Reliance Power share price slumped over 5% on Thursday, 15 October, after the Enforcement Directorate (ED) seized Indian assets worth ₹2,032.81 crore belonging to the Anil Ambani-led group company as part of a Foreign Exchange Management Act (FEMA) investigation, according to a PTI report.
The seized assets include Reliance Power’s bank balances and its shareholding in Sasan Power Ltd, the ED said in a statement. The seizure order was issued on 12 October under Section 37A of FEMA.
Responding to the action, Reliance Power said in a regulatory filing that it disputes the allegations and will take all appropriate steps, as advised by its legal counsel, to protect its interests and those of its shareholders and other stakeholders, PTI reported.
What is the ED investigation about?
According to PTI, the ED investigation stems from a Securities and Exchange Board of India (SEBI) action regarding write-offs or provisions of ₹2,101.46 crore recorded in Reliance Power’s books. These related to overseas investments and advances made to companies in the British Virgin Islands (BVI) and the Cayman Islands.
The ED said the investigation traces back to 2006, when Reliance Natural Resources Ltd, which has since merged with Reliance Power, raised $300 million through foreign currency convertible bonds. Of this amount, $275 million was invested in its wholly owned Singapore subsidiary, Reliance Natural Resources (Singapore) Pte Ltd (RNRL-S).
RNRL-S subsequently deposited the funds with Deutsche Bank (Suisse) SA in Geneva. The deposits were then used as collateral for loans extended to entities incorporated in the BVI, according to the ED, as reported by PTI.
The agency alleged that these BVI entities were controlled and managed from India by the Reliance Anil Ambani Group through front persons acting on the group’s directions.
ED alleges fund diversion and fabricated documents
The ED’s investigation found that the loan proceeds were used for various purposes, including the alleged temporary round-tripping of funds into India through foreign entities based in Mauritius. The agency claimed that the transactions benefited the group, while funds were parked overseas.
According to the ED, the BVI entities failed to repay the loans extended by Deutsche Bank. The agency further alleged that documents were fabricated to show that RNRL-S and Reliance Power’s Indonesian subsidiaries had provided advances to these entities for apparently legitimate business purposes.
The ED alleged that the documents were backdated to portray the transactions as genuine business dealings, PTI reported.
Reliance Power share price today
Reliance Power share price today opened at ₹19.68 apiece on the BSE, the stock touched an intraday high of ₹19.84 per share, and an intraday low of ₹18.80 per share.
Rajesh Bhosale, Technical Analyst at My Advisor Alpha, said Reliance Power shares remain in a downtrend, with every bounce attracting selling pressure. He placed the next support at ₹17.50 and resistance at ₹20.50.
Virat Jagad, Senior Technical Research Analyst at Bonanza, said Reliance Power remains in a sustained downtrend, falling 3.58% to ₹19.12 and trading below all its key moving averages, indicating continued selling pressure. The stock is forming lower highs and lower lows, reflecting a weak technical structure. Its RSI of 31.22 signals strong bearish momentum, with the stock nearing oversold territory.
Jagad placed immediate support at ₹19, followed by ₹18.50, with resistance at ₹21.50. A sustained move above ₹21.50 would be needed to signal a potential recovery, whereas a break below ₹19 could trigger further downside.
Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
