Capital MarketsAvneep MehtaNo Comments

The Right Financial Foundation: Why IPO Success Begins Long Before the DRHP

Part 1 of the series: The Right IPO Starts with the Right Foundation

An IPO is often viewed as the culmination of a company’s growth journey. The focus tends to be on the DRHP, roadshows, valuation discussions and, ultimately, the listing day. While these milestones define the public phase of the journey, they are rarely where success is determined. In my experience, the strongest IPOs are built long before the company begins engaging with investors or regulators. They are the outcome of disciplined preparation that typically starts 18 to 24 months before listing, when leadership begins transforming the organisation from a promoter-led business into an institution capable of operating in the public markets.

Every company approaching an IPO has a compelling growth story. It may have expanded into new markets, built a differentiated product or achieved impressive financial milestones. But public market investors look beyond the narrative. They want confidence that the business is supported by reliable financial reporting, sound governance and disciplined decision-making. Ultimately, investors invest in future performance, but they rely on historical financial credibility to assess whether that future is believable.

Financial reporting is the first test of credibility

One of the biggest misconceptions about IPO readiness is that financial reporting can be strengthened once advisors are appointed. In reality, financial discipline cannot be built overnight. By the time merchant bankers, auditors and legal advisors begin their due diligence, the expectation is that the company already has robust financial processes in place.

Financial reporting is much more than a compliance requirement. It is the language through which investors understand a business. Every revenue figure, margin, cash flow statement and disclosure contributes to an investor’s assessment of management quality. Companies that consistently produce timely, transparent and reliable financial information inspire confidence because they demonstrate control over their business. Conversely, frequent adjustments, inconsistent accounting practices or weak documentation often raise questions that extend well beyond the finance function.

One thing I’ve consistently observed is that IPO readiness challenges rarely arise because of accounting; they arise because the business has grown faster than its financial reporting framework. In one engagement, converting historical financials from an LLP structure into a format suitable for the DRHP took much longer than expected. In another, multiple acquisitions completed shortly before the IPO made consolidation a significant exercise. I have also seen overseas acquisitions add another layer of complexity, where financial statements prepared under local regulations had to be aligned with Indian reporting requirements before they could be consolidated. These are challenges that cannot be addressed in a few months and reinforce the importance of preparing well in advance.

Building the right financial foundation

Financial readiness begins with establishing processes that deliver accurate information consistently, not just during the annual audit. Monthly financial closures, disciplined management reporting, audit-ready documentation and clearly defined accounting policies create the foundation on which every successful IPO is built. These practices enable leadership teams to make informed decisions throughout the year while ensuring that the organisation is prepared for the increased scrutiny that accompanies a public listing.

As businesses grow, financial complexity also increases. Multiple subsidiaries, diverse business lines and expanding operations often result in different accounting practices evolving across the organisation. While these differences may appear manageable in a private company, they become significant during IPO due diligence. Standardising accounting policies, aligning group reporting and ensuring consistency across entities are therefore not merely accounting improvements, they are essential steps in building investor confidence.

Transparency matters as much as accuracy

Another area that deserves early attention is related party governance. Most successful businesses operate within broader promoter ecosystems, and commercial relationships between group entities are often entirely legitimate. However, public market investors expect these transactions to be transparent, well documented and demonstrably conducted on an arm’s length basis. Questions around related party transactions rarely arise because they exist. They arise when the rationale, documentation or governance around them is unclear.

The same principle applies to the transition towards Indian Accounting Standards (Ind AS). Many companies initially approach Ind AS as a regulatory requirement, but its impact extends far beyond compliance. It influences how financial performance is measured, reported and interpreted. Starting this transition early allows management teams to strengthen internal capabilities, refine reporting processes and avoid unnecessary pressure closer to the IPO.

Financial excellence reflects organisational maturity

Strong financial reporting is never the responsibility of the finance team alone. It reflects the maturity of the organisation as a whole. Reliable reporting depends on accurate operational data, disciplined internal processes, appropriate technology and leadership that values transparency. Finance brings these elements together, but it cannot compensate for weaknesses elsewhere in the business.

