Key Quantitative Figures

  • Total funds raised through preferential issue: ₹128.78 crore (received up to September 30, 2026)
  • Funds utilized as per management: ₹97.56 crore
  • Unutilized amount as per company: ₹31.22 crore
  • Monitoring agency reported utilization: ₹101.34 crore
  • Monitoring agency reported unutilized amount: ₹27.44 crore

Parties Involved

  • Listed entity: Fredun Pharmaceuticals Limited
  • Monitoring agency: CARE Ratings Limited
  • Regulatory authority: BSE Limited

Monitoring Agency Observations

CARE Ratings Limited raised several observations regarding:

  • Reporting and reconciliation of utilization and unutilised proceeds
  • Management Certificate and CA Certificate discrepancies
  • Classification of balances in Cash Credit Account
  • Reconciliation of opening balance of unutilised proceeds
  • Verification of source of funds
  • Specific observations included ₹3.78 crore treatment in Cash Credit accounts and ₹6.85 crore of salary and Medical Representatives-related expenditure during Q2 FY27

Audit Committee Response

The Audit Committee reviewed monitoring agency observations and provided detailed explanations:

Deployment and Source of Funds

  • Difference in deployment schedule arose from presentation and carry-forward of amounts in Cash Credit accounts and Fixed Deposits
  • Typographical error in certificates for quarter ended June 30, 2026 noted
  • Revised opening deployment of ₹34.43 crore in Q2 FY27 reflects company's reporting position

Cash Credit Account Treatment

  • Company maintains temporary transfer to Cash Credit account doesn't constitute utilization
  • ₹3.78 crore difference (₹2.65 crore Q3 FY26, ₹1.13 crore Q2 FY27) attributed to differing treatment

Unutilised Proceeds Difference

  • Monitoring agency derived ₹27.44 crore unutilized vs company's ₹31.22 crore
  • Differences due to treatment of Cash Credit balances and presentation of deposits and interest

Routing Through Accounts

  • Transfers between Current/Operating and Cash Credit accounts for operational and treasury management
  • Internal records maintained for object-wise tracking

Reimbursement of Expenses

  • ₹6.85 crore salary and MR-related expenditure classified under relevant disclosed objects
  • Statutory payments classified under Strategic & Statutory Reserves

Fund Utilization Breakdown

| Object | Original Allocation (₹ Crore) | Funds Utilized (₹ Crore) | Deviation | Remarks |

| Brand Marketing & Distribution | 49.00-50.00 | 11.50 | NIL | Utilization as per proposed timeline |

| CAPEX | 6.00-7.00 | 6.98 | NIL | Utilization as per proposed timeline |

| Formulation Development & R&D | 7.00-8.00 | 1.50 | NIL | Utilization as per proposed timeline |

| Contingency/Miscellaneous | 7.00-7.50 | 3.95 | NIL | Utilization as per proposed timeline |

| Working Capital | 53.00-54.00 | 57.07 | NIL | Utilization as per proposed timeline |

Board Confirmation

The Board confirmed:

  • No change in objects for which funds were raised
  • No deviation in amount of funds utilized versus original disclosure
  • No change in terms of contract referred to in fund-raising document
  • Unutilized proceeds continue to be deployed in permitted instruments
  • Enhanced monitoring and segregation mechanisms implemented

Financial Impact

No financial impact quantified beyond the disclosed utilization figures and reconciliation differences. The company maintains that all proceeds have been applied for objects approved by shareholders.