In eye of storm, CG Power CEO Neelkant resigns

MUMBAI: CG Power & Industrial Solutions Managing Director and CEO KN Neelkant has resigned from his post after being sent on leave since instances of financial irregularities came to light that may have caused the company to lose Rs 3,000 crore.Sources told ET that the board of the company asked Neelkant to step down, as the company is trying to resolve its debt issues and a change in promoter group and management is understood to be a prerequisite for creditors for restructuring the company's debt. The banking sector is dealing with huge stressed assets, and in the current environment, it is unlikely that banks would restructure debt of a company if the promoter has come under the scanner.Prior to this, CG board asked Chairman Gautam Thapar and Chief Financial Officer VR Venkatesh from their positions for their alleged role and is now engaging with its lenders to resolve the debt issue faced by the cash-strapped company.Speaking to ET exclusively post the board meeting Neelkant said, "The turn of events in today's board Meeting is indeed quite saddening and it is all the more disheartening to see that the disclosure released by the company to the stock exchanges, reflects a picture different from the amicable separation which was discussed in today’s board meeting. Unfortunately, while it was me who had flagged the suspicious transactions earlier this year and despite my having been widely credited for the operational turnaround of the company, I was asked to go on leave and have now been asked to step down".A CG Power executive involved with the development told ET, “Mr Neelkanth was the one who over the last few years has made wrong representation about the company's accounts to the board, the audit committee and other stakeholders; such as analysts, banks etc. It's a voluntary resignation, not forced.”Another executive told ET that the board was of the view that as CEO and MD, he cannot be absolved of responsibilities.71384395 CG Power notified the exchanges that Neelkant tendered his resignation orally at the board meeting on Monday, which was recorded through video-conferencing. “Given the ongoing investigations and enquiries, the board of directors accepted K.N. Neelkant's resignation, subject to and without prejudice to any of the company's rights, contentions, entitlements and remedies, whether in law or in equity, including the right to subsequently undertake actions, if needed, towards termination for cause,” the board said in a statement.CG Power set up an operations committee (OC) to preserve value in the company after creditors of parent company Avantha Holdings started invocation of pledge of shares. This committee was informed of some irregular financial transactions that were executed by the top brass of CG without following due processes and board approvals. Subsequently, the company appointed law firm Vaish Associates which found that at least nine transactions were undertaken wrongfully, which included related party transactions and round tripping, that may have led to CG losing Rs 3,000 crore.

from Economic Times https://ift.tt/2mregHi