IPO Consultant in Chennai: CA Murli Chandak’s Guide to Mainboard and SME IPO Readiness for Tamil Nadu’s Automotive, GCC and Family-Owned Manufacturing Companies

In short: Chennai has been part of India’s public-markets story since before most other tier-two hubs had one: Thejo Engineering, a Chennai conveyor-maintenance and rubber-products manufacturer, was the first company to list on the NSE’s SME platform, EMERGE, when Finance Minister P. Chidambaram launched the segment in September 2012. Fourteen years on, the city carries India’s largest automotive and auto-component manufacturing base — long nicknamed the “Detroit of India” — more than 300 global capability centres spanning automotive engineering, BFSI and life sciences, a hospital and healthcare sector with national reach, and a generation of family-owned engineering and industrial groups now working through succession and governance transitions. Each of these company types meets the mainboard or SME eligibility tests differently under a SEBI ICDR framework that was materially tightened through 2025 and refined again in March 2026. This guide explains how an IPO consultant in Chennai fits alongside the merchant banker, the current eligibility tests for both routes, the step-by-step process to T+3 listing, realistic timelines and costs, the governance and post-listing obligations that begin on listing day, and how I support Chennai companies through the readiness, financial-preparation and valuation work that decides whether a listing succeeds.

By CA Murli Chandak, FCA — Fellow Chartered Accountant and IBBI-Registered Valuer (Securities or Financial Assets), registration IBBI/RV/07/2021/14408, with 8+ years in valuation, audit and advisory practice. Regulatory citations verified against SEBI, NSE and NSDL sources as at September 2026.

Contents

1. 1. Why Chennai Companies Are Looking at an IPO in 2026
2. 2. What an IPO Consultant Does, and How the Role Sits Alongside the Merchant Banker
3. 3. Mainboard vs SME IPO: Eligibility Under the ICDR Regulations
4. 4. IPO Readiness Assessment: What to Test Before Appointing Anyone
5. 5. The IPO Process Step by Step
6. 6. DRHP vs RHP: The Two Offer Documents
7. 7. Financial Preparation: Restatement, KPIs and Related-Party Clean-Up
8. 8. Governance Readiness Under LODR and the Insider Trading Regulations
9. 9. How Long an IPO Takes and What It Costs
10. 10. Post-Listing Compliance: What Changes on Listing Day
11. 11. Common IPO Readiness Mistakes Chennai Companies Make
12. 12. IPO Readiness Services From CA Murli Chandak
13. 13. Frequently Asked Questions
14. Discuss Your IPO Readiness

1. Why Chennai Companies Are Looking at an IPO in 2026

Chennai’s relationship with public markets is older than its reputation suggests. When the NSE opened its SME platform, EMERGE, in September 2012, the very first listing was a Chennai company: Thejo Engineering, a conveyor-belt maintenance and rubber-products manufacturer whose IPO was flagged off by the then Union Finance Minister. That history sits on top of a corporate base that has only broadened since. Chennai is India’s automotive and auto-component manufacturing capital — the “Detroit of India” — home to Hyundai Motor India, Ford India’s engineering operations, Renault Nissan, Ashok Leyland and TVS Motor, and to hundreds of ancillary manufacturers clustered around Ambattur, Sriperumbudur and Oragadam that carry decades of financial track record. Layered on top are more than 300 global capability centres, concentrated in automotive engineering, BFSI and, increasingly, life-sciences R&D — AstraZeneca has expanded its Chennai centre into the company’s largest anywhere in the world. The city’s hospital and healthcare groups have made it India’s most cited “health capital,” its IT and SaaS companies along the OMR corridor sit alongside the Tamil Nadu Startup and Innovation Policy’s target of 15,000 registered startups by 2032, and a generation of family-owned engineering, castings and trading houses — some founded before independence — are now working through the succession and governance questions that a listing forces into the open.

