The Ministry of Corporate Affairs (MCA) wants fraud-hit CG Power and Industrial Solutions to restate accounts of the past five fiscal years reflecting the actual financial position of the company, including receivables from companies linked to erstwhile promoter Gautam Thapar, sources said.

The new management of the company, soon after the fraud came to light, had on August 30 expressed desire to restate financial accounts for last five years and it will now expedite the process.

Sources said MCA has 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 subsidiary companies for the past five financial years beginning 2014-15.

Wants auditors to re-open account books

It wants chartered accountants to re-open the books of account and recast the financial statements of the company and its subsidiary firms.

MCA had previously asked its Serious Fraud Investigation Office (SFIO) to probe the affairs of the company along with 15 other firms, including two subsidiaries CG Power Solutions Ltd and CG International BV.

CG Power, which has ousted its chairman over allegations of financial irregularities, had plans to re-examine its accounts over the past fiscal years to ascertain whether similar transactions may have escaped detection after an internal probe into current performance revealed nine such deals.

A recent investigation by the company revealed that the nine wrongful transactions caused the company to lose around Rs 3,300 crore.

It has asked companies linked to promoter Gautam Thapar, among others, to return the money and has initiated the second phase of the probe to fix responsibility for the alleged fraudulent transactions.

CG Power had in August stated that an investigation instituted by its board had found major governance and financial lapses, including some assets being provided as collateral and the money from the loans siphoned off by “identified company personnel, both current and past, including certain non-executive directors.” Also, some liabilities and advances to related and unrelated parties had been understated.

Following this, the firm has issued recovery notices to seven entities demanding repayment of Rs 1,314.78 crore owed by them to the company. Besides, its subsidiaries have sent 23 notices to recover Rs 2,095.64 crore, they said.

CG Power had previously in regulatory filings stated that a total of Rs 3,018.62 crore was receivable from “various promoter affiliate companies and connected parties“.

This includes Rs 1,001.38 crore from Thapar’s Avantha Holdings Ltd. Another Rs 287.75 crore was due from Blue Garden Estate Pvt Ltd and Rs 175 crore from Acton Global Pvt Ltd -- two firms which were classified as “promoter connected party“.

Among parties related to the promoter group, Rs 552.33 crore was due from Ballarpur Graphics Paper Product Ltd, Rs 348.71 crore from Avantha International Assets BV and Rs 378.76 crore from Solaris Industrial Chemicals Ltd.

Blue Garden Estate Pvt Ltd also had Rs 320 crore of pending loan/advance. The board of CG Power had in August sacked Thapar as chairman and thereafter forced CEO K N Neelkant to resign as well.

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