The DRHP Is the Last Document in a Three-Year Process, Not the First
Finchase Capital · 10 minute read · Indore
Restated financials, related-party cleanup, and KPI definitions all have to be settled long before the banker is appointed.
SEBI's ICDR Regulations require three years of restated financial statements on consistent accounting policies, meaning an accounting policy changed in year two of the lookback period forces a restatement that can delay the entire filing. Related-party transactions need arm's-length benchmarking with contemporaneous evidence, not intent explained after the fact, because SEBI's scrutiny and later shareholder litigation both test the same documentation.
Since 2021, SEBI has required issuers to disclose Key Performance Indicators used in investor pitches within the DRHP itself, computed consistently, a rule introduced specifically because pre-IPO KPI definitions used to shift conveniently between the fundraising deck and the prospectus. Promoter shareholding, ESOP pool documentation, and group structure simplification typically take longer to clean up than the drafting itself.
The comment-cycle process with SEBI and the stock exchanges penalizes inconsistency far more than complexity, a clearly wrong number is faster to fix than a number that keeps changing definition.
The filing is a lagging indicator. The three years of decisions before it are the actual product.
Companies that start restating, documenting and standardizing years before they engage a banker spend the DRHP process filing paperwork instead of rebuilding history under a deadline, which is usually the difference between an IPO timeline that holds and one that slips a year.