Reliance Power settles corporate guarantee of ₹3,872.04 crore; VIPL ceases to be a subsidiary of the company

Reliance Power’s shares were locked in a 5% upper circuit on Wednesday after the company announced that it has settled a corporate guarantee of ₹3,872.04 crore. As a result, Vidarbha Industries Power (VIPL) has ceased to be a subsidiary of the company and all obligations and undertakings of the company as a guarantor have been discharged.

Reliance Power reported that VIPL contributed ₹8.73 crore to the company’s revenue in FY24, accounting for 0.11% of the company’s consolidated revenue. As a part of the settlement, Reliance Power and its subsidiary, Rosa Power Supply Company have pledged over 1,49,16,260 shares representing 100% of the equity share capital of VIPL.

Axis Trustee Services enforced the pledge on behalf of CFM Asset Reconstruction and Axis Bank who are the lenders of VIPL. Reliance Power, Rosa, and VIPL will withdraw all proceedings initiated by them against CFM.

Reliance Power stated that following the discharge of the corporate guarantee, the listed entity has no debt from banks and financial institutions. As of June 30, 2024, the company has a net worth of ₹11,155 crore on a consolidated basis.

The company recently confirmed that it has participated in the request for selection to establish a 500 MW/1000 MWh battery energy storage system (BESS) by the Solar Energy Corporation of India (SECI).

For the quarter ended June 30, 2024, Reliance Power reported its net loss narrowing to ₹97.85 lakh compared to ₹296.31 crore in the corresponding quarter last year. The company’s total consolidated income for the quarter grew 6% year-on-year (YoY) to ₹2,069 crore.

Shares of the company have been in focus as they have risen over 40% in the past six months. However, the shares were under pressure and lost nearly 10% in the past month.

Shares of the company have risen by nearly 37% since the beginning of the year. The stock has gained over 72% in the past year.