Weeks after its board-instituted investigation unearthed a multi-crore financial fraud, CG Power and Industrial Solutions Chief Executive Officer KN Neelkant has reportedly resigned from all subsidiaries of the company. Investors and lenders have questioned his continuance and mounted pressure for his ouster for the alleged irregularities happening under his watch, sources close to the development told news agency PTI.
Confirming his resigning, Neelkant said he believed that investors and lenders would not want him to step down from CG Power in the "best interest" of the company, PTI reported.
On August 29, the board of CG Power & Industrial Solutions had removed its founder Gautam Thapar as chairman after an investigation unearthed a multi-crore financial scam in the firm. Later, the CG Power board also sacked the firm's CFO V R Venkatesh over alleged "misconduct" and breach of trust. In the wake of the scam, CG Power's financial damage is estimated to be more than Rs 3,000 crore.
The move from the board was reportedly at the behest of investors and lenders of the power equipment maker, who sought the removal of the present management from their posts, especially Thapar and Neelkant, for enabling a thorough cleanup of the company affairs.
Neelkant was sent on leave on May 10 by the board to enable proper investigation into financial irregularities. During the investigation, it was found that some assets were provided as collateral and the money from the loans was siphoned off by "identified company personnel, both current and past, including certain non-executive directors." The money was siphoned off through some of the subsidiaries of the company, from which Neelkant has resigned, PTI quoted sources as saying.
Commenting on the development, Neelkant said, "Based on analyst calls, the key investors are rather concerned about the operations which have been growing profitably and significantly faster than the market in the last few years, since my assuming the position of MD and CEO of CG Power."
"On the contrary (to investors seeking my ouster), there has in fact been inquiries on, as to when would I be back into the operations. Thus, the same leads me to believe that the investors and lenders in the best interest of the company would not be keen to have me to step down," he reportedly said.
He reportedly said the operations committee of the company, of which he was part, had set up an independent investigation around March-April 2019. "Thereafter in the board meeting held on May 10, 2019, the board suggested that since there was an ongoing investigation, it would be fair and equitable that till such time it is concluded, I, being the MD and CEO, recuse myself from the operations and management of the company for the said period. This suggestion was duly accepted by me to support the idea of fair investigation in the best interest of the company," he said.
In an exchange filing last month, CG Power had stated that an investigation instituted by its board had found major governance and financial lapses, including that some liabilities and advances to related and unrelated parties had been understated. Though the company had not named anyone involved in the scam, the sources said the investigation had found strong links to the current management. The company now reportedly plans to conduct a detailed forensic investigation to establish wrongdoing.
Edited by Chitranjan Kumar with PTI inputs