An IPO gives each of these company types something different: growth capital without loan covenants for a capital-intensive manufacturer, a liquidity route for founders and early investors in a venture-backed technology business, listed equity to fund acquisitions or employee stock plans, and the credibility of public disclosure for a hospital group or auto-ancillary business competing for institutional capital. It is also one of the most demanding transactions any of them will undertake: restated financial statements, a several-hundred-page offer document, coordination across a dozen or more intermediaries, and a permanent change in how the company governs itself. Whether a listing lands on time at the intended valuation, or stalls in diligence, is usually decided before the merchant banker is even appointed — and that preparatory phase is where an IPO consultant in Chennai earns the fee.

2. What an IPO Consultant Does, and How the Role Sits Alongside the Merchant Banker

The two roles are often confused, and the distinction is worth being precise about. The merchant banker — the Book Running Lead Manager (BRLM) on a mainboard issue, the Lead Manager on an SME issue — is a SEBI-registered intermediary under the SEBI (Merchant Bankers) Regulations, 1992. It conducts due diligence, drafts and files the offer document, signs the due-diligence certificate to SEBI and the exchanges, and runs the book. Its obligations run as much to the regulator and to investors as to the issuing company.

The IPO consultant is engaged by the company itself and works purely in its interest. The consultant is typically appointed before the merchant banker and stays alongside it throughout: testing eligibility, running the readiness diagnostic, organising financial and corporate information, building the valuation and equity-story groundwork, negotiating with intermediaries, and keeping the overall programme on schedule. A company that walks into the merchant banker’s diligence with restated numbers already reconciled, related-party transactions already documented and governance already in place shortens the timeline materially and typically negotiates better commercial terms.

For Chennai’s first-time issuers, the coordination and preparation role is where the value concentrates most visibly. Family-owned auto-ancillary and engineering groups, several of them run by a second or third generation now formalising what were previously informal arrangements between group entities, consistently underestimate how much documentation a public issue requires. So do founder-led technology and GCC-adjacent companies whose finance teams have never worked to listed-company timelines. In my engagements, the readiness diagnostic and financial and valuation preparation form the core of the work; the SEBI-registered merchant banker is then appointed onto a company that is genuinely ready for it.

3. Mainboard vs SME IPO: Eligibility Under the ICDR Regulations

The first strategic decision is which platform to target. The mainboard of the NSE and BSE sits under Chapter II of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (ICDR Regulations); the SME platforms, NSE Emerge and BSE SME, sit under Chapter IX.

3.1 Mainboard IPO on NSE or BSE

The draft offer document is filed with SEBI, which reviews it and issues observations before the issue can open. On a restated, consolidated basis, Regulation 6(1) requires:

• Net tangible assets of at least ₹3 crore in each of the three preceding full financial years, with not more than fifty per cent held in monetary assets (relaxed where the issue is entirely an offer for sale).
• Operating profit (EBITDA) averaging at least ₹15 crore over the three preceding years, with operating profit in each of those years.
• Net worth of at least ₹1 crore in each of the three preceding full financial years.
• Where the company’s name changed in the preceding year, at least fifty per cent of revenue from the activity suggested by the new name.
• The exchanges’ own criteria on post-issue paid-up capital and market capitalisation, and minimum promoter contribution of twenty per cent of post-issue capital under Regulation 14.

A company that cannot meet the profitability track record — a common position for asset-light technology companies still scaling, less common for Chennai’s capital-intensive auto-component manufacturers — may still list under Regulation 6(2) through the book-building route, provided at least seventy-five per cent of the net offer goes to qualified institutional buyers. This is the route most relevant to venture-funded technology and SaaS businesses in the city’s OMR corridor.

3.2 SME IPO on NSE Emerge or BSE SME

The SME platforms let smaller companies list under a proportionate regime: the exchange reviews the draft offer document rather than SEBI, the timeline is shorter and the minimum issue size lower. The SEBI (ICDR) (Amendment) Regulations, 2025, notified in March 2025 following the SEBI Board’s December 2024 decisions, materially tightened this framework. In force now:

