After removing founder Gautam Thapar as chairman of the company, the board of fraud-hit CG Power and Industrial Solutions has sacked the firm's CFO V R Venkatesh over alleged "misconduct" and breach of trust. The board of the company at its meeting on Friday "terminated the employment of V R Venkatesh as the Chief Financial Officer of the company, for cause, with immediate effect," CG Power said in a regulatory filing.
"The termination of the employment of Venkatesh is due to the grave nature of the misconduct and breach of trust on his part and having knowingly undertaken actions which were detrimental to the interests of the company and its stakeholders," it said. Venkatesh could not be contacted for comments.
Company CEO and Managing Director K N Neelkant, who was sent on leave on May 10 by the board to enable proper investigation into financial irregularities, continues in his role for now. However, some investors and lenders have questioned his continuance given that the fraud involving some assets of the firm 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", happened under his watch.
The board-instituted investigation had also found some liabilities and advances to related and unrelated parties being understated. The company has restated its financial results for the previous fiscal taking into account the unstated liabilities, the filing said.
"Certain unauthorized/unapproved banking transactions in the nature of loans (unauthorized transactions/ loans) taken from banks / financial institutions (lenders)/a connected party aggregating to Rs 635 crores were not disclosed in the Standalone Financial Results of prior years / periods by off-setting against certain related and unrelated party balances," the company's auditors said in the audit note furnished with the restated statement. It said interest expenses of Rs 90.93 crore which were serviced by the company in relation to these unauthorized loans were accounted under different heads in the Standalone Statement of Profit and Loss and "were mispresented in the financial statements/ results of prior years / periods."
"The company also has loans including interest receivables and advances recoverable from related and unrelated parties, as reinstated on March 31, 2019, aggregating to Rs 2,439.94 crore for which further interest income aggregating to Rs 337.61 crore is currently not recorded as at March 31, 2019," it said. On August 29, the board has removed Thapar as the chairman of the company through a circular resolution approved by a majority of the members. Thapar opposed the resolution, while CEO and Managing Director K N Neelkant had abstained from voting.
Thapar, who had not commented on the issue since the company disclosed financial irregularities on August 20 after a marathon board meeting on the previous day, had in a statement after his removal said: "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.
"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 said. The board was headed by him during that period.
Thapar would, however, continue to be a member of the board -- a position from which only shareholders can remove him. Though a founder promoter of CG Power, Thapar lost almost all of his shares after lenders in past years invoked pledges he had created to borrow money. He currently has only 8,574 shares out of 62.6 crore shares of the company.India falls further behind China as GDP slips 5% in June quarter