XYZ Ltd. an unlisted company and now wishes to expand its business. For expansion, company decided to bring an initial public offer. Referring to provisions of SEBI (Issue of Capital and Disclosure Requirements) Regulati

(i) Eligibility requirements for an initial public offer [Regulation 6(1) & 6(2) of the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018] An issuer shall be eligible to make an IPO only if: a. The issuer has net tangible assets of atleast ₹ 3 crores, calculated on a restated and consolidated basis, in each of the preceding three full years (of 12 months each), of which not more than 50% are held in monetary assets. However, if more than 50% of the net tangible assets are held in monetary assets, the issuer has utilized or made firm commitments to utilize such excess monetary assets in its business or project. This limit of 50% on monetary assets shall not apply in case of IPO is made entirely through an offer for sale. b. The issuer has an average operating profit of at least ₹ 15 crores, calculated on a restated and consolidated basis, during the three preceding 3 years, with operating profit in each of the three preceding years. c. The issuer has a networth of atleast ₹ 1 crore in each of the preceding three full years, calculated on a restated and consolidated basis. d. In case the issuer has changed its name within the last one year, atleast 50% of the revenue calculated on a restated and consolidated basis, for the preceding one full year has been earned by it from the activity indicated by the new name. (ii) In case the Eligibility conditions are not met- An issuer not satisfying the above-mentioned conditions shall be eligible to make an initial public offer only if the issue is made through the book-building process and the issuer undertakes to allot at least 75% of the net offer to qualified institutional buyers (QIBs) and to refund the full subscription money if it fails to do so.