• Post-issue paid-up capital not exceeding ₹25 crore under Regulation 229, alongside the exchanges’ own criteria.
• Operating profit (EBITDA) of at least ₹1 crore from operations in at least two of the three preceding financial years, under Regulation 229(6).
• Offer for sale capped at twenty per cent of the total issue size, with no single selling shareholder permitted to sell more than fifty per cent of their pre-issue holding.
• General corporate purposes capped at fifteen per cent of the amount raised or ₹10 crore, whichever is lower, under Regulation 230(2), with a bar on using proceeds to repay promoter or related-party loans.
• Minimum application size raised to two lots, increasing the ticket size for individual investors and reducing speculative oversubscription.
• Mandatory underwriting of the full issue and market making for a prescribed period after listing.
• A one-year cooling period after conversion from a proprietorship, partnership or LLP, and after a change in promoters exceeding fifty per cent, before an offer document can be filed.

For well-run, profitable auto-ancillary businesses and engineering firms with a clean three-year record, the SME route remains a realistic path, typically for issue sizes between ₹10 crore and ₹80 crore. It is no longer a route for a company that is not genuinely ready for public ownership.

3.3 Key differences at a glance

Parameter	Mainboard IPO (NSE/BSE)	SME IPO (NSE Emerge/BSE SME)
Governing chapter	ICDR Regulations, Chapter II	ICDR Regulations, Chapter IX
Offer document review	SEBI issues observations	Stock exchange grants in-principle approval
Profitability test	Average operating profit of ₹15 crore over three years, or the QIB route	Operating profit of ₹1 crore in two of the three preceding years
Post-issue paid-up capital	Above ₹10 crore (exchange criteria apply)	Not exceeding ₹25 crore
Typical issue size	₹100 crore to several thousand crore	₹10 crore to ₹80 crore
Underwriting	Optional in book-built issues	Mandatory, 100 per cent
Market making	Not required	Mandatory for the prescribed period
Financial reporting after listing	Quarterly	Half-yearly
Cost as a share of issue size	Lower percentage, higher absolute cost	Higher percentage, lower absolute cost

An SME listing can also be a stepping stone: a company that later meets the mainboard tests may migrate under Regulation 277 after the prescribed period, with shareholder and exchange approval, without a fresh public issue — a path several Chennai SME issuers from the last decade have already taken. The NSE Emerge listing criteria and the equivalent BSE SME criteria sit on top of the ICDR tests and should always be checked together.

4. IPO Readiness Assessment: What to Test Before Appointing Anyone

Before approaching any intermediary, a company should go through a structured readiness assessment aimed at surfacing every gap that could delay the issue, invite adverse observations or dent the valuation — while the company still controls its own timetable. In a Chennai readiness diagnostic, I test:

• Financial eligibility. The three-year net tangible asset, operating profit and net worth thresholds on a restated, consolidated basis, and whether the QIB route or the SME platform is the better fit.
• Promoter and shareholding structure. Identification of the promoter group, minimum promoter contribution (Regulation 14, or Regulation 238 for SME issues), lock-in eligibility under Regulations 16 and 17, and — a recurring issue in second- and third-generation family businesses — informal cross-holdings between group entities that need to be formalised or unwound before filing.
• Corporate history. Three years of operations, past changes in name, objects or control, and any mergers, demergers or entity conversions that affect the track record.
• Related-party transactions. Every transaction with promoters, group companies and key managerial personnel, its arm’s-length basis, and which arrangements should be unwound or formalised — particularly relevant where a manufacturing unit, a trading arm and a property-holding entity sit under one family with overlapping directors.
• Customer and supplier concentration. For auto-component manufacturers supplying one or two OEMs, and for GCC-adjacent technology vendors with a handful of anchor clients, this concentration is a disclosure item in its own right and often a valuation discount driver that needs to be addressed well before the equity story is drafted.
• Litigation and regulatory matters. All civil, criminal, tax and regulatory proceedings involving the company, its subsidiaries, promoters and directors, plus the materiality policy that will govern disclosure — including labour, factory-licensing and pollution-control-board compliance for manufacturing units, and product-liability exposure for auto-component makers.
• Tax and statutory compliance. Income tax, GST, customs, labour and FEMA compliance; confirmation that neither the company nor its promoters are debarred, wilful defaulters or fugitive economic offenders under Regulation 5; and quantification of contingent liabilities.
• Internal controls and governance. Internal financial controls, ERP audit trails and management reporting built to listed-company standards — often the single largest gap in family-run manufacturing groups still running on spreadsheets and manual approvals.
• ESOPs and existing instruments. Employee stock option schemes tested against the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, and the treatment of convertible instruments, preference shares and warrants.
• Capital structure and valuation. Whether a bonus issue, split or conversion is needed to arrive at a sensible post-issue capital and price band, and a preliminary valuation view to test whether promoter expectations and the likely market outcome are aligned.

