Gautam Thapar, who holds negligible stake in the company, denies wrongdoing charges
More than a week after CG Power and Industrial Solutions made a series of startling revelations about some unauthorised transactions carried out by some of its employees, the company on Thursday removed its founder Gautam Thapar as chairman. The company’s board through a circular resolution approved by a majority of the members removed Thapar as the chairman with immediate effect, the company said in a regulatory filing. CG Power is part of the Thapar-led Avantha Group but the promoters hold a negligible stake in the company after the lenders invoked the pledged shares.
While Thapar opposed the resolution, CEO and managing director KN Neelkant, whose continuance has been questioned by investors, abstained from voting on the resolution. The board is likely to meet on Friday to elect a new chairman and in all likelihood, one of the independent directors will be appointed as the non-executive chairman.
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Thapar would, however, continue to be a member of the board — a position from which only shareholders can remove. On his part, Thapar denied charges of embezzlement of funds. “No promoter or promoter entity has derived any undue benefit. There is simply no fraud. The reports following the board meeting of August 19, 2019, are disheartening. Indeed, I would say that the reports do not reflect facts,” he said.
“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,” Thapar said in a statement.
He added that promoters who have paid back Rs 4,000 crore to lenders since 2015 “do not cheat”. “I had no opportunity to participate in the ‘investigation’ nor the resulting ‘report’. I leave it to the stakeholders to draw their own conclusions from this fact. I will reaffirm this at the board meeting tomorrow, August 30, 2019,” he added.
On August 20, CG Power had informed the stock exchanges that liabilities and advances to related and unrelated parties have been understated for financial years 2016-2017 and 2017-2018. While assets were provided as collateral without any authority and the company was made a co-borrower/guarantor to enable third parties to secure loan, the money so obtained was immediately routed out of the company.
“These were carried out by identified company personnel, both current and past, including certain non-executive directors. These transactions appear to be undertaken in a seemingly fraudulent manner and, hence warrant further detailed investigation,” the company had said without naming any official.
As of March 31, 2018, total liabilities of the company and the group were potentially understated by around Rs 1,053.54 crore and Rs 1,608.17 crore, respectively. For April 1, 2017, it was understated by Rs 601.83 crore and Rs 401.83 crore, respectively, the company had said. On Thursday, CG Power in a regulatory filing, said, “In cognizance of the current situation being faced by the company and the recent developments, including disclosures dated August 19, 2019, made by the company, the board of directors through a circular resolution dated August 29, 2019, passed by a majority consent, have resolved to remove Gautam Thapar as the chairman of the board with immediate effect”. The decision, it said, “has been taken in the interests of the company and its stakeholders in the discharge of the fiduciary responsibilities of the board”.
While the board had on May 10 sent CEO Neelkant on leave pending an investigation into the suspect, unauthorised and undisclosed transactions, Thapar had continued as the company chairman. Thapar has only 8,574 shares out of 62.6 crore shares of the company. This shareholding does not provide him with a board position, the sources said.
Yes Bank was the last one to invoke the pledge in May. It now owns 12.79% of CG Power. The company now plans to conduct a detailed forensic investigation to establish wrongdoing.