ED orders attachment of Rs 2,032.81 crore assets of Reliance Power in FEMA case

The Enforcement Directorate (ED) has taken major action against Reliance Power Limited, a company of Anil Ambani. In a case of alleged violation of foreign exchange rules, the ED has ordered the seizure of the company's assets worth Rs 2,032.81 crore. Anil Ambani's troubles continue to mount, and the order is being seen as a big blow for Reliance Power.

The action covers shares worth Rs 2,026.65 crore in Sasan Power Limited, a wholly owned subsidiary of the company. It also covers bank balances totalling Rs 6.16 crore. This means the company cannot, for now, use these shares worth Rs 2,026.65 crore and the bank balance of Rs 6.16 crore.

In an exchange filing on October 12, Reliance Power said it had received the order under Section 37A(1) of the Foreign Exchange Management Act (FEMA). According to the filing, the ED action relates to Foreign Currency Convertible Bonds (FCCBs) issued in 2006 and a foreign investment made in 2008 through a Singapore subsidiary.

The company said in its statement: "The order relates to foreign currency convertible bonds issued in 2006, that is, 20 years ago, and a foreign investment made in a Singapore subsidiary in 2008 (that is, 18 years ago), for which all necessary approvals were obtained. The attachment action relates mainly to the company's shares in its wholly owned subsidiary Sasan Power Limited. These shares have already been pledged for more than 10 years under a security arrangement in favour of Power Finance Corporation Limited. Some bank balances of the company are also included."

Reliance Power shares have fallen 42 per cent so far this year and 55 per cent over the past year. At 3 pm on Wednesday, the stock was trading at Rs 19.9, down 0.55 per cent.