The output is a gap analysis and remediation plan with named owners and target dates. Finding these gaps before the merchant banker and legal counsel start billable diligence is consistently cheaper than finding them afterwards.

5. The IPO Process Step by Step

The sequence below is for a mainboard issue; an SME issue follows the same shape with exchange review in place of SEBI observations and a compressed timeline throughout.

1. Readiness assessment and route selection. Eligibility is tested, the platform chosen, a target listing window set, and board and shareholder approvals obtained under Sections 23, 26, 32 and 62 of the Companies Act, 2013. The articles of association are amended to remove provisions inconsistent with listing.
2. Appointment of the merchant banker and other intermediaries. Lead manager(s), legal counsel to the issuer and to the underwriters, peer-reviewed auditors for restatement, the registrar to the issue, a practising company secretary and, where required, valuers. The consultant helps evaluate proposals, negotiate terms and set up the data room.
3. Financial restatement and due diligence. Restated consolidated financial statements for three years and any stub period are prepared under Schedule VI of the ICDR Regulations and the ICAI Guidance Note on Reports in Company Prospectuses, examined by an auditor holding a valid ICAI peer-review certificate, while legal counsel and the merchant banker run business, financial and legal diligence.
4. DRHP preparation and filing. The draft red herring prospectus is drafted collaboratively and, once board-approved, filed with SEBI and the exchanges under Regulation 25 with the prescribed fees and due-diligence certificate. Since the March 2026 amendment, a draft abridged prospectus is filed alongside it.
5. SEBI review and observations. SEBI and the exchanges review the DRHP, raise queries, and — after the issuer’s responses — SEBI issues its observations, while the exchanges grant in-principle approval. Observations remain valid for twelve months under Regulation 44.
6. RHP filing with the Registrar of Companies. The document is updated for observations, the latest financials and material developments; the price band is announced at least two working days before opening under Regulation 29; and the red herring prospectus is filed with the RoC under Section 32 of the Companies Act.
7. Anchor allocation and the public issue. Anchor investors may be allotted a portion of the QIB book one working day before opening, subject to lock-in — an early signal of institutional demand.
8. Bidding, allotment and demat credit. The issue stays open for a minimum of three working days under Regulation 46, bids come in through ASBA and UPI, and the basis of allotment is finalised with the designated stock exchange.
9. Listing on T+3. Under SEBI circular SEBI/HO/CFD/TPD1/CIR/P/2023/140 dated 9 August 2023, listing and trading commence on the third working day after issue closure, mandatory for all public issues opening on or after 1 December 2023.
10. Transition to listed-company compliance. From listing day the company is bound by the LODR Regulations, the Insider Trading Regulations and the Takeover Regulations; the systems built during the pre-IPO phase go live immediately.

6. DRHP vs RHP: The Two Offer Documents

The draft red herring prospectus (DRHP) is the first public version of the offer document. It contains everything Schedule VI requires except the price, issue dates and number of shares: business and industry description, risk factors, restated financials, management discussion and analysis, key performance indicators, objects of the issue, capital structure and shareholding, board and governance disclosures, litigation, material contracts and the basis for the offer price. Once filed it is hosted for public comment for twenty-one days under Regulation 26 while SEBI examines it. SEBI’s observations are not an approval — they confirm that disclosure is adequate, and say nothing about the merits of the company or the price.

The red herring prospectus (RHP) is the updated document filed with the Registrar of Companies before the issue opens. It incorporates SEBI’s observations, financial information not older than six months at the date of filing, material developments since the DRHP, the price band and issue dates, and syndicate details. After the issue, the final prospectus records the price and number of shares allotted.

