Anil Ambani’s Reliance shares plunge up to 10%. Here’s what’s behind the steep sell-off

Shares of Anil Ambani-led Reliance companies plunged to 10.5% in morning deals on Monday, October 13, after the Times of India reported that the Enforcement Directorate had arrested senior Reliance Power director Ashok Kumar Pal in the alleged fake bank guarantee and fake invoicing case on Saturday.

Shares of Reliance Power crashed over 10% to the day’s low of Rs 43.55 per share, while shares of Reliance Infrastructure fell 4.5% to Rs 231 per share.

Pal was remanded in custody for two days and will appear in court today. Pal was arrested on Friday evening and interrogated for hours.

The Enforcement Directorate (ED) is investigating alleged financial irregularities and possible violations of the Prevention of Money Laundering Act (PMLA).

This comes after a large-scale ED operation on July 24, during which 35 premises, 50 companies and more than 25 individuals associated with Reliance Anil Ambani Group (RAAGA) companies were searched.

The investigation follows a money laundering case registered on the basis of a First Information Report (FIR) filed by the Central Bureau of Investigation (CBI). The role of Yes Bank, including its then promoter, is also under scrutiny. The ED suspects illegal misappropriation of around Rs 3,000 crore of loans disbursed by Yes Bank between 2017 and 2019. The study is reportedly based on inputs from multiple regulatory and financial agencies, including the National Housing Bank, SEBI, National Financial Reporting Authority (NFRA) and the Bank of Baroda. Investigators said Pal played a crucial role in diverting funds from the company and submitting a fake bank guarantee (BG) worth over Rs 68 crore to the Solar Energy Corporation of India (SECI), with an intention to defraud the PSU.

According to officials, a board resolution had given Mr Pal and others the authority to finalize, approve, sign and execute all documents related to SECI’s tender for the Battery Energy Storage System (BESS) and to utilize RPL’s financial capabilities for the bid.

On Friday, shares of Reliance Power rose as much as 15% to their day’s high of Rs 50.75 on the NSE on Friday, October 10, amid renewed buying interest and strong volumes. Data showed that around 7 crore shares of the company changed hands, compared to the average one-week and one-month trading volumes of 2 crore shares each.

At around 10.10 am, the company’s shares were trading at Rs 46.20, down 5% from its last close on the NSE. Reliance Infra fell 2% to Rs 238 per share.

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