Thapar has, however, denied allegations that he misappropriated funds of the power equipment maker, which is part of Avantha Group. In a statement, Thapar said he has repaid ₹4,000 crore to various lenders since 2015 and allegations of fraud were unfounded.
“I must say that no funds lent by banks nor any funds of CG have been misappropriated. The money has been applied with due board approval. All inter-corporate transactions have been fully authorized by the board. No promoter or promoter entity has derived any undue benefit," Thapar said in a statement.
On 20 August, CG Power’s board said the company has discovered “significant accounting irregularities", including suspect transactions that have led to understatement of the company’s liabilities and advances to related and unrelated parties by hundreds of crores of rupees. Some assets were also purportedly used as collateral and the money from the loans was siphoned off by “identified company personnel".
“In cognizance of the current situation being faced by the company and the recent developments, including disclosures dated August 19, 2019, made by the company, the board of directors passed by majority consent, has resolved to remove Gautam Thapar as the chairman of the board with immediate effect," CG Power said in a regulatory filing on Thursday.
The total liabilities of the company and the group may have been understated by approximately ₹1,053.54 crore and ₹1,608.17 crore, respectively, as on 31 March 2018, the exchange filing said.
The board had on 10 May sent CEO and managing director K.N. Neelkant on leave, pending an investigation into some “suspect, unauthorized and undisclosed" transaction.
Thapar said he didn’t have the opportunity to participate in the investigation. “I leave it to the stakeholders to draw their own conclusions from this fact. I will reaffirm this at the board meeting tomorrow, 30th August, 2019."
On 20 August, CG Power said it planned to conduct a detailed forensic investigation to establish wrongdoing.
With lenders invoking pledged shares, Thapar’s Avantha Group has a negligible stake in CG Power as on 30 June, while private sector lender Yes Bank held a 12.79% stake.
Other major shareholders include HDFC Mutual Fund, Aditya Birla Sun Life Asset Management, Franklin Templeton and Life Insurance Corporation of India.
The company is now controlled by lenders, which invoked the pledged shareholding of promoters earlier this year.
In a regulatory filing on Tuesday, the company said that it will sell non-core assets and explore various fundraising avenues to reduce debt and optimize its operations.
The sale of assets includes the Kanjurmarg land in Mumbai and its CG House headquarters.
The board is also considering other fundraising avenues, including an equity raise for bridging cash flow gaps and meeting working capital requirements to avoid business disruption, it said.
It is also reviewing its international operations, which span Europe and South-East Asia.
Burdened with debt, Avantha Group has also been in talks to sell assets to raise cash. In 2014, it sold its Korba power plant to Adani Power for ₹4,200 crore. Another group company, Crompton Greaves Consumer Electricals Ltd, sold a large stake in its consumer electrical business to private equity funds Advent International Corp. and Temasek Holdings for ₹2,000 crore.