Monitoring Agency Report: How to Check Whether a Company Spent Its IPO Money as Promised

An IPO prospectus makes promises. A new plant here, a loan repaid there, some money for general corporate purposes. Then the shares list, the ticker starts moving, and almost nobody goes back to check whether the money actually went where the company said it would. The monitoring agency report is the document that does that checking for you, every quarter, and it is free to read on the exchange website.

We think it is one of the most under-read filings in the Indian market. In this guide we’ll cover when a company has to appoint a monitoring agency, what the report contains line by line, how it ties in with the company’s own statement of deviation, and a worked example showing how a fairly serious diversion of money can still show up in the lowest deviation band.

What a monitoring agency report is

When a company raises fresh money from the public, SEBI wants someone independent to keep an eye on how it is spent. Under Regulation 41 of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, if the issue size, excluding the offer for sale by selling shareholders, is more than ₹100 crore, the company has to arrange for a credit rating agency registered with SEBI to monitor the use of the proceeds. Issues by banks, public financial institutions and insurance companies are exempt.

The agency then sends the company a report every quarter, in a format laid down in Schedule XI of the same regulations, until 100% of the issue proceeds have been used. The board of directors and management have to add their comments on the agency’s findings. And within 45 days from the end of each quarter, the company must upload the report on its own website and file it with the stock exchanges where its shares are listed.

Note the exclusion. Offer for sale money goes to the selling shareholders, not the company, so there is nothing for the company to spend and nothing to monitor. A ₹2,000 crore IPO that is mostly OFS with, say, a ₹90 crore fresh issue would not cross the line. If that distinction is new to you, our explainer on fresh issue vs offer for sale walks through it.

How the rules got tighter after 2022

The current version is stricter than the one many older IPOs were listed under. The footnotes in SEBI’s consolidated regulations show three changes that took effect on January 14, 2022:

• Who monitors. The job moved to a SEBI-registered credit rating agency. Earlier, it went to a public financial institution or a scheduled commercial bank named in the offer document as the issuer’s banker.
• How long. Reports used to be required until at least 95% of the proceeds were used. Now it is 100%.
• What is covered. The old rule left out money raised for general corporate purposes. That carve-out was deleted, so GCP money is monitored too.

SEBI’s own board memorandum from November 2022 then pushed the same framework to preferential issues and qualified institutional placements. Its reasoning was blunt: existing shareholders agree to be diluted based on the stated use of funds, and money from mutual funds, insurers and banks is also public money. The memo noted that companies had raised ₹91,517 crore through preferential issues and ₹32,397 crore through QIPs over the previous financial year and the current one up to May 2022.

The prospectus tells you what the company plans to do with your money. The monitoring agency report tells you what it actually did, one quarter at a time.

Which issues need a monitoring agency today

The thresholds are not the same everywhere. Based on the March 2026 consolidated ICDR text:

• Mainboard IPOs and FPOs: fresh issue of more than ₹100 crore (Regulation 41 for IPOs; Regulation 137 is the equivalent section for further public offers).
• SME IPOs: fresh issue of more than ₹50 crore under Regulation 262. This was cut from ₹100 crore by an amendment effective March 8, 2025. Below that line, the company has to file a statutory auditor’s certificate on the use of the money with the SME exchange along with its quarterly results, until the proceeds are fully used. If working capital is an object and more than ₹5 crore is raised for it, a separate auditor’s certificate on that use is required in the format given in the offer document.
• Rights issues: Regulation 82 now applies to every rights issue. The words “If the issue size exceeds one hundred crore rupees” were removed by an amendment effective April 8, 2025.
• Preferential issues: issue size above ₹100 crore (Regulation 162A).
• QIPs: issue size above ₹100 crore, excluding any offer for sale (Regulation 173A).

For small-cap and SME investors, the 2025 change matters. A lot of SME issues were never large enough to need monitoring under the old ₹100 crore line. Our piece on mainboard vs SME IPO risk explains why that gap was a concern in the first place.

Reading the monitoring agency report, section by section

Schedule XI fixes the format, so once you have read one report you can read them all. Here is what each part tells you.

The front page: the verdict

The cover page carries the headline finding. Under “Deviation from the objects”, the agency states one of three things: there is no deviation; money was used differently from the offer document but in line with a change of objects approved by a shareholders’ resolution; or money was used in a way that is neither in line with the offer document nor approved by shareholders. That third line is the one to watch for.

Next comes the “Range of Deviation”, shown in bands such as up to 10%, 10-25%, 25-50%, 50-75%, 75-100% or not ascertainable. The agency also declares that it has no direct or indirect interest in or relationship with the issuer, its promoters, directors or management.

The yes/no checklist

This is the quickest part to scan. For each object, the agency answers yes or no to a set of questions, with its own comments and the board’s comments alongside:

• Is all utilisation as per the disclosures in the offer document?
• Has shareholder approval been obtained for material deviations?
• Has the means of finance for the objects changed?
• Is there any major deviation compared with earlier monitoring agency reports?
• Have all government and statutory approvals for the objects been obtained?
• Are technical assistance or collaboration arrangements in operation?
• Are there favourable or unfavourable events affecting the viability of the objects?
• Is there any other information that could materially affect investors’ decisions?

Schedule XI defines a material deviation as either a change in the objects themselves, or a difference of more than 10% between the amount actually used and the amount projected in the offer document. Keep that 10% figure in mind for the example below.

Cost and progress tables

The cost table puts the original cost of each object, as per the offer document, next to any revised cost, with reasons and the proposed way to fund the difference. The progress table is the heart of the report: for each object, the amount proposed in the offer document, the amount used at the beginning of the quarter, during the quarter and at the end of it, the total unutilised amount, and reasons for any idle funds.

