Released on: October 27, 2007, 6:12 am

Press Release Author: Dev Ghosh

Industry: Financial

Press Release Summary: The Anil Ambani Group had stated recently that SEBI\'s
clearance for the IPO is awaited

Press Release Body: The Securities & Exchange Board of India (SEBI) has asked Kotak
Mahindra Capital Company Ltd, lead manager to the Reliance Power IPO, to provide
certain clarifications related the public offer even as concerns have been expressed
over corporate governance issues involved in issue of the company\'s shares to
promoters at par and transfer of Reliance Energy\'s power projects to Reliance Power.
The Anil Ambani Group had stated recently that SEBI\'s clearance for the IPO is
awaited.

REL investors say that approval of shareholders was not obtained for transfer of
power projects -- core business of the company which is to bring in revenues -- to
Reliance Power. This, being a major decision with a significant impact of the
company\'s future -- should have been placed before the shareholders.

REL did not inform stock exchanges about the transfer of power projects to Reliance
Power. Being a listed company, REL should have informed the exchanges about this
important decision which has an impact on the future earnings of the company.
According to SEBI norms, listed companies have to inform stock exchanges about all
decision that have a bearing on their earnings.

Dharampal Sabharwal, a Rajya Sabha member from Punjab, had drawn the attention of
finance minister P Chidambaram and SEBI to irregularities reported about the
Reliance Power IPO. While the promoter companies have been issued 500 crore shares
of the company at Rs.2 per share, the IPO is said to be aiming at a premium of Rs.60
per share from the public. Some investors have also written to SEBI, complaining
about irregularities.

Reliance Power had filed draft red herring prospectus with SEBI on October 3.
Usually, clearance from the regulator is granted in three weeks and there was
expectation that the IPO would get clearance on Tuesday.

While ADAG still awaits clearance for the issue, it is understood that Kotak
Mahindra is communicating with SEBI for the clarifications. The Group wants to issue
shares at a face value of Rs.2 per share, but the regulator provides permission for
such pricing only in case the value of the shares is Rs.500 or more.

The clarifications sought by SEBI are in line with SEBI (Disclosure and Investor
Protection) Guidelines of 2000. \"If any additional information/clarification is
sought by SEBI in relation to the draft offer document from the merchant banker(s),
SEBI may issue such observations within 15 days from the date of receipt of
satisfactory reply from the merchant banker(s),\" say norms framed by the regulator
for such clarifications.


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