Fraud hit CG Power locked in lower circuit

CG Power has discovered unauthorised and undisclosed transactions in the company, said a pre-market release filed by the company this morning.  The company stated that its total liabilities may have been understated by Rs. 1,053.54 crore and the group’s liabilities by Rs. 1,608.17 crore, as on March 31, 2018. Additionally, advances to related and unrelated parties of the company and group are estimated to be understated by Rs. 1,990.36 crore and Rs. 2,806.63 crore, respectively as on March 31, 2018. Certain assets were purportedly provided as collateral without due authorisation. The company was made a co-borrower or guarantor for enabling apparently unrelated third parties to obtain loans without due authorisation.

Also, the net worth of the company was possibly understated due to unauthorised and inappropriate write-offs and charges debited to the Profit & Loss statement of the company during the year ended March 31, 2018 and April 1, 2017.

To ascertain an accurate financial position and legal implication the company plans to conduct a forensic investigation. With this negative development, on Tuesday, the stock of CG Power was locked in the lower circuit at Rs. 14.75, down by ~20 per cent from its previous close.