The DRHP Rulebook: Volume II – Our Business And Industry Overview

These twin chapters don't just describe, they define. The former maps the issuer's external ecosystem; the latter, the internal engine. Volume II aims to dissect how macroeconomic cues, domestic policy signals, sectoral nuances, and primary business pertaining to the Issuer Company converge into a foundation of transparency. The Business, in contrast, demands operational clarity and where trust is earned through evidence, not embellishment.

But what happens when this foundation is treated like marketing material? Drawing from an empirical review of SEBI's observation letters spanning across a plethora of DRHPs, Volume II challenges drafters to resist cosmetic disclosures and instead build credibility, layer by regulatory layer. In a world where every business claims to lead, this is where it must be proven. Not in adjectives, but in disclosures. Not in claims, but in clarity. Not in formality, but in substance. Because when investors read between the lines, only one thing echoes: data trumps description.

INDUSTRY OVERVIEW

Mapping the Market Before Making a Pitch

No issuer company can declare its destiny until it maps the market it dares to conquer – this is gospel-worthy when the topic of discussion is the 'Industry Overview' chapter of a certain DRHP. Far from being a ceremonial backdrop, this chapter is a legal mandate which ought to walk the tightrope codified by Regulation 24(2) of the SEBI (Issue of Capital and Disclosure Requirements) Regulations 2018 (“ICDR Regulations”) for Main Board IPOs whereas SME issuers concern themselves with Regulation 245(2), supplemented by Clause 10(A) of Part A, Schedule VI of the ICDR Regulations.

Further on, the concise codification of Clause 10(A) makes it discretionary upon the Issuer Company to synthesize an industry report rooted in unassailable facts that ought to be independently validated and free from the tints of a rosy bias, while apprising the investors with authentic dynamics of the market that the Issuer Company aspires to navigate.

Yet, time and again, Issuer Companies have attempted to turn this chapter into a marketing brochure, peppering it with phrases like “market leader,” “fastest growing,” or “poised to disrupt” bereft of any cogent external validation. Such pompous claims are responsible for keeping the Regulator on the look-out. Resultantly, the Observation Letters of the Regulator bear testimony to the fact that the Industry Overview chapter is not a ponzy-pitch; per contra a factual declaration.

The Regulator's intention makes it plain that every data point etched in this chapter must be recent and sourced from credible third-parties reflecting party authorities. This ensures that all statistical references are not only fresh but also reflect a balanced and unvarnished view of the industry landscape. Cherry-picking favourable metrics while conveniently sidestepping known sectoral constraints amounts to a masking of reality, an approach the Regulator is quick to call out.

Issuer Companies need to wrap their mind around the fact that while inking the Industry Overview chapter, structure is the pulse of clarity making it as indispensable as ice in the arctic. A compelling narrative alone is not enough, regulatory compliance requires a clear, logical, and transparent framework that allows investors to precisely understand the economic context, sector dynamics, and the Issuer Company's positioning and where they are coming from.

At this juncture, one may ask: why does the structure matter? Well, the answer lies in the mission which is to craft a vibrant mosaic of factual insights. Firstly, Investors should be able to grasp the sweeping economic currents shaping the landscape. Secondly, be able to decode the structural and regulatory DNA of the issuer's industry. Ultimately, pinpoint the Issuer Company's place within this realm, not with flashy descriptors, but with the sharp clarity of comparative data and unyielding facts.

I. The “Glass-Funnel” approach

The most effective way to achieve a structured chapter is through a funnel-based approach wherein the funnel is made out of glass to ensure transparency i.e., the “Glass-Funnel” approach. Starting from the broad macroeconomic canvas and narrowing down seamlessly to the Issuer Company's competitive landscape. This see-through analytical structure not only filters information efficiently but also allows each layer to be perceived with clarity, lending visibility to the internal dynamics that shape the Issuer Company's positioning. The following levels of the Glass-Funnel approach are commonly traversed by a well-drafted Industry Overview chapter:

1. Global Economic Landscape

Every economic story begins with the winds that blow across borders. Before a single number is disclosed or a domestic trend is analysed, it is the global economic landscape pulse that sets the rhythm right. The global economic signals affecting a sector's characteristics of an Issuer Company in question at the widest rim of the Glass Funnel is the starting line for a well-written Industry Overview chapter. The disclosed numbers and metrics should touch upon (including but not limited to):

1. Global GDP growth trajectories,
2. interest rate cycles,
3. commodity price shifts,
4. geopolitical changes (including global trade related shifting and impositions), and
5. supply changes.

