At the time when the need of bringing more real sector companies in the Nepali capital market is being asserted, the existing companies under the manufacturing sectors in the stock exchange are less interested in following the regulation.

Among the 18 listed manufacturing companies on Nepal Stock Exchange (Nepse) – only three have submitted their financial report of the second quarter to Securities Board of Nepal (Sebon) on time. The listed companies have to submit their financial report of the second quarter of the fiscal year to the regulator by February 13.

The three companies that have submitted the reports within the time are Bottlers’ Nepal Ltd, Bottlers’ Nepal (Terai) and Himalayan Distillery Ltd.

The overwhelming presence of financial intermediaries in the secondary market is supposed to do not much good to the secondary market thus the stakeholders have been expressing the need for more manufacturing companies to enter the capital market.

“In the absence of tight regulations and penalties, the companies keep disregarding the rules,” said the stock market analyst, Rabindra Bhattarai.

Of the total 197 listed companies in the stock exchange, 169 are banks and financial institutions dominating the secondary market and creating tussles at times among the regulatory authorities of the capital market-Sebon and financial market-central bank.

However, the experts are not that much hopeful of increasing the numbers of real sector companies in the capital market in the absence of tight regulations.

“Increasing the numbers of the ‘real sector’ companies will not be beneficial to the capital market or the shareholders unless the companies are sincere about their responsibilities after going public,” Bhattarai said, adding that most of the companies do not care about the investors – all they care about is raking in money from the public and spend it to fulfil their own interest, putting the investors’ interest on the backburner.

“Unless the attitude of the promoters of the the real sector companies is changed and they are conscious about their goodwill in the market, the quantitative increment in numbers of productive sector companies in the stock exchange will do nothing to boost the confidence of the market,” he said, adding that the peformance and the good corporate governance of the listed real sector is an example.

Of the total listed companies in the secondary market that were supposed to submit the report to Sebon, 119 have submitted their financial report within the stipulated time.

source: The Himalayan Times(2011),"Real sector reluctant to submit financial report ", The Himalayan Times, 19 feb 2011