Is an SME IPO right for your company?
An SME IPO can give a growing company access to equity capital, a market value for its shares and more visibility with customers and lenders. It also brings continuing obligations: periodic financial results, disclosures, a stricter governance structure and the cost of intermediaries. The decision should be made with clear numbers.
Many companies in Gurugram and the NCR that think about an SME IPO are profitable and growing, but their records are not ready. Books are kept for tax purposes, related-party transactions are informal, GST and TDS have small but old mismatches, and some MCA forms were never filed. Our job is to find and fix these well before the merchant banker starts due diligence.
SME platforms and current eligibility, in brief
The two main SME platforms are BSE SME and NSE Emerge. Both follow Chapter IX of the SEBI ICDR Regulations and add their own eligibility criteria.
SEBI tightened the SME IPO framework through amendments notified in March 2025. The key points, in plain words:
| Rule | Position after the 2025 amendments |
|---|---|
| Operating profit | EBITDA of at least Rs 1 crore from operations in any two of the three preceding financial years |
| Offer for sale | Not more than 20% of the issue size; a seller cannot offer more than 50% of their pre-issue holding |
| General corporate purposes | Capped at 15% of the issue size or Rs 10 crore, whichever is lower |
| Use of proceeds | Cannot be used to repay loans from promoters, the promoter group or related parties |
| Promoter holding above minimum contribution | Locked in, with half released after one year and the rest after two years |
| Draft offer document | Made public for comments for 21 days, with a public announcement |
| Related party transactions | Main-board rules on related party transactions apply to SME-listed companies |
NSE Emerge additionally requires positive free cash flow to equity in at least two of the three preceding financial years, and revised the method of computing it for draft offer documents filed from 20 April 2026. BSE SME applies its own conditions on track record, net worth and other matters.
In October 2026 SEBI published a consultation paper proposing a further overhaul of the SME IPO framework. These are proposals, not law. The eligibility actually applied to your company will be confirmed by the merchant banker against the rules in force when the draft offer document is filed.
Our role, and the role of others
| Party | Role |
|---|---|
| Merchant banker (lead manager) | Manages the issue, conducts due diligence, prepares and files the offer document. Must be registered with SEBI. |
| Peer-reviewed Chartered Accountant | Examines and reports on the restated financial statements. |
| Statutory auditor | Audits the annual financial statements of the company. |
| Legal adviser | Legal due diligence, title, litigation and agreements. |
| Registrar to the issue, market maker, underwriter | Process the applications, provide liquidity and underwrite the issue as required. |
| KSV | Readiness review, cleaning of books and records, tax and GST compliance clean-up, schedules and reconciliations, and coordination with all of the above. |
KSV is not a merchant banker, auditor, Company Secretary or legal adviser, and we do not sign the restated financials or any certificate in the offer document.
What IPO readiness work covers
1. Readiness review
We review the last three years’ financial statements, books, ITRs, GST returns, TDS returns and MCA filings, and prepare a gap list with the time and cost to close each gap.
2. Books and restated financials support
- Re-checking ledgers year by year, clearing suspense and unexplained balances.
- Supporting schedules for every balance sheet item, with confirmations from banks, lenders, customers and suppliers.
- Identifying adjustments that the peer-reviewed auditor is likely to raise in restatement, such as prior-period items or changes in accounting policies.
- Related party lists and transaction summaries for the offer document.
3. Tax and GST clean-up
- Turnover reconciled between books, GST returns and ITRs for each year.
- Input tax credit reconciled with GSTR-2B and any excess credit reversed with interest where required.
- TDS defaults and short deductions identified and regularised.
- Pending notices, demands and appeals listed with status, since these are disclosed as litigation. Our GST compliance and notice teams help close what can be closed.
4. Corporate records
Pending RoC filings, share allotment forms, registers and minutes are completed. The capital structure, any conversion from a private to a public company, and board composition are planned with the Company Secretary and merchant banker.
5. Ongoing finance support
After listing, the company must publish half-yearly results and comply with listing obligations. Our virtual CFO service can support the finance team with closing, MIS and board reporting.
Common issues that slow down an SME IPO
- Books maintained only for tax, with year-end entries that cannot be supported.
- Loans from promoters and relatives without agreements or interest accounting.
- Revenue in GST returns that does not tie to the books or the ITR.
- Unfiled MCA forms for share allotments or director changes.
- Undisclosed or unresolved tax, GST or other litigation.
- Weak internal controls over cash, stock and approvals.
How we work with you
- Initial discussion at our Gurugram office or online, to understand your business, plans and timeline.
- Readiness review with a written gap list.
- Clean-up phase over the following months, in parallel with your regular compliance.
- Banker and auditor support once the merchant banker is appointed, answering their queries from the cleaned records.
We work with companies in Gurgaon, Delhi and across the NCR. Contact us to discuss your plans, or read about us first.
Frequently asked questions
What is an SME IPO?
It is a public issue of shares by a small or medium company that lists on a dedicated SME platform of a stock exchange, mainly BSE SME and NSE Emerge, instead of the main board. The rules for these issues are set by SEBI under the ICDR Regulations and by the exchanges.
What profit does a company need to list on the SME platform?
Under the amendments notified by SEBI in March 2025, an SME issuer must have an operating profit (EBITDA) of at least Rs 1 crore from operations in any two of the three preceding financial years. Each exchange also applies its own additional conditions, such as NSE Emerge's requirement of positive free cash flow to equity in two of the last three years.
How much can existing shareholders sell in the IPO?
Under the 2025 amendments, the offer for sale portion cannot exceed 20% of the total issue size, and a selling shareholder cannot offer more than 50% of their pre-issue holding.
Can IPO money be used to repay a loan from the promoter?
No. The amended rules do not allow the objects of an SME issue to include repayment of loans taken from promoters, the promoter group or related parties, directly or indirectly. General corporate purposes are capped at 15% of the issue size or Rs 10 crore, whichever is lower.
Does KSV act as merchant banker or auditor for the IPO?
No. An SME IPO must be managed by a SEBI-registered merchant banker, and the restated financial statements must be examined by a peer-reviewed Chartered Accountant. KSV is an accounting and taxation consultancy; we prepare the company for these intermediaries and support them with the books, reconciliations and records.
Can you promise that my company will be listed?
No one can. Listing depends on the exchange's approval, the merchant banker's due diligence, market conditions and investor demand. What good preparation does is reduce delays and surprises during due diligence.
How long before the IPO should we start preparing?
Ideally at least one to two years before. The offer document uses restated financials for the last three financial years, so problems in those years, such as unreconciled GST, missing RoC forms or unexplained loans, have to be fixed or explained.
Is my partnership firm or LLP eligible?
Only a company can issue shares to the public. A partnership firm or LLP must first convert into a company, and the track record of the earlier entity is considered only in the manner the exchange rules allow. We can help with the conversion planning through our [company incorporation](/company-incorporation-services/) team.
SEBI SME IPO rules phir se badalne wale hain kya?
SEBI released a consultation paper in October 2026 proposing further changes to the SME IPO framework. These are proposals only and not law yet. We track the final changes and update the readiness plan if they are notified.
What does an IPO readiness review cost?
It depends on the size of the company, the number of years to be reviewed and the state of the books. We quote a fixed fee for the review after a first discussion. See our pricing page or contact us.