The abovementioned elements/factors are far from being ornamental, for they inform sector-wide headwinds or tailwinds that transcend domestic boundaries. The aforementioned could be inflation-rates in the US or a dramatic trade war in any part of the world that ends up directly affecting demand, input costs, and market behaviour in India. All in all, the Regulator presumably expects the Issuer Companies to be able to use the cues to set the context, not just add colour or contouring.

To indicate an example: “In light of continued monetary tightening across advanced economies in FY24, capital flows to emerging markets including India have seen increased volatility, impacting infrastructure and manufacturing investments.”

2. Macroeconomic and Policy Context for India

Flowing down from the global perspective, the Chapter works down to India's economic trajectory and sectoral trends in the context of what is happening at home. This very bit of the Glass Funnel ought to marry an answer to the question: How are India's policies and economic direction making it easier or more difficult for the Issuer Company's industry? The aforestated question must compel Issuer Companies to refer to the factors enlisted below but not limited to:

1. Fiscal policy,
2. Budget announcements,
3. Monetary position,
4. PLI schemes,
5. FDI reforms/changes,
6. infrastructure development and consumption.

The bucket of these factors are paramount more than just indicators of growth - they help to shape regulatory landscape, capital availability, and sectoral focus.

To indicate an example: “The Indian logistics sector has gained from dedicated freight corridor investments and GST rationalisation, supported by ₹2 lakh crore infrastructure push in the Union Budget 2024.”

3. Sectoral Snapshot and Trends

Pouring down from macroeconomic level, the narrative now makes way to the Issuer Company's specific sector, making the Industry Overview more focused, relevant, and tailored. This section of the Glass Funnel must be inclusive of key metrics, figures, charts, and graphs that showcase sector size (in other words, graphical representation), CAGR, market fragmentation (organized vs unorganized), demand drivers, and customer demographics. Clearly explain any policy frameworks that can cast a considerable impact on the sector of the Issuer Company, to name a few: environmental regulations, tariff structures, or government subsidies. In a nutshell, the sole objective is to provide a clear understanding of how the respective industry operates, evolves, and competes within the broader economic landscape.

To indicate an example: “India's CDMO (Contract Development and Manufacturing Organization) segment is projected to grow at a CAGR of 11.6% until FY2030, driven by patent expirations and outsourcing by global pharmaceutical majors.”

In common parlance, when Companies prepare for an IPO, be it for a Mainboard or an SME segment; one crucial step they undergo is turning to reputable industry agencies like CRISIL, ICRA, D&B, and Frost & Sullivan for their industry market reports. This has become the standard practice in the industry.

Moreso, SEBI rightfully mandates that all statistical data including the projections of growth trends and analyses cited and referenced in this chapter must be supported by reliable, data-backed foundations. If an Issuer Company injects extracts from industry reports commissioned exclusively for their DRHP, the entire report must be made available for public inspection and referenced clearly in the “Material Documents for Inspection” section of the said DRHP.

4. Sub-sector Nuances and Issuer Relevance

Within broader sector disclosures, Issuer Companies must weigh in the exercise of zooming in on specific sub-sectors or verticals that align with their primary business. Consider this for instance: a solar energy company may belong to the broader renewable energy sector, and by the virtue of their said business, they must chalk out aspects like REC (Renewable Energy Certificate) markets, grid integration issues, or state-level subsidy differences.

Not only such granular disclosures offer depth and speak for themselves, but additionally, they place the position of the Issuer Company's model into perspective without resorting to promotional language. Additionally, this exercise assists in allocating the standing of the Issuer Company in the value chain the company plays and what dynamics it navigates in the daily discourse.

