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MCA plea to reopen CG Power books likely

According to a person in the know, the MCA’s probe has indicated a suspicious diversion of more than Rs. 2,000 crore by certain erstwhile directors and key managerial executives.

Dec 09, 2019, 06.40 AM IST
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MUMBAI: After a recent probe by the western regional director of the corporate affairs ministry concluded that the accounts of CG Power & Industrial Solutions needed a thorough investigation, the ministry is likely to approach the National Company Law Tribunal seeking permission to reopen the company’s books for the past five years.

The ministry has also sought details of the transactions entered into by lenders with CG Power and other Avantha Group companies, where the promoter and a few former key managerial members are facing allegations of irregularities, people in the know said. Lenders to CG Power include Aditya Birla Finance, Standard Chartered, IndusInd Bank and Yes Bank. Lenders are also considering whether the company needed emergency funding, and have appointed SBI Capital Markets for a resolution plan.

According to a person in the know, the MCA’s probe has indicated a suspicious diversion of more than Rs. 2,000 crore by certain erstwhile directors and key managerial executives. Also, it noticed alleged instances of funds being transferred to promoter Gautam Thapar’s Avantha Group, he said.

The ministry’s move has made some lenders edgy, “since a few of the loans had been made to associate shell companies of Avantha Holdings without board approvals,” another top official close to the development told ET.

“Funds have been transferred to related and connected entities like Ballarpur International, Mirabelle, Solaris and a few others without board approval. However, permission will be sought for recasting of accounts as it will help reflect the company’s actual financial position, including receivables from companies linked to erstwhile promoter Thapar,” said another person. “The probe had found certain instances of funds being transferred to the promoter's company. When Thapar was confronted with the same, he refused to give satisfactory replies,” said one of the officials.

There was no response to a query emailed by ET from Thapar or the company until press time Sunday. CG Power has yet to receive any working capital help from lenders who are reluctant to be further involved in any investigations. “It is an extremely tough situation. The only bank which is hugely understanding and supportive is SBI," said a top official close to developments.
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