CG Power’s OSAT QIP Fund Routing Raises Utilisation Red Flags
CG Power and Industrial Solutions’ ambitious semiconductor foray has hit a transparency snag. A monitoring agency has flagged difficulties in clearly tracing the utilisation of funds raised through the company’s ₹3,000-crore Qualified Institutional Placement (QIP), citing complex routing through multiple subsidiary bank accounts.
The observation appears in the monitoring agency’s report for the quarter ended December 31, 2025, and centres on funds earmarked for CG Power’s proposed Outsourced Semiconductor Assembly and Test (OSAT) facility.
OSAT allocation: ₹1,062.85 crore, utilisation hard to verify
Under the stated objects of the July 2025 QIP, CG Power allocated ₹1,062.85 crore for investment into its subsidiary, CG Semi Pvt Ltd, to support capex for setting up the OSAT unit.
As of the end of Q3FY26, reported utilisation against this allocation stood at ₹184.67 crore, leaving a substantial ₹878.18 crore unutilised. However, the monitoring agency noted that because the funds were routed through multiple current accounts of the subsidiary—accounts that also saw numerous unrelated debit and credit transactions—it could not independently verify how much was actually deployed for OSAT activities.
As a result, the agency relied largely on management submissions and certificates provided by the statutory auditor.
The report also noted that part of the funds earlier parked in mutual funds were subsequently drawn down, with around ₹51.86 crore utilised during Q3 towards OSAT-related expenditure.
Transformer manufacturing capex sees limited progress
Another major QIP allocation of ₹856.98 crore was earmarked for capex and strategic initiatives, including the establishment of a power transformer manufacturing plant and leasehold land development.
During the December quarter, CG Power spent ₹43.36 crore towards the transformer plant. Cumulative utilisation under this object reached ₹63.44 crore by end-Q3FY26, leaving ₹793.54 crore still unutilised.
Acquisitions and corporate purposes remain untouched
Other QIP objects show minimal movement so far:
The ₹330 crore allocated for acquisitions and inorganic growth has not been utilised at all.
Under general corporate purposes (₹724.14 crore), only ₹0.03 crore has been deployed, with ₹723.91 crore still lying unused.
QIP issue-related expenses of ₹26.03 crore, however, have been fully spent.
Overall utilisation remains modest
In total, by the end of the December quarter, CG Power had utilised just ₹274.37 crore out of the ₹3,000 crore raised. A sizeable ₹2,725.63 crore remains unutilised and is currently parked in short-term instruments such as fixed deposits and liquid mutual funds.
While slow deployment is not unusual for large capex-led fundraises, the monitoring agency’s inability to independently trace OSAT-related spending due to fund-routing structures introduces an added layer of scrutiny—particularly given the strategic importance and policy focus around semiconductor manufacturing.
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