Court stalls SEBON’s letter, clears path for Reliance Spinning Mills IPO

 

KATHMANDU, MAY 8:  An interim order has been issued by the Patan High Court in response to a writ petition challenging the Securities Board of Nepal's (SEBON) directive to halt the IPO issuance process of Reliance Spinning Mills. The directive had been communicated to the issue manager of the company.

The joint bench of Justices Munendra Prasad Awasthi and Tikaram Acharya issued the interim order in response to the writ filed by Reliance Spinning Mills, naming SEBON and others as defendants.

On 10th July, 2024, the then Finance Secretary, Narendra Kumar Rana, who was also serving as Chairperson of SEBON, had instructed the board to immediately stop the IPO issuance. Following that instruction, SEBON sent a letter to the issue manager requesting a suspension of the IPO process until further notice. In response, the company filed a writ petition in the Patan High Court. The IPO issue manager for Reliance Spinning Mills is Global IME Capital.

The company had planned to issue shares to the public at a rate of NPR 820.80 per share through the book-building method. However, the IPO process was disrupted after complaints were lodged in the Parliamentary Public Accounts Committee regarding the share pricing and other related matters.

After the IPO process remained halted for an extended period, Reliance Spinning Mills filed the writ petition seeking to move the process forward. A hearing on the petition was held on 6th May. The court found SEBON’s letter dated 10th  July a year back to be legally questionable at a preliminary level. As a result, the court issued an interim order not to enforce the suspension letter and to halt all related activities until a final verdict is reached.

Reliance Spinning Mills has also published its financial report for the third quarter of the current fiscal year, showing notable growth across major indicators. The company earned a total net profit of NPR 1.02 billion as of mid-April this year, up from NPR 865 million during the same period last year—an increase of NPR 163.4 million.

By the end of the third quarter of 2023/24, the company’s earnings per share (EPS) reached NPR 25.49. In comparison, the EPS was NPR 22.19 in the second quarter and NPR 19.95 in the first quarter of the current fiscal year. In mid-June to mid-July 2023, the EPS had stood at just NPR 2.95.

The company’s total turnover by the third quarter reached NPR 7.39 billion, compared to NPR 9.20 billion at the end of the last fiscal year. It also reported other income amounting to NPR 4.27 million. Its net profit after tax stood at NPR 324.3 million as of mid-April 2025.

Established some 28 years back, Reliance Spinning Mills Limited has been operating for over 27 years and currently provides direct employment to more than 4,000 people. Its total investment has now exceeded NPR 15 billion. While fulfilling domestic demand for yarn, the company also exports its products to several countries, including India and Turkey.

Reliance operates a yarn manufacturing plant in Sunsari, producing woolen, cotton, polyester, acrylic, and viscose yarns