This is why IPO readiness should never be viewed as a project that begins with the DRHP. It is an enterprise-wide transformation that requires sustained focus well before listing. Companies that invest in strengthening their financial foundation early spend less time resolving historical issues and more time demonstrating the long-term value they can create as a public company.

The public often remembers an IPO for its listing gains or valuation. Those involved in the journey remember something different: the months of preparation, the countless decisions and the discipline required to build an organisation that can withstand public scrutiny. In the end, successful IPOs are not defined by how well a company performs on listing day. They are defined by the quality of the financial foundation built long before the market notices.

Ultimately, an IPO is a milestone, not the destination. While valuation and listing day often attract the headlines, long-term success depends on the strength of the financial foundation built well before the company enters the public markets. In the end, trust is earned through consistency, transparency and financial discipline, not just growth.

Building the right financial foundation is the first step towards IPO readiness. In the next article, we will examine why governance has become one of the strongest indicators of investor confidence, valuation and long-term market success.

Assurance, Capital Markets, Financial Advisory, Risk Advisory, UncategorizedAvneep Mehta

Competitiveness Is a Team Sport: Here’s What Government and Industry Must Get Right.

Global competitiveness is one of those terms that appears frequently in boardroom discussions, government policy papers and industry forums. Yet it often means different things to different people. For some, it is about attracting investments. For others, it is about exports, manufacturing or ease of doing business. In reality, competitiveness is much broader. It reflects a country’s ability to help its businesses compete successfully in global markets over the long term.

India has made remarkable progress over the past decade. Investments in infrastructure, manufacturing, digital public infrastructure and entrepreneurship have significantly strengthened the country’s economic foundation. As global supply chains diversify, India has emerged as a credible destination for manufacturing and investment. The challenge now is no longer about becoming globally competitive. It is about sustaining that competitiveness in an increasingly dynamic global economy.

In my experience, sustained competitiveness is never the result of one policy decision or one corporate initiative. It is created when government and industry move in the same direction. Their roles are different, but their objective is the same, building an ecosystem where Indian businesses can compete confidently with the best in the world.

One observation has stayed with me through my interactions with manufacturing and business leaders over the years. Companies rarely lose their competitive edge because they lack ambition. More often, they lose it because they stop improving. Processes remain unchanged, investments in people slow down, innovation takes a back seat and governance becomes a compliance exercise rather than a strategic advantage.

A few years ago, I interacted with the leadership team of a manufacturing company that had invested significantly in expanding production capacity. Yet customer complaints continued to rise. The issue wasn’t the technology or the machinery. It was inconsistent production planning, weak process discipline and insufficient investment in people. Once these operational issues were addressed, productivity improved and customer confidence returned. The experience reinforced an important lesson for me. Competitiveness is rarely built through capital investment alone. It is built through continuous improvement.

If India is to sustain its global competitiveness over the next decade, both government and industry have important responsibilities.

What Government Can Prioritise

Government’s role is to create an environment where businesses can compete globally. Continued focus on a few structural priorities can significantly strengthen India’s long-term competitiveness.

  • Promote skill-based education, vocational training and stronger industry-academia collaboration to create a future-ready workforce.
  • Continue investing in roads, railways, ports and multimodal logistics to reduce transportation costs and improve supply chain efficiency.
  • Improve industrial energy competitiveness by reducing distribution losses and rationalising cross-subsidisation.
  • Encourage research, innovation and commercialisation through easier access to risk capital, particularly for MSMEs and emerging technology businesses.
  • Simplify the regulatory and tax environment to encourage long-term investment and improve ease of doing business.
  • Continue supporting MSMEs through policies that strengthen competitiveness, technology adoption and market access.

What Industry Must Do

Government can create opportunities. Industry must convert those opportunities into a competitive advantage. 

