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Public Outcry Halts Reliance Spinning Mills’ IPO Amidst Financial Scrutiny

July 10, 2024
Reliance Spinning Mills

The Securities Board of Nepal (SEBON) has put a temporary hold on the issuance of Reliance Spinning Mills’ (RSM) initial public offering (IPO) following mounting public pressure and scrutiny from Nepal’s parliamentary Public Accounts Committee (PAC).

RSM had received approval on June 26th to issue shares at a price of Rs 820.80 per unit, but the process was met with controversy.

Accusations surfaced that RSM submitted misleading financial information to SEBON. Specifically, the company allegedly failed to disclose a debt of Rs 753.68 million owed to the Nepal Electricity Authority for dedicated power lines. Additionally, critics claimed RSM inflated their per-share earnings from Rs 2 to Rs 54 in their application to the regulator.

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Despite these concerns, SEBON initially allowed RSM to proceed with a book-building process to determine the final share price.

However, on Tuesday, the PAC intervened, demanding clarification from SEBON on several key issues. These included the justification for the initial share price, potential manipulation of financial statements, and overall investor protection.

Facing public outcry and parliamentary pressure, SEBON has halted the IPO process for the time being. This move comes as a relief to many who voiced concerns about the legitimacy of the offering and potential risks to public investment.

Further investigation and transparency regarding RSM’s financial health will be crucial in determining whether the IPO can proceed in a fair and ethical manner.

The Ditible

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