The board of CG Power & Industrial Solutions, a producer of power equipment, decided to remove Gautam Thapar as chairman after an investigation by a legal firm revealed corporate governance issues and suspect financial transactions at the company.

"In cognizance of the current situation being faced by the Company and the recent developments, including disclosures dated August 19, 2019 made by the Company, the Board of Directors through a circular resolution dated August 29, 2019, passed by majority consent, have resolved to remove Mr. Gautam Thapar as the Chairman of the Board with immediate effect," the company said in a statement.

Thapar, in an emailed statement, said, "The reports following the Board meeting of 19 August, 2019 are disheartening. Indeed, I would say that the reports do not reflect facts."

There is simply no fraud, he added, saying, "In the interests of all stake holders, including banks and financial institutions, I must say that no funds lent by banks nor any funds of CG have been misappropriated. The money has been applied with due Board approval. All inter-corporate transactions have been fully authorised by the board."

The company said the decision has been taken in the interests of the company and its stakeholders in discharge of the fiduciary responsibilities of the Board.

CNBC-TV18 had earlier reported that lenders and investors were building pressure on the board to oust Thapar as he faces fraud allegations. Key stakeholders in CG Power include Yes Bank, KKR, Bharti (SBM) Holdings, Birla MF, HDFC MF, L&T Finance and Franklin Templeton.

The company disclosed on August 20 about the findings of an internal probe which unearthed several unauthorised transactions, understatement of its liabilities and advances made to related and unrelated parties, among other financial irregularities.

The stakeholders’ demand for his ouster was based on the fact that Thapar is the common link between all the related parties of Avantha Group amongst which fraudulent transactions have been detected.

Thapar was re-appointed as the director of the company in September 2017 for three years and his position as the director is up for renewal only next year.

The director board will next meet on August 30 to decide on the financial performance of the crisis-hit company in Q1FY20.

Thapar said, "I had no opportunity to participate in the ‘investigation’ nor the resulting ‘report’. I leave it to the stakeholders to draw their own conclusions from this fact. I will reaffirm this at the Board meeting tomorrow, 30th August, 2019."

This story has been updated with comments from Gautam Thapar.

First Published:Aug 29, 2019 11:10 AM IST