New Delhi: The Employees’ Provident Fund Organisation (EPFO), India’s largest retirement fund, has continued to invest in two Adani stocks, Adani Enterprises and Adani Ports and SEZ, and will keep doing so till at least September this year, The Hindu reported.
However, its trustees are expected to meet this week to rethink their investment approach, the newspaper reported.
The shares of Adani Group have tanked since US short seller Hindenburg Research released its report on January 24, alleging that the company was involved in stock manipulation and accounting fraud. It also accused the company of improper use of offshore funds to manipulate stocks.
Several news reports have highlighted the role of offshore firms and their alleged links to some of the group companies. Meanwhile, the Securities Exchange Board of India is investigating market allegations against the group.
According to the report, EPFO earmarks up to 85% of its equity investments into exchange-traded funds (ETFs) which tracks the performance of Nifty 50.
Nifty50 had added Adani Enterprises in September 2022. Back then, brokerage house ICICI Securities had told moneycontrol that the entry of Adani Enterprises into Nifty will result in buying worth Rs 1,760 crore for the stock just from fund managers of ETFs that track Nifty.
Nifty50 has retained the stock for another six months for the period starting from March 30 this year.
EPFO has been investing in ETFs since August 2015. Initially, the body had decided to invest 5% of its deposits in stock markets. Later, it was increased to 10% in 2016-17 and 15% in 2017-18 onwards.
Adani Ports and SEZ has been part of the Nifty 50 since September 2015. This stock has also been retained in the Nifty 50 for the next six months, after a recent index review by NSE subsidiary, NSE Indices, the business daily said.
Also read: Explained: Factors Behind Changes in Stock Prices of Adani Group Firms
The EPFO, which had Rs 1.57 lakh crore invested in ETFs as of March 2022, is estimated to have invested another Rs 38,000 crore in them during 2022-23 out of the fresh contributions amounting to an estimated Rs 2.54 lakh crore remitted into EPF members’ accounts, the newspaper said.
However, it is not clear whether its fund managers had been given any instructions to avoid fresh investments in those stocks to safeguard people’s old age savings.
Trustees of the EPFO told The Hindu that they were not aware of its Adani stock exposures, but the issue may figure in a two-day meet of its board. The meeting will be chaired by Union Labour and Employment minister Bhupender Yadav. It’ll happen on March 27 and 28.
The interest rate to be paid to members are expected to be discussed in the meeting.
EPF offers an interest rate of 8.10%, which is applicable to EPF deposits made between April 2022 and March 2023. The interest on the deposits is calculated monthly, but it is only deposited to the Employees’ Provident Fund account once a year on March 31 of the applicable fiscal year.
In March 2022, the EPF rate was lowered to a 45-year low of 8.1% for the financial year 2021-22. However, according to the Indian Express, the interest rate for FY23 is unlikely to go below 8% level amid a rising interest rate scenario.