Fraud-hit CG Power Chief Executive Officer K N Neelkant resigned on Monday as the company begins a clean-up of its operations.
"K N Neelkant, the Managing Director and Chief Executive Officer of CG Power and Industrial Solutions Ltd tendered his resignation orally at the meeting of the Board of Directors of the company held today, ie September 30, 2019, which was recorded through video-conferencing," the company said in a regulatory filing.
Late last month, the board of CG Power and Industrial Solutions removed its founder Gautam Thapar as chairman following an investigation unearthing a multi-crore financial fraud in the company.
"Given the ongoing investigations and enquiries, the Board of Directors accepted Neelkant's resignation, subject to and without prejudice to any of the company's rights, contentions, entitlements and remedies, whether in law or in equity, including the right to subsequently undertake actions, if needed, towards termination for cause," the filing said.
Sources said investors and lenders want a clean-up of the company and so first forced Thapar out and now Neelkant has also resigned.
The company's board had on May 10 sent Neelkant on leave pending an investigation into some "suspect, unauthorised and undisclosed" transactions.
The investigation found that some assets were provided as collateral and the money from the loans siphoned off by "identified company personnel, both current and past, including certain non-executive directors".
Neelkant had previously resigned from all subsidiaries of the company.
Earlier this month, Neelkant had told PTI that "based on analyst calls, the key investors are rather concerned about the operations which have been growing profitably and significantly faster than the market in the last few years, since my assuming the position of MD and CEO of CG Power."
"On the contrary (to investors seeking my ouster), there has in fact been inquiries on, as to when would I be back into the operations. Thus, the same leads me to believe that the investors and lenders in the best interest of the company would not be keen to have me to step down," he had said.
Neelkant had abstained from voting on the resolution to remove Thapar as the company's chairman. The resolution was carried by a majority vote of the members of the board, the company had said on August 29.
Sources said the board has not yet named a replacement for Neelkant.
After his removal, Thapar had stated that "no promoter or promoter entity has derived any undue benefit. There is simply no fraud". He reportedly has sent a legal notice to the company board.
"In the interests of all stakeholders, including banks and financial institutions, I must say that no funds lent by banks nor any funds of CG have been misappropriated. The money has been applied with due board approval. All inter-corporate transactions have been fully authorised by the board," he had said.
The company had, in a regulatory filing last month, stated that an investigation instituted by its board had found major governance and financial lapses, including that some liabilities and advances to related and unrelated parties had been understated.
While the regulatory filing had not named anyone involved in the scam, the sources said the investigation had found strong links to the current management.
The company now plans to conduct a detailed forensic investigation to establish wrongdoing.