New Delhi: The stocks of Anil Ambani’s group of companies (Reliance ADAG) plunged on the stock exchanges after the Security and Exchange Board of India (SEBI) barred the industrialist and 24 other entities, including former key officials of Reliance Home Finance Ltd (RHFL), from the securities market for five years for diversion of funds from the companies.
The Indian capital market regulator slapped a penalty of Rs 25 crore on Anil Ambani and issued an order to bar him from being associated with the securities market as a director or key managerial personnel (KMP) in any listed company, or any intermediary registered with the market regulator. The penalty on Anil Ambani and 24 others together works out to be over Rs 625 crore.
The SEBI order resulted in Reliance Power shares falling by 5%, Reliance Infra by 10.4% and Reliance Home Financing Limited by 4.90%.
The effect was also felt on three other Reliance ADAG stocks, namely Reliance Capital, Reliance Communications and Reliance Naval and Engineering. The trading of the three stocks remained suspended during Friday’s dealings.
According to SEBI, its investigation had revealed that significant amounts of funds were misused under the watch of Anil Ambani and other key figures of the companies. These entities, SEBI says, were involved in siphoning off money, leading to a violation of the securities laws and a breach of investor trust.
“Investigation in the matter has concluded that the Noticees were involved in perpetrating a fraudulent scheme by disbursing general purpose working capital (GPC) loans resulting in erosion of the company’s finances due to such loans eventually being declared NPA,” the order signed by SEBI Whole Time Member Ananth Narayan G said, according to the Indian Express.
The 222-page order of SEBI goes on to say, “Certain KMP under the instruction of Noticee No 2 [Anil Ambani] who was not holding any position of governance of RHFL, systematically stripped the company’s assets in blatant defiance of RHFL’s board of directors.”
“I note that Investigation Report and Interim Order contain repeated references to promoter-linked entities being the beneficiaries of the funds diverted from RHFL. I am of the view that there is a need to quantify such gains and ascertain the real beneficiaries behind the web of companies. Illegal gains if any must be quantified. Noticees who have made the said gains must be identified,” Ananth Narayan G said in the order.
The SEBI’s investigation was after multiple complaints it had received from investors about the alleged diversion of funds from RHFL by promoter group entities.
