What the section tells you
Every RHP has a section called Objects of the Issue, or Objects of the Offer. It answers one question: what will the company do with the money it raises?
The section lists each use, the amount set aside for it and, usually, when the money will be spent. It is one of the most useful parts of the RHP, because it shows the company’s plans in rupees, not words.
First, separate the fresh issue from the offer for sale
An IPO can have two parts:
- Fresh issue. The company creates new shares and sells them. The money goes to the company.
- Offer for sale (OFS). Existing shareholders sell some of their shares. The money goes to them.
The objects of the issue apply only to the fresh issue. Money from an OFS never reaches the company. Read fresh issue vs offer for sale.
So the first number to find is how much of the IPO is fresh issue. On IPO24by7, the key facts on each IPO page show the split.
Gross proceeds, issue expenses and net proceeds
The RHP uses three terms for the money:
| Term | Meaning |
|---|---|
| Gross proceeds | All the money from the fresh issue |
| Issue expenses | Fees to lead managers, registrars, exchanges, lawyers and others |
| Net proceeds | Gross proceeds minus the company’s share of issue expenses |
The specific objects are paid from the net proceeds. In an IPO with both parts, the selling shareholders usually bear part of the issue expenses in proportion to the shares they sell.
The usual objects
Most IPOs use one or more of these:
- Repaying borrowings. The company pays down bank loans to cut interest costs.
- Capital expenditure. New machinery, plants or equipment, with quotes from suppliers.
- Working capital. Money to run the business day to day, such as stock and credit to customers.
- Acquisitions. Buying other companies, named or not yet identified.
- General corporate purposes. Money the company can use as it decides.
The limits SEBI sets
SEBI does not tell companies what to do with the money. It does cap the part that is not tied to a stated use.
| Limit | Mainboard IPO | SME IPO |
|---|---|---|
| General corporate purposes | At most 25% of gross proceeds | At most 15% of the money raised or ₹10 crore, whichever is lower |
| General corporate purposes plus unidentified acquisitions | At most 35% together, each at most 25% | Not stated in the SME RHPs we read |
| Monitoring agency needed | Issue size above ₹100 crore | Issue size above ₹50 crore |
Some RHPs add their own limits. Bombay Coated’s RHP, for example, says its general corporate purposes money will not be used to repay loans given by its promoters or directors.
A worked example
Here are three IPOs from October 2026, from their RHPs. Amounts are in ₹ crore.
| IPO | Fresh issue | Offer for sale | Main objects |
|---|---|---|---|
| Zetwerk | 2,830 | 2,182.33 | Repay borrowings of the company (1,300) and nine subsidiaries (860) |
| Carver Roboweld (SME) | 28.29 | None | Buy 27 welding robots (11.99); repay loans (8.60) |
| Sahajanand Medical Technologies | None | 475.48 | None: the whole IPO is an offer for sale |
Zetwerk’s offer for sale is our calculation: the ₹5,012.33 crore issue size minus the ₹2,830 crore fresh issue. Its RHP also caps general corporate purposes and unidentified acquisitions at 35% of gross proceeds together.
For Carver Roboweld, 15% of ₹28.29 crore is about ₹4.24 crore, lower than ₹10 crore. So its general corporate purposes can be at most about ₹4.24 crore, our calculation.
Sahajanand Medical Technologies received none of its IPO money. All of it went to the selling shareholders.
How each object is described
Each object in the RHP comes with its own sub-section. These are worth reading, not just the summary table.
- Repaying borrowings. A table lists each loan: the lender, the amount sanctioned, the amount outstanding, the interest rate and what the loan was used for. A chartered accountant usually certifies that the loans were used as stated.
- Capital expenditure. The RHP names the equipment or project, gives supplier quotations and states whether orders have been placed. Quotations that are old or not yet ordered mean costs can change.
- Working capital. The RHP shows how much working capital the company needs, how much its own cash and loans cover, and the gap the IPO fills.
- Acquisitions. If a target is named, the RHP gives details. If not, the money is for “unidentified” acquisitions, which falls under the 35% combined cap on the mainboard.
The more detail a sub-section gives, the easier it is to judge later whether the company kept to its plan.