5. Peer Comparison and Market Position

The final segment of the Glass Funnel involves comparative benchmarking. First things first, what is 'comparative benchmarking' really? Comparative benchmarking is the process of evaluating an Issuer Company's performance by systematically comparing it with industry peers on objective, quantifiable parameters. Rather than vague claims of leadership, issuers must present objective comparisons with listed and unlisted peers, anchored in financial and operational metrics.

Holistically, parameters like revenue, EBITDA margins, RoNW, installed capacity, geographic spread, and product verticals help investors gauge the Issuer Company's standing without a hyperbole. The benefit that flows from this action not only enhances transparency but sets up a natural bridge into the Our Business chapter, where these metrics find contextual meaning.

To indicate an example: “In FY24, the issuer recorded an EBITDA margin of 18% compared to the peer median of 14%, with operations across 14 states and a product mix spanning three verticals.”

II. Industry Challenges & Integrated Risk Factors

While the Risk Factors chapter (to read more about the said chapter, refer The DRHP RuleBook: Vol. I Risk Factors) of a DRHP addresses vulnerabilities unique to an Issuer Company, the Industry Overview chapter demands to disclose inherent sectoral challenges in a manner which is both, neutral and factual. Sectoral challenges that typically merit disclosure in this chapter include but are not limited to:

1. Capital Intensity: High upfront investment and long gestation periods in sectors such as infrastructure, logistics, and renewable energy.
2. Policy and Regulatory Uncertainty: Frequent or ambiguous policy shifts, particularly relevant for sectors like NBFCs, real state, and education.
3. Input Price Volatality: Common in commodity-linked industries such as cement, steel, oil and gas, and FMCG.
4. Labour Law Sensitivites:
   Relevant for sectors with high labour intensity like textiles, construction, and mining.
5. Environmental Compliance Burdens: Especially critical for industries under the CPCB's red category, such as chemicals, thermal power, or tanneries.
6. Geopolitical Disruptions: Sectors like defense, electronics manufacturing, and pharma APIs may see significant exposure to trade tensions and supply chain realignments.

Now, for illustrative purposes, consider this: Issuer companies in the API (Active Pharmaceutical Ingredient) sector often highlight dependency on Chinese imports for Key Starting Materials (KSMs), which has been flagged consistently by the Indian Ministry of Chemicals & Fertilizers. Whereas, IT services providers may discuss exposure to evolving data privacy regulations like GDPR (General Data Protection Regulation) and India's forthcoming Digital Personal Data Protection Act, 2023 which has sector-wide implications for contract structuring, client relationships, and cross-border data transfers.

These discussions, when articulated with care, allow the investor to understand the broader risks of the industry without implying issuer-specific problems. However, when such systemic risks affect the issuer disproportionately, SEBI requires a reference or cross-link to the Risk Factors chapter to ensure consistency.

III. Data Accuracy & Visualization

At the heart of it, the Industry Overview chapter must offer a fair and balanced representation of the sector, neither overstating prospects nor overlooking critical assumptions. Investors must be able to rely on this chapter as a clear window into the industry's realities. One of the most effective ways to ensure this clarity is through well-curated visual disclosures using charts, graphs, and tables that illustrate market size, growth trajectories, or competitive segmentation. These visuals representation not only simplifies complex economic narratives but also become especially valuable when issuers do not commission external industry reports and instead rely on public data sources such as IBEF, DPIIT, or RBI. SEBI emphasises data-backed neutrality, and well-sourced, up-to-date visuals can distil complex industry trends into clear, digestible insights.

OUR BUSINESS

Unpacking the Disclosures That Powers the Enterprise

While the Industry Overview answers the question, “Where does the company play?”, the 'Our Business' chapter compels a series of questions: “What is the primary business of the company”,“How does it play, and how well does it perform? What drives the company's revenue? Where does it stand operationally in the real world?” The curiosity constructed by these questions is debunked ahead.

The Regulator, while perusing and scrutinising the Our Business Chapter of a DRHP, has consistently flagged the use of vague narratives, segmental ambiguity, and overuse of subjective language in the offer documents that blur rather than clarify. More than mere accuracy, the Regulator (being the rightful 'Watchdog of the Securities Market”) seeks precision in the words, data and information that comprise the said Chapter. Considering that the DRHP is the introductory step for an Issuer Company, the issuer cannot resort to catchphrases or take the refuge of technical jargon.