Aspect	DRHP	RHP
Timing	Filed at the start of regulatory review	Filed after SEBI observations, before opening
Filed with	SEBI and the stock exchanges	Registrar of Companies, SEBI and the exchanges
Price and dates	Not included	Price band and issue dates included
Financial information	As available at drafting	Updated; not older than six months
Legal status	Draft, subject to change	Statutory document under the Companies Act

Disclosure quality in both documents is where liability sits. Risk factors must be specific, KPIs must reconcile to audited financials and be certified as Schedule VI requires, and the objects of the issue must rest on board-approved estimates and quotations. Inaccurate disclosure exposes the company, its directors and the merchant banker to regulatory action and to liability under Sections 34 to 36 of the Companies Act, 2013.

7. Financial Preparation: Restatement, KPIs and Related-Party Clean-Up

Financial preparation is the most time-consuming part of readiness, and the area where this practice’s audit and valuation background is most directly useful.

• Restated financial statements. Three years and any stub period presented on a uniform basis, adjusted for changes in accounting policy, prior-period items and audit qualifications. Chennai manufacturing groups still reporting under Indian GAAP may need to transition to Ind AS, and the consolidation perimeter — frequently split across a manufacturing entity, a trading arm and a property-holding company under one family — must be settled before restatement begins.
• Revenue and profitability analysis. Revenue by product, customer and geography, margin drivers and seasonality, with every material movement explained and management accounts reconciled to audited figures. For auto-component manufacturers, this includes isolating the impact of steel, aluminium and rubber input-price movements on margin, since a diligence team will ask for it regardless.
• Working capital and debt. Borrowing arrangements, covenants and security documented, and, where the objects include debt repayment or working capital, lender certificates and auditor-certified projections in place.
• Related-party transactions and the promoter group. A complete map of transactions across the restated period, their pricing basis, audit-committee approval where required, and a decision on which arrangements end before listing. Promoter-group entities operating in the same or an adjacent line of business — common where a family runs both a components manufacturer and a trading company — must be identified and any conflict addressed.
• Litigation, tax and contingent liabilities. A full inventory, a board-adopted materiality policy, and income tax, GST and transfer pricing positions reviewed and quantified — the last of these particularly relevant where a Chennai manufacturer sells to, or a GCC-linked entity bills, an overseas group company.
• KPIs and the equity story. The metrics that best describe the business, computed consistently across the restated period and certified by the auditor or an independent chartered accountant. For technology and SaaS businesses along the OMR corridor that means recurring revenue, retention and customer concentration on an auditable basis; for hospital groups, metrics such as bed occupancy and average revenue per bed. Disclosed KPIs must continue to be reported for at least a year after listing or until the issue proceeds are fully deployed.
• Valuation groundwork. A defensible view of enterprise and equity value, built from the same discounted cash flow, comparable company and net asset methods used in this practice’s Registered Valuer work, so the price band discussion with the merchant banker starts from evidence rather than aspiration. Where ESOP grants precede the IPO, the grant-date fair values and the pre-IPO valuation need to tell a consistent story.

8. Governance Readiness Under LODR and the Insider Trading Regulations

A listed company operates under a governance framework far more prescriptive than a private company’s, and both investors and exchange listing committees read board composition and committee quality as a signal of how seriously a company takes public ownership. Before filing, the main requirements to have in place are:

• Board composition satisfying Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 on independent directors, at least one woman independent director, and the directorship limits under Regulation 17A.
• Committees — audit, nomination and remuneration, stakeholders’ relationship and risk management — constituted under Regulations 18 to 21 with the prescribed composition and terms of reference.
• Policies and codes on related-party transactions, materiality of events, preservation of documents, whistle-blowing, and codes of conduct for directors, senior management and insider trading.
• The insider-trading framework under the SEBI (Prohibition of Insider Trading) Regulations, 2015: a structured digital database of designated persons and unpublished price-sensitive information under Regulation 3(5), a code of conduct, trading windows and pre-clearance procedures.
• Disclosure workflows able to meet the Regulation 30 timelines: thirty minutes for board-meeting outcomes, twelve hours for events originating within the company, and twenty-four hours in other cases.
• Investor grievance machinery, including SCORES registration and a compliance officer, and a finance function able to close quarterly results within forty-five days and audited annual results within sixty days under Regulation 33.

