The board of directors at crisis-ridden CG Power and Industrial Solutions Ltd on Thursday resolved to remove Gautam Thapar as its chairman with immediate effect.

"This decision has been taken in the interests of the company and its stakeholders in discharge of the fiduciary responsibilities of the board," the company said in regulatory filings at stock exchanges.

"In cognizance of the current situation being faced by the company and the recent developments, including disclosures dated August 19, 2019 made by the company, the board of directors through a circular resolution dated August 29, 2019 passed by majority consent have resolved to remove Gautam Thapar as the chairman of the board with immediate effect," it added.

On August 19, CG Power's Risk and Audit Committee had raised red flags on five counts which were prejudicial to the company. The committee found understated liabilities, related party transactions, unauthorised guarantees, understated net worth and company personnel transactions among other irregularities.

"The total liabilities of company and the group may have been potentially understated by about Rs 1,053.54 crore and Rs 1,608.17 crore, respectively as on 31 March 2018," CG Power had said in a statement.

It said that advances to related and unrelated parties and the Avantha Group may have been potentially understated by Rs 1,990.36 crore and Rs 2,806.63 crore respectively as on March 31 last year.

An independent legal firm was appointed by the board of directors to probe certain financial irregularities by certain employees of the company which submitted a report to the board. The firm pointed out certain misrepresentation in financial statements of the company and unauthorised financial transactions.

CG Power and Industrial Solutions has business interests in diverse areas including pulp and paper, power transmission and distribution equipment and services, food processing, farm forestry, chemicals, energy, infrastructure, information technology (IT) and IT-enabled services.