Madras Management Association Book Launch & Panel Discussion
MMA hosts “The Great Revival” book launch: NS’s turnaround tale of CG Power, with Vellayan Subbiah and Prashant Jain insights.
The Unexpected Journey: How CG Power Came Into Our Fold
Vellayan Subbiah
Executive Vice Chairman, Tube Investments of
India; Executive Chairman, Cholamandalam
Investment and Finance Company Limited
Many people look at things retrospectively and attribute our CG acquisition to a grand ten-year strategy. However, reality is often quite different. Most significant developments are not meticulously planned—they emerge organically through a sequence of events. This acquisition was not the result of a grand strategic vision. Rather, it evolved naturally as one thing led to another.
The true story began with a routine receivables review. We regularly reviewed Shanthi Gears, one of TI’s subsidiaries. During these reviews, CG Power repeatedly appeared as a company that had not paid its bills. My team flagged this concern, noting that something seemed amiss, yet the company itself appeared to be fundamentally sound. This is how we first discovered CG’s existence—I was not even aware of the company beforehand.
In August 2019, the Vyas Report revealed that approximately 3,500 crores had been siphoned from the company over time. This disclosure piqued our interest further because CG appeared to be a quality asset in distress due to malpractice rather than fundamental business failure. We contacted management in January 2020 and scheduled a meeting for March. However, a week after that meeting, the nationwide lockdown commenced.
When we proceeded with this acquisition, we had not visited even a single manufacturing facility. We possessed no knowledge of whether the plants actually functioned or their operational condition. All the standard due diligence procedures we should have conducted were impossible because of the lockdown. We were forced to submit our bid and proceed to a Swiss auction where any competitor could match our offer.
When no other bidder submitted an offer, our anxiety increased significantly. We had publicly disclosed our willingness to pay, yet no private equity firms, strategic investors, or financial investors showed interest. This situation severely tested my self-confidence as a leader. The absence of competing bids felt ominous.
I consulted my father about who should relocate to Mumbai to lead this turnaround. He immediately responded, “You should ask NS. There is no better candidate.” I met with NS multiple times. I honestly cannot say who was more apprehensive initially—myself or NS—about the magnitude of what lay ahead.
The reality of corporate management is that nothing is risk-free. Significant thinking must occur in solitude. As one advances within an organization, the number of people with whom you can candidly discuss major decisions diminishes substantially. How does one develop conviction that a decision is correct? There are no reliable indicators or benchmarks for such judgments.
The only approach is rigorous self-reflection and developing internal conviction. External forces cannot provide this certainty. While data, spreadsheets, and analytics contribute to decision-making, they are not the primary drivers. Many crucial decisions must ultimately be guided by instinct and intuition.
I have discussed spirituality because I believe it represents one of India’s greatest strengths. My spiritual journey has evolved in parallel with this business journey. These spiritual foundations have provided me courage for actions I would not otherwise have attempted. Spirituality is a technology—a methodology. What India must offer the world is an approach that harmonizes Western intellectual rigor with our own inherent strengths. India alone possesses this capability.
From Crisis to Credibility: Building a Turnaround From the Ground Up
N. Srinivasan
Former MD & CEO, CG Power and Industrial
Solutions Limited; Author, The Great Revival
When I assumed leadership in November 2020, the outlook appeared deeply uncertain. CG faced formidable challenges: multiple investigations, escalating financial pressure, and a struggling operational base. The COVID-19 pandemic was at its height. Many observers viewed CG as a sinking enterprise, and several colleagues urged me to decline the opportunity. However, adversity simultaneously creates opportunity. What motivated me daily was an unwavering conviction that with the appropriate vision, genuine commitment, and diligent effort, even the most troubled organization can be revitalized.
What distinguishes this turnaround? First, this represents the fastest turnaround of comparable magnitude, accomplished in just four years, with comprehensive transformation. Market capitalization increased from 5,000 crores at acquisition to over 1 lakh crores within four years. Second, this turnaround occurred under RBI’s stressed asset resolution mechanism. While average resolution timelines under the Insolvency and Bankruptcy Code span 24–36 months, this case achieved resolution in merely six months. Third, the turnaround progressed while simultaneous investigations by SFIO, the Bombay Stock Exchange, CBI, and the Enforcement Directorate continued.
Within my first seven days, the situation revealed itself starkly: secured creditors demanded 2,600 crores in payments. Unsecured creditors and income tax demands totaled 800 crores. Five years of historical accounts required recasting. The company lacked a reliable balance sheet. Because COVID-19 lockdowns were in effect, all nine manufacturing facilities were inoperative. Working capital was unavailable due to frozen bank accounts. My initial reaction was genuine shock—what have I undertaken? The isolation was complete; during COVID restrictions, I worked alone with no one to consult.
