The government has issued a look-out circular against Gautam Thapar, the ousted chairman of fraud-hit CG Power and Industrial Solutions, said senior official.
“We are looking at the gaps in the company’s books. The circular has been issued as a pre-emptive measure,” the senior official added.
The circular has been issued at the behest of the Ministry of Corporate Affairs (MCA), which is currently inspecting the books of the company. The case could be referred to the Serious Fraud Investigation Office (SFIO) if the preliminary inspection report points to a fraud and gaping holes in the books of the firm.
A month ago, the company was hit by an accounting scandal and the liabilities of the group were found understated by over Rs 1,600 crore for 2017-18.
“Funds diverted from CG Power were fraudulently transferred to its promoter company Avantha Holdings and entities related/connected with the company, Avantha International, Acton, Ballarpur International, Mirabelle and Solaris, without knowledge of the company and without any approval from its board,” the report of the risk and audit committee said.
The regional director’s (RD’s) office of the MCA – western region – is conducting the inspection and is likely to submit its report soon. The RD’s office has questioned more than 20 persons in connection with the matter so far.
Resignation of the company’s auditor had triggered an MCA inquiry into CG Power and Industrial Solutions.
On Tuesday, the Securities and Exchange Board of India (Sebi) debarred Thapar from accessing the capital market for a number of alleged irregularities, including diversion of money.
The market regulator also barred the chief financial officer (CFO) and two directors of the company for their involvement in dubious transactions.
Sebi also restrained three entities belonging to the Thapar-led Avantha Group from diverting their money or disposing of their assets. It has also directed CG Power to take necessary steps to recover the amount due to it and take legal action to safeguard the interests of investors. Thapar, the founder of Avantha Group, demerged the consumer business in the face of financial troubles, which became Crompton Greaves Consumer Electricals, and the erstwhile Crompton Greaves became CG Power and Industrial Solutions.
His stake in Crompton Greaves Consumer, which also houses the brand, was sold to private equity funds Advent International and Temasek Holdings for Rs 2,000 crore in 2015. Promoters had also pledged CG Power shares against loans they took to invest in other businesses.