Governance readiness is best addressed six to twelve months before filing, so that new independent directors know the business and committee processes are already running before the merchant banker’s diligence begins — a longer runway than most closely held Chennai manufacturing groups budget for on their first attempt.

9. How Long an IPO Takes and What It Costs

A realistic end-to-end timeline for a mainboard IPO is twelve to eighteen months from the decision to list; the SME route is typically completed in six to nine months.

Phase	Mainboard IPO	SME IPO
Pre-IPO preparation (readiness, governance, restructuring)	3 to 9 months	2 to 4 months
Intermediary appointment, restatement, diligence and DRHP drafting	3 to 5 months	2 to 3 months
SEBI or exchange review and observations	2 to 4 months	1 to 2 months
RHP, marketing and issue opening	1 to 2 months	3 to 6 weeks
Bidding, allotment and T+3 listing	About 1 week	About 1 week

Audit qualifications, incomplete litigation records, unresolved related-party arrangements, an unsettled consolidation perimeter and adverse market conditions all extend the timeline. Because SEBI’s observations expire after twelve months, the plan should run backward from the intended listing window with buffers at each dependency, and the restated financials must be no more than six months old when the RHP is filed.

Cost. As a broad indication, total issue expenses for a mainboard IPO commonly fall between three and seven per cent of the issue size, and for an SME IPO between eight and fifteen per cent, because fixed costs are spread over a smaller issue. The main heads are merchant banker fees (fixed plus success-linked, including underwriting and selling commissions), legal counsel, audit and restatement, registrar, SEBI and exchange fees, valuation and other certifications, marketing and statutory advertising, printing, compliance systems, and post-listing costs such as annual listing fees and independent-director remuneration. Issue expenses are borne by the company in a fresh issue and shared proportionately with selling shareholders in an offer for sale, and are disclosed in the offer document. One Tamil Nadu-specific offset is worth checking for a qualifying SME issuer: the state’s MSME Policy 2021 includes a Subsidy for Fund Raising from Capital Markets, which the department’s 2021-22 policy note describes as assistance of up to ₹30 lakh towards the expenditure incurred on an SME Exchange IPO — the scheme’s guidelines have been revised since, so the current quantum and eligibility conditions should be confirmed with the Department of MSME before being factored into a cost estimate. Written fee proposals from every intermediary should be in hand before appointment, and the exchanges’ current fee schedules should be taken from their own websites at the time of filing.

10. Post-Listing Compliance: What Changes on Listing Day

Listing day is the beginning of the company’s public-market obligations. From admission to trading:

• Periodic reporting. Mainboard companies publish auditor-reviewed quarterly results within forty-five days of quarter-end and audited annual results within sixty days under Regulation 33; SME-listed companies report half-yearly.
• Event disclosures. Material events, board outcomes, changes in directors or auditors, credit-rating changes, fraud and defaults are disclosed within the Regulation 30 timelines.
• Related-party transactions. Prior audit-committee approval, shareholder approval of material transactions and half-yearly disclosure under Regulation 23. SME-listed entities have historically been exempt from Regulations 17 to 27 under Regulation 15(2)(b), but since 1 April 2025 Regulation 23 applies to any SME-listed entity with paid-up equity capital above ₹10 crore or net worth above ₹25 crore.
• Corporate governance reporting, annual secretarial audit under Regulation 24A, a minimum of four board meetings a year with no more than one hundred and twenty days between them, and a website compliant with Regulation 46.
• Insider-trading and takeover compliance. Trading-window closures, pre-clearance, disclosures of promoter and designated-person trading, and monitoring of shareholding changes and encumbrances under Regulations 29 to 31 of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.

Because these obligations apply from the first day of trading, the compliance calendar, disclosure workflows and reporting processes are built during the pre-IPO phase. Early compliance lapses damage the company’s standing with the investors it has just attracted.