Businesses that aspire to compete globally need to look beyond cost as their primary differentiator. Increasingly, customers evaluate suppliers on reliability, governance, compliance, innovation and their ability to deliver consistently.

To remain globally competitive, businesses should focus on:

  • Investing consistently in research, technology, automation and digital transformation.
  • Building strong governance, legal compliance and ethical business practices that inspire confidence among customers and investors.
  • Creating internal learning and skill development programmes while offering competitive career opportunities to attract and retain talent.
  • Maintaining an uncompromising focus on quality, productivity and on-time delivery.
  • Expanding into international markets and participating more actively in global supply chains through cluster-based manufacturing and collaboration.
  • Strengthening financial discipline and succession planning to build resilient organisations capable of sustaining long-term growth.

Global competitiveness is not achieved once and preserved forever. It must be earned continuously through better policies, stronger businesses and a willingness to improve every day.

India has already demonstrated its ability to compete on scale. The next phase of our journey will depend on how consistently we invest in productivity, innovation, skills and governance. When government creates the right environment and industry responds by building stronger, more innovative and globally respected businesses, competitiveness becomes a sustainable advantage rather than a temporary achievement.

About the Author

Avneep L. Mehta is a Partner at M O J & Associates and has over 16 years of experience advising businesses on audit, valuation, governance and risk advisory. His professional experience spans listed companies, large enterprises and growth-stage businesses across multiple sectors. 

Capital Markets, Financial AdvisorySrinivasan Chandrasekar

Can India Fund Its Five-Trillion-Dollar Ambition? The Infrastructure Finance Question That Matters

India’s infrastructure ambition is, by any measure, enormous. The National Infrastructure Pipeline alone targets over ₹111 lakh crore in investment. Add to this the Smart Cities Mission, Bharatmala, Sagarmala, and the renewable energy transition, and the capital requirement quickly exceeds what any single source, government, banking system, or capital market, can support on its own.

The question, therefore, is not theoretical. Can this scale of ambition actually be funded?

Reasons to be constructive

There are clear reasons for optimism. The PPP framework has matured significantly. Model concession agreements are in place. Institutional knowledge has deepened over two decades of transactions. This matters more than it appears, because a large part of what deters capital is not just uncertainty of returns, but uncertainty of process.

InvITs and REITs have demonstrated that Indian infrastructure and real estate assets can attract global institutional capital. The proof of concept is now established.

Asset monetisation through the National Monetisation Pipeline is unlocking capital without increasing sovereign borrowing. And India’s long-term growth trajectory continues to appeal to investors willing to take a long-duration view.

The constraints that matter

The challenges, however, are structural. Land acquisition remains one of the most persistent sources of delay and cost escalation. While regulatory safeguards have strengthened, the early stages of project development continue to be slow and unpredictable. Developers have adapted, and investors have priced this in. That does not mean the issue is resolved.

Regulatory consistency is another critical factor. Infrastructure investments are inherently long-term. Capital committed today is based on expectations that extend across decades.

When tariff frameworks lack transparency, or when regulatory decisions appear inconsistent, the impact is immediate. It reflects in higher risk premiums and, in some cases, in capital choosing alternative markets. Contract enforcement and dispute resolution complete the picture. The contracts themselves have become more sophisticated. The systems required to interpret and enforce them must evolve at the same pace.

What the five-trillion ambition requires

India has made meaningful progress in rebuilding its infrastructure financing architecture. The next phase is less about introducing new instruments and more about strengthening the institutional foundations that support them.

India does not lack capital interest. It needs structural predictability that converts interest into long-term commitment.

The ambition is fundable. The more important question is whether the institutional infrastructure can keep pace with the physical infrastructure. 

Capital Markets, Financial AdvisorySrinivasan Chandrasekar

The Airport Story: What India’s Privatisation Experience Tells Us About Infrastructure’s Future

Think about the last time you flew through Delhi’s Terminal 3, or walked through one of Mumbai’s expanded terminals. Then try to recall what Indian airports looked like in the 1990s.

