Crompton Greaves: Debt-laden Loss-making Company to a Successful Global Company

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Case Details:

Case Code : BSTR379
Case Length : 25 Pages
Period : 2000-2010
Pub Date : 2010
Teaching Note : Not Available
Organization : Crompton Greaves Ltd
Industry : Electrical equipment and Engineering
Countries : India; Global

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Analysts felt that this was like a reversal of fortunes for CGL, which had incurred huge losses in the late 1990s and early 2000s. For the first time in its history, CGL reported a loss of Rs. 1.47 billion for the financial year 1999-2000. In the next year - 2000-2001, it recorded a loss of Rs. 0.7 billion, taking its total loss to Rs.2.2 billion in two consecutive years.6 As a result, its share prices hit the lowest levels. The company had never before faced such a disastrous situation. Many analysts and shareholders were doubtful whether the company would survive. The stock market too was abuzz with rumors of the company's closure on account of accumulated losses.

Faced with continuous losses for two years, CGL initiated various measures and these, according to analysts, led to the company achieving a spectacular turnaround within a span of two years. In 2002-2003, it registered a small profit after initiating various restructuring measures. After a successful turnaround, the company focused on growing globally, adopting the inorganic route. Through its acquisition strategy, it not only increased its global presence but also improved its product portfolio. As of April 2010, it was one of the top ten companies in the global power equipment industry.

Analysts felt that the management at CGL had not only orchestrated a remarkable turnaround but had also transformed CGL from a domestic company to a leading global company in its industry...

Excerpts >>

6] "Crompton Greaves Puts 3 Non-viable Businesses on Block as Part of Revamp,", April 2, 2004.

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