Hikal Limited has disclosed significant irregularities in revenue recognition that have impacted its financial results across three quarters, following a comprehensive fact-finding review that uncovered employee misconduct involving document alterations.

Nature of Irregularities

The pharmaceutical and crop protection company identified suspected misconduct by certain employees involving irregularities and alteration of documents relating to revenue recognition. The irregularities were discovered during a fact-finding review and are being treated as misconduct by the company.

Financial Impact Assessment

The company has quantified the impact of these irregularities across the affected quarters, with the most significant adjustment being a revenue reversal of ₹80.70 crore in Q2FY26.

The impact primarily relates to revenue recognition timing, including potential reversals and adjustments to revenue recorded in the relevant periods. These adjustments have consequential impacts on quarterly financial results and related financial statement line items.

Company's Position and Clarifications

Hikal Limited has provided important clarifications regarding the nature of the irregularities and their impact on the company's operations. The company emphasized that despite the irregularities, all recognized transactions are legitimate and backed by proper documentation.

Key clarifications include:

• All underlying sales transactions are genuine and supported by customer purchase orders
• No siphoning, embezzlement, or misappropriation of company funds has occurred
• The irregularities relate specifically to timing of revenue recognition rather than fictitious sales
• The company has already taken corrective action by reversing ₹80.70 crore in Q2FY26

Regulatory Compliance and Next Steps

The company is currently evaluating applicable reporting requirements and will take appropriate steps to report the matter to relevant authorities as required under applicable laws and regulations, subject to legal advice. This disclosure has been made under Regulation 30 of the SEBI Listing Obligations and Disclosure Requirements Regulations, 2015.

Hikal stated it is assessing its statutory obligations and preparing to notify authorities where required, demonstrating the company's commitment to regulatory compliance and transparency in addressing the internal control issues.

The company has confirmed that all underlying sales are genuine, despite the revenue recognition irregularities affecting Q4FY25, Q1FY26, and Q2FY26. The most significant impact was a revenue reversal of ₹80.70 crore in Q2FY26, which has already been implemented by the company.

Hikal Limited has undergone a significant ownership restructuring as Castilia Life Sciences Private Limited successfully acquired a stake in the company through a strategic amalgamation scheme. This corporate action, sanctioned under Section 233 of the Companies Act, 2013, was approved on November 18, 2025, and became effective on December 1, 2025.

Key Details of the Acquisition

The amalgamation involved the following entities:

Impact on Shareholding

The shares previously held by Shri Rameshwara Investment Private Limited and Shri Badrinath Investment Private Limited have been transferred to Castilia Life Sciences Private Limited through this amalgamation scheme. This transfer affects the shareholding structure of Hikal Limited.

Regulatory Compliance

The transaction was carried out in compliance with regulatory requirements, including necessary disclosures to the stock exchanges. The amalgamation scheme was sanctioned under Section 233 of the Companies Act, 2013.

Implications for Investors

This corporate action represents a significant restructuring within the ownership structure of Hikal Limited. Investors should monitor any potential long-term strategic changes that may result from this consolidation of ownership under Castilia Life Sciences Private Limited.

Shareholders and potential investors are advised to conduct their own research and consult with financial advisors before making investment decisions based on corporate actions such as this amalgamation.