Reliance Power Shares Fall 5% After CFO Arrested in PMLA Case

Market Performance

Shares of Reliance Power slipped over 5% on October 13, trading at Rs 46.17 per share. The stock has seen a 52-week low of Rs 31 and a high of Rs 76.5, with a market capitalization of approximately Rs 19,000 crore. The decline followed the arrest of the company’s Chief Financial Officer, Ashok Kumar Pal, in connection with a money laundering case.

Main News

On the night of October 10, the Enforcement Directorate (ED) took Pal into custody under charges related to a Rs 68.2 crore bank guarantee. Pal immediately resigned from his position to cooperate with ongoing proceedings. He was produced before the court on October 11, which granted ED two days of custody.

The bank guarantee in question was submitted to the Solar Energy Corporation of India Limited (SECI) on behalf of Reliance NU BESS Limited, a subsidiary of Reliance Power. Investigations revealed that the guarantee was allegedly fake.

Company Details

Reliance Power, formerly known as Maharashtra Energy Generation Limited, became embroiled in this case following a complaint lodged with the Economic Offences Wing (EOW) of Delhi Police in October 2024. The complaint involved forged bank guarantees issued by an Odisha-based company, Biswal Tradelink.

• Biswal Tradelink allegedly functioned as a “paper entity” with its registered office at a residential property of a relative of its managing director, Partha Sarathi Biswal.
• ED sources indicated Pal played a central role in approving and facilitating the documentation for SECI’s BESS tender. Communication for the approval process was carried out using platforms like Telegram and WhatsApp, bypassing normal vendor workflows.
• The guarantee was reportedly issued by FirstRand Bank in Manila; however, the bank has no branch at that location.

Reliance Power has emphasized that Anil Ambani has not been associated with the company’s board for over 3.5 years and is not connected with this matter. The group highlighted that the company was a victim of fraud, forgery, and cheating, which had been disclosed to the stock exchange on November 7, 2024.

Summary

This incident underscores the complexities companies can face in financial operations and regulatory compliance. While Reliance Power navigates the legal proceedings, market participants reacted promptly, reflecting in a 5% drop in shares. The case continues to develop as the ED investigates the role of other parties involved in the alleged fraudulent bank guarantees.

Key Points at a Glance:

• CFO Ashok Kumar Pal arrested under PMLA for Rs 68.2 crore fake bank guarantee.
• Pal resigns immediately to cooperate with ongoing investigation.
• Reliance Power shares drop 5% to Rs 46.17 on October 13.
• Bank guarantee submitted to SECI by subsidiary Reliance NU BESS found fake.
• Odisha-based Biswal Tradelink identified as alleged paper entity.
• ED investigates use of forged communications and fund diversion.