That gap is not just about architecture or passenger experience. It reflects what infrastructure can become when the underlying financial and operational structure is right.

India’s airport privatisation journey is one of the most instructive case studies for infrastructure development. It has delivered real outcomes. It has also surfaced real challenges.

What changed

Major airports in Delhi, Mumbai, Bengaluru and Hyderabad transitioned to private concessionaires under long-term agreements.

That shift brought more than capital. It introduced operational discipline, sharper execution, and a long-term approach to asset management.

Revenue streams that were once negligible became central to the model. Retail, hospitality, real estate and commercial development now contribute meaningfully to airport economics. This reduces dependence on aeronautical charges alone.

Access to capital also evolved. Airport operators today can raise debt and attract institutional equity in ways that were not possible under a purely government-run model.

The replicable lesson

 The core insight from the airport experience is straightforward.

When an infrastructure asset is structured with clear revenue streams, a credible risk-sharing framework, and a concession period that supports long-term investment, capital follows.

Financing does not have to rely entirely on government budgets. It can be unlocked through structure.

This logic is now being extended to other sectors, ports, highways, urban transit and water infrastructure. Some of these applications are working well. Others are still navigating the institutional complexities that marked the early years of airport privatisation.

The unfinished business

Not every airport privatisation has been smooth.

Revenue-sharing disputes, questions around tariff setting, and gaps between projected and actual traffic have created friction. Some of these challenges have led to prolonged negotiations and, in certain cases, litigation.

The model works. But it works best when three elements are in place, regulatory credibility, effective dispute resolution, and contracts that are designed with foresight.

India is still strengthening these capabilities. The airport sector has served both as proof of concept and as a testing ground.

What this means going forward

The story is still unfolding.

But one thing is clear. Infrastructure delivers better outcomes when it is structured as a long-term business with public purpose, rather than treated purely as a public project.

That is the lesson the airport sector offers. And it is a lesson worth applying more widely.

Capital Markets, Financial AdvisorySrinivasan Chandrasekar

Why InvITs and REITs Are the Financial Innovation India Did Not Talk About Enough

Ask most people what a Real Estate Investment Trust (REIT) is, and you will get a blank stare. Ask an infrastructure developer what an Infrastructure Investment Trust (InvIT) has done for their balance sheet, and you will hear something quite different.

Real Estate Investment Trusts and Infrastructure Investment Trusts have emerged as among the most consequential financial innovations in India’s infrastructure story. Quietly, and without the visibility of policy announcements, they have reshaped how developers think about capital and how investors approach India.

The problem they solved

 Developers of infrastructure and real estate have always faced a particular kind of constraint.

Their best assets, operational highways, stabilised office parks, running power lines, sit on the balance sheet generating cash, but locking in capital that could otherwise fund the next phase of growth. The assets perform. The limitation is that they cannot easily be converted into liquidity without selling them outright, and selling them outright often means losing operational control.

InvITs and REITs addressed this directly.

By allowing developers to list operational assets on public markets, these instruments created a monetisation path that did not require exiting the business. Developers could recycle capital, reinvest in new projects, and retain a continuing economic interest in the underlying assets.

That combination had not been available earlier.

What has changed on the ground

The impact is now visible across sectors.

  • Highway InvITs hold thousands of kilometres of operational toll roads, opening access to infrastructure yields that were once limited to large institutions.
  • Office REITs in Bengaluru, Mumbai and Hyderabad have become benchmarks for institutional-grade real estate, attracting global pension funds and sovereign investors.
  • The model has enabled asset recycling at scale, allowing developers to monetise, reinvest and build again without waiting for traditional funding cycles.

A decade ago, these were not assets you could meaningfully access as an investor. Today, they are part of mainstream portfolios.

The investor case

For long-term investors, including pension funds, insurance companies and family offices, these instruments offer something that is harder to find than it appears, predictable, yield-generating assets with regulatory oversight and tradeable liquidity.