Instead, the said Chapter must walk on the lines of codification etched in Clause 10(B) of Part A, Schedule VI of the SEBI ICDR Regulations, which sets out an expectation, i.e., a business model that is granular, neutral, and backed by verifiable data and walk the reader through the key components of the business in a way that makes both strategic and regulatory sense.

1. Business Structure and Commercial Identity

Every investor begins with a simple question: What does the issuer company do? and this chapter Our Business must answer it without flourish, fiction, or fog. Whether the company operates in a B2B, B2C, B2G model, is product-led or service-driven, or functions across domestic or international markets - each aspect enlisted herein must be presented factually and free of promotional language.

disclosure begins at the root: the legal identity and historical transformation of the issuer company. Whether the Issuer Company has been metamorphosized from a private to a public limited entity, transformed from an LLP, or there has been a shift of the registered office, restructuring, or renaming, such material changes form part of the business's structural truth and must be set out transparently without mincing any detail. These transitions shape how the business has evolved legally, geographically, and commercially and provide critical context for the investor evaluating its trajectory.

Gauging the focus on what exactly irks the Regulator: vague, promotional self-definitions such as “India's fastest-growing X” unless backed by credible, independently sourced evidence. The focus must instead be on structural clarity: What are the business verticals? How is revenue segmented? Which customer ecosystems does the company serve, and how has this footprint evolved over time? One has to keep in mind that every distinct sector and the nature of an Issuer Company would invariably distil a custom-tailored answer to the aforeprompted questions. Therefore, the present narrative is more concerned about the questions that yield and present the answer that shall form part of the said Chapter of a DRHP.

Moving further, equally vital is a transparent mapping of the issuer company's position within the value chain and appropriately pigeon-hole them within a given trifecta of production. Are they a raw material provider (upstream), a processor or assembler (midstream), or a retail-facing brand (downstream)? Overstatement here has often triggered the Regulatory observation, especially when issuer companies overplay strategic roles without defining functional linkages within the industry.

Furthermore, an Issuer Company's commercial identity is edged into the intangible assets that form part of it. For this purpose, the DRHP must provide an exhaustive snapshot of all material IPRs, trademarks, patents, copyrights, domain names, software licenses specifying whether these rights are formally registered in the name of the issuer and whether all legal formalities have been complied with. Where any critical IPRs are not owned by the issuer but by group entities or promoter-controlled firms, the issuer must disclose the details of the ownership and the legal arrangement governing usage, be it through a royalty-based license, an irrevocable user right, or a shared asset model.

If the business model hinges on technology, content, or brand-driven differentiators, the absence of IPR clarity could significantly impair investor understanding. Hence, such assets, if registered or licensed, must be named, numbered, and jurisdictionally identified preferably in sync with disclosures in the Material Contracts or Other Regulatory Approvals chapters. This foundational clarity does more than fulfil a regulatory checkbox, it sets the stage for the next vital inquiry: How does this structure translate into earnings, scale, and sustainability?

2. Products, Services, and Operational Footprint

Once an Issuer Company's business identity has been established, the next layer of disclosure must capture the operational anatomy of the company; what it offers, how those offerings are structured and delivered, and the scale at which it operates. This is where the DRHP must walk the investor through the products, services, and commercial delivery model with complete clarity and precision.

The Issuer Company is required to provide a clear and structured account of their business offerings which would be inclusive of but not limited to all core products, supporting services, and any innovation-led components that define the portfolio. The regulatory expectation is crystal clear: avoid puffery, resist exaggeration, and ensure that claims of differentiation or competitive strength are backed by measurable evidence or third-party validation.

To indicate an example: a pharmaceutical Issuer Company manufacturing generic drugs should detail its core product range (e.g., 25 formulations across cardiovascular and anti-diabetic segments), specify production capacity (e.g., 500 million tablets annually at 80% utilization), and disclose third-party certifications (e.g., WHO-GMP compliance verified by an independent auditor in FY24), while clearly outlining its supply chain reliance on top suppliers for active pharmaceutical ingredients.

