TVS Group and a bunch of special situation investors, including AION Capital, India Resurgence Fund (a consortium of Bain Capital and Pirmal Group) and SSG Capital Management are in preliminary talks with CG Power and Industrial Solutions to put Rs 500 crore fresh equity into the company.
The company has mandated SBI Capital Markets and Arpwood Capital to run a formal process for fund infusion in the company. If successful, the transaction will also be followed by an additional infusion of working capital credit from the lenders and may help put the fraud-hit company back on its feet, multiple sources with knowledge of the matter said.
“We have started initial negotiations. There are some strategic buyers as well as financial investors, who have shown interest,” said one of the sources mentioned above. CG Power, Aion Capital and India Resurgence Fund declined to comment. Mails sent to TVS and SSG remained unanswered till press time.
The board of CG Power and Industrial Solutions removed its founder chairman Gautam Thapar last August amid pressure from investors and lenders after a probe revealed financial and governance irregularities in the company.
Once part of Avantha Group, CG Power’s product portfolio ranges from transformers, switchgear, circuit breakers, network protection & control gear, project engineering, HT and LT motors, drives and power automation products. Established in 1937, CG Power also provides turnkey solutions in all these areas.
The firm had a debt of Rs 2,455.39 crore (fund-based, including short-term loans) and ₹1,380.00 crore (non-fund based) as on March 31, 2019. On Friday, the company’s chairman Ashish Guha told ET that the lenders consortium along with the company is working to infuse equity capital and work out a debt resolution plan.
The corporate affairs ministry’s Serious Fraud Investigation Office (SFIO) has initiated a probe into 16 entities of the Avantha Group, including CG Power, which finally resulted in the removal of its promoter Gautam Thapar from the company’s board.