Having settled the dues of the creditors of CG Power and Industrial Solutions, the new promoter of the company, Murugappa group, said it will adopt a two-pronged strategy to resolve the company’s legacy issues.

While it will make a fair assessment of recent value erosion, especially in the wake of controversies, a robust framework of risk management and corporate governance will be evolved.

Writing in the latest annual report, the first one since the group took over the reins of CG Power last year, the company’s chairman Vellayan Subbiah said it was a matter of satisfaction that they could settle the outstanding dues of employees, vendors and other creditors as the first step of revival.

He said the second priority was to restore normalcy of operations across all business divisions. Timely infusion of working capital and smooth alignment of leadership teams and the talent pool has helped the company accomplish this goal, he said.

This has enabled sequential improvements in the quarterly financial performance. He said there is significant growth opportunity going forward, with steps being taken to strengthen customer engagement, supply chain, talent ramp-up, new product development and exploration of new markets and segments.

“Our decision to operate CG Power as a standalone entity while subtly integrating the cultural ethos of the Murugappa group shall help the company evolve in the near to medium term,” he said.

Murugappa group’s Tube Investments of India (TII) had acquired CG Power under a Swiss challenge as part of the resolution process initiated by lenders under the Reserve Bank of India directive on prudential framework for resolution of stressed assets.

TII infused equity funds of about `687 crore for equity stake of 54% in the company, besides subscribing to certain warrants. TII took control of the company on November 26, 2020, with a new board constituted and new MD appointed the same day.

The NCLT had ordered the reopening, recast and re-audit of the company’s accounts for the past five years ending with financial year 2018-19. All lenders of the domestic entity, overseas subsidiaries, guarantee obligations which were defaulted on the loans, the dues of operational creditors and other stakeholders had to be settled by the Murugappa group, according to management commentary at the second quarter earnings call by CG Power.

There were investigations by SFIO and SEBI. The company was a non-performing asset and the new management had the task of completing all the settlements as per the resolution plan and get the account reclassified as standard, it said.