HDFC MF holds 9.17% in beleaguered CG Power and Industrial Solutions

Mutual Funds have invested a large chunk of their equity portfolio in CG Power and Industrial Solutions, where a financial fraud to the tune of thousands of crores has been detected. Five mutual fund houses have significant exposure to the beleaguered company.

Among them, HDFC Mutual Fund had 9.17% invested in the company as on June 30, 2019, and Aditya Birla Sun Life, had deployed 8.92%. IDFC Mutual, Reliance Mutual Fund and Franklin Templeton Mutual Fund are the other fund houses that had exposure in the range of 1-3 percent as on June 30, 2019 in the company. Two different segments are held by CG Power, power systems and industrial systems.

The company had informed stock exchanges that an investigation by an independent law firm had found that some employees had carried out unauthorised transactions that led to a potential understatement of not just the liabilities of CG Power, but even of advances to related and unrelated parties of the company and the group.

Shares of the company had fallen 20% on August 19 after the company’s regulatory filing about the irregularities. “While working on one of its priority tasks of seeking refinancing of certain facilities and as a part of conducting financial analysis in this regard, the Operations Committee was made aware of some unauthorised transactions by certain employees of the company,” the filing to BSE said.