Innova Captab Limited , a pharmaceutical company, has received a Show Cause cum Demand Notice from the Central Goods & Services Tax (CGST) Commissionerate, Shimla, regarding alleged excess refund claims of accumulated Input Tax Credit (ITC). The notice, issued under Section 74 of the CGST Act, 2017, covers the period from May 2020 to March 2024.

Key Details of the Notice

Alleged Violation

The tax authority claims that Innova Captab applied for refunds under Rule 89(4) of CGST Rules instead of Rule 89(4B), which they assert is a violation of Section 54 of the CGST Act. The company is accused of claiming excess refunds of accumulated Input Tax Credit on account of zero-rated supplies.

Company's Stance

Innova Captab has stated that it believes the notice has no merit. The company plans to submit its defense within the prescribed 30-day timeline. In its disclosure to the stock exchanges, Innova Captab mentioned that it would file its response to the show cause notice with supporting documents.

Potential Implications

The notice demands that Innova Captab show cause as to why:

1. The excess refund of ₹15,81,37,255.40 should not be recovered.
2. Appropriate interest should not be charged under Section 50 of the CGST Act, 2017.
3. A penalty of ₹15,81,37,255.40 should not be imposed under Section 74(1) of the CGST Act, 2017.

This development could have significant financial implications for Innova Captab if the demand is upheld. However, the final outcome will depend on the company's response and the subsequent decision by the tax authorities.

Investors and stakeholders of Innova Captab should monitor this situation closely, as it may impact the company's financial position and compliance status. The resolution of this matter could provide insights into the interpretation and application of GST rules regarding Input Tax Credit refunds for zero-rated supplies in the pharmaceutical sector.

Innova Captab , a leading pharmaceutical company, has announced strong financial results for the first quarter, demonstrating significant growth and operational efficiency.

Financial Highlights

• Revenue from operations surged by 19% year-on-year to ₹351.50 crore, up from ₹294.30 crore in the same quarter last year.
• Consolidated EBITDA showed impressive growth of 28%, reaching ₹56.60 crore compared to ₹44.30 crore in the corresponding quarter.
• EBITDA margin improved to 16.1%, up from 15.1% in the corresponding quarter of the previous year.
• Profit After Tax (PAT) increased by 5% to ₹31.00 crore, despite higher depreciation and finance expenses.
• Basic and diluted earnings per share stood at ₹5.42, compared to ₹5.15 in the same quarter of the previous year.

Business Segment Performance

Innova Captab's growth was driven by strong performances across its two main business segments:

CDMO Services and Products

• Revenue reached ₹249.50 crore, growing 8% year-on-year.
• This segment constituted approximately 71% of the total business in the quarter.
• Growth was attributed to enhanced client traction, both from new and existing customers.

Branded Generics

• Recorded revenue of ₹102.10 crore, marking a significant 59% growth from ₹64.20 crore in the corresponding quarter.
• Growth was underpinned by broader geographic reach and increased penetration in the domestic market.

Operational Highlights

• The company's newly commissioned facility in Jammu gained momentum during the quarter, contributing to the overall growth.
• Innova Captab reorganized its business areas into two focused verticals: CDMO and Branded Generics, aligning with its strategic vision.
• The company continued to strengthen its partnerships with CDMO clients across global markets while simultaneously enhancing its direct presence in India and other key international geographies.

Management Commentary

Vinay Lohariwala, Managing Director of Innova Captab Limited, commented on the results: "The first quarter has provided us with a strong and confident start to the financial year. We delivered solid growth, reflected in both a healthy expansion of our topline and a notable improvement in operating profitability. We continued to make steady progress on our strategic initiatives, in line with our plans."

He further added, "Our newly commissioned facility in Jammu gained momentum during the quarter, and we expect this traction to accelerate in the coming quarters and beyond. We remain committed to executing our strategy with discipline and agility. With a strong foundation in place, we are confident in our ability to drive sustainable growth and long-term value for all stakeholders."

Future Outlook

Innova Captab Limited appears well-positioned for continued growth, leveraging its strong CDMO partnerships and expanding branded generics business. The company's strategic reorganization and the ramping up of its Jammu facility are expected to drive further operational efficiencies and market expansion in the coming quarters.

As the pharmaceutical sector continues to evolve, Innova Captab's diverse business model and focus on both domestic and international markets position it favorably for sustained growth and value creation.