Gautam Thapar's CG Power finds unauthorised advances, major financial lapses

Advances to related and unrelated parties of the company and the group may have been potentially understated by Rs 1,990.36 crore and Rs 2,806.63 crore, respectively as on March 31, 2018, and by Rs 1,479.34 crores and Rs 1,331.47 crores respectively as on April 1, 2017, the filing said.

According to the filing, recovery of these amounts together with interest will be evaluated with appropriate legal inputs, the firm said.

Also, total liabilities of the company and the group may have been potentially understated by Rs 1,053.54 crore and Rs 1,608.17 crore respectively as on March 31, 2018, and by Rs 601.83 crore and Rs 401.83 crore respectively as on April 1, 2017, it noted.

"Certain assets of the company were purportedly provided as collateral without due authority, and the company was made a co-borrower and or guarantor for enabling ostensibly unrelated third parties to obtain loans without due authorisation.

"The money so obtained was immediately and without due authorisation routed out of the company, either by itself or from its subsidiaries or ostensibly unrelated parties to certain related parties," it said.

As per the filing, the net worth of the company was potentially understated due to unauthorised and inappropriate write-offs and charges debited to the Profit & Loss statement of the last two financial years.

"These (transactions) were purportedly carried out by identified company personnel (both current and past) including certain non-executive directors, certain KMPs and others identified employees in breach of the Rules of Procedure of the Company (ROP), and or without proper information to or authorisation of either the Committee for Risk Assessment (RAC) or the board, or in breach of the Companies Act 2013, applicable Sebi regulations and other applicable laws," it said.

These transactions, the filing said, appear to have been carried out by various means, including inappropriate netting off using ostensibly unrelated third parties, routing transactions through subsidiaries, promoter affiliated companies and other connected parties.

These may have potentially resulted in a mis-statement of past financial statements, it said.

The company now plans to conduct a detailed forensic investigation to establish wrongdoing. "The board is fully committed to and will cooperate with the relevant regulatory authorities, as they may require, to ensure compliance with the law," it said.

The company would undertake requisite legal actions to protect its interest, the filing said. "All identified failures in the system, misuse of authority granted and any other weaknesses will be swiftly addressed and appropriate rectification measures are being put in place."

The company, controlled by Gautam Thapar, business tycoon and founder of the Avantha Group, had appointed an independent law firm to investigate certain transactions after the company could not trace transactions when a finance firm raise the issue of interest payment failure and a bank sought replacement of cheque validity that was about to expire.

CG Power said Managing Director K N Neelkant was away from day-to-day management services during this period of investigation.

Sudhir Mathur, then an independent director of the company and a member of operations committee, was re-designated as a whole-time executive director with effect from May 10.