The Securities Board of Nepal (SEBON) has halted the process of issuing the initial public offering (IPO) by Reliance Spinning Mills (RSM), responding to the criticism from various fronts and under pressure from the parliamentary Public Accounts Committee (PAC).
According to SEBON officials, acting chairman of the board, Narendra Kumar Rana, has halted the process of issuance of the primary shares of the RSM. Navaraj Adhikari, executive director of SEBON, said the regulator took the decision following the directions of the PAC.
After receiving SEBON approval, the RSM had prepared to issue its primary shares to the general public starting from Thursday. The company received approval on June 26 to issue its IPO at the rate of Rs 820.80 per unit.
The company’s IPO issuance process, however, courted controversy as it faced accusations of submitting fake financial details to the sector’s regulator in the process.
The company has been blamed for manipulating its financial details while not listing dues of Rs 753.68 million that it owes to Nepal Electricity Authority for using dedicated lines.
Likewise, the company has also been found to have submitted fake financial details to SEBON. Although the per share earning of the company is just Rs 2, it showed the figure at Rs 54 per share before the sector’s regulator. However, the regulator has permitted the company to float its IPOs through a book-building process.
The company’s networth stands at just Rs 179.45 per share if its financial liability of dedicated lines is considered. Based on the fact, the opening range of the company’s IPO should not cross Rs 538.35 per share, according to experts.
Issuing directives on Tuesday, the PAC sought from SEBON a five-point clarification. The basis for fixing the share price in the book-building process, possible manipulation made in financial statements of the company and concern for the security of the investment of the general public are among the areas that the parliamentary committee has asked the sector’s regulator to clarify.
