CG Power commissions first phase of Rs 748-cr switchgear expansion ahead of schedule – How it is becoming key player In India’s power capex cycle | ET NOW EXCLUSIVE

Electrical engineering industry major CG Power and Industrial Solutions Ltd on Thursday inaugurated and commenced commercial production at its extra high-voltage (EHV) switchgear manufacturing facility S3 unit-II in Maharashtra’s Nashik. The commissioning of the facility is the first phase of its Rs 748-crore switchgear expansion project, significantly ahead of schedule, as the company ramps up capacity to capitalise on growing opportunities in India's power transmission and distribution sector.

In an exclusive interview with ET NOW, Amar Kaul, Global CEO and Managing Director of CG Power, said the project forms part of a larger investment plan of nearly Rs 800 crore approved by the board in September 2025.

“Last year, around the September time frame, we had the board approval to go ahead with about close to Rs 800 crore of investment for switch gear. And this is the first phase that we have already executed. So, what we made the announcement to SEBI as well as to the stock market was that the first phase has been done,” he stated.

He emphasised, “What is important here is to see the speed of execution. So, in approximately 6 months, we are up and running, and that's what we did yesterday, inaugurated the facility. We had a lot of customers come in there, and the commercial production has started.”

The expansion has increased the company's circuit breaker manufacturing capacity from 9,000 units to 16,000 units annually, representing an increase of nearly 80 per cent. Kaul described the current phase as only the beginning of a much larger capacity enhancement programme.

“In terms of numbers for switch gear, for example, this inauguration that we did yesterday and commercial production started. So, our circuit breaker capacity is increasing from 9,000 to about 16,000, which is almost 80% increase in the capacity, but this is just the beginning of it. It's phase one. It’s going to be multi-fold in terms of capacity. I'm not allowed to give the specific, in terms of revenue, or what numbers are there, because we don't declare separately for the power business. But it's just the beginning of that. So, it's going to, you know, I think this is a step forward towards supporting the government and Atmanirbhar Bharat and making sure that we are accelerating on that journey,” Kaul said.

On industry opportunities, Kaul noted that while high-voltage direct current (HVDC) projects represent a promising segment, they account for only a portion of the broader transmission and distribution opportunity available in the market.

"HVDC is only a fraction of the opportunity. I think the market is pretty big. So, HVDC is specific; we don't directly get into those tenders because HVDC is a very different technology. We are, of course, the R&D and development is happening on that as well. But there's still a big chunk of market that is available, and that's what we are focusing on right now,” he said.

According to the company, the first phase was originally expected to be completed within 18 months as part of a broader project timeline of 33 months. However, the execution team completed the phase in nearly half the anticipated time.

“33 months was from the date of when we got the board approval, when we made the announcement, which was September approximately last year, 2025. And from there was 33 months to complete the whole project. And this phase one was supposed to be completed in about 18 months. And I think the team has done a wonderful job in executing it in 6 to 7 months itself. So, 50% faster in terms of the lead time and what we are trying to do,” Kaul said.

Kaul said the company expects the newly added capacity to be fully ramped up by August-September 2026. The expanded facility is designed to operate at around 85 per cent capacity utilisation, matching the utilisation levels achieved at the existing plant.

Discussing raw material costs, Kaul said commodity price fluctuations remain an industry-wide challenge, but the company mitigates risks through price variation clauses in long-duration contracts and by securing raw material supplies immediately after receiving large orders.

Beyond capacity expansion, Kaul said CG Power is increasing investments in technology development and new product innovation. The company is working on advanced switchgear technologies, including equipment designed for up to 800 kV applications and environmentally friendly SF6-free gas insulation technologies.

“I think to the core of us, CG as a group, you know, a part of the group, so technology innovation stays at the core of us. So, if you look at some of the new technologies that we are trying to bring in, of course, one is the capacity going right up to 800 KV. Second, is also right now most of these breakers are SF6 right now. So, the technology development is happening on SF6-free gas, which is more environmentally friendly as well. So, that development is happening as well,” he noted.

Kaul also highlighted power electronics as a major growth area, driven by increasing demand from artificial intelligence applications, data centres and modern power infrastructure.

“Power electronics becomes important, and for us as a power business vertical, which is transformer and switch gear together, and also on the other side, in the industrial sector, we have railways. So, there's a lot of work happening on the power electronics. So, that's one of the focus areas for us as well,” he stated.

While refraining from providing specific timelines for the company's transformer capacity expansion plans, Kaul indicated that execution is progressing rapidly and further announcements could follow once internal milestones are achieved.

On capital allocation, Kaul said CG Power currently has more than Rs 2,000 crore worth of ongoing investments across greenfield projects, brownfield expansions and capacity enhancement initiatives.

“Today, almost we have the capex of Rs 2000 crore plus is already happening in CG, whether it's greenfield or brownfield or the capacity expansion of the existing plant. So, which is reasonably good, and it doesn't mean that we stop there, depending on how the business case passes through different gates, and we definitely take those funds on that as well. Number one, number two is also NPD - new product development. So you will gradually see our percentage of investment in new product development, innovation will keep going up point by point year over year,” he said.

“I think that's the commitment that we have for the market for the customers that we keep doing all that. So, there's no specific question whether it's in semiconductors, whether we invest in power, we invest in industrial or any of the new verticals; it is on a case-by-case basis depending on the compelling reason that we have. So the teams are actually working on all these business cases regularly, so there's a process set up there,” he added.

The company also plans to steadily increase spending on new product development and innovation over the coming years.

Funding for these investments is being supported by a strong balance sheet, internal accruals and proceeds from the company's recent Rs 3,000-crore Qualified Institutional Placement (QIP).

“If you look at our balance sheet and our P&L sheet, we are fairly cash rich, sitting, you know, with what we have there. We raised a QIP of about Rs 3,000 crore a couple of months back. So that amount is also sitting there. So, there's a structured process. So it's a combination of all. So we are cash-rich right now, for like this particular project, we spent Rs 40 crore already, which is purely internal accruals,” Kaul concluded.