Five mutual fund houses have significant exposure to CG Power and Industrial Solutions, where a financial fraud to the tune of thousands of crores has been detected.
Mutual Funds have invested a large chunk of their equity portfolio in the beleaguered company. In all, five of the 44 mutual fund participants have exposure to the company.
Of these, HDFC Mutual Fund had 9.17 percent invested in the company as on June 30, 2019, followed by Aditya Birla Sun Life, which had deployed 8.92 percent.
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 CG Group and Industrial Solutions.
CG Power has two different segments, power systems and industrial systems.
On August 20, the company 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 percent on August 19 after the company's regulatory filing about the irregularities.
As per media reports, the Ministry of Corporate Affairs (MCA) has ordered an inspection of the company's affairs in the wake of the financial mess at CG Power.
"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.
An independent legal firm appointed by the board of directors to probe financial wrongdoings pointed out certain misrepresentation in financial statements of the company and unauthorised financial transactions.
The company plans to conduct a detailed forensic investigation to establish the accountability of wrongdoings and will take requisite legal actions to protect its interest, it said.
Discover the latest business news, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
