When a company files a Draft Red Herring Prospectus (DRHP) with SEBI for an IPO, one of the mandatory requirements is a Chartered Engineer (CE) certificate verifying the fixed assets of the company. Yet many companies — and even their merchant bankers — are unclear on exactly what this entails, who qualifies, and how long it takes.
This guide clarifies the requirements.
What Is a Chartered Engineer Certificate for an IPO?
SEBI's Issue of Capital and Disclosure Requirements (ICDR) Regulations require companies to disclose their fixed assets in the prospectus. For capital-intensive companies — those with significant plant, machinery, real estate or infrastructure — SEBI requires an independent Chartered Engineer to verify and certify the existence, condition and value of these fixed assets.
The CE certificate confirms that the assets listed in the prospectus actually exist, are in the condition stated, and are being used for the purpose described.
Who Qualifies as a Chartered Engineer for IPO Purposes?
A Chartered Engineer (India) is a professional certified by The Institution of Engineers (India) possessing the technical competence to independently assess engineering assets and industrial facilities. For IPO-related fixed asset certification, the Chartered Engineer should:
- Hold a valid Chartered Engineer certification issued by The Institution of Engineers (India).
- Possess relevant domain expertise corresponding to the assets under review (Civil, Mechanical, Electrical, Chemical, Industrial Engineering, etc.).
- Be independent of the issuer company and free from any conflict of interest.
- Have adequate experience in industrial inspections, plant engineering, fixed asset verification and technical due diligence.
Chartered Engineers who are also IBBI Registered Valuers are increasingly preferred by merchant bankers because they combine technical engineering expertise with a structured understanding of asset valuation, documentation and regulatory reporting
What Does the CE Certificate Cover?
A Chartered Engineer Certificate for an IPO goes beyond fixed asset verification. It provides an independent technical assessment of the company's manufacturing facilities, supporting the due diligence process undertaken by merchant bankers and investors.
The certification typically covers:
- Physical verification of fixed assets such as land, buildings, plant & machinery, utilities, vehicles and equipment.
- Asset condition assessment to evaluate operational status, maintenance, remaining useful life and any major deterioration.
- Installed capacity verification by reviewing machinery specifications, production lines, utilities and manufacturing capabilities.
- Production process and plant layout verification to confirm that the manufacturing setup supports the products and capacities disclosed in the offer document.
- Capital asset verification by reconciling major fixed assets with the fixed asset register and capitalisation records.
- Asset utilisation review to identify idle, underutilised or under-installation assets that may affect production.
- Technical due diligence by reporting material engineering observations relevant to IPO disclosures, while noting any significant physical restrictions or operational constraints.
Together, these procedures provide an independent technical opinion on the existence, condition and production capability of the company's fixed assets, helping strengthen investor confidence during the IPO process.
How Long Does the Process Take?
For a mid-sized manufacturing company operating across two or three locations, a Chartered Engineer certification assignment generally requires 10 to 15 working days, including:
- Document review
- Site inspections
- Capacity assessment
- Production process verification
- Report preparation
- Clarifications with management
- Finalisation with merchant bankers
Early engagement is advisable, as the Chartered Engineer's report often forms part of the technical due diligence supporting the Draft Red Herring Prospectus (DRHP) and subsequent IPO documentation.
Why Axium Valuation
- Axium Valuation's team comprises Chartered Engineers certified by The Institution of Engineers (India), supported by IBBI Registered Valuers and experienced engineering professionals. Our technical due diligence assignments cover manufacturing facilities across engineering, automotive, pharmaceuticals, food processing, chemicals, infrastructure and other industrial sectors.
- Our services include:
- Physical verification of fixed assets
- Installed capacity verification
- Production process assessment
- Plant layout and engineering review
- Asset condition assessment
- Capital asset verification
- Technical certifications for IPOs, private equity transactions, mergers and acquisitions, lenders and regulatory compliance
- We work closely with merchant bankers, legal advisors, auditors and company secretaries to deliver technically robust reports aligned with transaction timelines and due diligence requirements.
- Engage us early in the IPO process—technical asset verification and capacity assessment are often critical components of the overall due diligence exercise.
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