BackSunil Mittal likely to pump capital into CG Power, lead turnaround efforts
Mittal held 8.3% in the company through an entity Bharti Holdings Pvt. Ltd, as of 30 JuneMittal could buy more stake in the company or bring in the capital in the form of debt
PremiumMumbai: Bharti Airtel promoter Sunil Mittal, who currently holds an 8% stake in CG Power and Industrial Solutions Ltd, is likely to infuse capital into the fraud hit company as he looks to lead efforts to turn around the company, said two people aware of the matter.
Mittal held 8.3% in the company through an entity Bharti (SBM) Holdings Pvt. Ltd, as of 30 June.
“The investor shareholders of the company and the management are in talks with Mittal, who has shown keen interest in reviving the company by bringing in fresh capital and helping the company meet its liquidity requirements," said the first person cited above, requesting anonymity as the talks were private.
Mittal could buy more stake in the company or bring in the capital in the form of debt to help with working capital needs, along with a clutch of other new investors, he said, adding that the consortium led by Mittal is also reaching out to lenders of the company to implement the turn around plan for CG Power.
A spokesperson for the Bharti group declined to comment on the development. The spokesperson of CG Power could not be immediately reached for a comment. The Economic Times, on Thursday, was first to report Mittal’s efforts to revive the fraud hit company.
CG Power, in August, said the company will restate accounts after discovering “significant accounting irregularities" and governance lapses that have led to significant understatement of the company’s liabilities and advances to related and unrelated parties.
“The total liabilities of the company and the group may have been potentially understated by approximately ₹1,053.54 crore and ₹1,608.17 crore, respectively as on 31 March 2018," CG Power had said in its exchange filing.
The company is now controlled by several lenders, who invoked the pledged shareholding of promoters earlier this year. As on 30 June, Thapar’s Avantha Group had a negligible stake in the company, while private sector lender Yes Bank held a 12.79% stake and private equity investor KKR holds close to 10%. Other major shareholders include HDFC Mutual Fund, Aditya Birla Sun Life Asset Management, Franklin Templeton and Life Insurance Corp. of India.
As part of efforts to turn around the company’s operations, CG Power’s board on 27 August said the company was considering selling non-core assets and exploring various fundraising avenues to deleverage the company.
In a presentation, the board said it was evaluating divestments of non-core assets, including the sale of the Kanjurmarg land and CG House, where its headquarter is located. 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 (SEA).
“CG Power continues to be a leader in the areas that it operates in. It is either number one or number two in these businesses in India. Its overseas businesses, especially its Southeast Asia operations are doing very well, and any turnaround plan could involve a monetization of this business," said the second person cited above, also requesting anonymity.
“I don’t have any idea where is this story coming from," Sunil Bharti Mittal told Mint in response to a query about whether he would be investing additional capital in CG Power.
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