After several weeks, I gathered courage and engaged in extensive meditation. I developed short-term operational plans. My objectives were clear: settle creditor obligations, eliminate the NPA classification, restart production, and complete account recasting to establish a reliable balance sheet. During the first quarter—January through March—we achieved 1,000 crores in turnover. Production restarted. This initial success provided crucial momentum.
We executed three focused initiatives. Project Mudra concentrated on establishing proper procurement principles and equitable supplier practices. Annual procurement expenditure approximated 3,000 crores. We reviewed every single item, comparing historical rates against current rates. We achieved three-digit savings annually for three consecutive years. Project Lean engaged a specialized Japanese consulting firm to optimize workflow and operational efficiency. Combined, Projects Mudra and Lean improved our operating margins by approximately 2%. Project Clean emphasized operational discipline, process streamlining, and cultivating a culture where every rupee held significance.
Transparency proved essential. During the account recasting, we identified a 3,500 crore hole—funds that had been extracted from the company, disguised as advances or receivables that would never be recovered. We chose to absorb this loss completely and made full provisions for the amount.
If I can impart one fundamental lesson to every leader, it is this: you cannot authentically lead an organization you do not ethically own. Our commitment to unwavering governance standards enabled us to arrest the financial hemorrhaging, stabilize operations, and ultimately restore stakeholder confidence. The journey from bankruptcy to a $10 billion valuation represents a remarkable financial achievement, but our true legacy is the restoration of trust.
A Master Class in Value Creation: The Investor Perspective on CG’s Transformation
Prashant Jain
Co‐Founder & CIO, 3P Investment Managers;
Former CIO, HDFC Mutual Fund
My reputation rests entirely on a simple principle: investing in fundamentally sound businesses led by capable management. My experience illustrates this philosophy rather starkly. Two companies in which HDFC Mutual Fund maintained a 9% ownership stake—Shanthi Gears and CG Power—were subsequently acquired by the Murugappa Group.
Although HDFC Mutual Fund generated substantial returns—we held CG shares for 20 years—when the company ultimately collapsed, the experience proved deeply embarrassing for our firm. We recognized that something was amiss, yet our confidence in the company’s fundamental strength prevented us from recognizing the severity of the underlying problems. Fortunately, we retained our conviction through the downturn because our inherent belief in the company’s core capabilities remained intact.
I read this book with considerable interest. In my 35-year capital markets career, I have not encountered a more impressive or successful turnaround. I state this with absolute sincerity: this book represents a masterclass for executives, business owners, management students, and investors alike. Despite comprising fewer than 200 pages, it masterfully narrates the turnaround while simultaneously establishing a practical framework applicable to other turnaround efforts.
This book transcends the category of ordinary turnaround narratives. The distinction between a routine turnaround and a truly exceptional turnaround lies in the outcomes: a standard turnaround restores organizational health, but NS and the Murugappa Group elevated CG far beyond its previous zenith. HDFC sold our position at 300–350 per share, believing the turnaround was complete. Subsequently, the stock appreciated an additional 150% because developments exceeded our visibility. What emerged was fundamentally superior to CG’s previous incarnation.
Consider the financial transformation: in fiscal 2015, including consumer durables operations, turnover reached 6,000 crores with profit after tax of 350 crores—a 5–6% margin—and working capital of 93 days. In 2025, examining the industrial business alone: turnover stands at 10,000 crores, profit after tax reaches 1,000 crores, return on capital is 28%, and working capital has compressed to just 11 days. This efficiency rivals Infosys. Such financial metrics exemplify the quality of this turnaround.
We originally acquired CG in the year 2000 when market capitalization was approximately 200 crores. We purchased a 9% stake. The investment appreciated nearly 100-fold within seven years. Subsequently, the company began underperforming. However, having known this management for 15–17 years with such an exceptional track record, our judgment became clouded by historical experience. This represented a failure of our analytical process. Yet the underlying strength of CG remained remarkable—my father’s directive when purchasing a water cooler exemplifies the brand equity: “Ensure the fan and pump come from CG.” That statement captures CG’s market position.
When the Murugappa Group entered, we understood their exceptional track record. Our only regret was the absence of competing bidders; we believed they acquired CG at an advantageous valuation. Nevertheless, we felt genuinely pleased with their acquisition. I believe this represented not merely a positive development for CG and its stakeholders, but fundamentally beneficial for the nation itself, given CG’s substantial contribution to India’s industrial and infrastructure development.
