Prajita Budhathoki
The controversy surrounding Reliance Spinning Mills' IPO has taken a new turn as the Securities Board of Nepal (SEBON) requested the Central Investigation Bureau (CIB) of Nepal Police to halt its investigation. According to CIB spokesperson Superintendent of Police Hobindra Bogati, the board has communicated that no further investigation is required, placing the complaint on hold for now.
In a letter written by the CIB to SEBON dated August 16, the CIB acknowledged receipt of the Securities Board's letter No 278 dated July 7, 2024.
SP Bogati informed that the complaint regarding the IPO of Reliance Spinning Mills has been forwarded to the SEBON. He added that there was no need for the police to investigate the issue as it was being investigated by SEBON.
"This is not a clean chit as mentioned in news reports. If additional evidence emerges and further investigation is required, the CIB will resume its inquiry," said Bogati.
The Securities Board had approved the IPO, allowing the company to sell shares at NPR 820.80 each to the public starting June 26. The company intended to allocate 10 per cent of these shares to Nepalis working abroad from July 11. However, the IPO faced significant criticism due to its high pricing.
In response to the concerns over the IPO pricing, the Public Accounts Committee of the House of Representatives sent a letter to the Securities Board on July 9, posing five questions and requesting a reply within one week. Consequently, the Board's Executive Committee decided on July 10 to temporarily halt the IPO process.
Amidst pressure to halt the IPO of a financially struggling company, complaints have also been filed with the Patan High Court and the Commission for the Investigation of Abuse of Authority (CIAA). The High Court issued a temporary order stopping the IPO, while the CIAA is investigating the matter. The Public Accounts Committee is also conducting its investigation.
Dr. Navaraj Adhikari, the Executive Director and spokesperson for the Securities Board, stated he was unaware of the CIB's letter regarding the IPO.
The company had been approved to issue 1,155,960 shares valued at NPR 948,811,968 to the public. Previously, it sold 770,640 shares to qualified institutional investors at NPR 912 per share, planning to offer the public a 10 per cent lower rate.
Discrepancies between the company’s public financial statements and recent financial details have sparked concerns. The financial report released in April showed earnings per share (EPS) of NPR 2.08, which was NPR 54.34 in last July, suggesting a significant decrease in value over the past nine months. These changes raised concerns about the IPO's impact on investors.
The company's report showed an annual net worth per share of NPR 242.05 for the fiscal year 2022/23. However, with electricity liabilities exceeding NPR 753.68 million, the audited net worth per share as of mid-April was NPR 179.45. These figures have further fueled concerns about the IPO price burdening investors.
Despite the ongoing investigations by various bodies, the CIB has reported that the Securities Board's request to halt further investigation.
you need to login before leave a comment
Write a Comment
Comments
No comments yet.