The ongoing crisis at the National Spot Exchange (NSEL) has forced at least one company to shelve its initial public offer (IPO) plans. Bangalore-based Aastha Minmet (India) has withdrawn its R42-crore IPO document, filed with the Securities and Exchange Board of India (Sebi), anticipating poor investor response since its name figures in the NSEL fiasco. The coal and ferrous metal importer owes NSEL R26.5 crore.
Further, it needs to repay R219.2 crore to Juggernaut Projects, one of the 24 borrowers of NSEL that the exchange has declared as a defaulter.
The company has paid around R3 crore to NSEL during the last four weeks.According to people familiar with the matter, the sudden suspension in trading of all contracts at NSEL significantly impacted and altered Aastha Minmet’s business model. The company was the first small-sized coal importer that used the NSEL platform to sell 3,000 tonne of non-coking coal.
Sources further add that the bankers — Aryaman Financial Services - were earlier relying on the likes of high net-worth individuals (HNIs), big-ticket investors and equity brokerages for margin funding but started receiving poor feedback after the company's name emerged in the NSEL matter.
“Investors will look at the issue with suspicion because of its involvement in the NSEL crisis... they will continue to be wary of the company even if it settles its obligations with the exchange. Hence the company decided to withdraw its IPO,” the source said.
“The promoters were finding hard to get investors and brokers, who play a big role in the success of a public issue,” the source added requesting anonymity.
According to a person familiar with the company’s IPO plans, the objects of the issue also changed due to a sharp 28% depreciation in the rupee, which forced the company to shelve its overseas acquisition plans. Aastha had plans to acquire a Turkish mining company Chrome Ore Mines.
In addition, the company had plans to increase its product base by starting international trading of textiles by importing goods for sale in India and other foreign countries.
Sebi’s Issue of Capital and Disclosure Requirements (ICDR) regulations, which