It is not clear if the amount will be paid out of UTI MF’s books or whether the Specified Undertaking of the Unit Trust of India (Suuti) — formed by the restructuring of the erstwhile UTI in 2003 — will step in to foot the bill. A full or part payout by the former could impact valuations for the asset manager’s upcoming share sale, said experts.
The UTI Retired and VSS Employees’ Social Association (UTIRAVESA) has filed two writ petitions before the Bombay High Court, demanding the opportunity to exercise options to avail of pension.
“UTIRAVESA has filed a writ petition before the Bombay High Court against our Company, among others, challenging the legality of the UTI AMC Pension Regulations 2003, and demanding, among others, that its members be paid pension under the Unit Trust of India Pension Regulations, 1994, and not under the UTI Asset Management Company Pension Regulations, 2003, with arrears of pension from their respective dates of retirement. Our company has filed its reply, among others, challenging the maintainability and seeking dismissal of the petition. The matter is presently pending,” the draft offer for UTI MF
The UTI MF
management had written to the government regarding the pension conundrum in 2013 and 2015, but drew a blank on both occasions. According to sources, former managing director Leo Puri and current acting CEO Imtaiyazur Rahman, has written to the government.
“The staff welfare fund was created by the Unit Trust of India and has about Rs 500 crore. We are trying to get that money released from the government and knocking on the finance ministry’s doors as the money is meant exclusively for the benefit of employees. The government is now seeking the opinion of the Ministry of Labour & Employment on the issue,” said a person familiar with the matter. An email sent to UTI MF
did not get a response.
The erstwhile UTI had constituted a staff welfare fund which became part of Suuti after the former split into two entities. Suuti and UTI MF have not been on the same page with regard to the pension payout.
UTI had offered a Voluntary Retirement Scheme (VRS) in 2003 for employees completing 10 years of service, opted for by about 1,200 employees. "The objective is to make the organisation lean. We are not hugely overstaffed but there could be a VRS to cut the flab," former UTI chairman M Damodaran had told Business Standard in January 2003. Back then, UTI had an employee base of 2,500 across 54 offices in India.
According to Unit Trust of India Pension Regulations, 1994, 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 AMC is also involved in litigation
filed by an association of employees and a former employee which, in addition to reliefs in connection with service conditions, also challenge the sale of equity shares by the sponsors to T Rowe Price in 2009.
One of the cases has sought prohibition on the listing of the equity shares or disinvestment of the respective shareholdings by the sponsors till the matter is decided. In addition, UTI AMC is also involved in various labour and employment-related proceedings and consumer-related matters, the draft offer noted.
UTI AMC will be the third fund house to get listed. Year-to-date, HDFC AMC and Nippon India MF have both delivered gains of over 100 per cent. The IPO was consistently put on the back burner amid lack of agreement between shareholders.