11. Common IPO Readiness Mistakes Chennai Companies Make

• Appointing intermediaries before testing eligibility, which wastes cost and time when a threshold turns out to be unmet on a restated basis.
• Undisclosed customer or OEM concentration, a recurring issue for auto-component manufacturers supplying one or two large buyers, which surfaces during diligence rather than being addressed proactively in the equity story.
• Differences between management accounts, audited financials and tax filings, the single most common cause of a delayed restatement.
• Informal arrangements between family group entities — shared premises, unbilled services, undocumented loans — that cannot be justified at arm’s length once a related-party register is compiled.
• Missing board resolutions, share-transfer records, factory licences or land titles, particularly for units operating out of older industrial estates where documentation has not kept pace with decades of operation, and which must be reconstructed under diligence pressure.
• KPIs that cannot be computed consistently across the restated period and therefore cannot be disclosed, weakening the equity story.
• Vague objects of the issue that invite SEBI queries and reduce investor confidence.
• Late appointment of independent directors and hurried committee formation, visible to both investors and exchanges.
• Undisclosed litigation or regulatory matters discovered during diligence, including pending labour, factory or pollution-control-board proceedings, which undermine the credibility of the whole document.
• Choosing the cheapest merchant banker or auditor rather than the one with relevant sector bandwidth and experience.
• Treating SEBI’s observations as an approval, when they address disclosure adequacy only.
• A valuation expectation formed from a private funding round or a family’s own sense of the business’s worth rather than from public-market comparables, which leads to a price band the book cannot support.

12. IPO Readiness Services From CA Murli Chandak

IPO work in this practice covers the readiness, financial-preparation and valuation phases, and coordination of the wider intermediary group once the company is ready:

• Eligibility and route advisory. Testing the mainboard and SME thresholds on a restated basis and recommending the platform and timing.
• IPO readiness diagnostic. A structured gap analysis across financial, legal, tax, governance and operational areas, delivered as a prioritised remediation plan with owners and dates.
• Financial and compliance review. Historical financials, accounting policies, consolidation perimeter, tax positions and statutory compliance reviewed ahead of restatement, drawing on the practice’s statutory and concurrent audit and due-diligence background.
• Pre-IPO valuation. A defensible enterprise and equity valuation to anchor the price band discussion, alongside any Registered Valuer reports needed for pre-IPO allotments, ESOP grants or restructuring under the Companies Act.
• Capital-structure advisory. Bonus issues, splits, conversion of instruments, promoter contribution and post-issue shareholding.
• Merchant banker, auditor and counsel coordination. Evaluating proposals, negotiating engagement terms, running the master work plan, data room and issues log through drafting, filing and updates.
• KPI and equity-story support. Identifying, computing and documenting the KPIs and helping management articulate the growth story in a form that survives diligence.
• Governance preparation. Board restructuring, committee constitution, policy drafting and the insider-trading framework.
• Post-IPO compliance set-up. The LODR calendar, disclosure workflows and first-quarter reporting processes, with continuing Virtual CFO support where the finance function needs it in the first year as a listed company.

13. Frequently Asked Questions

Q1. What is the difference between an IPO consultant and a merchant banker?

A: The merchant banker is a SEBI-registered intermediary responsible for due diligence, the offer document and the issue process, with obligations to the regulator and investors. The IPO consultant is appointed by the company, works in its interest, and handles readiness, financial preparation, valuation and coordination of the overall programme, before and alongside the merchant banker.

Q2. Can a family-owned Chennai auto-component company launch an SME IPO under the 2025 rules?

A: Yes, provided it meets Regulation 229: post-issue paid-up capital not exceeding ₹25 crore and operating profit of at least ₹1 crore in two of the three preceding financial years, alongside the exchange’s own criteria. The 2025 amendments also cap the offer for sale at twenty per cent of the issue, cap general corporate purposes at fifteen per cent or ₹10 crore, and bar using proceeds to repay promoter loans — all of which matter for closely held family businesses restructuring ahead of a listing.

Q3. Our OMR-based technology company is loss-making. Is a mainboard IPO still possible?

