Industry Standards for Key Performance Indicators (KPIs) Disclosures in the draft Offer Document and Offer Document
Summary: The Industry Standards Forum (ISF), comprising ASSOCHAM, CII, and FICCI, has formulated industry standards for disclosing Key Performance Indicators (KPIs) in draft offer documents and final offer documents under SEBI (ICDR) Regulations, 2018. These standards, applicable from April 1, 2025, aim to enhance transparency and consistency in financial disclosures. Issuer companies and merchant bankers must follow these guidelines to ensure compliance. Stock exchanges will publish the industry standards and are responsible for ensuring compliance. The KPIs disclosed in offer documents must be clearly defined in simple terms, approved by the Audit Committee, and certified by a statutory auditor or a qualified Chartered/Cost Accountant. These certifications must be included in the material documents for inspection. The disclosed KPIs should align with restated financial information, be comprehensive, and provide historical context on how management has used them for performance tracking. Any significant business changes affecting KPI comparisons must be explained. The “Basis for Issue Price” section must disclose all KPIs shared with investors in the last three years, confirmed by the Audit Committee. Issuers may include additional material KPIs relevant to the issue price determination and provide cross-references to other sections of the offer document. Comparisons with listed Indian or global peers must be included where available. Post-listing, companies must continue disclosing these KPIs at least annually until the later of one year after listing or full utilization of issue proceeds. Any changes in KPIs during this period must be explained and certified. These measures ensure better investor understanding and accountability in financial disclosures.
Industry Standards Forum (ISF) comprising of representatives from three industry associations, viz. ASSOCHAM, CII and FICCI has formulated industry standards for effective implementation of the requirement to disclose Key Performance Indicators (KPIs) in the draft offer document and offer document as per the provisions of SEBI (ICDR) Regulations, 2018.
The industry associations which are part of ISF (ASSOCHAM, FICCI, and CII) and the stock exchanges shall publish the industry standards on their websites.
This will be applicable for all draft offer documents / offer documents filed with SEBI / Stock Exchanges on or after April 1, 2025. The Issuer Companies and Merchant Bankers shall follow these issued industry standards to ensure compliance with the disclosure requirement.
The Stock Exchanges are advised to bring the contents of this circular to the notice of all stakeholders and ensure its compliance.
At present in compliance with the SEBI (ICDR) Regulations, 2018, for all the KPIs disclosed in the offer document, the Issuer Company and the Lead Merchant Bankers (LMs) shall ensure that:
(a) KPIs disclosed in the offer document and the terms used in KPIs shall be defined consistently and precisely in the “Definitions and Abbreviations” section of the offer document using simple English terms /phrases so as to enable easy understanding of the contents. Technical terms, if any, used in explaining the KPIs shall be further clarified in simple terms.
(b) KPIs disclosed in the offer document shall be approved by the Audit Committee of the Issuer Company.
(c) KPIs disclosed in the offer document shall be certified by the statutory auditor(s) or Chartered Accountants or firm of Charted Accountants, holding a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India or by Cost Accountants, holding a valid certificate issued by the Peer Review Board of the Institute of Cost Accountants of India.
(d) Certificate issued with respect to KPIs shall be included in the list of material documents for inspection.
(e) For each KPI being disclosed in the offer document, the details thereof shall be provided for period which will be co-terminus with the period for which the restated financial information is disclosed in the offer document.
(f) KPIs disclosed in the offer document should be comprehensive and explanation shall be provided on how these KPIs have been used by the management historically to analyse, track or monitor the operational and/or financial performance of the Issuer Company.
(g) Comparison of KPIs over time shall be explained based on additions or dispositions to the business, if any. For e.g. in case the Issuer Company has undertaken a material acquisition or disposition of assets / business for the periods that are covered by the KPIs, the KPIs shall reflect and explain the same.
(h) For ‘Basis for Issue Price’ section, the following disclosures shall be made:
(i) Disclosure of all the KPIs pertaining to the Issuer Company that have been disclosed to its investors at any point of time during the three years preceding to the date of filing of the DRHP / RHP.
(ii) Confirmation by the Audit Committee of the Issuer Company that verified and audited details for all the KPIs pertaining to the Issuer Company that have been disclosed to the earlier investors at any point of time during the three years period prior to the date of filing of the DRHP / RHP are disclosed under ‘Basis for Issue Price’ section of the offer document.
(iii) Issuer Company in consultation with the lead merchant banker may make disclosure of any other relevant and material KPIs of the business of the Issuer Company as it deems appropriate that have a bearing for arriving at the basis for issue price.
(iv) Cross reference of KPIs disclosed in other sections of the offer document to be provided in the ‘Basis for Issue Price’ section of the offer document.
(v) For the KPIs disclosed under the ‘Basis for Issue Price’ section, disclosure of the comparison with Indian listed peer companies and/ or global listed peer companies, as the case may be (wherever available). The set of peer companies shall include companies of comparable size, from the same industry and with similar business model (if one to one comparison is not possible, appropriate notes to explain the differences may be included).
(i) The Issuer Company shall continue to disclose the KPIs which were disclosed in the ‘Basis for Issue Price’ section of the offer document, on a periodic basis, at least once in a year (or for any lesser period as determined by the Issuer Company), for a duration that is at least the later of (i) one year after the listing date or period specified by the Board; or
(ii) Till the utilization of the issue proceeds as per the disclosure made in the objects of the issue section of the prospectus. Any change in these KPIs, during the aforementioned period, shall be explained by the Issuer Company. The ongoing KPIs shall continue to be certified by a member of an expert body as per clause 3(c).
Reference:
1. SEBI Circular No.: SEBI/HO/CFD/CFD-PoD-2/P/CIR/2025/28 dated 28th February 2025
2. SEBI Website (sebi.gov.in)
3. SEBI (ICDR) Regulations, 2018
Note: Readers are advised to go through the original content of the issued circular/references.
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