The transaction is likely to conclude in July, sources said.
Chennai-based Murugappa Group has evinced interest in taking over scam-hit CG Power and Industrial Solutions Ltd by investing around Rs 750 crore equity in the company, sources said.
Three sources with direct knowledge of the deal said the Rs 36,900-crore Murugappa Group, which also has an engineering arm, has made a non-binding offer to invest around Rs 750 crore that would give it 60-75 percent stake in CG Power.
The investment, they said, was however linked to lenders to CG Power agreeing to debt restructuring.
The transaction is likely to conclude in July, they said.
While Murugappa Group spokesperson did not revert to emails sent for comments, CG Power Chairman Ashish Kumar Guha in reply to an email seeking comments said the company had previously disclosed to stock exchanges about the discussions it had been having for past several months towards capital infusion.
"The company is also engaged with the lenders towards a debt resolution plan. However, we, as a matter of policy don't respond to speculations," he added.
Sources said Murugappa Group will be issued fresh equity shares and the money that it brings in would be used to meet operating and working capital expenditure.
CG Power and Industrial Solutions, erstwhile known as Crompton Greaves, has an excellent order book as well as human and technical capital.
It got derailed in August last year after a board-instituted investigation found major governance and financial lapses, including some assets being provided as collateral and money from loans siphoned off by "identified company personnel, both current and past, including certain non-executive directors".
After the scam came to light, the company sacked founder Gautam Thapar as chairman, and a new board thereafter undertook cleaning up of the accounts and to fix governance issues.
Processes have been overhauled and money siphoned off from the company is being sought to be recovered.
The company is also talking to lenders led by SBI for the restructuring of Rs 2,200 crore of debt.
The Serious Fraud Investigation Office (SFIO) as well as SEBI are probing former management of CG Power for lapses and fraud.
Sources said the business performance of CG Power has been affected due to a severe crunch in working capital and bringing in an investor like Murugappa Group would help tide over that.
Capital restructuring of the business and the company is critical as the working capital gap is wide and while the businesses are intrinsically strong, this starvation has led to lower revenue, they said adding the company has a robust order book of Rs 3,000 crore.
The Murugappa Group has an engineering division which may hold synergies with CG Power and Industrial Solutions Ltd that designs, manufactures, and markets products related to power generation, transmission, and distribution.Chennai-based Murugappa Group is the holding company for a group of businesses. The Group holds diversified interests in abrasives, engineering, farm inputs, sugar, confectionery, plantations, bio-products, chemicals, nutraceuticals, insurance, and financial services.