CG Power now removes CFO V R Venkatesh after irregularities, fraud

A day after CG Power and Industrial Solutions Ltd sacked its Chairman Gautam Thapar, the troubled company has removed V R Venkatesh as the Chief Financial Officer for irregularities and unauthorised transactions.

"The termination of the employment of Venkatesh is due to the grave nature of the misconduct and breach of trust on his part and having knowingly undertaken actions which were detrimental to the interests of the company and its stakeholders," it said.

"The board of directors at its meeting terminated the employment of V R Venkatesh as the Chief Financial Officer of the company for cause with immediate effect," the company said in a regulatory filing late on Friday just before midnight.

On August 19, CG Power's Risk and Audit Committee had raised red flags on five counts which were prejudicial to the company. The committee found understated liabilities, related party transactions, unauthorised guarantees, understated net worth and company personnel transactions among other irregularities.

"The total liabilities of company and the group may have been potentially understated by about Rs 1,053.54 crore and Rs 1,608.17 crore, respectively as on 31 March 2018," CG Power had said in a statement.

It said that advances to related and unrelated parties and the Avantha Group may have been potentially understated by Rs 1,990.36 crore and Rs 2,806.63 crore respectively as on March 31 last year.

According to reports, the Ministry of Corporate Affairs has summoned Thapar along with other key management personnel and auditor KK Mankeshwar & Co to its Mumbai office next week.

On Thursday, the board of CG Power had sacked Thapar as its chairman. Thapar vehemently denied any fraud, claiming that all transactions were done with due approval from the board.

Trouble started brewing at CG Power when its parent Avantha Holding's creditors started invoking pledge of the former's shares in March. In response to this, the company board set up an operations committee to suggest measures for value preservation and enhancement.

The committee was informed of some financial transactions that had been made without proper authority. So an independent law firm was appointed to investigate and some other questionable transactions were identified.

The group's liabilities and advances to certain entities were found to be understated. The net worth of the company too was found to be understated due to unauthorised and inappropriate write-offs and the relevant charges were debited to the profit and loss account, leading to refiling of financial statements.

CG Power is in the business of products and solutions for the power sector. The industry has been hit by the broader slowdown and muted industrial capacity expansion. Its attempt to sell a loss-making unit in Hungary failed earlier this year.

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