To illustrate further, for a manufacturing business, a simple list of product names won't cut it. The disclosures must go beyond product names and cover installed production capacity, actual utilization rates, comprehensive workflow processes. The issuer must also disclose the plant locations, nature of machinery employed, sourcing of raw materials, and core processes or technologies that enable its product or service delivery. Whether the production is labor-intensive, semi-automated, or backed by cutting-edge technology such as AI-enabled quality controls or IoT-integrated production lines, these disclosures must be brought to the fore.

Where the business is manufacturing-led or capacity-intensive, the narrative must be supplemented with a table outlining, product-wise, the installed capacity (in MT, litres, pieces, etc.), actual production volumes, and capacity utilisation percentages for at least the last three completed financial years. This table should also highlight expansions or contractions in capacity due to operational decisions, mergers, or plant upgrades.

To indicate an example: a chemical manufacturer may disclose that its production of specialty surfactants rose from 2,000 MT to 3,500 MT over three years, with utilisation climbing from 60% to 88%. These disclosures not only establish the operational scale but also act as a mirror reflecting efficiency, supply-demand alignment, and preparedness for scalability.

In SEBI's lens, data trumps description, and such tabular representation becomes a non-negotiable regulatory expectation in the DRHP process. The narrative should clarify whether the technology is indigenously developed or licensed from a third-party. These disclosures, when mapped with capacity and certification data, allow investors to assess not only current performance but also resilience and scalability in a competitive sectoral landscape. Who are the top 10 suppliers, and how dependent is the company on them? Is there operational reliance on a specific supplier? These questions must be answered transparently, as any dependence on a sole supplier could pose risks to operational continuity.

Beyond standalone operations, several issuer companies are enmeshed in a fabric of technical collaborations, strategic alliances, and infrastructure dependencies that significantly influence their commercial architecture. A company manufacturing electronics may, for instance, operate under a technology license agreement with a Japanese innovator; a textile player may have a joint marketing arrangement with a European fashion house, or a defence component manufacturer may operate under performance-linked marketing support from a government agency. Such subsisting collaborations must be identified, along with their nature whether exclusive or non-exclusive, time-bound or evergreen, and their impact on product development, customer access, or cost economics.

Equally crucial is a disclosure of infrastructure dependencies: arrangements with utility providers (e.g., for uninterrupted power or captive water supply), integrated raw material parks, proximity to industrial corridors, or special access to logistics hubs. These utility-related disclosures provide crucial insight into the issuer's risk insulation and operational continuity, especially in sectors sensitive to infrastructural disruptions. Further, issuers should disclose the top 10 customers, highlighting the concentration of revenue and any dependency on a small number of key clients. This breakdown is crucial for investors to assess risks related to customer reliance.

In contrast, companies operating digital platforms or service-based models must describe aspects such as the customer interface, technology backbone, service delivery protocols, and data management frameworks. What does the company's service ecosystem look like? How does it integrate technology into its offerings? These factors shape the scalability and security of the business and must be laid out clearly for investors to understand. For export-oriented businesses, it becomes equally vital to disclose international market presence, overseas client exposure, and compliance with foreign certifications or operational norms. issuers in this space must disclose their top clients. What percentage of revenue comes from the top 10 or top 5 clients? How reliant is the business on a few key accounts?

This breakdown, along with a clear understanding of how revenue is distributed across national and international clients is critical for investors. For example, a SaaS-based Issuer Company offering cloud accounting software should detail its customer interface (e.g., a web and mobile app with multi-language support), technology backbone (e.g., AWS-hosted infrastructure with 99.9% uptime in FY24), and data security measures (e.g., ISO 27001-certified encryption protocols). For its export operations, it should disclose that 60% of its revenue comes from international markets (e.g., US and UK), with 45% from its top 5 clients, and confirm compliance with GDPR for EU clients, supported by an independent audit in FY24.

3. Geographic Footprint and Infrastructure

A company's geographic footprint is not just a list of addresses; it is a statement of scale, capability, and ambition. This section of the 'Our Business' chapter must capture, with unambiguous clarity, where the company operates, where it delivers, where it manufactures, and where it reaches, including domestically and globally.

