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CG power share nosedives 20% on reports of fraud transactions; YES Bank tanks 8%

Shares of domestic private lender YES Bank that held 12.79% stake in the CG Power and Industrial Solutions also tanked over 8% intraday on the Bombay Stock Exchange.

twitter-logo BusinessToday.In        Last Updated: August 20, 2019  | 19:29 IST
CG power share nosedives 20% on reports of fraud transactions; YES Bank tanks 8%
With a trend reversal after 2 days of consecutive gain, the stock price of CG power opened at a fresh 52-week low of Rs 14.75 on BSE, against the closing price of Rs 18.40

Shares of CG Power and Industrial Solutions fell to lower circuit limit of 20% to Rs 14.75 on Tuesday after the Gautam Thapar-led electric equipment maker reported major corporate governance issues involving unauthorised transactions and understatement of liabilities and net worth.

Shares of domestic private lender YES Bank that held 12.79% stake in the CG Power and Industrial Solutions also tanked over 8% intraday on the Bombay Stock Exchange.

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With a trend reversal after 2 days of consecutive gain, the stock price of CG power opened at a fresh 52-week low of Rs 14.75 on BSE, against the closing price of Rs 18.40. Weighed down by surge in sells volume, CG Power lost its market capitalisation by Rs 228.76 crore to Rs 924.45 crore on the BSE. The CG Power shares has fallen over 33% in last one month and 67% year to date.

The CG Power said in an exchange filing that its board and Risk and Audit Committee ("RAC") of CG Power and Industrial Solutions Limited ("Company") held a meeting on Monday for discussing the status of annual financial statements. The board briefed on certain findings which may have potential understated implications on the financial position of the firm potential including its liabilities, advances to related and unrelated parties of the company and the group.

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As per the filing, in March 2019, an operations committee was set up under the chairmanship of one of the independent directors for seeking refinancing of certain facilities and conducting financial analysis. The alleged financial irregularities and some unauthorised transactions carried out by 'certain employees' might have resulted in a misstatement of past financial statements as the reported corporate fraud has gone unnoticed for almost three years. 

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The company also informed that its Managing Director had received a request from a bank to replace a cheque the validity of which was about to expire. "The committee could not relate this to any obligations of the company," said the company. The company said it would cooperate with regulatory authorities and promised to restore 'the highest level of governance standards and internal control within the company.'

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On May 7, 2019, Yes Bank had acquired 8 crore shares,  representing 12.79% ownership in CG Power and Industrial Solutions, which were pledged to the borrower.

Reacting to the news, shares of Yes Bank registered an overall 8.02 % fall to the intraday low of Rs 70.55. The share has fallen over 10% in the last 2 days. YES Bank shares ended 7.11 % lower at Rs 71.25 on BSE.

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