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Foreign subsidiaries of CG Power Industrial Solutions are facing a severe paucity of funds in addition to legal issues.
CG Electric Systems Hungary Zrt. ('ESHU') has received a notice of a proceeding filed for alleged non-performance of a GIS substation contract entered into in 2012. This notice was sent through one of its associates in Kuwait, Al Kharafi National company, which has claimed₹224 crore worth damages, sources CG Power said in a filing.
It is examining the extent of damage due to this non performance and said that it will contest the claim.
Further, the paucity of funds has affected its operations in Belgium and Hungary. Already in Belgium certain bank accounts have been blocked and recovery of dues initiated by creditors.
"Such events could result in potential legal and regulatory proceedings for recovery of dues initiated by creditors," said a legal expert.
The company has issued recovery notices to 7 entities demanding repayment of ₹1,314.78 crore. Another 3 notices were sent to recover ₹452.12 crore, have been returned undelivered. Besides the above, recovery notices for claims of ₹74.63 crore owed could not be sent for want of requisite details, the Board said in its filing.
These steps are being taken as the Board of CG Power found financial misappropriation of funds by former Chairman Gautam Thapar. It found out that advances to related and unrelated parties have been potentially understated by ₹1,990.36 crore and ₹2,663 crore, respectively, as on March 2018.
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