It said an analysis of the issues at the firm reveals that "a battle for the boardroom and battle for corporate control has led to value destruction for minority shareholders of the company."
"However, could these transactions have happened without Board approvals, and without the knowledge of key management personnel and auditors? Where these Board approvals shared with SEBI in their investigations? What role did promoters, executive directors, the managing director & CEO and independent directors play in this?," it asked.
It said the roles of various stakeholders -- the board, key management personnel, internal auditors, bankers to the company, lenders to holding company, statutory auditors, promoters and other group companies -- need to be examined.
It went on to allege that private equity firm KKR India may have had a role in the unfolding of events at CG Power.
"KKR India had a debt exposure to the holding company Avantha Holdings which the latter was unable to repay fully. This may be why the relations went downhill between KKR India and the promoter of CG Power, Gautam Thapar.
"It seems that upon request by Avantha Holdings to convert the debt into equity, KKR India asked for the appointment of Narayan Seshadri initially as a consultant but later as an Independent Director. Seshadri has close business interests with KKR India," it said.
Seshadri and KKR India did not immediately respond to e-mails sent for comments.
According to Thapar, the events at CG Power have been orchestrated by the lenders as KKR India wanted to oust the promoters and take control of the company.
InGovern said banks and NBFCs seem to have been fully cognizant of the situation in CG Power and other group companies and yet continued to fund and increase group company exposures against guarantees of the listed company.
"Would the banks have curtailed the bank limits of CG Power as other group companies were in stress?," it asked. "What role did KKR play in the entire saga? Did the default of loan to holding company trigger these series of events that led to control of management, the boardroom and eventually the company by KKR? Why didn't the Board look into the conflict of interest of Mr. Narayan Seshadri who was appointed as an independent director?"
Stating that overall it was a huge loss of value for minority shareholders, it said all elements of corporate governance seem to have failed minority shareholders -- key management personnel, independent directors, statutory auditors, internal auditors, banks, NBFC lenders and whistleblowers.
"SEBI and other regulators need to investigate this matter holistically on the role played by all stakeholders. Regulators need to investigate whether a battle for corporate control has played out in this manner," it added.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.