A Draft Red Herring Prospectus (DRHP) is the first formal offer document filed with SEBI when a company decides to go public. It is called 'red herring' because at this stage the price band, exact issue size, and final dates are not yet fixed — the document is incomplete with respect to those final commercial terms.
The DRHP is exhaustive on everything else. It typically runs 400-800 pages and covers: business overview, industry context, competitive positioning, three to five years of audited financials, promoter and management background, related-party transactions, litigation, regulatory approvals, intended use of proceeds, and a detailed risk-factors section that often runs 50-100 pages.
SEBI reviews the DRHP and issues observations — questions and clarifications the issuer must respond to. The DRHP is publicly available on SEBI's website and is the single most important document for any serious IPO research. After SEBI clears the DRHP, the issuer files the RHP with final commercial terms before the public subscription window opens.