There is also a table on where the unused money sits right now: the type of instrument, the entity it is invested with, the amount, the maturity date, earnings, return and market value at quarter end. And a table on delays, comparing the completion date in the offer document with the actual or revised date. Since 2022, general corporate purpose money gets its own section too.

The source column

One small column, added in 2022, deserves attention: “Source of information / certifications considered by Monitoring Agency for preparation of report”. It tells you whether the agency relied on bank statements, auditor certificates or just management representations. A report built mostly on management’s word is weaker evidence than one backed by a chartered accountant’s certificate.

Worked example: a deviation that hides in the smallest band

All figures here are made up for illustration. Say a company we’ll call Konkan Polymers raised ₹600 crore in fresh money in its IPO, alongside an offer for sale. The fresh issue is above ₹100 crore, so it needs a monitoring agency. The objects in the offer document were:

• New plant: ₹350 crore
• Repayment of borrowings: ₹130 crore
• General corporate purposes: ₹120 crore, which is 20% of the ₹600 crore raised

A few quarters after listing, the report shows the loans fully repaid. Of the plant money, the company has spent ₹65 crore on the plant. But it has also used ₹50 crore of the plant allocation for day-to-day working capital, and there is no shareholder resolution approving that change.

Now look at the numbers the way the report would. For the plant object on its own, ₹50 crore out of ₹350 crore is a deviation of about 14.3%. That is above the 10% line, so it is a material deviation under Schedule XI’s definition, and the answer to “Whether shareholder approval has been obtained in case of material deviations” would be no.

But the range of deviation on the cover page is worked out differently. Schedule XI says it may be computed as a weighted average of the financial deviation of each object, weighted by the share of issue proceeds allocated to it. The plant carries a weight of 350/600, or about 58.3%. The other two objects show no deviation. So the weighted figure is 58.3% × 14.3%, which comes to about 8.3%. That is simply the ₹50 crore diverted divided by the total ₹600 crore.

The cover page would therefore show deviation in the “up to 10%” band. Someone glancing at the front page sees a small number. Someone reading the checklist sees an unapproved, material diversion of plant money into working capital. Same report, very different impressions.

The range of deviation on the cover is an average across all objects. A big problem in one object can look small once it is averaged with clean ones.

That’s why we’d never stop at the front page. Look at the cover for the type of deviation, then go straight to the checklist and the progress table.

The company’s own filing: statement of deviation or variation

The agency’s report has a twin filed by the company itself. Under Regulation 32 of the SEBI Listing Obligations and Disclosure Requirements (LODR) Regulations, a listed company that has raised money through a public issue, rights issue, preferential issue or QIP has to file a statement of deviation or variation with the exchanges every quarter. As this TaxGuru analysis of Regulation 32 explains, a deviation means money used for a different object, while a variation means the objects are the same but the category-wise split, such as capex versus working capital, has changed.

The statement goes before the audit committee first and is then filed with its comments, within 45 days of each quarter end, or 60 days for the last quarter of the financial year, until the money is fully used or the purpose is achieved. Where a monitoring agency has been appointed for a public or rights issue, its report must also go before the audit committee every quarter, promptly after it arrives, and the company must file the agency’s comments or report with the exchanges within 45 days of quarter end.

Reading the two together is useful. If the company’s statement says “no deviation” while the agency’s checklist has several “no” answers, that mismatch is worth noticing.

How to find the reports

There’s no secret database. The report has to be on the company’s website and filed with the exchanges, so:

1. Go to the company’s page on the BSE or NSE corporate announcements section and search filings for “monitoring agency”.
2. Check the investor relations page of the company’s website. Many companies keep a separate folder for IPO-related disclosures.
3. Look for the Regulation 32 statement of deviation filed around the same time, usually alongside the quarterly results.
4. Pull out the offer document’s objects section and keep it next to you. The report only makes sense against what was promised. Our guide on reading the objects of the issue covers that section in detail.

Red flags to look for

• “Not ascertainable” in the range of deviation. If the agency can’t measure the deviation, ask why.
• Idle money that stays idle. A large unutilised balance quarter after quarter, with vague reasons, suggests the project is slipping.
• Revised costs and a changed means of finance. If the plant now costs more and the gap is being filled by fresh debt, the original IPO math no longer holds.
• A creeping delay table. Completion dates that move back every quarter are an early warning on growth guidance.
• Unfavourable events marked “yes”. Read the agency’s comment next to it. This is often where the useful detail sits.
• Thin sourcing. If the source column leans on management representations rather than certificates, give the report less weight.

Where this fits in your IPO homework

Most IPO analysis stops on listing day. The monitoring agency report is how you keep score afterwards. It won’t tell you whether the stock is cheap or expensive, and a clean report doesn’t make a business good. But it does tell you whether management is doing what it said it would do with shareholders’ money, and that is a fair test of the people you are backing. Ten minutes a quarter, for the first few quarters after listing, is a good habit.

For the wider process, from reading the prospectus to allotment and listing, see our guide to IPO investing in India.

Disclaimer: This article is for educational purposes only and is not investment advice. The rules described are summarised from the SEBI ICDR Regulations, 2018 (consolidated text amended up to March 2026), SEBI’s November 2022 board memorandum and TaxGuru’s analysis of LODR Regulation 32, all linked above and checked on October 21, 2026. Regulations change, so check the latest SEBI text before relying on any threshold. Konkan Polymers and all its figures are made up to show the calculation. Investing in IPOs involves risk of loss. Please do your own research and consult a SEBI-registered investment adviser before making any investment decision.