Former CFO of CG Power VR Venkatesh prevented from travelling abroad

Venkatesh who was allegedly travelling to Belgium was prevented from travelling abroad and handed over to the officials from the Ministry of Corporate Affairs.

Agencies
CG Power is in the business of products and solutions for the power sector.
Acting on a look out circular (LoC), the immigration official at the Mumbai’s Chhatrapati Shivaji International Airport (CSAI) on wee hours of Saturday morning prevented VR Venkatesh, the sacked Chief Financial Officer (CFO) of CG Power and Industrial Solutions from travelling abroad, sources in the know told ET.

According to these sources, Venkatesh who was allegedly travelling to Belgium was stopped at the immigration counter and asked to return, after informing him that he was barred from leaving the country owing to a LoC opened against him at the request of the Ministry of Corporate Affairs (MCA). The Mumbai regional office of MCA is probing the firm over alleged irregularities and issues concerning corporate governance.

Earlier this week, both, Venkatesh and former chairman, Gautam Thapar were questioned by the MCA sleuths which had also carried out an inspection at the company’s Worli based headway last month.


“Venkatesh who also holds a Belgium passport had booked himself on a flight to Belgium, however at the immigration counter he was asked to step aside. He was informed that he cannot travel owing to a LoC opened against him and was asked to return. The MCA on whose request the LoC was issued was appraised of the developments,” said an official privy to the probe detail.

According to sources, probe against the firm started a few months ago, after the firm’s auditors resigned abruptly in April. Officials of the ministry have been inspecting the books of CG Power for alleged irregularities and unauthorised transactions,

“The probe is to ascertain under what circumstances did the auditors step down,” a government official said. “Also, there have been allegations of related party transactions and the company’s audit committee flagging off certain unauthorised transactions apparently carried out by certain employees. These are being probed and the inspection report is expected to be submitted by the end of this month.”
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Trouble started brewing at CG Power when, in March, parent Avantha Holding’s creditors started invoking pledge of the former’s shares. In response to this, the company board set up an operations committee to suggest measures for value preservation and enhancement.

The committee was informed of some financial transactions that had been made without proper authority. So, an independent law firm was appointed to investigate, and some other questionable transactions were also identified. The group’s liabilities and advances to certain entities were found to be understated. The net worth of the company, too, was found to be understated due to unauthorised and inappropriate write-offs, and the relevant charges were debited to the profit and loss account, leading to refiling of financial statements.

The company then restated its financial statements for 2017-18 to incorporate the impact of the identified transactions. Its consolidated liability increased to Rs 7,976 crore from Rs 6,405 crore, and consolidated net worth increased to Rs 2,912 crore from Rs 2,714 crore, after adjusting for the impact of these transactions. Notably, FY18 total consolidated receivables balances from various subsidiaries, promoter affiliate companies and connected parties increased to Rs 2,657 crore from just Rs 131 crore.

CG Power is in the business of products and solutions for the power sector, and the industry has been hit by the broader slowdown and muted industrial capex. Its attempt to sell a loss-making unit in Hungary failed earlier this year.
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