Reliance Power shares in focus after ED seizes Sasan Power shares worth Rs 2,027 crore

Shares of Reliance Power Ltd are in focus on Wednesday after the Enforcement Directorate (ED) issued a seizure order covering shares worth Rs 2,026.65 crore in its wholly owned subsidiary, Sasan Power Ltd, and bank balances of Rs 6.16 crore. The order relates to alleged violations of foreign exchange regulations involving transactions dating back nearly two decades, Reliance Power said in a filing with the BSE.

Reliance Power shares are down 42 per cent year-to-date and 55 per cent in the past one year.

The order relates to foreign currency convertible bonds issued in 2006 and an overseas investment made in 2008 in a Singapore-based subsidiary, which the company said was made with all applicable approvals. The seizure primarily covers shares held by Reliance Power in Sasan Power, which have been pledged in favour of Power Finance Corporation Ltd (a Government of India undertaking) under security arrangements for more than 10 years, as well as certain bank balances.

Reliance Power said the seizure is provisional and subject to confirmation by the competent authority under Section 37A of the Foreign Exchange Management Act, 1999. The company is assessing the implications and disputes the allegations of a contravention of Section 4 of the Act.

The company said it is restrained from transferring, selling, pledging, encumbering or otherwise dealing with the seized assets. No penalty has been imposed.

"The company shall take all appropriate steps to safeguard its interest as well as the interests of all its shareholders and other stakeholders, as may be legally advised," it said.