Akums Drugs & Pharma has informed stock exchanges about an additional penalty imposed on its wholly-owned subsidiary Maxcure Nutravedics Limited by Gujarat tax authorities. The disclosure follows a previous announcement regarding regulatory action by the same authorities.

Penalty Details

The Office of the Deputy Commissioner of State Tax, Gujarat, has imposed an additional penalty of ₹1.80 crore under Section 129(3) of the CGST Act, 2017. This penalty is in addition to the amount already disclosed, bringing the cumulative financial impact to significant levels.

Nature of Violation

The penalty stems from shipping address errors in invoices and e-way bills. According to the company's disclosure, the shipping address was mistakenly entered incorrectly in the invoice and e-way bill documentation, leading to the regulatory action by Gujarat State Tax authorities.

Financial Impact Assessment

The company has provided a comprehensive assessment of the total financial impact from both penalties. The cumulative effect includes the current penalty along with the previously disclosed amount.

Regulatory Compliance

Akums Drugs & Pharma has fulfilled its disclosure obligations under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The company provided detailed information as required under the SEBI Master Circular, including the nature of violation, authority details, and financial impact assessment.

Company Response

The disclosure indicates that while the total penalty amount of ₹3.59 crore represents a significant sum, the company has assessed it as not material to its overall financial, operational, or other activities. This assessment suggests the penalty amount is manageable within the company's current financial framework and operational scale.

Akums Drugs & Pharma reported flat quarterly results for Q2FY26, with revenue at INR 1,018.00 crores, down 1.5% year-on-year. The company faced challenges as EBITDA margins declined to 9.3% from 11.7% in Q2FY25, primarily impacted by continued API price declines and higher overheads from new facilities.

Key Financial Highlights

Factors Affecting Performance

• API Price Decline: The company experienced an 8% decline in API prices, which significantly impacted the top line and EBITDA margins.
• New Facility Overheads: Higher overheads from newly operationalized facilities contributed to the margin pressure.
• Volume Growth: Despite challenges, the CDMO business witnessed a healthy volume growth of over 7%, outperforming the flat IPM (Indian Pharmaceutical Market) volume growth.

Strategic Developments

1. Zambia Joint Venture: Akums Drugs & Pharma announced a joint venture with the Zambian government to set up a USD 45.00 million manufacturing plant in Lusaka. The facility is expected to commence production in CY 2028 and will cater to various therapies in the region.

2. European CDMO Contract: The company secured European CDMO contract approvals, with commercial supplies to Europe expected from 2027. This marks a significant step in Akums' international expansion strategy.

3. European Market Entry: Akums Drugs & Pharma dispatched its first commercial supply of Dapagliflozin tablets to Switzerland and expects to supply Rivaroxaban tablets to Europe in Q3.

Segment Performance

• CDMO Business: Revenue stood at INR 804.00 crores, a slight increase from INR 799.00 crores in the previous quarter. EBITDA for this segment was INR 84.00 crores, showing a decrease of 31.3% year-on-year.
• Domestic Branded Formulations: Revenue increased by 5.3% year-on-year to INR 122.00 crores, with EBITDA at INR 26.00 crores, showing a 28.2% year-on-year increase.
• International Branded Business: Revenue declined by 14% year-on-year to INR 22.00 crores, affected by seasonal factors.
• API Business: Revenue decreased to INR 44.00 crores from INR 59.00 crores year-on-year, with the company focusing on higher-margin molecules.

Management Commentary

Sandeep Jain, Managing Director of Akums Drugs & Pharma, commented on the results: "While our revenue remained flat, margins saw a dip as API prices continued their downward trend. Our CDMO business witnessed a healthy volume growth of over 7%, even though the IPM volume growth was flat."

Future Outlook

The management remains optimistic about long-term growth prospects, citing the following factors:

• Expected benefits from the Zambia joint venture and European market expansion
• Continued focus on improving the product mix and operational efficiencies
• Anticipated growth in domestic business driven by stricter regulatory enforcement and a strong product pipeline

Akums Drugs & Pharma maintains a strong balance sheet with a cash surplus of INR 1,649.00 crores, providing leverage for both organic and inorganic growth opportunities.

Investor Meeting Announcement

The company also announced its participation in the JM Financial India Conference 2025, scheduled for November 20, 2025, in Mumbai. This event provides an opportunity for investors to gain further insights into Akums' strategies and future plans.

As Akums Drugs & Pharma navigates through the current challenges, the company's focus on diversification, international expansion, and operational improvements may position it for potential growth in the coming quarters.