CG Power and Industrial Solutions were locked in 5% upper circuit at Rs 9.95 after the company decided to remove Gautam Thapar as the chairman of the board with immediate effect.
This decision has been taken in the interests of the company and its stakeholders in discharge of the fiduciary responsibilities of the board, the company said in a statement during market hours today, 29 August 2019.Meanwhile, with reference to the news item captioned, "Deals Buzz: CG Power to sell non-core assets, raise fresh equity," CG Power issued a clarification after market hours yesterday, 28 August 2019. The company clarified that this news is arising from investor presentation submitted to the stock exchanges on 27 August 2019 where it is mentioned that the company is evaluating divestments of non core assets and considering other fund-raising avenues including a potential equity raise for bridging the cash flow gaps as well as working capital requirement to avoid any business disruption. It confirmed that there is no information presently that merits disclosure.
On the BSE, 5863 shares were traded in the counter so far compared with average daily volumes of 49 lakh shares in the past one quarter. The stock hit a high of Rs 9.95 and a low of Rs 9.95 so far during the day.
The stock hit a 52-week high of Rs 60.4 on 28 Aug 2018. The stock hit a 52-week low of Rs 8.25 on 27 Aug 2019.
The stock plunged 48.37% in seven trading session to Rs 9.50 on Wednesday, 28 August 2019, from its close of Rs 18.40 on Monday, 19 August 2019.
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The recent selling was triggered following the company's disclosure before trading hours on 20 August 2019, that an internal probe of the company had uncovered several irregularities in the financial statements of the company.
As per the disclosure, the company said it had set up an Operations Committee (Ops Committee) in March 2019. The committee was made aware of some unauthorized transactions by certain employees of the company. An independent legal firm was appointed to probe certain financial wrongdoings by certain employees of the company. It submitted a report, pointing out certain misrepresentation in financial statements of the company and unauthorized financial transactions.
The total liabilities of the company and the group may have been potentially understated by approximately Rs 1,053.54 crore and Rs 1,608.17 crore, respectively, as at 31 March 2018; and by Rs 601.83 crore and Rs 401.83 crore, respectively as at 1 April 2017.
Advances to related and unrelated parties of the company and the group may have been potentially understated by Rs 1,990.36 crore and Rs 2,806.63 crore, respectively, as at 31 March 2018; and by Rs 1,479.34 crore and Rs 1,331.47 crore, respectively as at 1 April 2017.
Certain assets of the company that were purportedly provided as collateral without due authority; and the company was made a co-borrower/guarantor for enabling ostensibly unrelated third parties to obtain loans without due authorisation. The money so obtained were immediately and without due authorisation routed out of the Company, either by itself or from its subsidiaries or ostensibly unrelated parties to certain related parties.
The net worth of the company was potentially understated due to unauthorised and inappropriate write-offs and charges debited to the Profit and Loss statement of the company during the year ended 31 March 2018, and 1 April 2017.
These were purportedly carried out by identified company personnel (both current and past) including certain non-executive directors, certain KMPs and others identified employees in breach of the rules of procedure of the company and/or without proper information to or authorization.
The financial results of the previous quarters for the years ended March 2019, 2018 and 2017 could be impacted as a consequence of these adjustments. As a result of the above findings the opening balances of financial year ended 31 March 2019 and earlier years may have to be restated.
Meanwhile, the company's board has decided to conduct a detailed forensic investigation to establish wrongdoing accountability and any other residual implications. The board is fully committed to and will cooperate with the relevant regulatory authorities, as they may require, to ensure compliance with law.
The company will undertake requisite legal actions to protect its interests vis-a-vis each of the specified suspect transactions and entries.
Avantha Group Company, CG Power and Industrial Solutions (CG), is a global pioneering leader in the management and application of electrical energy. CG's offerings include electrical products, systems and services for utilities, power generation and industries.
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