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SECI Bans Reliance Power For Three Years:Shares Hit Lower Circuit
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SECI bans Reliance power for three years. Shares hit lower circuit.
Solar Energy Corporation of India Ltd. (SECI) bans Anil Ambani’s Reliance Power, its subsidiary, and Reliance NU BESS Ltd. for three years from participating in tenders issued by the state-owned companies in reaction to the Anil Ambani companies' allegedly fraudulent document submissions in a June SECI tender. So, on Friday 08 November 2024, Reliance Power Shares opened at Rs.41.47 which was its 5% lower circuit.
The stock had been trading at the upper circuit for two consecutive days earlier.
What’s the Story so far?
In June, SECI tendered 1 GW of solar energy as well as a 2 GW standalone battery energy storage system and invited bids. However, at the last moment, it had to cancel the tender as discrepancies were noticed in the bid submitted by the subsidiary of Reliance Power, NU BESS Limited.
It was in this process that Reliance NU BESS furnished a foreign bank guarantee accompanied by an email from the State Bank of India. As SECI dug in to search for facts, SECI found that such a guarantee was never released by SBI. The email also came from a fake address. According to a Business Standard newspaper report, a third party was blamed by Reliance NU BESS for the fake bank guarantee. Nevertheless, no mention of such a third party was discovered throughout SECI's examination.
Rather, SECI sued Reliance NU BESS and Reliance Power and canceled the bidding procedure. Therefore, this is the second limitation that SECI is causing for the Reliance Group, which is run by Anil Ambani. Before this, SEBI, in August, banned Anil Ambani from the securities market for five years and charged him a fine of Rs.25 crore.
Even though the Securities Appellate Tribunal restrained SEBI from collecting the fine in October, the bar from the securities market stays in place. This SEBI order was a part of the case related to general-purpose loans dispensed by Reliance Capital's subsidiary, Reliance Home Finance. In 2016, the Anil Ambani group also went hammer and tongs in the already insolvent Pipavav Shipyard, now Reliance Naval and Engineering.
It could not be sustained, however, and was sold under the Insolvency and Bankruptcy Code for the shipyard. Besides, the bankruptcy of Reliance Communications and Reliance Capital has badly damaged the financial prospects of the group.
How did Reliance Power respond?
In response, Reliance Power stated in an exchange filing that the business and its affiliates "acted bonafidely and have been a victim of fraud, forgery and cheating conspiracy."
"A criminal complaint in this regard has already been lodged with the Economic Offence Wing of Delhi Police against the third party on October 16, 2024. The due process of law will follow. The company will take all appropriate legal steps to challenge the unwarranted action of SECI in the interest of its more than 40 lakh shareholders," Reliance Power said.
Conclusion
Anil Ambani’s Reliance Power, its subsidiaries, and Reliance NU BESS have been barred from SECI tenders for three years on allegations of fraud leveled in the recent bid under question. This has produced the hardship that Anil Ambani's Reliance Group was already facing with financial setbacks and regulatory actions it is witnessing. SECI action has highlighted the severity of the problem, notwithstanding Reliance Power's continued claims that the organization was tricked by a third party. The company will take legal steps to safeguard the interests of Shareholders.
Disclaimer- The information presented related to 'Reliance Power' and 'Reliance NU BESS' in this blog is as per the official Notice issued by Solar Energy Corporation of India Ltd. (SECI) in its official notification dated 06 November 2024 under the title 'Debarment of M/s Reliance Power Limited and M/s Reliance NU BESS Limited from participating in SECI’s tenders issued for a period of 3 years'. The author or the Company (Finowings) doesn't put any allegations/challenges on anyone or the company as a whole nor validates the allegations put from any sources. Also, No buy or sell recommendation is given. No investment or trading advice is given. This blog is only for information purposes. Always consult with your financial advisor before investing.