Kathmandu. The Securities Board of Nepal (SEBON) has come under pressure after the Ministry of Finance (MoF) issued a letter to the Ministry of Finance (MoF) for issuing IPO to Reliance Spinning Mills at a high price despite its weak financial condition.
The Financial Sector Management and Coordination Division of the Ministry of Finance sent the letter via email on Wednesday. In a letter sent by the Division as per the secretary-level decision dated December 29, the Securities Board of Nepal (SEBON) has directed to take necessary action and inform the Ministry about the complaints received from Reliance Spinning’s bookbuilding method regarding IPO approval.
The Securities Board of India (SEBON) has been accused of granting IPO approval to Reliance Spinning on the basis of financial statements from two years ago. The company has already issued an IPO to Nepalis working abroad and is going to open the IPO to the general public from December 21. The general public will have to pay Rs 820.80 per share.
Investors and the general public have accused the Securities Board of Nepal (SEBON) of not reviewing its financial statements while giving IPO approval to Reliance Spinning. They have demanded an impartial investigation into the complaints on the same issue.
The Securities Board of Nepal (SEBON) on July 10, 2081 decided to halt the IPO of Reliance Spinning Limited after the Nepal Electricity Authority (NEA) cut off electricity for non-payment of dedicated and truck line dues. Earlier, the Securities Board of Nepal (SEBON) had granted IPO approval to the company on June 26 this year. Prior to this, the Public Accounts Committee (PAC) had also directed the Securities Board of Nepal (SEBON) to furnish clarification on the IPO approval.
The Securities Board of Nepal (SEBON) had allowed Reliance Spinning, which is yet to pay more than Rs 1.71 billion in electricity bills, to issue IPO through book building at a high price on the basis of financial irregularities. Ramesh Kumar Hamal, the immediate past chairman of the Securities Board of Nepal (SEBON), had granted permission to the company to issue IPO to qualified institutional investors on January 19 last year.
Last time, in the second week of Chaitra 2081, the Patan High Court had ordered not to stop the IPO of Reliance Spinning. Santosh Narayan Shrestha, chairman of the Securities Board of Nepal (SEBON), had given permission to Reliance Spinning Limited to issue IPO to the general public. However, he did not ask for Mills’ latest financial statements and gave permission on the basis of old financial statements. Currently, the financial condition of Reliance Spinning has deteriorated.
A senior official of the Securities Board of Nepal (SEBON) said that he received the letter via e-mail. “Yesterday (Thursday) Chairman Santosh Narayan Shrestha did not come to the office. Now we will discuss how to move forward with the letter of finance. ’
The official claimed that the Securities Board of India (SEBON) has gone ahead with the IPO of Reliance Spinning as per the court’s order. “If the IPO was not granted, the company could have filed a defamation case with the Securities Board of India (SEBON),” the official said.
