CG Power, while presenting its Q3FY21 numbers, having shown an operational improvement, has also cleaned its books, by writing off all doubtful receivables, as also, by fully booking all the liabilities, detailed as under-
1) It is important to focus on Indian operations, thus standalone numbers only, of CG Power from hereon, as new promoter, Murugappa Group is seen highly positive on Indian economy. Note 5 to Q3 numbers, states of new promoter bringing in Rs. 1,000 cr , of which, Rs. 687.50 cr already brought in cash, Rs. 200 cr NCD, issued to Lenders and Rs. 112.50 cr to be brought in, on or before 25-5-22, for exercising Warrants.
2) CG got a waiver of Rs. 1,409 cr from lenders, on settlement of all past dues, which was repeatedly stated by us, of this seen coming in Q3.
3) To clean the Balance Sheet, as a measure of transperancy, wrote off Rs. 2,358.11 cr, to be receivable from the old promoter, for which, legal case for recovery are already filed.
4) Provided all the liabilities, on account of Corporate Guarantees issued by the Overseas Subsidiaries of Rs. 46.96 cr, CG House liability of Rs. 44.64 cr, on valuation raised to Rs. 150 cr. , Rs. 48.04 cr, for Forex Loss/Non performance of Contracts and Professional Fee etc.
5) Exceptional loss of Rs. 799.52 cr seen in Q3, is thus the net sum of all above items, which should and will get liked by the Analysts (not sure about Media, due to lack of knowledge).
6) CG has complied with all the condition Precedent, for sale of remaining portion of Kanjurmarg land at Mumbai, paving way for completion of sale, and to receive balance amount from buyer.
7) Has an order book of Rs. 2,815 cr which will get executed in MT, seen having good margins.
8) CG is still having an unutilised cash of Rs. 315.17 cr, as at 31-12-20, of amount of Rs. 687.50 cr brought in by the new promoter.
Hence, this has reduced the Balance Sheet size, as at 31-12-20, on standalone basis from Rs. 4,700 cr to Rs. 2,800 cr. On liabilities side, CG has Equity Capital of Rs. 268 cr, Reserves of Rs. 250 cr, Debt (NCD) of Rs. 200 cr, Working Capital Finance of Rs. 650 cr, and Creditors of Rs. 1,432 cr. On Assets side, it has Fixed Assets of Rs. 950 cr (including CG House at Rs. 150 cr,. Whose NPV is seen at Rs. 450 cr) Cash and Bank of Rs. 477 cr, Current Assets of Rs. 990 cr, Deferred tax Assets (being non cash item) of Rs. 383 cr.
CG may be able to settle Trade Payables by making a saving of about Rs. 500 cr, which will get reflected in Q4 numbers, as an exceptional gain. Hence, with sound financial, with good liquidity, having order book for next 12 months, has put CG on a "Take Off" Platform from here, which will eventually get reflected in its future working, thus making share price to move higher.
Today, have also given additional data on CG Power, in our Buy Call, in Member Zone, in Little Gems Section.