Reliance Power, Reliance Infrastructure shares in focus after Sebi issues show cause

Core Viewpoint - The ongoing regulatory scrutiny involving Reliance Infrastructure and Reliance Power is centered around past financial ties with CLE Private Limited, particularly concerning an alleged loan fraud of Rs 17,000 crore, which is currently under investigation by the Enforcement Directorate (ED) and the Securities and Exchange Board of India (Sebi) [7][11]. Group 1: Company Disclosures and Legal Actions - Reliance Infrastructure has clarified that it settled its dispute regarding exposure to CLE Private Limited through a consent filing before the Bombay High Court, in accordance with the Mediation Act, 2023 [2][5]. - Reliance Power has stated it has "ZERO exposure to CLE Private Limited" and will take appropriate legal steps as advised [6][11]. - Both companies received Show Cause Notices from Sebi, which has sparked market interest despite previous settlements and clarifications [11]. Group 2: Financial Allegations and Investigations - Sebi's findings indicate that Reliance Infrastructure allegedly diverted approximately Rs 8,302 crore to CLE Private Limited over several years, with funds routed through intercorporate deposits, equity investments, and corporate guarantees from FY16 to FY23 [7][8]. - The annual expenditure on CLE reportedly ranged from 25% to 90% of CLE's total assets from FY13 to FY23, and Reliance Infrastructure wrote off Rs 10,110 crore between FY17 and FY21 under various provisions [8][9]. - Allegations also include misclassification of CLE as an independent third-party entity in financial statements to bypass mandatory approvals, leading to misstated financial disclosures [9][10]. Group 3: Responses and Counterclaims - A representative close to Reliance Group refuted Sebi's claim of a Rs 10,000 crore diversion, asserting that the actual exposure was Rs 6,500 crore, which had been disclosed earlier [9][10]. - Reliance Infrastructure emphasized that it reached a court-approved settlement to recover dues through mediation proceedings supervised by a retired Supreme Court judge [10].