Hikal Limited , a prominent Indian pharmaceutical company, has received a warning letter from the United States Food and Drug Administration (US FDA) regarding its manufacturing facility in Jigani, Bengaluru. The company disclosed this development in a regulatory filing to the stock exchanges on August 21, 2025.

Details of the FDA Inspection

The warning letter follows an inspection conducted by the US FDA at Hikal's Jigani facility from February 3rd to February 7th, 2025. The company had previously intimated the stock exchanges about this inspection on February 8th, 2025, and provided an update on May 23rd, 2025.

Company's Response

In response to the warning letter, Hikal has stated its commitment to addressing the regulatory concerns raised by the FDA. The company plans to work closely with the US FDA to resolve the issues at the earliest possible time.

Rajasekhar Reddy, Company Secretary and Compliance Officer of Hikal Limited, emphasized the company's stance on quality and compliance, stating, "We uphold quality and compliance issues with utmost importance and remain committed to be compliant with cGMP quality standards across all our manufacturing facilities."

Impact on Operations

While the specific details of the warning letter have not been disclosed, such regulatory actions can potentially impact a company's ability to supply products to the US market from the affected facility. However, Hikal has not provided any information on the potential impact on its operations or financial performance at this time.

Credit Ratings Reaffirmed

In a separate announcement on the same day, Hikal informed that ICRA Limited has reaffirmed the company's credit ratings:

This reaffirmation of credit ratings suggests that, despite the regulatory challenges, the credit rating agency maintains a stable outlook on Hikal's financial position.

As the situation develops, investors and stakeholders will be closely watching Hikal's efforts to address the FDA's concerns and the potential implications for the company's operations and market position in the pharmaceutical industry.

Hikal Limited , a leading manufacturer of specialty chemicals and pharmaceuticals, reported a decline in revenue for the first quarter, primarily due to regulatory challenges and deferred shipments in its pharmaceutical business.

Financial Performance

The company's consolidated revenue for Q1 stood at Rs. 380.00 crores, down from Rs. 407.00 crores in the corresponding quarter of the previous year. EBITDA fell to Rs. 25.00 crores, with margins contracting to 6.50% compared to 14.30% in Q1 of the previous year.

Segment-wise Performance

Pharmaceutical Business

The pharmaceutical division recorded revenue of Rs. 203.00 crores, experiencing an 11.70% year-on-year decline. The segment reported an EBIT loss of Rs. 27.00 crores, primarily attributed to deferred shipments worth approximately Rs. 50.00 crores. This deferment was a result of the US FDA's Official Action Indicated (OAI) status issued to the company's Bangalore facility.

Crop Protection Business

The crop protection division maintained a relatively stable performance with revenue of Rs. 178.00 crores and an EBIT of Rs. 17.00 crores, remaining largely flat year-on-year.

Regulatory Challenges and Remediation Efforts

Hikal's Bangalore facility received an OAI status from the US FDA following an inspection in February. The company has implemented comprehensive corrective and preventive actions (CAPA) to address the observations, which were primarily procedural in nature and did not include data integrity issues.

Sameer Hiremath, Vice Chairman and Managing Director of Hikal Limited, stated, "We have already implemented 75-80% of corrective actions and expect to complete the remaining measures by September. We are in constant communication with the US FDA and are confident of resolving the issue at the earliest."

Despite the OAI status, the company successfully completed GMP audits at its Bangalore API facility by ANVISA (Brazil) and PMDA (Japan), reinforcing its regulatory credentials in key Latin American and Japanese markets.

Outlook and Recovery Plans

Management expects the deferred pharmaceutical shipments to be recovered in Q2 and Q3. The company maintains its annual guidance of flat growth for the crop protection division and 12-14% growth for the pharmaceutical business.

Hikal is implementing several strategic initiatives to strengthen its position:

1. Expanding capacity at the Panoli site to mitigate risks and support new product launches.
2. Intensifying efforts to validate products at multiple sites.
3. Offering customers the option of dual-site manufacturing for existing products.
4. Enhancing the CDMO (Contract Development and Manufacturing Organization) pipeline with a focus on complex chemistries and on-patent molecules.

Diversification and Future Growth

The company is actively diversifying its portfolio, with plans to expand into personal care and specialty chemical spaces. Hikal is retooling some of its crop production lines to manufacture personal care products, with launches expected from Q3 onwards.

Hiremath added, "While Q1 reflects a slow start, we remain confident of delivering on our yearly guidance. We expect performance to improve meaningfully in the second half of the financial year, with Q4 being the strongest quarter, led by enhanced plant utilization, increased offtakes, and new product commercialization."

As Hikal navigates through these challenges, the company remains focused on its long-term growth strategy, emphasizing innovation, operational excellence, and strategic customer engagements across its diverse business segments.