CG Power continued to plunge today too; it is the top loser on the BSE and the stock hit the 20% LC at Rs.11.80 the moment it opened for trading, which is a new low too.
The stock price has been hitting new lows since the time it was learnt yesterday that the Ministry of Corporate Affairs (MCA) has ordered an inspection into the affairs of the company after reports of financial wrongdoings in the company came into the light.
The company had issued a Press Release yesterday that the Operations Committee (OP) constituted in March 2019, while working on one of its priority tasks of seeking refinancing of certain facilities and as a part of conducting financial analysis in this regard, the Ops was made aware of some unauthorised transactions by certain employees of the company. The Ops Committee was also made aware of a letter received by the company from a particular financing company regarding a certain interest payment failure which the Ops Committee was unable to trace or ascertain from the financials of the Company. Further, the Managing Director on getting a request by a bank to replace cheque the validity of which was about to expire, he immediately brought the same to the notice of the Ops Committee. The Ops Committee and the Managing Director could not re late this to any obligations of the company.
The findings made were:
- The total liabilities of the company and the Group may have been potentially understated by approximately Rs.1053.54 crores and Rs. 1,608.17 crores respectively as at 31 March 2018; and by Rs.601.83 crores and Rs.401.83 crores respectively as at 1 April 2017.
- Advances to related and unrelated parties of the Company and the Group may have been potentially understated by Rs.1,990.36 crores and Rs.2,806.63 crores respectively as at March 31, 2018; and by Rs.1,479.34 crores and Rs.1,331.47 crores respectively as at April 1, 2017.
- Certain assets of the Company that were purportedly provided as collateral without due authority; and the Company was made a co-borrower and/or guarantor for enabling ostensibly unrelated third parties to obtain loans without due authorisation. The moneys so obtained were immediately and without due authorisation routed out of the Company, either by itself or from its subsidiaries or ostensibly unrelated parties to certain related parties.
- The net worth of the Company was potentially understated due tb unauthorised and inappropriate write offs and charges debited to the Profit & Loss statement of the Company during the year ended March 31, 2018 and April 1, 2017.
- The most damaging part – the financial results of the previous quarters for FY19,FY18 and FY17 could be impacted and the opening balances of FY19 could also change.