Shares of Reliance Power , led by Anil Ambani, experienced a significant drop of over 10% following reports of an executive's arrest by the Enforcement Directorate (ED). The arrest is linked to alleged financial irregularities, including fake bank guarantees and invoicing cases.

Market Impact

The news had a ripple effect on other Anil Ambani-led Reliance companies:

Investigation Details

The ED's investigation focuses on:

• Alleged financial irregularities under the Prevention of Money Laundering Act
• Suspected illegal diversion of approximately ₹3,000.00 crore in loans disbursed by Yes Bank between 2017 and 2019
• A large-scale operation in July that involved searching 35 premises and 50 companies linked to Reliance Anil Ambani Group firms

Executive's Involvement

Ashok Kumar Pal, an executive of Reliance Power, was arrested by the ED. He is alleged to have played a key role in:

• Fund diversion
• Submission of a bogus bank guarantee worth over ₹68.00 crore to the Solar Energy Corporation of India

The arrest and ongoing investigation have raised concerns among investors, leading to the sharp decline in share prices of Reliance Group companies. As the investigation unfolds, market participants will be closely monitoring any further developments and their potential impact on the group's financial standing and market performance.

Reliance Power Limited has announced key leadership changes amidst an ongoing Enforcement Directorate (ED) investigation into suspected loan frauds involving associated companies.

New Appointments

In a board meeting held on October 11, Reliance Power made the following appointments:

• Shri Arup Ashok Gupta has been appointed as a Non-Executive and Non-Independent Director. Gupta brings over 40 years of HR experience and has been with the Reliance Group for 16 years.

• Shri Neeraj Parakh, currently serving as Executive Director and CEO, has been given additional charge as interim Chief Financial Officer. Parakh has 29 years of professional experience, including more than 20 years with Reliance, and has been instrumental in delivering power generation projects totaling over 10 GW with capital expenditure of ₹50,000.00 crore.

Ongoing ED Investigation

These appointments come in the wake of the ED's investigation into suspected loan frauds involving Reliance Home Finance Ltd. (RHFL) and Reliance Commercial Finance Ltd. (RCFL). The probe centers on loans totaling ₹12,524.00 crore, of which ₹6,931.00 crore have been classified as non-performing assets (NPAs).

Key Findings of the Investigation:

• Preliminary findings suggest potential circular lending practices, with funds being routed back to other Reliance group companies.
• Rana Kapoor, associated with Yes Bank, allegedly played a significant role in sanctioning these loans.
• Companies linked to Kapoor's family also received credit facilities.
• A Grant Thornton audit identified significant fund diversion and violations of lending policies.

The ED has conducted extensive searches across 60 companies and 22 individuals as part of this wide-ranging investigation.

Corporate Developments

Reliance Power has also reported recent corporate activities:

1. Outstanding debt securities worth ₹250.00 crore, issued on July 10, 2017, with a maturity date of June 30, 2035, and an 8.00% coupon rate.

2. An application for reclassification of Reliance Capital Limited to the public category, following IndusInd International Holdings Limited's implementation of a resolution plan under the Insolvency and Bankruptcy Code, 2016.

As the investigation continues and the company undergoes leadership changes, stakeholders will be closely monitoring further developments in this case.