A: Potentially, through Regulation 6(2): a book-built issue with at least seventy-five per cent of the net offer allotted to qualified institutional buyers. The equity story, KPIs and valuation evidence then carry more weight than the profit track record, which makes the financial-preparation phase even more important.

Q4. Does SEBI approve an IPO?

A: No. SEBI reviews the draft offer document for adequacy of disclosure and issues observations. It does not approve the issue, endorse the company or vet the price, and every offer document carries a disclaimer to that effect.

Q5. How long does an IPO take for a Chennai company?

A: Typically twelve to eighteen months for a mainboard IPO and six to nine months for an SME IPO from the decision to list, depending on how much readiness work is outstanding. Listing itself now occurs on the third working day after the issue closes.

Q6. What is the difference between a DRHP and an RHP?

A: The DRHP is the draft filed with SEBI and the exchanges for review and twenty-one days of public comment; it excludes the price and issue dates. The RHP is filed with the Registrar of Companies before opening, incorporating SEBI’s observations, financials not older than six months, the price band and the issue dates.

Q7. What does an IPO cost, and is any Tamil Nadu government support available?

A: As a broad indication, three to seven per cent of the issue size for a mainboard IPO and eight to fifteen per cent for an SME IPO. Tamil Nadu’s MSME Policy 2021 separately provides a Subsidy for Fund Raising from Capital Markets toward SME Exchange listing expenditure; the quantum has been revised since the scheme’s 2021 policy note, so current terms should be confirmed with the Department of MSME before an SME issuer relies on it in its cost planning.

Q8. How does customer concentration with one or two large OEMs affect an auto-ancillary company’s IPO?

A: It falls squarely within the risk-factor and business-description disclosures in the offer document, and institutional investors price it directly into the valuation. Documenting the relationship, contract terms and any diversification plan well before drafting begins is far better than having it surface as a diligence finding.

Q9. Do we need a Registered Valuer’s report as part of the IPO?

A: The IPO price itself is set through book building rather than a statutory valuation report. Registered Valuer reports are, however, commonly required for pre-IPO events under the Companies Act — a preferential allotment, an ESOP grant or a group restructuring — and a defensible pre-IPO valuation is central to the price band discussion with the merchant banker.

Q10. Can an SME-listed company move to the mainboard later?

A: Yes. A company that satisfies the mainboard criteria may migrate under Regulation 277 after the prescribed listing period, with shareholder and exchange approval, without a fresh public issue.

Discuss Your IPO Readiness

If your Chennai company is evaluating a mainboard or SME listing in 2026 or 2027, tell me where you are today — financials, shareholding, governance and growth plan — and I can map out what remains to be done before a merchant banker is appointed.

CA Murli Chandak – FCA | IBBI-Registered Valuer (Securities or Financial Assets) | IBBI/RV/07/2021/14408
Website: murlichandak.com
Phone: +91 99985 39902
Email: murlichandak@murlichandak.com
LinkedIn: Connect with CA Murli Chandak

Book a Free ConsultationChat on WhatsApp

This article is intended for general guidance only and does not constitute legal, financial or investment advice. Regulatory positions are stated as at September 2026 and were verified against the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (as last amended on 21 March 2026), the SEBI (ICDR) (Amendment) Regulations, 2025 on the SME framework, the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2025, SEBI circular SEBI/HO/CFD/TPD1/CIR/P/2023/140 dated 9 August 2023, and NSE Emerge listing criteria. The Tamil Nadu MSME Policy 2021 scheme reference is drawn from the Department of MSME’s 2021-22 policy note; readers should confirm current quantum and eligibility with the department directly, as guidelines have been revised since. Chennai and Tamil Nadu sector references are drawn from publicly available industry sources. Thresholds, timelines and procedures under the SEBI framework are revised from time to time and should be confirmed with the merchant banker and legal counsel on the date of filing.

Related reading: ESOP Consultant in Chennai | Virtual CFO in Chennai | Transfer Pricing Consultant in Chennai | GST Consultant in Chennai | Income Tax Consultant in Chennai | Trademark Consultant in Chennai