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CG Power a long term bet; helps reduce reliance on auto: Tube Investments

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S Vellayan, MD of Tube Investments spoke to CNBC-TV18 on the company’s acquisition of CG Power and fund raising plans.

S Vellayan, MD of Tube Investments spoke to CNBC-TV18 on the company’s acquisition of CG Power and fund raising plans.
“We wanted to hit revenue growth compounding at 17 percent, the second is we wanted our profitability to go double digit within 3 years,” Vellayan said.
“Also we wanted to diversify away from auto. We have a huge dependence on the auto sector and I don’t like that dependence because of its extreme cyclicality. So CG was perfect from both perspectives,” he said.
He said CG Power was a very strong franchise.
“The performance degraded for all the wrong reasons. We believe that given the environment, the turnaround will take a little bit of time. But we are fairly bullish about getting to good performance numbers,” he said.
“We are more bothered about where we can get the company in 3-4 years versus worrying about whether we can kind of turn it around kind of within a 3-6 months period,” he said.
Vellayan refrained from making any guidance for the auto business.
“We don’t spend a lot of time kind of forecasting what the future can be, nobody knows when the auto market is going rebound or not. We have done a lot of work to push down breakeven in that business and improve our profitability. So if the auto market does pick up that is great news for us and we will have a great year next year,” he said.
Vellayan sounded cautious on the outlook for the NBFC arm, Cholamandalam Investment and Finance Company.
“We still have to see how the whole moratorium effect plays out because we have only seen two months of it, post moratorium. So I would still say that we have to continue kind of that slightly cautious outlook till we get into February-March. Traditionally, in financial services the fourth quarter tends to be the strongest quarter, so if that does play out in collections then that puts us in a very strong position for next year,” he said.

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ICICI Bank676.65 20.85 3.18
ITC212.35 5.30 2.56
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CompanyPriceChng%Chng
ICICI Bank676.65 20.70 3.16
ITC212.40 5.40 2.61
Wipro599.15 14.95 2.56
SBI Life Insura1,050.45 24.45 2.38
SBI428.90 6.85 1.62
CompanyPriceChng%Chng
ICICI Bank676.65 20.85 3.18
ITC212.35 5.30 2.56
SBI429.15 7.15 1.69
HCL Tech994.25 15.65 1.60
Axis Bank755.25 8.75 1.17

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Rupee-100 Yen0.6730-0.0030-0.44