Reliance Power Wipes Out ₹3,872 Crore Debt, Becomes Debt-Free; Stock Hits Upper Circuit

On September 18, shares of Reliance Power Ltd. jumped by 5% after the company announced it had fully settled a ₹3,872 crore guarantee for Vidarbha Industries Power (VIPL). This settlement resulted in the release of all corporate guarantees, undertakings, and obligations related to the outstanding debt of ₹3,872.04 crore.

At 12:04 PM IST, Reliance Power’s stock was trading at ₹32.97 on the NSE, marking a 5% rise from the previous day’s close. The stock had hit a 52-week high of ₹38.07 on August 23. So far this year, it has gained 37.7% and has surged 73% over the last 12 months.

Reliance Infrastructure, which owned a 23.15% stake in Reliance Power as of June 30, also saw its stock rise by 3.31%, reaching ₹243.45. Additionally, Reliance Power confirmed that it had resolved all disputes with CFM Asset Reconstruction. 

VIPL, in which a 100% stake had been pledged to CFM, ceased to be a subsidiary of Reliance Power. This ended all of Reliance Power’s obligations as VIPL’s guarantor, as the corporate guarantee was officially released.

The transaction, completed on September 17, 2024, saw Axis Trustee Services invoke a pledge on VIPL’s shares on behalf of CFM Asset Reconstruction and Axis Bank, the primary lenders to VIPL. With this, Reliance Power announced that it is now free of debt owed to banks or financial institutions. The company’s consolidated net worth at the end of the first quarter of FY25 stood at ₹11,155 crore.

Furthermore, Reliance Power, along with Rosa Power Supply and VIPL, agreed to drop all legal actions against CFM, with CFM similarly withdrawing its cases against Reliance Power and Rosa Power, including those filed under the Insolvency and Bankruptcy Code.

In an official statement, Ramandeep Kaur, the Company Secretary and Compliance Officer, confirmed: “The entire obligations of the Company as a Guarantor on behalf of VIPL have been fully settled, resulting in the release and discharge of Corporate Guarantee, Undertakings, and all related claims concerning VIPL’s outstanding debt.”

Separately, on August 22, market regulator SEBI imposed a five-year ban on promoter Anil Ambani from the securities market, alongside a ₹25 crore penalty. He has been barred from any involvement with listed companies or intermediaries regulated by SEBI during this period. 

However, Reliance Power clarified that it was not implicated in these proceedings. Anil Ambani had resigned from its board following SEBI’s interim order in February 2022, and the recent ban has no effect on the company’s operations or business.

Reliance Power also confirmed that Axis Trustee Services, representing CFM Asset Reconstruction and Axis Bank, had enforced the pledge over 100% of VIPL’s equity shares. This gave the lenders complete control over VIPL’s voting rights and management. The company further clarified that this was not a related-party transaction, as the lenders are not part of Reliance Power’s promoter group, nor was it part of a broader scheme affecting the company’s assets.