Reliance Power Ltd has received a seizure order from the Enforcement Directorate (ED) covering assets worth Rs 2,032.81 crore in connection with alleged violations of foreign exchange regulations.
The action includes shares valued at Rs 2,026.65 crore in its wholly owned subsidiary, Sasan Power Ltd, along with bank balances totalling Rs 6.16 crore.
In a regulatory filing dated Oct 13, Reliance Power disclosed that it received the order on Oct 12 under Section 37A(1) of the Foreign Exchange Management Act (FEMA).
The company has disputed the allegations and maintained that the transactions under investigation complied with applicable regulations.
Seizure Order Linked To 2006, 2008 Transactions
According to Reliance Power, the ED's action concerns foreign currency convertible bonds (FCCBs) issued in 2006 and overseas investments made in 2008 through a Singapore-based subsidiary.
The company said it had obtained the necessary approvals for these transactions.
The enforcement agency has alleged a contravention of Section 4 of FEMA, 1999.
However, Reliance Power clarified that the seizure order is provisional and requires confirmation by the competent authority under Section 37A.
The company also stated that the order does not impose any financial penalty.
Under the directions, the assets covered by the seizure cannot be transferred, sold, pledged, encumbered or otherwise dealt with.
The restrictions will apply subject to the relevant legal proceedings.
'Sasan Power Shares Already Pledged To PFC'
Reliance Power highlighted that the Sasan Power shares covered by the order have been pledged to state-run Power Finance Corporation (PFC) for more than 10 years.
The pledge forms part of existing security arrangements, according to the company's disclosure.
Reliance Power said it was evaluating the implications of the enforcement action and considering appropriate legal steps.
The company maintained that it would act to protect the interests of its shareholders and other stakeholders.
The dispute relates to transactions undertaken nearly two decades ago, with the company's position differing from the allegations raised by the ED.
Meanwhile, Reliance Power shares closed 0.86% higher at Rs20.05 apiece on the BSE on Tuesday. The stock movement preceded the company's disclosure of the seizure order.
