Fraud-Hit CG Power Asks Gautam Thapar-Linked Firms To Return Rs 3,300 Crore

CG Power and Industrial Solutions Ltd. on Tuesday said it has asked companies linked to promoter Gautam Thapar among others to return over Rs 3,300 crore and has initiated the second phase of the probe to fix responsibility for the alleged fraudulent transactions.

In August, CG Power had stated that an investigation instituted by its board had found major governance and financial lapses. That included some assets being provided as collateral and the money from the loans siphoned off by “identified company personnel, both current and past, including certain non-executive directors”. Also, some liabilities and advances to related and unrelated parties had been understated.

In its earnings statement for the July-September quarter, CG Power on Tuesday said: “The Phase-2 investigation has been initiated by the board and update/report of the ongoing investigation shall be submitted to the board in due course. The investigation is expected to be completed by the fourth quarter of FY 2019-20.”

The firm said it has issued recovery notices to seven entities demanding repayment of Rs 1,314.78 crore owned by them to the company. Besides, its subsidiaries have sent 23 notices to recover Rs 2,095.64 crore.

“Three notices sent by the company (recovery amount Rs 452.12 crore) and nine notices sent on behalf of the subsidiaries (recovery amount Rs 429.85 crore) have been returned undelivered,” it said. “Besides, recovery notices for claims Rs 74.63 crore owed to the company and Rs 395.18 crore owed to certain subsidiaries could not be sent for want of requisite details including communication details.”

CG Power said a total of Rs 3,018.62 crore was receivable from “various promoter affiliate companies and connected parties”.

These include Rs 1,001.38 crore Thapar’s Avantha Holdings Ltd. Another Rs 287.75 crore was due from Blue Garden Estate Pvt. Ltd. and Rs 175 crore from Acton Global Pvt. Ltd. - two firms which were classified as “promoter connected party”.

Among parties related to the promoter group, Rs 552.33 crore was due from Ballarpur Graphics Paper Product Ltd., Rs 348.71 crore from Avantha International Assets BV and Rs 378.76 crore from Solaris Industrial Chemicals Ltd., the filing showed.

Blue Garden Estate Pvt Ltd. also had Rs 320 crore of pending loan.

The board of CG Power had in August-end sacked Thapar as chairman and thereafter forced then Chief Executive Officer KN Neelkant to resign.

CG Power reported narrowing of consolidated net loss in July-September to Rs 61.47 crore from Rs 101.83 crore in the same period of the previous year, according to the regulatory filing by the company.

The board of troubled power equipment manufacturer said it has withdrawn of its amalgamation plans with its wholly-owned subsidiary CG Power Solutions.

The decision to withdraw was taken in the backdrop of findings of the phase-I investigation report, which had alleged financial fraud by its former chairman Gautam Thapar.

Thapar had previously denied wrongdoing and said no transaction was done without the knowledge of the board.

“Out of the recovery notices sent by the company, responses have been received from two entities (recovery amount Rs 108.85 crores) seeking particulars of the claim made by the company; from one entity (claim amount Rs 685.31 crores) making counter claim of Rs 525.21 crores with interest at 15.70 percent per annum from April 30, 2019,” CG Power said.