CG Power Gets Shareholders Nod To Raise Rs 5,000 Crore
CG Power & Industrial Solutions Ltd. has got shareholders' nod to borrow up to Rs 5,000 crore to meet working capital and other business needs.
As many as 99.99 percent of shareholders, at the company's annual general meeting in Mumbai on Dec. 14, voted in favour of a resolution moved for raising borrowing limit, CG Power said in a regulatory filing on Tuesday.
They also approved appointment of Sudhir Mathur as whole time executive director of the company with 99.99 percent voting in favour of the resolution.
Mathur, who along with non-executive chairman Ashish Kumar Guha has been overseeing the clean up of the company after the alleged fraud of over Rs 3,000 crore came to light, was first appointed as independent director on CG Power board on Oct. 1, 2018 and moved into an executive role from May 10, 2019.
Shareholders approved both his appointments, the filing showed.
They also approved appointment of Narayan K Seshadri as independent director on the board of the company.
In the shareholder notice, the firm had stated that its current borrowing as of March 31, 2019 was Rs 2,455.39 crore (fund based including short term loans) and Rs 1,380.00 crore (non-fund based).
"Keeping in view the existing borrowing and additional fund requirements and given the current financial condition of the company, the company is in urgent need of both long-term capital and working capital and towards this, the management of the company is in the process of identifying potential sources of capital," it had said.
The company is also seeking external advice next mode and sources of fundraising.
"Hence, approval of the members (or shareholders) is sought for availing borrowings up to an amount of Rs 5,000 crore for meeting the immediate funding requirements of the company," it had said.
The company had in August said that an investigation instituted by its board had found major governance and financial lapses, including 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".
Gautam Thapar, who was non-executive chairman of the company, was removed by its board on Aug. 29.
CG Group incurred a net loss of Rs 652.38 crore during the year ended March 31, 2019. Its current liability exceeds its current assets by Rs 2,115.98 crore.
The firm's annual report said its Board of Directors are in active discussions with lenders for restructuring its borrowing and fresh capital infusion.
"The Group has a robust unexecuted business order book of over Rs 7,000 crore as on March 31, 2019," it said.
It is "evaluating divestments of non-core assets, including but not limited to the sale of Kanjurmarg land without hampering the capability to serve customers".
The company is also planning to initiate recovery of receivables from promoter affiliate companies and connected parties based on consultation with independent legal counsel, the annual report said, adding that the board will review the international business with a view to making it a coherent part of business and drive synergies.