The liabilities could amount to Rs 1,250 crore, with the bulk of it arising out of pension dues to around 1,200 former employees, according to the UTIRAVESA's and the Officers' Association's estimates. UTI AMC, however, maintained that the liabilities were not quantifiable at this stage.
"There is no change in the amount of contingent liability included in the financial statements included in the offer document. Our company has agreed, without prejudice to the rights of the company, to record the allegation of the petitioner on the amount involved in certain ongoing litigation along with the statement that such allegations are disputed by the company and are not quantifiable at this stage. The disputes in relation to the claims by the petitioners are sub judice at this stage," UTI AMC
clarified in an email.
A few months back, the central government filed an affidavit, saying it was not a party to the ongoing pension dispute of former UTI employees. This could put the onus on the AMC to pay the employee dues.
"The AMC has agreed to disclose the allegation and along with the fact that it disputes the allegation. The demand for the third pension does not exist today and the question of liability will arise only when it gets activated," said a person with the knowledge of the development.
In January 2019, the ministry of finance, through the Department of Investment and Public Asset Management, had asked UTI AMC
to address pending grievances and ensure entitlements of the officers of the erstwhile UTI are protected under Section 6 (1) of the UTI Repeal Act 2002.
"The management of UTI AMC
has delayed the implementation of the decision of this critical report to suppress the huge liability arising out of the settlement of long-pending issues, and to camouflage and present a better financial statement before the IPO
to prospective investors, which is unfair and misleading… the management and the board of UTI AMC are in a hurry to push the IPO
at a high price, suppressing large liabilities,” a letter sent to Sebi by the All India UTI AMC Officers’ Association a few months back had observed.
The information on employee-related dues and liabilities has to be disclosed in the prospectus to ensure investors do a fair evaluation of the IPO pricing, said a person, who is part of the retired association. He added payouts arising out of these liabilities could impact the AMC’s balance sheet.
According to Unit Trust of India Pension Regulations, 1994, the pension will be payable to all full-time and part-time employees (exceeding 13 hours per week) who have completed 10 years of service.
The UTIRAVESA had earlier filed two writ petitions before the HC, demanding the opportunity to exercise options to avail of pension. The Officers' Association had also filed a writ petition in the court to restore the retirement age of officers to 60 years, in line with that of workmen staff and employees in the RBI/IDBI and public sector banks. Another writ petition was filed for restoration of sick leave and other leave facilities.
The erstwhile UTI had offered a Voluntary Retirement Scheme in 2003 for employees completing 10 years of service. It had constituted a staff welfare fund, which became part of Specified Undertaking of the Unit Trust of India, or Suuti, after the former split into two entities.