CG Power auditors unable to comment on company's future


New Delhi, Feb 16 (IANS): The auditors of fraud-hit CG Power and Industrial Solutions are unable to opine whether the company would be able to survive as a going concern since the comany is currently facing regulatory scrutiny, large debts and unrealised recoverables.

CG Power's consolidated net loss for the 2019-20 third quarter ended December almost doubled to Rs 210.07 crore, from Rs 105.78 crore reported during the same period of the last fiscal, the company said in its regulatory filing on Friday.

The company has been under constant scrutiny, after August last year, since it disclosed the findings of the Risk and Audit Committee (RAC) which revealed that the firm and the group together could have under-reported Rs 3,600 crore liabilities in financial years 2017 and 2018.

As per the company's earnings results, the group's current liabilities have exceeded its current assets as at December 31, 2019, by Rs 3,455.04 crore and it is in the process of signing an Inter Creditor Agreement (ICA) with the lenders to which certain lenders are yet to concur.

"The holding company is in the process to identify/conclude on the completeness of the borrowings and pending outcome of investigation initiated and ongoing regulatory enquiries/actions, the management has not concluded on the recoverability ofloans and advances from related parties and connected parties," said the independent auditor's review report.

Referring to the ongoing case in the Mumbai bench of the National Company Law Tribunal (NCLT), the auditor said thaqt unsuccessful attempts of the company to realise outstanding receivables worth Rs 3,023.08 crore was among other factors they had considered.

"We are unable to obtain sufficient appropriate audit evidence as to whether the Group will be able to service its debts, realize its assets and discharge its liabilities as and when they become due over the period of next 12 months. Accordingly, we are unable to comment on whether the Group will be able to continue as Going Concern," the report said.

Besides, according to the auditors, a Belgium court has declared two of the group's subsidiaries located in that country as bankrupt, and said that they hold investment in "underneath operations in Indonesia and Ireland". The court has also appointed receivers who will proceed to auction their assets.

During the previous quarter, the group had accounted impairment losses aggregating to Rs 575.18 crore towards the receivables outstanding in certain overseas entities, including receivables related to these entities.

"Further the Board of Directors are unable to determine impact of any unforeseen liability/surplus which may arise post completion of bankruptcy process and are in the process to seek legal view about the bankruptcy proceeding mechanism and its applicability to the Group," said the auditor's report.

Erstwhile CG Power Chairman Gautam Thapar, CFO V.R. Venkatesh and others were removed from the company board in August over alleged under-reporting and siphoning off money to Thapar's other firms. They were eventually barred from the stock markets and Thapar was also summoned by the Ministry of Corporate Affairs (MCA).

The MCA had ordered a probe by the Serious Fraud Investigation Office (SFIO) into the matter. The MCA had also approached the NCLT seeking to reopen the financial statements of CG Power Industrial Solutions for 2015-19 on the basis of the company's announcement about financial irregularities, on which the tribunal has reserved its order.

  

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Title : CG Power auditors unable to comment on company's future


 
 
 
 

 
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