, it bagged a Rs 450 crore order to supply railway products for Vande Bharat trains. It secured this significant order from Kinet Railway Solutions Ltd for the supply and servicing of railway products, including propulsion kits, motors, transformers, etc, for 10 Vande Bharat train sets. In addition to this order, it has also signed a separate 35-year service agreement as part of the long-term supply contract. The company has a long- standing presence in the railway sector with over 88 years of experience. It offers a comprehensive range of products, including traction machines and systems, railway propulsion systems and signalling products, and Collision Avoidance Systems (TCAS) for KAVACH domains. The company now has plans to develop specialised ship solutions for industrial and technology applications.

HI-TECH FORAY

• One of India’s first ‘fabless’ semiconductor companies operating at scale – with millions of ICs shipped monthly to global players such as Ericsson, Nokia, Hughes and Siemens — Axiro, CG Power’s subsidiary, is poised to address sectors including 5G/6G, strategic defence, satellite commu nications and IoT. CG Power has the first- mover advantage in the fascinating and exciting semicon ductor ecosystem. A far-sighted Vellayan Subbiah has transformed CG Power from a traditional engineering firm to one with ambitions in emerging technology and semiconductor value creation. When the Murugappa group acquired the company in 2020, it was deep in the red with its share price sliding to a penny stock level of Rs 4. Today, after its massive and impressive turnaround, the stock is quoted around Rs 680, and can only go up further. Discerning investors should have these stocks in their portfolio with a long-term perspective. If over 15 research analysts are to be believed, the share price will move into four-figure territory in the very near future.