Chennai: Absolving all other directors from any personal liability for Subhiksha’s current period of default, the regional provident fund commissioner has asked the discount retailer’s MD R. Subramanian to immediately pay the entire due, totalling little less than Rs2 crore.
“... it is found that most of the day-to-day functions were attended by R. Subramanian, managing director, even though ICICI Venture Ltd has substantial interest in the running of the establishment,” the commissioner noted after an enquiry into the providend fund default by crisis-hit Subhiksha.
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Subhiksha has said that its 15,000 employees have not been paid since October last.
“The specific personal responsibility or involvement of the nominee directors and independent directors is found not established. Accordingly, the nominee directors and the independent directors other than R. Subramanian are found not personally liable for the current period of default on the part of the establishment,” the commissioner stated.
However, the financial responsibilities of the investors and bankers continue as per law, he added.
The dues, which needs to be paid immediately by Subramanian works out to be around Rs1.76 crore, it added.
For the past few months, Subhiksha has been in deep financial trouble and one of its major shareholders, ICICI Ventures, has approached the Registrar of Companies (RoC) for an investigation into the affairs of the company and also for an independent audit.
The order quoted Subramanian as saying that as a measure of cost cutting, all the employees had agreed from June 2008 onwards to restrict their contributions to Rs6,500, which is the salary ceiling for the purpose of EPF & MP Act, 1952.
Further, even though the salary has not been disbursed so far and only an advance is given to the employees, it is already decided to scale down the expenditure on bi-partite arrangement of paying contributions on a higher salary.
Besides, ICICI Venture, along with some other shareholders that include an entity promoted by IT major Wipro chairman Azim Premji is also said to be opposing Subhiksha’s move to merge itself with Chennai-based firm Blue Green Constructions.
The company said that it was unable to pay the salaries and arrears to its 15,000 employees since October 2008, but it has repaid a loan of Rs15 crore to one of its shareholders.
While announcing that all its 1,600 stores would remain closed at least till May, the company, burdened under a huge debt, recently said that it immediately needs Rs300 crore.
Commenting on the EPFO enquiry, the company has said that its MD R. Subramanian has offered the PF amount in his personal account “to be adjusted and treated as paid on behalf of the company towards part payment of the arrears and the request is being processed by the EPFO.”
On reports that Subhikhsha has opted to repay a Rs15 crore loan to a shareholder despite not being able to pay staff salaries and arrears, the company said about “Rs14 crore was repaid during early January 2009 to a shareholder in part repayment of the lifeline granted by them in December 2008 and the company repaid this as it was contractually bound to do so as per its arrangement with the said shareholder.”
The company said it was “committed to pay the arrears of salaries and understands the pain of the 15,000 employees who are unpaid since October 08 but that it was helpless in the matter of repayment of the said loan for the reason that the contract with the said shareholder provided no option to the company.”