CG Power and Industrial Solutions Ltd said on Thursday its board of directors has decided to remove chairman Gautam Thapar with immediate effect.
The move comes after the company disclosed last week that it had uncovered a financial fraud and had ordered a forensic investigation.
It said in a stock-exchange filing on Thursday that the board, through a resolution passed by majority consent, removed Thapar in view of the situation the company is facing.
"This decision has been taken in the interests of the company and its stakeholders in discharge of the fiduciary responsibilities of the board," it said.
Last week, the company had said that some current and past employees, including senior executives, carried out certain transactions it hadn't authorised. "These transactions appear to be undertaken in a seemingly fraudulent manner and, hence, warrant further detailed investigation," it said.
CG Power had also said that these transactions appeared to have been carried out by various means including routing transactions through subsidiaries and promoter affiliate companies. "These may have potentially resulted in misstatement of past financial statements."
CG Power is part of Thapar-led Avantha Group, although the promoters hold a negligible stake in the company. A bunch of financial institutions, including Yes Bank, own a large stake in the company. Another key shareholder is Bharti Group, led by billionaire Sunil Mittal.
The company's shares have lost half their value since the disclosure. It is now also looking to sell non-core assets and planning an equity fund raise to bridge the cash flow gaps and meet working capital requirements.