Apollo Ingredients Limited (formerly Indsoya Limited) has reported a significant deviation in the utilization of funds raised through its rights issue, according to its quarterly compliance report filed with BSE for the quarter ended December 31, 2025. The company submitted the statement on February 14, 2026, revealing that Rs. 300.00 lakhs from the rights issue proceeds were used for purposes different from those originally specified.

Rights Issue and Monitoring Details

The company successfully completed its rights issue on August 12, 2025, raising Rs. 500.00 lakhs from investors. The fund utilization is being monitored by Infomerics Valuation and Rating Limited, which serves as the designated monitoring agency. The monitoring agency has formally observed and reported the deviation from the stated objects of the Letter of Offer.

Fund Utilization and Deviation Details

The latest quarterly report shows a marked change from the previous quarter, where no funds had been utilized. The current status reveals significant deployment of the raised capital:

Nature of Deviation

The monitoring agency observed that Rs. 300.00 lakhs from the rights issue proceeds were utilized towards lease consideration for a factory taken on lease from a related party, Apollo Ingredients India Private Limited. This utilization was not aligned with the objects specified in the Letter of Offer, which designated the majority of funds for raw material procurement, funding trade receivables, maintaining inventory, and reducing trade payables cycles.

Regulatory Approvals and Board Response

The Audit Committee and Board of Directors acknowledged the monitoring agency's observations during their respective meetings. The company had obtained prior approval from its members at the 45th Annual General Meeting held on September 27, 2025, for entering into the related party lease transaction. The lease agreement covers a factory owned by the related party for a period of 10 years, with an aggregate lease amount not exceeding Rs. 300.00 lakhs.

Current Compliance Status

The deviation report was signed by CS Ayushi Agrawal, Company Secretary and Compliance Officer (Membership No.: A54489), confirming the accuracy of the reported information. The company noted that while shareholder approval was obtained for the related party transaction, no specific approval was taken for changes in the objects of the rights issue. The auditors provided no additional comments on the deviation.

The statement indicates that Rs. 300.00 lakhs originally allocated for working capital requirements were redirected to advance lease payments, representing a substantial portion of the total funds raised through the rights issue.

Apollo Ingredients Limited (formerly Indsoya Limited) has disclosed significant deviations in the utilization of its rights issue proceeds through a monitoring agency report for the quarter ended December 31, 2025. The report, prepared by Infomerics Valuation and Rating Limited, highlights concerns regarding fund deployment that diverged from the original stated objectives.

Rights Issue Details and Fund Utilization

The company had raised ₹5.00 crore through a rights issue conducted from July 16 to July 29, 2025. The issue involved 1,00,00,000 fully paid-up equity shares at a face value of ₹5.00 each, offered to eligible shareholders in a ratio of 25 rights shares for every 1 equity share held as on the record date of July 7, 2025.

Deviation from Stated Objectives

The monitoring agency identified a significant deviation in fund utilization, with the company using ₹3.00 crore for advance lease payments instead of the originally planned raw material procurement and working capital requirements. This deviation falls within the 50-75% range of the total issue size.

Regulatory Compliance Issues

The report highlighted that the company failed to obtain proper shareholder approval through a special resolution for making the advance lease payment of ₹3.00 crore from the rights issue proceeds. While the company did secure approval for the related party transaction involving Apollo Ingredients India Private Limited at the 45th Annual General Meeting held on September 27, 2025, this approval did not specifically cover the change in utilization of issue proceeds.

Fund Deployment Status

As of December 31, 2025, the company had utilized ₹4.33 crore out of the total ₹5.00 crore raised, leaving ₹0.67 crore unutilized and maintained in the company's current account with Axis Bank. The utilization included ₹4.05 crore towards working capital and lease payments, along with ₹0.28 crore for issue-related expenses.

Company's Position

The Board of Directors noted that shareholders had approved the proposal to lease a factory from the related party for ₹3.00 crore at the Annual General Meeting. The company emphasized that the transaction was implemented in accordance with the approval granted and applicable statutory provisions, though this did not address the specific concern regarding deviation from the original issue objectives.

Business Operations

Apollo Ingredients Limited operates as a global science-based company developing innovative nutrition solutions, dietary supplements, and natural food colors. The company recently shifted its business activity to pharmaceuticals and nutraceuticals, entering this new line of business through a special resolution dated June 19, 2024.