Final monitoring agency report: preferential issue proceeds fully utilised, Rs. 58.99 crore shortfall flagged
CARE Ratings has given its final monitoring agency report on the preferential issue of 2.6 crore fully convertible warrants.
By ScoutQuest · · 3 min read
- Shortfall vs planned raise (lapsed warrants)
- Rs. 58.99 crore against the Rs. 314.60 crore planned
- Amount raised and utilised till date
- Rs. 255.61 crore
- Unutilised proceeds at quarter end
- nil, shown as 0.00
The company has shared the monitoring agency report from CARE Ratings for the quarter ended September 30, 2026, covering money raised through a preferential issue of 2.6 crore fully convertible warrants. CARE Ratings monitored gross proceeds of Rs. 314.60 crore. The report has been reviewed by the Audit Committee and taken on record by the Board.
Money raised and spent
- Amount proposed in the offer document: Rs. 314.60 crore.
- Actual amount raised till date: Rs. 255.61 crore.
- Utilised up to the start of the quarter: Rs. 251.84 crore.
- Utilised during the quarter: Rs. 3.77 crore.
- Total utilised at the end of the quarter: Rs. 255.61 crore.
- Unutilised at the end of the quarter: nil, shown as 0.00.
The last Rs. 3.77 crore went towards building construction and advances for procurement and installation of machinery under the expansion plan. This figure excludes Rs. 0.27 crore of interest earned on fixed deposits created out of the unutilised proceeds.
The update calls this the final monitoring agency report for the issue because nothing remains unutilised. CARE Ratings stated there was no deviation from the objects of the issue and no material deviation from the offer document.
Points the agency flagged
- Lapsed warrants: one allottee, Saral Incorporated VCC Sub Fund 1, did not exercise the option to convert 65,00,000 warrants within the stipulated 18 months from allotment (on or before February 28, 2026). The warrants lapsed, resulting in a shortfall in overall funds-raising of Rs. 58.99 crore against the objects of the issue, which the agency said may adversely impact the viability and execution of the stated objects.
- Commingling of funds: in two instances during Q2FY27, a total of Rs. 0.78 crore was transferred from the preferential issue account to the company's current account with ICICI Bank before making payment to the vendor. The agency said this mixing of proceeds with other cash flows limited its ability to directly ascertain the end utilisation of the issue proceeds.
- Land bought and later sold: the company had acquired 40 bighas (~10 acres) of land at village Behra, Derabassi, Punjab in January 2025 using issue proceeds, for setting up a formulations manufacturing facility. Management found the land unsuitable for a finished dosages facility meeting applicable international regulatory and registration requirements, and it was sold in August 2026 for a consideration of Rs. 17.50 crore, at a loss of Rs. 0.22 crore. An advance of Rs. 1.96 crore was received and transferred back to the preferential issue account during Q2FY27, and was used for capex.
Company's replies
- The transfers to the current account were made because those were forex transactions that can be done only through an Authorised Dealer bank; ICICI Bank was the AD bank, so funds went first to ICICI Bank and then to the beneficiary foreign entity.
- Excluding registration charges and stamp duty, the land was sold at a marginal profit as per prevailing market rates; since the land was originally bought from the preferential issue account, the advance received was transferred back to that account.
- On the lapsed warrants, the company said it has sufficient internal accruals and cash balance for executing planned projects.
Object-wise position
- Expansion of business of the company or wholly owned subsidiaries: Rs. 150.00 crore proposed; Rs. 113.54 crore utilised at the end of the quarter.
- Investment in existing or to be acquired subsidiaries: Rs. 50.00 crore proposed; Rs. 27.47 crore utilised; no utilisation during the quarter.
- Working capital for existing business: Rs. 39.60 crore proposed and fully utilised; nil utilisation during the quarter.
- General corporate purpose: Rs. 75.00 crore proposed and fully utilised; nil utilisation during the quarter.
What a reader can take away
The report confirms that the money the company did receive has been spent, with nothing left idle at the end of the quarter. Alongside that, it records two items to weigh: part of the planned fund raise did not come in because warrants lapsed, and the agency could not directly trace the end use of a small amount that passed through the company's current account. The company's position on both is set out in the report.
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More numbers
- Issue size monitored (preferential issue)Rs. 314.60 crore
- Balance unutilised proceeds fully utilised in Q2FY27Rs. 3.77 crore
- Actual amount raised till date (Rs. crore)255.61
- Shortfall in overall funds-raisingRs.58.99 crore
- Warrants that lapsed on non-conversion65,00,000
- Sale consideration of the landRs.17.50 crore
- Loss on sale of landRs.0.22 crore
- Amount transferred to current account before vendor paymentRs.0.78 crore
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