Whether the issuer operates in a single city or across continents, each aspect of its physical and service presence must be fully disclosed and set out, with precision: where are the manufacturing facilities located? Where are the warehouses, service centres, fulfilment hubs, sales offices, or digital delivery nodes? Does the company export goods or services? If yes, which international markets, what percentage of revenue, and under what certifications or compliance regimes?

For the Regulator's watchful scrutiny of the components of the said Chapter and particularly the talked about section, is intense owing to the fact that operational geography is inseparable from business credibility. And naturally, the story isn't complete without the 'how' behind the 'where'. The 'Our Business' chapter must clearly state and disclose supply chain linkages and their dependencies, location-driven cost advantages, logistical strengths (like proximity to ports or highways), and bottlenecks (such as infrastructural or regulatory constraints). Investors are not just reading locations; they're reading between the lines to understand operational strength and a real-world view of the company's capacity to deliver, install, utilised, or planned.

The physical footprint of the Issuer Company's enterprise is not merely symbolic; it is a measure of commercial tangibility. Therefore, a DRHP must disclose a summary of all material immovable properties (factories, warehouses, regional offices, development centers, and logistics hubs) that are either owned, leased, or licensed by the Issuer Company. Each entry must clearly state the location, size, usage, and ownership status. Where properties are leased, the lease tenure, renewal rights, and key financial obligations (if material) should be laid out. For owned properties, title status (freehold or leasehold) must be clarified along with any encumbrances or litigation (if applicable). Such granular property-level disclosures give investors an on-ground understanding of the business's operational spread and capital commitment, while also offering insight into asset-light or asset-heavy business models that influence valuation and risk.

4. Revenue Composition and Segmental Performance

If locations and infrastructure are muscle, revenue is blood. Investors do not just want to know what a company does, they want to understand how it earns their keep. For this very reason, even before concerning oneself with the audited financials, the Our Business chapter must disclose a clear picture of what drives the topline.

This section is about connecting the business model to their income engine. Alongside audited financials, Issuer Company must disclose a clear breakdown of their revenue; segment-wise, geography-wise, product-wise, and service-wise highlighting dominant contributors and flagging potential risks such as over-dependence on a single client or market.

5. Recognition and Assurance

Once an Issuer Company has mapped their products, revenue model, and market reach, the next critical layer is 'credibility'. Not just what the business does, but how reliably and responsibly they do it. This gives cue to disclosures around certifications, regulatory compliance and operational systems step in.

Investors might but the Regulator does not care about a glossy overview; they demand and are convinced with cogent proof points; typically in the form of a legal recognition, awards bestowed, quality benchmarks, and operational resilience markers. Whether it's WHO-GMP certification for a pharma company, ISO standards for a manufacturer, or BIS approvals for infrastructure players, these disclosures anchor the business in accountability. They reflect a company's readiness to meet regulatory scrutiny, whether domestic or international.

Equally important is the quality assurance narrative. It is not enough to say that products are “high quality”, an Issuer Company is solely responsible to substantiate the 'how' behind it. Are there in-house labs? Do third-party audits take place? Are there SOPs for every stage? To be plain, investor confidence is catered and attended to vide the aforediscussed disclosures as they offer investors a rare glimpse into the company's commitment towards compliance, consistency, and reliability critical factors that separate a promising business from a fleeting opportunity.

6. SWOT Analysis

It is a no-brainer that every Issuer Company has strengths (it prides itself on), vulnerabilities (it manages), opportunities (it eyes), and threats (it must navigate). The Regulator has emphasized for umpteen times that this section under Our Business chapter is not a mimic or a marketing deck; Ergo, it must offer an objective and evidence-backed view of the Issuer Company's current (inclusive of periods in immediate proximity) business position.

Firstly, Strengths should sprout from and be grounded in verifiable facts like operational scale, integrated supply chains, or proprietary processes, not superfluous and pompous statements of leadership. All in all, an Issuer Company's strengths must not flicker with empty boasts.

Secondly, Weaknesses (though often downplayed to mask shortcomings) are not a confession of failure but a badge of courage. Far from concealing vulnerabilities like regional dependence, supplier concentration, or working capital strain, an Issuer Company that embraces transparency transforms these challenges into pillars of trust.

