Projections and utilization of funds by IPOs and compliance with clause 43 of listing agreement at stock exchanges in India: A case study

Abstract

The main issue this article deals with is the compliance with Clause 43 of the listing agreement by initial public offer companies in the Indian context. The study addresses utilization of the proceeds of such an issue in relation to the projected objectives as stated in the offer document at the time of issue and actual utilization of proceeds during the years 2003 to 2006. Using the 93 Initial Public Offers (IPO) companies listed on National Stock Exchange of India Limited (NSE) during this period as a dataset, the article shows the variations in proceed utilization and develops a tracking mechanism model procedure to be followed by major Indian stock exchanges for monitoring disclosure and utilization by companies listed on the exchange.