‘Suspect’ transactions detected at Gautam Thapar’s CG Power; stock tanks 20%. YES Bank suffers collateral damage, as per ET reports.
Shares of CG Power and Industrial Solutions lost one-fifth of their value to hit the lower circuit limit of 20% at Rs 14.75, recording the biggest drop in six months.
Shares of domestic private lender YES Bank, which owns 12.79 per cent stake in CG Group, tanked 6% to Rs 72 in recent trade.
After 13 hours of discussions with the risk and audit committee of the company, the board at 4 am on Aug 20, 2019 came to the conclusion that there were some unauthorised transactions carried out by ‘certain employees’.
It led to potential understatement of not only the company’s liabilities, but also advances to related and unrelated parties of the company and the group, surprisingly this has been going on for two years now.
CG Group is controlled by Gautam Thapar, business tycoon and founder of the Avantha Group.
Most noteworthy, certain assets of the company were purportedly provided for as collaterals without due authority.
The company was made a co-borrower or guarantor ostensibly for enabling unrelated third parties to obtain loans without due authorisation, CG Power said in a regulatory filing.
As a result, the net worth of the company was also understated due to un-authorised and inappropriate writeoffs and charges debited to the profit & loss statement in FY18 and FY17, the company claimed.
Chief Financial Officer VR Venkatesh, who had resigned on March 8, was asked to continue till the finalisation of the financial results.
Big hit on financials of CG Group
The company said total liabilities of the company and the group may have potentially been understated by Rs 1,053.54 crore and Rs 1,608.17 crore, respectively, as of March 31, 2018, and by Rs 601.83 crore and Rs 401.83 crore, respectively, as of April, 2017.
Besides, advances to related and unrelated parties of the company and the group may have potentially been understated by Rs 1,990.36 crore and Rs 2,806.63 crore, respectively, as of March 31, 2018.
Similarly, as of April 1, 2017, the group have potentially been understated by Rs 1,479.34 crore and Rs 1,331.47 crore, respectively.
It would cooperate with regulatory authorities and promised to restore ‘the highest level of governance standards and internal control within the company,” the company said.
By ABHINAV RANJAN, DKODING MEDIA