When the Murugappa Group took control of CG Power & Industrial Solutions in November 2020, the company was facing an existential crisis. It had no cash on its books, was under multiple investigations, burdened with tax demands of nearly Rs 1,000 crore, and five years of its financial accounts had to be recast and re-audited. Creditors were closing in, and the Covid-19 pandemic had crippled operations.

Veteran finance professional N Srinivasan, a long-time Murugappa executive and former group CFO, was appointed managing director to steer the troubled company. Five years later, CG Power now commands a market valuation exceeding Rs 1 trillion.

In an interview with Moneycontrol, Srinivasan said that Murugappa’s decision to acquire CG Power was based on the inherent strength of its core businesses—motors, transformers, switchgear, and railways. While corporate-level mismanagement had crippled the company through diversion of funds and collapse of working capital, its underlying businesses, technology base, and market position remained fundamentally strong.

At the time of takeover, CG Power was competing with global majors like ABB and Siemens in motors, had globally recognized transformer and power businesses, and enjoyed a strong franchise in railways as an approved supplier. Despite intimidating risks such as Covid uncertainty, regulatory probes, and massive liabilities, Murugappa made what Srinivasan described as a calculated but bold bet.

Srinivasan said his first priority was to prevent the company from being dragged into insolvency proceedings at the National Company Law Tribunal (NCLT). Under the RBI’s settlement framework, secured creditors were brought together to agree on a collective resolution. Complex exposures involving lenders like Exim Bank and Yes Bank were also negotiated systematically.

Parallelly, the company began the massive task of recasting five years of accounts to arrive at a clean and accurate balance sheet. At the same time, manufacturing operations were restarted urgently to generate cash flows. These three streams—creditor settlement, financial clean-up, and operational revival—ran simultaneously.

A key decision during the turnaround was to pay all operational creditors, mostly MSMEs, in full for their principal dues. Srinivasan said imposing haircuts on small vendors could have pushed many into bankruptcy. While interest was not paid, clearing principal dues helped restore trust across the supply chain.

Operationally, the company undertook sweeping reforms. Procurement was completely overhauled through a “clean-sheet costing” exercise with McKinsey, which helped cut costs across a Rs 3,000 crore procurement base. Over three years, CG Power reportedly generated hundreds of crores in annual savings. Japanese consultants were brought in under “Project Lean” to eliminate inefficiencies across plants.

Market share recovery was another focus area. In motors, CG Power lifted its share from around 20 percent to 26 percent. In railways, it regained approval status and re-entered after settling dues and penalties. Combined, these efforts lifted operating margins by about 150 basis points.

Once the accounts were fully recast and liabilities identified, Srinivasan began engaging with investors. A major boost came from the resolution of a long-pending Kanjurmarg property litigation, which enabled CG Power to repay nearly 50–60 percent of its debt. The company also succeeded in getting the Rs 1,000 crore tax demand quashed in the High Court.

By the end of the third year, CG Power had become virtually debt-free, cash-positive, and equipped with a clean balance sheet. Notably, the company did not raise fresh equity during this revival phase, relying entirely on internal cash generation.

Srinivasan described the CG Power turnaround as the most complex challenge of his career, involving legal, regulatory, financial, operational, and people management issues alongside the Covid crisis. With full operational freedom and strong backing from the Murugappa Group, he said the assignment stands out as the most fulfilling chapter of his professional journey.