Thirdly, Opportunities must emerge from tangible trends: sectoral shifts, government incentives, digital adoption, or export demand, not vague future ambitions. These are not mere wishes whispered into the void of vague ambitions but robust prospects rooted in market realities that investors can see, measure, and believe.

Lastly, Threats should reflect the real-world context the business operates in regulatory risks, forex exposure, or logistical constraints, without drifting into the Risk Factors chapter unless overlap is warranted.

To wrap it all up, an Issuer Company's business strategy, when presented here, must be current, actionable not speculative. Whether it's capacity expansion, market entry, or digital transformation, it should reflect what's in motion rather than what's imagined. By tethering these elements to verifiable data and market truths, the company crafts a narrative that captivates investors with its foresight and grounds their trust in its pragmatism, turning the DRHP into a roadmap of potential and preparedness.

7. Visual Disclosures for Enhanced Clarity

The SWOT of an Issuer Company rhapsodising around the strengths, vulnerabilities, opportunities, and risks has been unpacked. But what brings these concepts to life? How can investors truly visualize the operational pulse of the business? Enter 'visual disclosures'- an alchemist's tool that transmutes raw data into a perceivable panorama of insight. Far beyond mere numbers or words, visuals provide a tangible, immersive experience of an Issuer Company's operations, transforming complex data into clear, actionable insights that reveal not just how the business works, but how it thrives.

Strategy, in the regulatory sense, is not about envisioning the distant horizon, it is about disclosing the concrete, measurable steps the issuer is currently taking to evolve and capture market opportunities. The business strategy section must articulate forward-looking yet credible plans rooted in operational and financial reality. For example, an issuer engaged in contract manufacturing may outline plans to backward-integrate by acquiring a raw material facility, or a digital payments company may plan to diversify into embedded finance for MSMEs. Regulatory expectations demand that such disclosures avoid speculative projections, and instead anchor themselves in actual undertakings.

Visual representations, akin to the species of maps, business model diagrams, process flowcharts, and infographics, help break down complex information, making it more digestible. In a way, they act as windows to the enterprise, breaking down intricate processes into digestible, actionable insights that resonate with investors and regulators alike. Pertinently, these visuals should be backed by current, accurate data to ensure transparency and clarity to give them the flavour their purpose demands.

For manufacturing companies, photographs of the factory units, plants, machinery, and even a fire mock drill when paired with capacity charts and workflow diagrams offer tangible proof of the company's operational scale and commitment to safety. On the flip side, digital platforms and service-based companies thrive on infrastructure transparency. Technology stack diagrams, customer journey maps, and service delivery flowcharts can illustrate how the company's systems interact with its users, providing insights into scalability, security, and user experience. For businesses involved in exports, incorporating maps showing international market reach, or charts demonstrating overseas revenue exposure, can help investors understand the global footprint and the company's capacity to scale across borders.

These visual tools not only meet regulatory expectations but also enhance investor confidence by providing a detailed, clear understanding of how the business functions. They serve as an essential bridge between textual disclosures and operational reality, showcasing both the scale and the nuances of the issuer's operations. Lastly, “show not tell works” works every time.

8. Strategic Tie-ups and the Safety Net

When the financials end and the operational walkthrough is done, a critical question still hangs in the air: What are the hidden hinges that hold this business together? This is where the final stretch of the chapter must shift from narrative to infrastructure. This section laid out the visible architecture of a company. These are the disclosures that do not always draw headlines but often shape long-term risk, defensibility, and continuity.

Any Joint Ventures (JVs), strategic alliances, or collaborative arrangements whether operational, technological, or distributional, must be clearly disclosed by the Issuer Company. This includes not only domestic partnerships but also any cross-border JVs or memorandum-based arrangements that materially influence the business model or revenue architecture. The chapter should spell out the nature, objective, and commercial scope of such arrangements, along with any exclusivity or lock-in clauses, without veering into confidential commercial terms. These disclosures answer the deeper investor question: How far does this an issuer company's business really extend and with whose help?

Whether it is fire and property insurance for factories, marine coverage for logistics, product liability for regulated industries, or cyber insurance for data-dependent entities every risk category must be covered in spirit and letter. What risks are insured? To what extent? Are there renewals pending? Investors do not just want to know how the company grows; they want to know how it protects itself while doing so.

