NEW DELHI: One of India’s fastest-growing construction firms has been charged with carrying out the country’s biggest provident fund (PF) evasion. BL Kashyap and Sons Ltd — whose clients include Microsoft, IBM, Taj Hotels, and Delhi’s international airport — has been asked to fork out Rs 593 crore in PF dues and penalties.
The Employees’ Provident Fund Organisation (EPFO) has warned that if the company fails to pay up by August 15, recovery proceedings will be initiated against it for evasion of workers’ PF payments from April 2005 to December 2010.
Shares of BL Kashyap & Sons were down 20 per cent to hit a lower trading limit after ET’s report. However, the company denied any wrongdoing, saying the EPFO order was “totally erroneous, misconceived and perverse on various grounds.” At 9.29 a.m., shares of the company were down 20 per cent to Rs 15.20.
The country’s retirement fund regulator has also filed a police complaint against top officials of the company for forging employee muster rolls and submitting fake records after a forensic analysis revealed the same thumb impression had been put against the records of several employees.
BL Kashyap and Sons, however, denies any wrongdoing and says the EPFO order is “totally erroneous, misconceived and perverse on various grounds”. “No employee has complained against us. Moreover, no beneficiaries for whom the recovery is being made, have been identified,” said a company statement.
“It can be verified that we are making more EPF contributions than many other construction companies though their turnover is more than us. We are examining the order and shall take appropriate legal recourse available to us at the earliest,” the company said.
The provident fund rules stipulate that 12% of the basic salary of all employees earning up to Rs 6,500 a month must be compulsorily deposited in their PF accounts. The employer makes a matching contribution.
Last month, the Central Bureau of Investigation (CBI) had booked nine senior EPFO officials and top officials of the company for criminal conspiracy and forgery, estimating wrongful gains of 169 crores for the firm. But the PF department has alleged the actual evasion could be nearly four times the CBI’s estimate.
Between 2006-07 and 2010-11, BL Kashyap and Sons excluded nearly 71,000 workers from PF benefits, according to the EPFO order. The regulator received several complaints between 2005 and 2009 about the company denying retirement benefits to workers across its construction sites. The EPFO found huge variations in the wage payments booked by the firm in its audited balance sheets and the records submitted to the PF office, leading to suspicion that it employed more workers than it claimed.
Regional PF Commissioner Gautam Dixit, who is in charge of the Delhi (South) PF office, passed the order against the company on July 29 — after nearly six months of investigations and 20-odd hearings with the company. The Rs 593-crore notice served by the EPFO includes about Rs 437 crore that the firm should have paid into workers’ retirement accounts, and penal interest of Rs 156 crore, as per the assessment order in ET’s possession. Shares of BL Kashyap closed at Rs 19.15 on Wednesday.
The firm’s employee costs amounted to Rs 544 crore in 2010-11, when it made a profit of Rs 48.8 crore on revenues of Rs 1,586 crore. The company’s board is expected to meet on August 12 to approve its first-quarter results.
This, the company argued, was because workers were proceeding on ‘leave without pay, though it failed to back the claim with leave registers. “This argument can be true for some workers at some sites in some months, but not for thousands of cases every month across all sites… This implies that in almost every month work would come to a standstill or suffer heavily since large numbers of workers were on leave without pay,” the EPFO order noted.
