Bombay Rayon Fashions Ltd., a Mumbai-based textile company, is in trouble after three of its directors were charged for allegedly misappropriating Rs. 1.90 crore belonging to their employees' provident fund (PF). The three directors are Prashant Agarwal, Janardhan Agarwal and Aman Agarwal, according to a report in the Mumbai Mirror.
The alleged fraud was brought to light by Provident Fund Inspector Ganesh Ghaiwat, who later lodged a complaint with the Mumbai police.
The amount belonged to about 1,400 workers at the company's Tarapur plant and was collected between October 2014 and December 2015. Instead of depositing the amount with employees' PF accounts, the trio allegedly shared the money among themselves, the daily said.
"We have registered a complaint under Section 406 (criminal breach of trust) of the Indian Penal Code (IPC) against the trio," the daily quoted a local policeman as saying. The directors have not been arrested as of now as the police are in the process of gathering evidence.
Bombay Rayon Fashions (incorporated on May 21, 1992 as Mudra Fabrics Pvt Ltd) has 13 manufacturing facilities in India.
The company's net profit and revenues for the fourth quarter ended December 2015 were Rs. 4.86 crore and Rs. 1,093.75 crore, respectively. The share price of the company closed at Rs. 133.60 on the BSE on Thursday.
Also read: Restrictions on PF withdrawal rolled back
There are about 15 crore PF accounts in India of which about nine crore are inoperative holding about Rs. 44,000 crore. Recently, the government decided to pay interest on these accounts also with effective from April 1.
An inoperative employee provident fund account is one wherein there has been no contribution either from the employee or the employer for 36 months.
India's retirement fund manager Employees Provident Fund Organisation (EPFO) manages a corpus of over Rs 8.5 lakh crore.
[1 lakh = 100,000 | 1 crore = 10 million | 100 crore = 1 billion]
