Fraud enmeshed CG Power and Industrial Solutions (CG Power) on Wednesday sank deeper into the red for the three months ended September 30, 2019, even as the management warned the numbers could be subject to significant revisions in the wake of a welter of investigations being conducted by the company itself as well as a number of government and regulatory agencies.

The company further said the financial statements for the year ended March 31, 2019 do not reflect true and fair view. It said “Phase 2 investigation” has been initiated which is expected to be completed by the fourth quarter of this fiscal.

The much delayed second-quarter results show losses of Rs 1,595.21 crore against a loss of Rs 101.83 crore a year ago. The company said it had made an impairment provision of Rs 1,251.38 crore on its Belgium operations.

In August 2019, the company said its investigations have revealed a massive fraud in the company, including an understatement of liabilities and advances to related and unrelated parties of the group that subsequently led to the ouster of Gautam Thapar as chairman in September.

The new management under Pradeep Mathur on Wednesday gave some indication of the massive restatements of numbers that may have to be made on the basis of the investigations into the company.

The board has proposed to reopen the accounts of the previous three financial years for the “preparation and submission of true and fair financial statements under section 131 of the companies Act 2013”.

SR Batliboi & Co, the audit firm, has also raised red flags on certain related party transactions at CG Power in its audit report.

The existing management is seeking a reclassification of Gautam Thapar, Avnatha and their affiliates from promoters to public shareholders, according to the the SR Batliboi report.

Other investigations

Government agencies have also tightened the screws on the company.

Subsequent to the quarter ended June 30, 2019, the ministry of corporate affairs has filed an application before the NCLT for the reopening of the books of accounts of the company and its subsidiary companies tor the past five years from 2014-15 to 2018-19. On January 23, 2020, the NCLT has reserved the matter for passing the orders. The Serious Fraud Investigation Office (SFIO) has issued notices to the company to investigate its affairs.

The capital market regulator has also opened investigations. In an interim order in September 2019, it had ordered a forensic audit and banned Thapar from the markets. A final order is now pending on the matter.

Following Sebi’s interim order, the BSE is doing a forensic audit for the period 2015-16 till the date of the interim order.