Pf: Firms In Rush To Make Good Their Losses

Corporate India is being forced to make good the losses well in excess of Rs 8 crore towards money paid by their respective provident trust funds for investment in securities, that are not in their custody.

Asian Paints and Breach Candy Hospital have already made good the shortfall to the tune of Rs 1.16 crore to the trust fund from their own funds.

After the Seamen's provident fund scam, rogue brokerage firms -- one of the key culprits being Giltedge Securities Ltd -- have put the wool over the exempted provident trust funds of various corporate houses including Asian Paints, Knoll Pharmaceuticals, Mafatlal Dyes and Chemicals and Willco Shipping.

 

The regional provident fund commissioner's (RPFC) office had recently conducted an audit of the investment portfolios of 471 such trust funds and found 25 of them unable to produce securities for which they had paid amounts to brokerage firms.

Asian Paints India Ltd on Tuesday paid Rs 45 lakh to its trust fund following Giltedge Securities having failed to give physical delivery of the securities, despite having been advanced the sum of money from the trust.

The Breach Candy Hospital has similarly deposited Rs 71 lakh towards its trust fund's security purchases for which no physical delivery has been effected.

A senior PF official said: "Even as we are in the process of issuing show cause notices to both the trust funds as well as corporates running them, many corporates are making good the losses suffered by their trust funds. As far as the exempted funds are concerned even if they have suffered losses through their dealings with broking firms the same will have to be made good by the corporates running the same. There can be no loss to the trust fund." RPFC has been empowered to punish corporate directors and ensure that they meet all shortfalls as laid down by the provident fund norms.

Pending the receipt of certificates of the securities paid for by the trust funds, the inspection and audit being conducted by the PF commissioner's office in Maharashtra has resulted in the recovery of Rs 1.16 crore made good by corporates.