An article explaining the how CG power used a series of acquisitions to hide losses and divert funds.
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Good question analysed - Where did the money looted by Nirav Modi etc. go?
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COX & KING
The newly appointed Statutory Auditors have come across the fact that the audited consolidated financial statements of Prometheon Enterprise Limited (a material overseas subsidiary of the company, incorporated in the United Kingdom) as used for the purpose of preparation of Consolidated Financial Statements of âM/s Cox & Kings Limitedâ for FY 2018-19 (by the erstwhile Statutory Auditor, M/s DTS & Associates LLP), were not signed by the auditor of Prometheon Enterprise Limited i.e. âRaffingersâ and allegedly forged financial statements were used by the previous Statutory Auditors for the purpose of Consolidated Financial Statements while issuing their Auditors Report dated May 30, 2019 on Consolidated Financials.
Cox & King Ltd.pdf (25.0 KB)
The newly appointed Statutory Auditors, in the course of the performance of his duties as auditor, have a reason to believe that an offence of fraud involving Rs.1 Crore or above (individual amount), is being or has been committed in the Company by its officers or employees and accordingly correspondences to the Ministry of Corporate Affairs is in process.
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Regulator Securities and Exchange Board of India on Wednesday refused to lift the capital market ban imposed on fraud-hit CG Power and Industrial Solutions Ltd . ex-Chairman Gautam Thapar and three other former officials in a case related to diversion of funds.
Besides Thapar, the other officials banned are CG Powerâs former Chief Financial Officer VR Venkatesh and former directors Madhav Achary and B Hariharan. However, they have been allowed to liquidate up to 25 percent of the value of the securities held by them. The order comes following a directive to the Securities Appellate Tribunal in February which granted SEBI time till March 10 to pass the final order in the matter. The officials had moved the tribunal following an interim order passed by SEBI in September 2019, which had barred them from the capital markets for âseriousâ misstatement of accounts as well as diversion of funds. Besides, it had ordered forensic audit of the company.
In its 174-page confirmatory order on Wednesday, SEBI barred Thapar, Venkatesh, Acharya, and Hariharan from buying, selling or otherwise dealing in securities in any manner whatsoever, either directly or indirectly, till further orders. These four former officials "shall, however, be permitted to liquidate up to 25 percent of the value of the securities held by them as on the date of the interim order
SEBI also said that CG Power will continue to take all necessary steps to recover the amounts due to the company. Avantha Holdings, Acton Global and Solaris Industrial Chemicals have been directed to retain funds/other assets to the extent of receivables shown as outstanding to CG Power.
The regulator conducted an investigation to ascertain whether there were any violations of the provisions of securities laws by the company and its directors or promoters during the period 2016-2019. SEBI prima facie noted that the chairman along with certain directors, employees of CG Power and related entities, had perpetrated irregularities. These include the use of certain assets of the company as collateral, including being co-borrower and/or guarantor, for enabling third parties to obtain loans without due authorisation from the board of CG Power.
They allegedly routed transactions through subsidiaries, promoter-affiliated companies, and other connected parties for the ultimate benefit of companies related to the promoter group. Further, they allegedly used different accounting heads for concealing payments made by CG Power, facilitated interest-free advances to promoter-affiliated companies and entered into dubious transactions
The regulator, in the interim order, had said the transactions are prima facie âdesigned to divert/siphon off money from the listed company, which rightfully belongs to its shareholdersâ.
CG Power.pdf (1.5 MB)
Gautam Thapar, the ousted non-executive chairman of CG Power welcomed the Sebi order that provides certain relief to him and three other individuals.
Thapar also welcomed the regulatorâs decision to ask the BSE to appoint an auditor to restate fraud-hit CG Power and Industrial Solutionsâ books from 2014-15, saying that it would bring out the facts. I have been given some relief. That is good. And so is the Sebi underlining the need to probe the role Sheshadri and KKR in the entire issue. It is great that an audit report by Vaish Associates has been trashed by Sebi now as had been done by the NCLT earlier, he noted.
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Cox & Kings is presently going through corporate insolvency process. Suspecting fraud, lenders to Cox & Kings, had initiated a forensic investigation into the matter and the role, if any, of senior executives and the Indian promoters. The Ministry of Corporate Affairs (MCA) has also ordered Serious Fraud Investigation Office probe in travel firm Cox & Kings after it uncovered prima facie evidence of siphoning of money
It is alleged that
Cox & King has done Transactions worth Rs. 21,000 crores over four years (2015 to 2019) mainly to siphon off funds falsifying records.
- Rs. 1,100 crores loan from âbrother to brotherâ that violated basic fiduciary norms, The Company gave loan of Rs. 1,100 crore to Alok Industries. (CFOs of both the Company were brothers.
- Sales worh Rs. 9,000 crores to over 160 customers who are bogus or who do not exist
- Inflated Bank Balances
- Most of the related party transactions were executed without proper approvals from its Board
- Rs. 589 crores loans to related parties to related parties without executing proper loan documents
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Innovative way to calculate ROCE in case of Seya Industry. Enclosing link for reference.
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Indiaâs top 50 defaulters and outstanding amounts
The news came out recently a result of RTI query. I am not sure if this has been covered under any other thread on the forum.
Need to be on red alert 
about these companies, promoters and directors associated. Do remember that some of them do reincarnation/don new avatar also!
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Impropriety is the rule and honesty is the exception in the publicly listed companies these days. I am not able to understand why the law makers donât prescribe capital punishment for such offences! After all this is no less than terrorism. Blatant abuse of listed space provided by the law of land to businesses for raising money from public to fund âgrowthâ (or their own pockets?).
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SEBI Steps Up Vigil Against Insider Trading
In last two months, SEBI and SAT have pronounced orders in several high profile cases imposing heavy fine / penalties on violators.
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The Morning Context had an interesting analysis of Motherson Sumi
In sum:
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Unaudited subsidiaries form 20% of revenue vs 1% claimed by EY, their auditor.
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âEBIDTAâ of âOthersâ segment is 3 - 4 times MSSL, over 3 - 4 years, raising suspicions of âgoosingâ this metric
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As the firm grew from about ~ Rs 8,000 cr to ~ Rs 63,000 crores, it generated Rs 6,086 cr in net cash - operations, Capex, interest; while spending Rs 7,220 in making acquisitions that gave it this revenue, funded by borrowings.
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Interesting. Just wondering what is the source of the numbers in the article? Were they (subsidiary accounts) easily accessible, or has the writer moved mountains to access?
They are available on the website here
https://www.motherson.com/performance/mssl-investors/annual-reports
Warm regards,
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What about vakrangee, no mentions here till now
There is an sebi investigation one day and price drops from 500 levels.
Price Waterhouse has resigned as auditor of GVK Power & Infrastructure, stating that the company has not provided details of information and explanation sought from GVK Power.
âDetails of information and explanations sought and still not provided is reiterated in our letter dated August 12, 2020 to the management and copied to the audit committee,â the auditor said in a letter to the audit committee of the company. This letter was sent to the stock exchanges on Friday.
âIn view of the various matters described in our communications, including the recent events in relation to companyâs subsidiary, MIAL, we have assessed the appropriateness of our continuance as statutory auditors of the company and accordingly wish to communicate our intention to resign,â it said.
mockery of investors
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Good brief video
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