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    CG Power gets new chairman, sets up special situation committee

    Synopsis

    ​Guha was a non-executive independent director on the company’s board.

    CG-power-agenciesAgencies
    The company has restated its financial statements for FY18 to incorporate the impact of the identified transactions.
    MUMBAI: CG Power & Industrial Solutions has appointed Ashish Kumar Guha as its chairman, after Gautam Thapar was ousted from the position in August for allegedly being involved in financial irregularities that led to the company losing an estimated Rs 3,000 crore.

    Guha was a non-executive independent director on the company’s board.

    CG Power also dissolved an operations committee that was set up to preserve value in the company after the creditors of parent Avantha Holdings started invoking pledged shares. The electrical equipment and engineering company has now set up a Special Situation Committee (SSC) to resolve the issues faced by it.

    The broad terms of reference of the SSC are to focus on operational improvement, strategic review of international businesses, capital restructuring including in raising capital, and dealing with regulatory bodies, it said in a filing with stock exchanges.

    Guha was the chief executive and managing director at HeidelbergCement India from August 2006 to September 2014. Prior to that, he was into investment banking at Ambit Corporate Finance as deputy CEO and senior partner, and at Lazard India as its CEO.

    The company said in a separate statement that the Bombay Stock Exchange and the National Stock Exchange had asked it to pay a fine for missing the regulatory timeline for filing the fiscal first-quarter results. While the company had restated the financial result for 2018-19, it could not finalise the result for the quarter through June of fiscal 2020 due to an ongoing forensic audit. The board told the bourses that it would finalise the financial result for the first and second quarter before November 11.

    In April, the said OC was informed of some allegedly irregular financial transactions that were executed by the top brass of CG without following due processes and board approvals. Subsequently, the company appointed law firm Vaish Associates, which found that at least nine transactions were undertaken wrongfully. These allegedly included related-party transactions and round-tripping that may have led to CG losing Rs 3,000 crore.

    Ousted chairman Thapar has maintained that there was no fraud and challenged the board’s decision of his ouster, and discredited the report, citing the disclaimers in it.

    After the financial irregularities came to light, the board asked Thapar and the chief financial officer to step down, and sent the CEO on leave. It has elevated former non-executive independent director Sudhir Mathur as executive director.

    The company has restated its financial statements for FY18 to incorporate the impact of the identified transactions. The Ministry of Corporate Affairs is looking into the matter, and the Securities and Exchange Board of India has barred Thapar and three others from the stock market for their alleged roles in the case.


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