In a world searching for stable yield, these instruments are no longer niche. They are increasingly becoming part of core portfolio allocations.

A note of caution

These structures are not simple.

Governance arrangements, related-party transactions, interest rate exposure and sector-specific demand risks all require careful scrutiny. SEBI’s regulatory framework has matured considerably, and that has added credibility to the market. But investors who treat InvITs or REITs as straightforward fixed-income substitutes are not reading the instrument correctly.

What comes next

The real question now is not whether these structures work. The data on that is reasonably clear.

The question is how far they can scale, and what might limit that scale.

Capital Markets, Financial AdvisorySrinivasan Chandrasekar

India’s Infrastructure Finance: From Babus to Boardrooms

When I started advising on infrastructure projects nearly two decades ago, the financing conversation followed a fairly predictable script. You went to a public sector bank, negotiated a long-term loan, and then spent the next several months hoping land acquisition would not derail your timeline before the monsoons arrived.

Risk sat with the government. Money came from the same few places. Results were uneven, and everyone knew why.

That world is gone. What has replaced it is something genuinely different, and in many ways more interesting to work in.

The old model and why it broke

For most of independent India’s history, infrastructure was a government affair. Roads came from budgetary allocations. Railways ran on sovereign borrowings. Power projects were financed through public sector banks that absorbed risk that was, frankly, not theirs to absorb.

Looking back, three fault lines defined that system.

First, banks were lending long against short-term deposits, a mismatch that was always going to create stress. Second, financial, operational and political risk was concentrated with one entity, the government. That concentration led to inefficiency and, eventually, inertia. Third, no government budget was ever going to keep pace with the scale of infrastructure India actually needed.

By the early 2010s, the system had buckled. Non-performing assets mounted. Projects stalled. It became clear that the architecture itself needed rethinking.

What has changed

The shift took time, and it is still unfolding, but the direction is unmistakable.

Public-Private Partnerships have moved from policy aspiration to operational reality. Build-Operate-Transfer, the Hybrid Annuity Model and Design-Build-Finance-Operate structures now define how roads, metro rails and airports get built. Risk is shared rather than concentrated, and that changes incentives across the lifecycle of a project.

In many of the projects I have been involved with, you can see this shift clearly.

Capital markets have entered the picture in a serious way. Infrastructure Investment Trusts and Real Estate Investment Trusts have created a new class of participants, retail investors, global pension funds and sovereign wealth funds, who now have a genuine stake in Indian highways and Grade-A office parks.

A decade ago, these were not assets you could invest in. Today, they are part of mainstream portfolios.

Governments have also started monetising what they already own. Rather than relying only on fresh borrowing, the approach now is to lease operational toll roads, airports and pipelines, use the proceeds to fund new projects, and recycle capital more efficiently.

And ESG considerations, once seen as peripheral, have quietly become central to investor decision-making. Green bonds and sustainability-linked frameworks are now part of how serious infrastructure capital is deployed.

What this means on the ground

Nowhere is the transformation more visible than in real estate and technology parks. The rise of REITs has opened access to Grade-A office assets that were once held almost entirely by institutions.

Cities like Bengaluru, Hyderabad and Mumbai are now investable markets for global capital in ways they simply were not before. Smart cities, data centres and fintech hubs have moved from aspiration to active deal flow.

Where we go from here

India’s ambition to reach a five-trillion-dollar economy rests, in significant part, on getting infrastructure finance right.

India does not have a capital shortage. It has a capital structure challenge.

Progress has been real. But the next phase will require deeper capital market development, stronger institutional capacity for contract management and dispute resolution, and policy consistency that gives investors the confidence to commit capital over long time horizons.

The babus are still in the room. So are the boardrooms.

The most interesting work now happens at their intersection.

What has your experience been with the changing infrastructure finance landscape? I would be glad to hear from developers, investors and policymakers in the comments.