The deployment schedule
Below the objects, the RHP shows when the money will be spent, usually split by financial year. For example, a company might plan to spend most of its capex money in the first year and the rest in the second.
Until the money is used, the company may keep it in bank deposits. The RHP usually says so. If spending slips, the unspent money stays parked, and the monitoring agency’s report shows the gap.
Who watches how the money is used
Two bodies check the use of IPO money after listing:
- The audit committee of the company’s board, under the Companies Act.
- A monitoring agency, a SEBI-registered credit rating agency, for mainboard issues above ₹100 crore and SME issues above ₹50 crore. It reports every quarter until the money is spent.
The company files the monitoring agency’s reports with the stock exchanges. They show how much has been spent on each object and whether anything differs from the RHP.
If the company wants to change the plan
A company cannot simply spend IPO money on something else. To change the objects, it needs a special resolution of shareholders, under Sections 13(8) and 27 of the Companies Act.
The notice for that resolution must be published in newspapers. The promoters must then offer to buy the shares of shareholders who disagree, under SEBI’s rules. The RHP’s “Variation in Objects” paragraph sets this out.
What to check
- How much is fresh issue? If most of the IPO is an offer for sale, the company itself raises little.
- How specific are the objects? Named machines with supplier quotes say more than broad headings.
- Whose loans are being repaid? The RHP lists each loan being repaid and the lender.
- How large is the unspecified part? Compare general corporate purposes with the cap.
- When will the money be spent? The deployment schedule shows the year by year plan.
- Is anything bought from related parties? The RHP discloses if suppliers or sellers are linked to the promoters.
Our guide to things worth checking in an IPO puts these alongside other checks.
Common mistakes to avoid
- Counting the whole IPO as money for the company. Only the fresh issue goes to it.
- Ignoring issue expenses. Net proceeds are smaller than gross proceeds.
- Reading “repay borrowings” as a warning on its own. Lower debt cuts interest costs; the details matter.
- Skipping the deployment schedule. It shows whether the money will be used soon or over years.
- Not reading monitoring reports later. They show whether the company did what it said.
What to do next
Read how to read an RHP to find the Objects section quickly, then see the objects of each current IPO on our IPO pages.
Sources: SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018: Regulation 7(2) (general corporate purposes), Regulation 41 (monitoring agency), Regulation 262(1) (SME monitoring agency) and Regulation 59 (variation in objects); Zetwerk Manufacturing Businesses RHP, Objects of the Offer (p. 203): 35% combined cap on general corporate purposes and unidentified acquisitions, October 2026; Johnsoncab Electricals RHP and Carver Roboweld RHP, Objects of the Issue (SME caps and monitoring agency), October 2026; Bombay Coated and Special Steels RHP, Objects of the Issue and Variation in Objects, October 2026; Companies Act, 2013, Sections 13(8) and 27 (variation in the objects of a prospectus).
Frequently asked questions
What are the objects of the issue in an IPO?
They are the purposes for which the company will use the money from its fresh issue of shares, such as repaying loans, buying machinery or funding working capital. The RHP lists each purpose with an amount and a schedule.
Does the company get the money from an offer for sale?
No. In an offer for sale, existing shareholders sell their shares and receive the money. The objects of the issue cover only the fresh issue.
What is general corporate purposes in an IPO?
Money the company can use as it decides, without naming a specific use. SEBI caps it at 25% of the gross proceeds for mainboard IPOs, and at 15% or ₹10 crore, whichever is lower, for SME IPOs.
Who checks that IPO money is used as promised?
The company's audit committee, and for larger issues a monitoring agency, a SEBI-registered credit rating agency that reports every quarter. The threshold is an issue size above ₹100 crore on the mainboard and above ₹50 crore for SME IPOs.
Can a company change the objects of the issue after the IPO?
Only with a special resolution of shareholders. The promoters must then offer an exit to shareholders who disagree, under the Companies Act and SEBI's rules.
Is repaying loans a bad use of IPO money?
Not by itself. Lower debt reduces interest costs. It is worth checking whose loans are being repaid and why. Bombay Coated's RHP, for example, says its general corporate purposes money will not repay loans from its promoters or directors.