Reliance Power demands inquiry regarding into Price Fall

Reliance Power demands stock market inquiry

18 Feb 2008


Reliance Power Ltd (RPL), promoted by the Reliance Anil Dhirubhai Ambani Group (RADAG), has sought an inquiry by the markets regulator into the factors that resulted in a steep decline in the company's stock prices on its debut Feb 11.

In a communique Monday to the Bombay Stock Exchange (BSE), RPL said the slide was compounded by 'a vicious and orchestrated campaign of market manipulation and market abuse, unleashed by unscrupulous rival corporate interests, to hammer down all RADAG stocks'.

The statement added that this was an attempt to undermine the group's 'fair name and reputation and cause losses to million of genuine investors'.

The company said it had written to markets regulator Securities and Exchange Board of India (SEBI) seeking an investigation.

RPL also informed BSE that its board would consider a proposal Feb 24 to issue bonus shares to all categories of shareholders except the promoters.

The bonus issue would be considered 'in keeping with the Reliance ADA Group's fundamental and overriding philosophy of creating value for genuine long-term investors.

'This will include inter alia consideration of a proposal for issuing free bonus shares to all categories of shareholders, excluding the promoter group, thereby protecting investors even from notional short-term losses.

'The proposal will result in dilution of the promoter group's shareholding in Reliance Power.'

From the time of opening of the Reliance Power initial public offer (IPO) Jan 15, the sensitive index (Sensex) of the Bombay Stock Exchange was down 13 percent. The company's stock was down by a comparatively lower level of 11 percent from the issue price for retail investors, the company said.

Despite drawing record subscriptions, the first day of listing saw the Reliance scrip close at Rs.372 on the opening day Feb 11, with a huge discount over the issue price of Rs.450.

This had created huge resentment and disappointment among investors, who had overwhelmingly subscribed to the issue, as many expected the scrip to debut higher at around Rs.750-850 a share.

The IPO had attracted more than five million bids from all categories of domestic and international investors with aggregate commitment of over Rs.7.5 trillion ($189 billion) against the issue size of Rs.115.60 billion ($2.91 billion).

The company is currently developing 12 power projects in the country with a total planned installed capacity of 28,000 MW. This is among the largest portfolios of power generation assets under development.(Indiaenews)