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CG Power's ousted chairman Gautam Thapar making efforts to wrest back control; approaches SEBI, Ministry of Corporate Affairs

FP Staff

Businessman Gautam Thapar, who was ousted as the chairman of CG Power on 29 August, is reportedly initiating efforts to wrest back control of the power equipment maker.

Thapar may exercise his right to buy back pledged shares of the company as per an internal agreement structured in 2017 between him and a section of CG Power's lenders, including private equity fund KKR & Co. and L&T Finance, two people directly aware of the matter said to Mint, requesting anonymity.

Thapar has already approached market regulator SEBI and corporate affairs ministry regarding this, the report added.

Thapar was sacked as chairman with immediate effect on on 19 August after an investigation unearthed a multi-crore financial scam in the firm.

The company's board had earlier ousted Thapar and Chief Finance Officer VR Venkatesh along with a couple of senior executives citing alleged accounting fraud and pending investigation.

Thapar had refuted the allegations of siphoning money from the company.

"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... passed by majority consent, have resolved to remove Gautam Thapar as the chairman of the board with immediate effect," CG Power said in a regulatory filing.

On 20 August, the company had stated that an investigation instituted by its board had found major governance and financial lapses, including some assets being provided as collateral and the money from the loans siphoned off by "identified company personnel, both current and past, including certain non-executive directors."Also, some liabilities and advances to related and unrelated parties had been understated, a PTI report said.

CG Power said the decision was taken in the interests of the company and its stakeholders in discharge of the fiduciary responsibilities of the board.

The Securities Appellate Tribunal (SAT) on 1 October upheld regulator Sebi''s order that barred CG Power ex-chairman Thapar and three other former officials from capital markets for misstatement of accounts as well as funds diversion.

Besides, the tribunal ruled that the appellants are entitled for supply of documents from the company so that they may file an appropriate reply before Sebi and that denial of such documents by the company or by Sebi would be in violation of principles of natural justice as embodied in Article 14 of the Constitution of India.

On 30 September, KN Neelkant, Managing Director and Chief Executive Officer tendered his resignation "orally" at the board meeting and the resignation has been accepted by the board.

Given the ongoing investigations and enquiries, the Board of Directors accepted Mr KN 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 company said in a statement to exchanges.

The CG Power board had earlier asked Neelkant to go on leave pending probe into some dubious deals.

Neelkant was appointed by Gautam Thapar-led Avantha Group as MD and CEO of CG Power in March 2016.

The company, which had restated its FY18 numbers, saw its consolidated receivables balances from various subsidiaries, promoter affiliated companies and connected parties jump from Rs 131 crore to Rs 2,657 crore. Advances to related and unrelated parties of the company may have been potentially understated by Rs 1,990.36 crore, as on 31 March, 2018.

--With inputs from agencies

Also See: Sunil Mittal's company, other investors may infuse funds in bid to revive scam-hit CG Power & Industrial Solutions

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