Natural Capsules reported a challenging first quarter of FY27, with revenue contracting 17% year-on-year to ₹48.71 crore. Despite the top-line decline, the company managed to expand its EBITDA margin by 2 basis points to 2.30%, driven by improved realisations and timely pass-through of input cost increases. However, the net loss widened by 15% to ₹5.74 crore, compared to ₹4.96 crore in the corresponding quarter last year.

Financial Performance

The quarter’s financials reflect operational headwinds offset by margin preservation efforts and a sharp rise in non-operating income. While EBITDA fell 16% year-on-year to ₹1.12 crore, it rose 251% sequentially, indicating a recovery from the previous quarter’s low base. A significant development was the surge in other income, which jumped 556% year-on-year to ₹2.35 crore, up from ₹0.36 crore in Q1FY26. Conversely, finance costs nearly doubled, rising 97% year-on-year to ₹4.97 crore from ₹2.53 crore, exerting pressure on the bottom line.

What the Numbers Show

A significant divergence exists between operating performance and bottom-line results. While EBITDA improved sharply on a sequential basis (+251%), the net loss widened slightly (+3% QoQ). This suggests that fixed overheads, particularly the 97% year-on-year spike in finance costs, absorbed much of the operating gain. Furthermore, the 17% year-on-year revenue decline occurred alongside a 2 bps margin expansion, indicating that pricing power or mix shifts helped preserve profitability despite lower volumes. The substantial rise in other income (₹2.35 crore) partially mitigated the impact of high interest expenses on the final net loss figure.

Operational Updates

Sunil Mundra, Managing Director, noted that the reported numbers are not directly comparable to the preceding quarter, which benefited from the dispatch of deferred inventory following a plant shutdown in Puducherry. On an underlying basis, management described the performance as healthy.

Key operational developments include:

• ERP Disruption: Implementation of a new ERP system near the end of the quarter caused brief disruptions to billing and dispatch, pushing sales from the final five days into Q2. Management stated this impact modestly suppressed reported revenue.
• HPMC Segment: Due to erratic demand and duty uncertainty in the US market, the company temporarily converted one HPMC production line to gelatine capsules to optimise capacity utilisation. A second line is expected to follow next month.
• API Business: Geopolitical uncertainties and currency fluctuations (appreciating Chinese yuan, depreciating Indian rupee) weighed on African export volumes routed through merchant exporters.

Strategic Progress

Despite near-term pressures, Natural Capsules made strategic strides in its API segment. The company commenced its first batch under a contract manufacturing agreement with Fermbox Bio in August and signed a new deal with a Mumbai-based client. Technically, prednisolone synthesis was completed at gram-scale batches, with full backward-integrated production expected by September. Additionally, a fermentation step was transitioned to an enzymatic route, improving yields and cost efficiency.

Regulatory progress includes the initiation of the WHO GMP application process, with an audit expected by the end of Q2FY27. The company also appointed a Chief Operating Officer for the API business, leveraging over 30 years of industry experience.

Mundra expressed confidence in sustained performance for the capsules business through the fiscal year, citing firm demand trends into Q2FY27 and improved visibility across segments.

Natural Capsules Limited concluded its 33rd Annual General Meeting on August 12, 2026, approving key governance resolutions including the reappointment of directors and authorization of related party transactions.

The meeting was conducted through video conferencing from the company’s registered office in Bengaluru. Independent Director Tekkar Yashwanth Prabhu chaired the proceedings, which began at 12:10 pm after confirming the presence of a quorum comprising 34 members.

Key Resolutions Approved

Shareholders transacted six business items during the meeting. The ordinary business included the adoption of audited consolidated and standalone financial statements for the fiscal year ended March 31, 2026.

The board also sought approval for the following governance matters:

• Reappointment of Mrs. Jyoti Mundra as a director retiring by rotation.
• Reappointment of Mr. Laxminarayan Moondra as a director retiring by rotation.
• Reappointment of Mr. Laxminarayan Moondra as Whole Time Director for a three-year term with revised remuneration (Special Resolution).
• Approval of related party transactions with subsidiary Natural Biogenex Private Limited.
• Revision in remuneration for Mr. Shrey Mundra, General Manager – Marketing.

Voting Process

Pursuant to Regulation 44 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the company provided remote e-voting facilities from August 8 to August 11, 2026. Members attending the virtual meeting who had not voted remotely were given an additional 15-minute window to cast their votes electronically via the NSDL portal during the AGM.

Mr. Deepak Sadhu of Deepak Sadhu & Co served as the scrutinizer for the voting process. The final results will be submitted to stock exchanges separately upon receipt of the scrutinizer’s report.