MyValueResearch

Crompton Greaves Ltd.

Crompton Greaves Limited is India’s largest private sector enterprise, extensively engaged in designing, manufacturing and marketing high technology electrical products and services related to power generation, transmission, distribution as well as executing turnkey projects. The business is organized into three units: Power Systems, which includes transformers, switchgear, power quality equipment, as well as engineering projects; Industrial Systems, comprising motors (low tension and high tension) and alternators, stampings, railway transportation and signaling products and Fractional Horse Power motors and Consumer Products, which constitute fans, lighting and luminaires, domestic electrical appliances and pumps.

CG’s business operations consist of 22 manufacturing divisions spread across in Gujarat, Maharashtra, Goa, Madhya Pradesh and Karnataka, supported by well knitted marketing and service network through 14 branches in various states under overall management of four regional sales offices located in Delhi, Kolkata, Mumbai and Chennai. Its products include power & industrial transformers, HT circuit breakers, LT & HT motors, DC motors, traction motors, alternators/ generators, railway signaling equipments, lighting products, fans, pumps and public switching, transmission and access products. The company is in quality range by having many certifications in the ISO 9000/9001:2000/14001 series.

Investment Rationale

· It has completed the acquisition of French firm “Societe Nouvelle de Maintenance Transformateurs” (Sonomatra) for about Euro 1.30 million. This acquisition would enhance the firm’s capabilities in the services segment of its transmission and distribution business.

· Its Transformer Group has bagged a contract for supply of 13 nos 25 MVA, 400kV single phase and 10 nos 32 MVA, 220kV single phase Generator Transformers for another Hydel projects, valued at Rs 72 Crores.

· Crompton Greaves is working on a business plan to improve the performance of three power distribution divisions in Nagpur bagged from the Maharashtra State Electricity Distribution Company in September 2007. These attempts are being made to bring down the transmission and distribution losses, currently at 45 per cent, over the next few years.

· CG’s acquisitions (Pauwel, Ganz and Microsol) have given it the much-required brand recognition in the overseas market, access to superior technology and entry into automation products, thus providing unique synergies to become a global solutions-oriented T&D player. Today, it is one of the few manufacturers in the country to have access to 765-KV transformer technologies. Hence, CG has the capability to compete with large companies such as ABB and Areva for a share of incremental investment in T&D sector, which will come largely in high-voltage products.

· Company, through its wholly owned subsidiary- CG International BV, Netherlands, has acquired additional 40% voting share capital in PT Pauwels Trafo Asia, Indonesia, for a sum of USD 10.70 million. With the acquisition of these shares, the Company, through its subsidiaries now owns 100% of the voting share capital of the above Indonesian Company.

· Crompton Greaves is on the lookout for an acquisition in the industrial systems space.