SEBI steps up scrutiny on disclosure of KPIs by startups planning IPOs: Sources

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In order to keep a check on selectively disclosing performance indicators by startups ahead of launching public offers, market regulator SEBI has stepped up scrutiny on the disclosure of KPIs, or key performance indicators of such startups, sources told CNBC-TV18.

SEBI had recently increased scrutiny of new-age internet companies after firms like Paytm and others failed to deliver returns to retail investors in the past when the hit the public markets.

The regulator now requires all KPIs shared with private investors over the past three years to be disclosed in the DRHP, the sources added. However, issuers have the option to withhold disclosure by providing their reasons to SEBI.

This action follows startups selectively disclosing KPIs in their offer documents, according to sources. Recently, FirstCry faced additional disclosure demands from SEBI, prompting the company to refile its offer document with additional KPI disclosures.

SEBI and FirstCry were engaging for over a month before the regulator finally sent back the company's filings and sought more clarity last week.

Sources also told CNBC-TV18 that all IPO filings are currently under scrutiny.

SEBI had recently increased scrutiny of new-age internet companies after firms like Paytm and others failed to deliver returns to retail investors in the past when the hit the public markets.

SEBI introduced this rule in 2022, heightening scrutiny of companies looking to list, after wide-spread criticism on the seemingly lax oversight over large loss-making companies which have commanded lofty valuations.