Godavari Drugs reported no deviation or variation in the utilisation of funds raised through its preferential issue for the quarter ended June 30, 2026. The company raised a total of ₹4,411.73 lakh on March 18, 2026, and confirmed that the funds were deployed strictly according to the originally disclosed objects.

The Board of Directors considered and approved the Statement on Deviation or Variation in Utilisation of Funds at its meeting held on August 14, 2026. The filing was submitted to the BSE Limited pursuant to Regulation 32 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Fund Utilisation Breakdown

The preferential issue proceeds were allocated across three primary objects: capital expenditure, working capital requirements, and repayment of unsecured loans to promoters and directors. During the quarter, the company utilised funds only for capital expenditure purposes.

The capital expenditure was directed towards manufacturing Active Pharmaceutical Ingredients (APIs), intermediates, and specialty chemicals in therapeutic categories including Anti-HIV and CNS segments. Specific utilisations included civil construction for production blocks, procurement and installation of equipment such as reactors and heat exchangers, and augmentation of electrical infrastructure.

Compliance and Oversight

The Audit Committee reviewed the statement and recorded no comments, indicating compliance with the approved fund utilisation plan. Similarly, the auditors provided no comments on the deviation report. No monitoring agency was appointed for this issue.

There were no modifications to the original objects of the fund raising, nor any changes in the terms of the contract as disclosed in the fund raising documents. Consequently, no shareholder approval was required for variations during this quarter.

Godavari Drugs Limited reported a net profit of ₹1.11 crore for the quarter ended June 30, 2026, rising 7% from ₹1.10 crore in the same period last year. Revenue from operations expanded by 17% to ₹28.00 crore, compared to ₹23.81 crore in Q1FY25. On a sequential basis, however, profit fell 14% from ₹1.29 crore in the preceding quarter, as revenue contracted to ₹28.00 crore from ₹33.16 crore in Q4FY25.

The Secunderabad-based pharmaceutical firm saw its total expenses rise to ₹26.93 crore in Q1FY26, up from ₹22.52 crore in Q1FY25. This increase was driven primarily by higher costs of materials consumed, which jumped to ₹26.15 crore from ₹17.99 crore year-on-year. Despite the revenue growth, the surge in input costs compressed margins, resulting in a lower absolute profit figure compared to the strong finish in FY25.

Capital Raise and Warrant Conversion

In addition to approving the unaudited financial results, the Board of Directors authorized the allotment of equity shares upon the conversion of warrants. A total of 7,86,690 warrants were converted into an equal number of equity shares at an issue price of ₹89 per share. This transaction involved the receipt of ₹5.25 crore, representing 75% of the issue price per warrant.

The allotment was made on a preferential basis to individuals classified under the "Promoter Category." The post-allotment paid-up equity share capital increased from ₹10.13 crore to ₹10.91 crore. The share capital now consists of 1,09,14,125 equity shares with a face value of ₹10 each.

What the Numbers Show

A notable divergence exists between the company’s revenue growth and its cost structure. While revenue grew 17% year-on-year, the cost of materials consumed surged by 45% over the same period. This suggests significant pressure on gross margins, likely due to higher input costs or a shift in product mix towards lower-margin items. Furthermore, other income contributed ₹15.10 lakh to the bottom line, accounting for approximately 13% of the net profit, highlighting a modest but present reliance on non-operating income streams.

Fund Utilization Update

Godavari Drugs also filed its statement on the deviation or variation in the use of proceeds from its preferential issue dated March 18, 2026. The company raised ₹44.12 crore, primarily for capital expenditure related to manufacturing Active Pharmaceutical Ingredients (APIs) and intermediates, as well as working capital requirements. For the quarter ended June 2026, the company utilized ₹76.33 lakh towards capital expenditure. There was no deviation reported in the use of funds raised.

The results were reviewed by the Audit Committee and approved by the Board at its meeting held on August 14, 2026. The independent auditor, Ayyadevara & Co., issued a review report stating that nothing came to their attention to cause them to believe that the statement does not disclose the information required under SEBI Listing Regulations.