INSUBCONTINENT EXCLUSIVE:
Loss making entities planning to bring IPOs should disclose their performance indicatorsNew Delhi: Markets regulator Securities and Exchange
their key performance indicators considered for arriving at the basis of issue price in offer documents.Besides, such companies should make
disclosures about their valuations based on issuance of new shares and acquisition of shares in the past 18 months before filing draft offer
generally remain loss-making for a longer period before achieving break-even as they opt for ways to gain scale of operations rather than
These include Earnings Per Share (EPS), price to earnings, return on net worth and net asset value of the company as well as comparison of
such accounting ratios with its peers.According to SEBI, these parameters are typically descriptive of companies which are profit making and
do not relate to a loss-making firm
These parameters may not aid investors in taking investment decisions with respect to an loss-making issuer."It is obvious that disclosures
in 'Basis of Issue Price' section, particularly for a loss making company, are required to be supplemented with non-traditional parameters
by issuer company," the regulator said in the consultation paper.Apart from disclosing the financial ratios as per the current requirements,
considered or have a bearing for arriving at the 'Basis of Issue Price'.An issuer company should disclose about relevant KPIs during the
three years prior to the IPO and an explanation of how these KPIs contribute to form the 'Basis of Issue Price'.Also, an issuer company
should disclose all material KPIs that have been shared with any pre-IPO investor at any point of time during the three years prior to the
IPO, the regulator said in the consultation paper.