Together, these disclosures form the closing architecture of the Our Business chapter. While not always occupying headlines, they frame the company's preparedness that must disclosed by the issuer company. In a market where perception follows transparency, these are the details that move the dial from interest to confidence.

Practitioners' Takeaways

There is no punctuation mark to the living chronicle of a business and no final full stop to what ought be disclosed. With every DRHP filed, every market cycle turned, and every SEBI observation issued, the contours of the Industry Overview and Our Business chapters continue to evolve. What remains unchanged, however, is their purpose: to speak the truth of the enterprise not through gloss, but through granular, grounded, and governance-ready storytelling.

Read together, the Industry Overview and Our Business chapters formulate the thesis in the form of testimony of a concerned DRHP. The former sets the market context, the latter, places the company within it. Their value is not just in how they satisfy regulations but in how they anticipate scrutiny, invite confidence, and hold up under questions. Now, to finally complete the circle of the Rulebook's purpose below is the guiding signposts for the two chapters derived from a plethora of SEBI's Observation Letters across DRHPs:

Guiding Signposts – Industry Overview

1. Integrity of Excerpts: When quoting from industry reports, do not omit, alter, or selectively reproduce material information that is relevant to investors.
2. Comprehensiveness of Challenges: The industry report must explicitly cover challenges, weaknesses, and threats of the broader sector as well as specific segments or products relevant to the issuer.
3. Consistency with Risk Factors: Ensure that any challenges and threats mentioned in the Industry Report are also cross-referenced in the Risk Factors chapter, where applicable.
4. Recency of Data: All data points (market size, trends, growth forecasts) must be latest and updated, not stale or outdated.
5. Competitive Positioning: Disclose the market share or rank of competitors if comparative context is provided, especially where issuer claims industry leadership.
6. Disclosure of Negative Insights: Do not suppress or sanitize negative insights found in the commissioned industry report; the Industry Overview must reflect a balanced, unfiltered view.

Guiding Signposts – Our Business

1. Primary Source Mandate: The Our Business chapter must be based on issuer-derived disclosures. Do not cite or reference industry reports, including commissioned ones.
2. Avoid Promotional Language: Refrain from using phrases like “leading,” “dominant,” or “fastest-growing” unless backed by independent third-party evidence.
3. Share Purchase Agreements: If applicable, disclose key terms and price of acquisition under any Share Purchase Agreement, and include the agreement in Material Documents for Inspection.
4. Business Structure Clarity: Provide an organizational diagram of the issuer and include brief descriptions of holding/subsidiary entities, if any.
5. Property Disclosure: Clearly state whether each disclosed property is owned or leased, along with key tenure or title details.
6. Trademark & IPR Details: Disclose registered IPRs, trademarks, and patents and indicate their ownership (issuer, group entity, licensed, etc.).
7. Business Model Explanation: Provide a structured, non-generic explanation of the issuer's business model and how revenue is generated.
8. Geographical Footprint: Disclose the geographical reach of operations, services, and delivery, including state-wise customer concentration, where applicable.
9. Product & Input Disclosure: Offer full details of core products, raw materials, key contracts, and export/import dependencies.
10. Tabular Data Requirement: Where disclosures pertain to multiple years or business segments, present them in tabular format (e.g., capacity, revenue, certifications).
11. Capacity Utilization: If installed capacity is underutilized, provide specific operational or commercial reasons.
12. Certifications & Projects: Disclose all relevant certifications for completed, ongoing, or upcoming projects (e.g., BIS, ISO, WHO-GMP).
13. Collaboration Agreements: Mention the name of the contracting entity for any strategic or collaborative arrangement (e.g., JV, technology, distribution).

This is no routine filing per contra a summons to craft a legacy. To every issuer, Merchant Bankers, advisor, and on top of it all, the Investors: these chapters are your canvas, where data becomes destiny. Paint the Industry Overview with the hues of truth; sculpt Our Business with the chisel of accountability. Your DRHP will not merely meet the Regulator's gaze, should an issuer company crafts as a testament to trust.