The Serious Fraud Investigation Office (SFIO) has initiated a probe against CG Power and Industrial Solutions Ltd and 15 group companies for alleged irregularities into their business affairs.
The electrical equipment maker said in a stock-exchange filing it will cooperate with the SFIO, which functions under the Ministry of Corporate Affairs, in the investigation.
Shares of CG Power dropped by their maximum permission limit of 5% to close at Rs 11.11 apiece on the BSE.
CG Power has been under the scanner of the Ministry of Corporate Affairs ever since it disclosed financial irregularities in August. The company incurred a consolidated net loss of Rs 652.38 crore for the year ended March 31, 2019.
Soon after the fraud came to light, the company’s board removed chairman Gautam Thapar and chief financial officer VR Venkatesh.
CG Power had previously disclosed that the company and its group firms together could have under-reported liabilities to the extent of over Rs 3,600 crore in the financial years 2016-17 and 2017-18.
Thapar, Venkatesh and other CG Power executives Madhav Acharya and B. Hari Haran were eventually barred from the stock markets. Thapar and the firm's auditors were also summoned by the corporate affairs ministry.
Previously, the ministry had filed a petition before the Mumbai bench of the National Company Law Tribunal (NCLT) seeking permission to re-open the books of account and recast the financial statements of CG Power and its subsidiaries for the five financial years beginning 2014-15. These annual accounts reflect the actual financial position of the company, including receivables from companies allegedly linked to erstwhile promoter Gautam Thapar.
Last week, CG Power sought shareholders’ nod to borrow up to Rs 5,000 crore to meet working capital requirements and for other business. Apart from capital-raising plans, the company was also looking to offload its non-core assets.
CG Power is part of Thapar-led Avantha. Established in 1937, CG Power makes transformers, switchgear, circuit breakers, network protection gear and power automation products. It also offers turnkey services.
In September this year, global private equity giant KKR & Co. acquired a direct stake of about 10% in CG Power from Vistra ITCL. Private-sector lender Yes Bank (12.8% stake), billionaire Sunil Mittal-led Bharti Group and Life Insurance Corporation of India (LIC) also hold a stake in the power equipment maker.