CG Power and Industrial Solutions shares were locked in the upper circuit on Thursday, 29 August after the board decided to remover Gautam Thapar as chairman of the company, after a probe revealed corporate governance issues and suspicious financial transactions at the firm.
The CG Power stock closed at Rs 10 on Thursday, up 5% from its previous close. The share price has corrected nearly 50% in the past one month.
“In cognizance of the current situation being faced by the Company and the recent developments, including disclosures dated August 19, 2019 made by the Company, the Board of Directors through a circular resolution dated August 29, 2019, passed by majority consent, have resolved to remove Mr. Gautam Thapar as the Chairman of the Board with immediate effect,” the company said in a statement.
The decision “has been taken in the interests of the company and its stakeholders in discharge of the fiduciary responsibilities of the Board", the release added. The board will next meet on 30 August to decide on the financial performance of the company in the June quarter.
CG Power had disclosed on 20 August about the findings of an internal probe which revealed several unauthorised transactions, understatement of its liabilities and advances made to related and unrelated parties, among other financial irregularities.
The company had then said that the transactions were undertaken in a “seemingly fraudulent manner” and it would investigate the matter further.
A stock exchange notification by CG Power highlighted that advances to related and unrelated parties of the company and group may have been potentially understated by Rs 1,990.36 crore and Rs 2,806.63 crore, respectively, as on 31 March 2018, and by Rs 1,479.34 crore and Rs 1,331.47 crore, respectively, as on 1 April 2017.
Total liabilities of the company and group may have been potentially understated by Rs 1,053.54 crore and Rs 1,608.17 crore, respectively, as on 31 March 2018, and by Rs 601.83 crore and Rs 401.83 crore, respectively, as on 1 April 2017, the notification added.