CG Power & Industrial Solutions , maker of power equipment, plunged the most in six months after saying it will restate earnings on becoming aware of some suspect, unauthorized and undisclosed transactions.

The shares slumped by its daily 20 per cent limit to ₹14.75 in Mumbai, taking the years decline to 70 per cent. Earnings for the year ended March 2019, and previous years may have to be restated, according to a filing Tuesday.

The company, led by Chairman Gautam Thapar, said some liabilities and advances to related and unrelated parties have been understated. Also, some assets were purportedly provided as collateral and the money from the loans were siphoned by identified company personnel, both current and past, including certain non-executive directors.

The revelation adds to the spate of corporate governance lapses in India that have spooked investors over the past year and prompted several audit firms to abruptly cancel their contracts with companies including Fortis and Manpasand Beverages. These cases have led to increased scrutiny and regulatory catch-up to plug the loop holes.

This shocking instance of gross malfeasance must be seen in the wake of the dozens of other companies where auditors have refused to sign accounts due to their inability to vouch for the genuineness of transactions, said Ajay Bodke, chief executive officer for portfolio management services at Mumbai-based Prabhudas Lilladher.

CG Power said the transactions appear to be undertaken in a seemingly fraudulent manner and that it would investigate them further. The company’s board made the announcement after a marathon 13-hour meeting that ended at 4 a.m. on Tuesday.

Falling knife

Separately, Yes Bank , which owns about 13 per cent of CG Power, plunged 7 per cent to ₹71.25, its lowest since March 2014. The lender has seen its market value erode 61 per cent this year, partly due to its sizeable exposure to the cash-strapped shadow lenders.

Yes Bank shares are in negative territory and any bad news has a big impact, said Kranthi Bathini, director at Wealthmills Securities. Yes Bank is like a falling knife that no one wants to catch.

In May, Yes Bank took control of 12.8 per cent stake in CG Power after invoking shares pledged by founder Avantha Holdings. At the end of June, the company’s founders, including Avantha, held just 8,574 shares, data compiled by the BSE show.

Thapar’s Avantha Group also runs a paper mill, as well as power transmission and chemical businesses.

CG Power counts some of India’s biggest mutual funds, including HDFC Asset Management Co. and Aditya Birla Sun Life AMC Ltd. as its shareholders, data compiled by Bloomberg show.

The company’s debt was cut one level to BBB+ from A at India Ratings & Research on Aug. 8, citing a delay in the company reporting its earnings, and asset sales to cut debt.