Whether serial acquisitions helped camouflage losses and diversion of funds?
CG Power and Industrial Solutions Ltd (“ CG Power ”), which makes power equipment - electrical switchgears have tumbled 70% in the last 3 months on the stock exchanges with news of serious accounting lapses at the company. The stock of the company is brooding at the bourses as to what extent the problems are! From outlook, it seems erstwhile promoters of CG Power used acquisition as a tool for syphoning of money & to hide its losses. In this article, we have articulated how promoters used acquisition as a tool. In March 2019, the Board of Directors of CG Power constituted Operations Committee (“Ops Committee”) with aim of improving stakeholders’ value. However, while working on one of its priority tasks of seeking refinancing, of certain facilities and as part of conducting financial analysis, the Ops Committee was made aware of some unauthorised transactions. Digging further, they came out with some serious accounting lapses. As a result of this, on 10 th May 2019 the CEO ...