Rising consecutively for the fourth day, shares of CG Power & Industrial Solutions climbed another 5% to hit the upper circuit at Rs 10.40 on the BSE, as the company board sacked Gautam Thapar as its chairman after an investigation that unearthed a multi-crore financial scam in the firm.
The move from the board is reportedly on the behest of investors and lenders of power equipment maker, who sought the removal of the present management from their posts, especially Thapar and Nilkant, for enabling a thorough cleanup of the company affairs.
On Friday, shares of CG Power opened 4.52% higher at Rs 10.40 against the previous closing price of Rs 9.95.
The stock was locked in the upper circuit of 5% throughout the trading session. There are only buyers bidding and no sellers offering on the CG Power stock.
The stock has risen over 20.23% in the last three trading sessions but has significantly fallen around 76% year-to-date.
On August 20, 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." The funds so raised were routed out of the company. This, the company said, had been going on for two years.
On May 10, the company board sent CEO and Managing Director K N Neelkant on leave, pending an investigation into some "suspect, unauthorised and undisclosed" transactions, while Thapar, who held 8,574 shares out of 62.6 crore shares of the company, continued as the company chairman.
"This decision has been taken in the interests of the company and its stakeholders in the discharge of the fiduciary responsibilities of the board," the regulatory filing said.
CG Power had stated that the transactions appear to be undertaken in a "seemingly fraudulent manner" and that it would investigate them further. The company now plans to conduct a detailed forensic investigation to establish the wrongdoing.
Edited by Rupa Burman Roy