SEBI is planning to enhance the Key Performance Indicators (KPI) disclosure framework in response to the challenges faced by IPO-bound companies, particularly in the digital sector. The aim of the review is to strengthen the existing rules and ensure that investors receive comprehensive and transparent information about the financial health and operational metrics of these companies prior to their public offerings.
The KPI framework requires companies to disclose critical details regarding past transactions and fundraising activities, including the pricing of shares sold in the 18 months leading up to an IPO. This requirement was established following concerns about the pricing strategies employed during high-profile IPOs from digital companies such as Zomato, Nykaa, and Paytm.
SEBI is actively seeking feedback from industry bodies to refine the rules and improve disclosure standards. The regulator's proactive stance aims to foster a more transparent investment environment and protect investors. SEBI has also been taking a stringent approach to KPI-related disclosures, demanding detailed explanations for any changes in KPIs and their justification concerning the valuations sought during public offerings.
The IPO of FirstCry serves as an example of the challenges associated with KPI disclosures, highlighting the critical role that KPIs play in the IPO process, particularly for companies in the digital space. SEBI's ongoing review process aims to address these challenges and ensure higher standards of accountability for IPO-bound companies.
The regulatory review is still in its early stages, with discussions taking place at various levels within SEBI. The emphasis on improving disclosure practices signals a significant shift in the regulatory landscape for IPO-bound companies in India.