CG Power of Gautam Thapar says significant financial failures were found, unauthorized advances
New Delhi, August 20 () Gautam Thapar, promoted by CG Power and Industrial Solutions Ltd, said Tuesday that an investigation conducted by its board of directors found significant financial and government failures, including advances to related and unrelated parties, as well as The responsibilities of the company and the group potentially be underestimated by hundreds of millions of rupees.
Current and past employees of the company, including non-appointed non-executive directors and certain key management personnel (KMP) provided certain assets of the company as collateral and turned the company into a co-borrower or guarantor to obtain loans without due authorization.
The funds thus raised were diverted from the company, the firm said in a presentation to the stock exchanges.
After 13 hours of discussions that lasted until 4 in the morning, the board concluded that there were unauthorized 'transactions' made by 'certain employees', which led to a possible underestimation not only of the responsibilities of the company but also advances to related and unrelated parts of the company and the group.
This, the company said, had been going on for two years.
Advances to related and unrelated parties of the company and the group may have potentially been underestimated by Rs 1,990.36 million rupees and Rs 2,806.63 rupees, respectively, as of March 31, 2018, and Rs 1,479, Rs 34 million and Rs 1,331.47 rupees, respectively, on April 1, 2017, the presentation said.
According to the presentation, the recovery of these amounts along with the interests will be assessed with the appropriate legal contributions, the firm said.
In addition, the total liabilities of the company and the group may have potentially been underestimated by Rs 1,053.54 rupees and Rs 1,608.17 rupees respectively as of March 31, 2018, and Rs 601.83 rupees and Rs 401.83 Rs million respectively on April 1, 2017, he said.
Certain company assets were supposedly provided as collateral without proper authority, and the company became a co-borrower or guarantor to allow seemingly unrelated third parties to obtain loans without proper authorization.
The money thus obtained was diverted immediately and without the proper authorization of the company, either by itself or its subsidiaries or parties apparently unrelated to certain related parties, he said.
According to the presentation, the company's net worth was potentially underestimated due to unauthorized and inappropriate cancellations and charges due to the statement of profit and loss of the last two financial years.
These (transactions) were allegedly carried out by identified company personnel (both current and past), including certain non-executive directors, certain KMP and other employees identified in violation of the Company's Rules of Procedure (ROP), and/or without information or authorization from the Risk Assessment Committee (RAC) or the board, or in breach of the 2013 Companies Act, applicable Sebi regulations and other applicable laws, he said.
These transactions, according to the presentation, appear to have been carried out by various means, including inappropriate compensation using seemingly unrelated third parties, routing transactions through subsidiaries, promoter-affiliated companies and other connected parties.
This could have resulted in an erroneous statement of past financial statements, he said.
The company now plans to conduct a detailed forensic investigation to establish irregularities. The board is fully committed and will cooperate with the relevant regulatory authorities, as required, to ensure compliance with the law, he said.
The company would take the necessary legal actions to protect its interest, according to the document. All failures identified in the system, misuse of the granted authority and any other weaknesses will be addressed quickly and appropriate rectification measures will be implemented.
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 track transactions when a finance firm raises the problem of default. of interest and a bank was looking for a replacement of the validity of the check that was about to expire.
CG Power said the Managing Director, K N Neelkant, was away from everyday management services during this investigation period. Sudhir Mathur, then an independent director of the company and a member of the operations committee, was redesigned as a full-time executive director as of May 10. ANZ SHW SHW