Citing regular board approvals for various inter-corporate loans, former CG Power Industrial Solutions' non-executive chairman Gautam Thapar has refuted allegations of fund misuse amid alleged governance lapses coming under the regulatory scanner, according to documents submitted by him to the government.
In a 36-page submission to the corporate affairs ministry early November, Thapar, who was sacked in a boardroom coup in the wee hours of August 30, has provided documents on various issues, including inter-corporate loans, minutes of board meetings and loans from lenders like Standard Chartered Singapore and Yes Bank.
Markets regulator Sebi banned Thapar and entities associated with him for three years, following which he moved the Securities Appellate Tribunal, which has asked the company to provide relevant documents to him.
The Serious Fraud Investigation Office (SFIO) has also started a probe against CG Power and 15 group entities. The ministry has moved NCLT Mumbai seeking to restate the books of accounts of CG Power from FY16. An order is expected on Monday.
The documents, seen by PTI, show how Standard Chartered Singapore extended a $44-million lifeline to CG Singapore in February 14, 2018. The entire money was then paid to CG International Netherlands through another group entity AIA and Avantha. The same amount was fully transferred back to CG International Netherlands on the very same day.
Later, the company in turn paid back the entire amount to StanC Singapore, thus making the account standard, show the documents.
While a major allegation revolves around funds moving in and out of CG Power and group entities, Thapar has claimed that such a route was taken following suggestions from lenders since CG Power was facing liquidity issues.
Similarly, Aditya Birla Finance and Yes Bank allowed CG Power to get funds between 2016 and 2019 in a similar manner as StanC did in 2018, showed the documents.
"All the above transactions were done according to the structure provided by StanC and other respective lenders and every time the entire money was paid back to the respective lender. That not a single penny of such funds remained in Avantha books clearly shows that there is no siphoning of funds," Thapar has claimed.
Going by the documents, the company's risk and audit committee at its meeting held on May 26, 2017 gave an "omnibus approval for entering into transactions with related parties for throughout FY18". Similar omnibus approvals were sought for and were granted for FY19 as well.
Further, Thapar has submitted that the board approved a proposal from CG India on September 28, 2018 for a fixed deposit of Rs 229 crore as part of a credit line from IndusInd Bank. This deposit was a surety for part payments owed to Avantha towards brand royalty which the board approved, according to the documents.
"This clearly shows that Rs 229 crore was not an additional advance to Avantha but a refund of a conditional deposit made by Avantha to CG which had to be refunded in the event of conditions not being met," the document said.
On the allegations that CG Power made out-of-turn advances to group entity Mirabelle Trading since 2013 when CG Power was entering Southeast Asia, Thapar has said the board approved an advance payment of $20.15 million to Mirabelle towards service charges.
Currently, Thapar owns just 8,574 shares in CG Power. Some of its large non-promoter shareholders are HDFC Mutual Fund and Aditya Birla Mutual Fund.
Private equity giant KKR India led by Sanjay Nayar owns nearly 10 per cent, as does L&T Finance. The family office of Sunil Bharati Mittal of Bharti Airtel has since September picked up 8.3 per cent in CG Power.
The CG Power board began to feel the tremors this March, when an operations committee was formed under chairmanship Narayan Seshadri following the insistence of Nayar.
Incidentally, the documents also showed that Seshadri was not even present at the board meeting that appointed him as chairman of operations committee. Seshadri is also an independent director of CG Power.
Significantly, Seshadri's Tranzmute Capital is 50 per cent owned by Nayar but this was never disclosed to CG Power when he came onto the board, as per the the documents.
They are also directors in Epimoney and EPI Venture Partners as investors. Also, a non-disclosure agreement was signed between Tranzmute Capital & Management and CG Power in August 2018.
Going by the documents, Seshadri had a business relationship with Nayar and CG Power before he became a non-executive director on CG Power board.
It is also interesting to note that Anubhav -- son of Akhil Gupta, who is the vice chairman of Bharti Enterprises and a close confidante of group Chairman Sunil Bharti Mittal -- recently married Sanjay Nayar's daughter Adwaita.
In a detailed e-mail statement to queries from PTI, KKR India denied any involvement in Seshadri being appointed a director on CG Power board. "We are a lender to Avantha Holdings and have no locus standi in any of its underlying group companies. KKR India has never been involved in the decision-making process of CG Power," it said.
The statement said that KKR is aware that SeshadrI was invited directly by Thapar himself to join the board.
"We confirm that Narayan's partnership with KKR India was fully disclosed (on March 31, 2018). Tranzmute has working relationships with other PE funds, promoters and companies, including KKR India - there has never been exclusivity between KKR and Tranzmute in this regard," it said.
On relationship with Epimoney, the company said KKR has never been an investor in it but Nayar is one of its six investors.