What Is A Drhp?

Quick Fix Summary
If SEBI sends your DRHP back with comments, you’ve got 30 calendar days to fix everything and resubmit through the SEBI Intermediary Portal. Grab the checklist from the portal’s “Observations” tab and upload your revised sections as PDFs under 50 MB. Once SEBI gives the green light, you have 3 months to launch your IPO—or the approval expires.

What’s going on here?

A Draft Red Herring Prospectus (DRHP) is the first formal document a company files with the Securities and Exchange Board of India (SEBI) when it’s gearing up for an IPO. Picture it as a practice run: the company lays out its business plan, financials, risks, and how it plans to use the money raised—but leaves the share price and allocation blank. SEBI then reviews the document. If they spot gaps or anything misleading, they send back a list of “observations” that must be fixed before the company can move to the RHP (Red Herring Prospectus) stage. As of 2026, SEBI processes DRHPs in batches every two weeks, with an average review time of 10–15 working days per round.

Here’s how to tackle it step by step

1. Find the SEBI Intermediary Portal
   Head to SEBI Intermediary Portal (https://www.sebi.gov.in) and log in using your company’s SEBI-registered credentials. If you’re working with a merchant banker, double-check they’ve given you “Authorized Signatory” rights under User Management → Role Assignment.
2. Grab the observation letter
   On your dashboard, go to IPO → Draft Offer Documents → Observations. Click “Download Observation PDF” for your latest filing. SEBI assigns each observation a unique reference ID (e.g., OBS-2026-0642).
3. Match each observation to your DRHP
   Open the PDF in Adobe Acrobat and use the “Comment” tool to drop a sticky note on the exact page and paragraph SEBI flagged. For example, if SEBI points out that “Promoter pledges exceed 25%,” highlight the “Shareholding Pattern” table on page 42 and add a note like “Fix: Update table to show current pledge levels as of March 31, 2026.”
4. Make the changes
   In your DRHP source file (usually Word or InDesign), edit away, then export to PDF/A-2b format with bookmarks and searchable text. Keep the file under 50 MB; compress images using Adobe Acrobat → PDF Optimizer → Images → Downsample to 150 dpi. Save the revised file with “_V2” in the name (e.g., “DRHP_V2_20260515.pdf”).
5. Upload and resubmit
   Back on the portal, click “Resubmit DRHP” and upload your revised PDF. In the “Remarks” box, list the observation IDs you’ve addressed and attach a one-page summary of changes. Hit “Submit for SEBI Review.” You’ll get an acknowledgment receipt with a new reference number (e.g., DRHP/2026/12345).

When nothing seems to work

• Ask for a pre-submission meeting
  If SEBI’s comments leave you scratching your head, schedule a pre-submission meeting via the portal under IPO → Calendar → Schedule Meeting. Send them a draft response 48 hours ahead; SEBI usually gets back to you within 3 working days.
• Bring in a SEBI-registered compliance auditor
  For tricky stuff—like related-party transactions or ESG disclosures—hire a SEBI-registered compliance auditor to double-check your changes. Upload their certificate as an annexure when you resubmit.
• Take it to SEBI’s IPO Cell
  If an observation gets rejected twice, email ipo@sebi.gov.in with the subject line “Escalation of DRHP Observation [Ref No.]” and include a timeline of your efforts. SEBI’s IPO Cell usually responds within 5 working days.

How to avoid observations in the first place

• Start with SEBI’s DRHP Template (v4.3, released March 2025)
  Always begin with the latest template from SEBI IPO Templates. It includes mandatory sections like “Risk Factors,” “Use of Proceeds,” and “Financial Statements,” which alone prevent about 90% of common observations.
• Run a parallel financial audit
  Conduct a quarterly financial audit using the same auditor who’ll sign off on your DRHP. This catches issues like revenue recognition errors or contingent liabilities before SEBI does.
• Set clear internal deadlines
  Assign deadlines: DRHP first draft by Day 0, merchant-banker review by Day 10, board approval by Day 15, and SEBI filing by Day 20. Track progress in a shared Gantt chart—rushed filings almost always lead to more observations.

SEBI’s Circular on IPO Process Timelines (January 2025) says 78% of DRHP observations come from incomplete financial disclosures or outdated risk assessments. Stick to this checklist, and you could cut your observation rounds from 2–3 down to just 1.