Divi’s Laboratories Limited, a pharmaceutical company based in Hyderabad, stated on November 16th that it had been issued a demand notice from the Goods and Service Tax (GST) department amounting to ₹164 crore. It also demands interest and penalty charges.
According to the company, the notice was released by the office of the commissioner of Central Tax at the Ranga Reddy GST Commissionerate in Hyderabad.
Divi’s Laboratories stated that it does not anticipate any significant financial impact from this order. After evaluating the case’s intensity, the company has decided to file an appeal with the Appellate Authority within the stipulated timeline under the GST Law, as mentioned in a regulatory filing.
The order is related to the recovery of a refund for Integrated Goods and Service Tax (IGST) allowed under Rule 96 of the CGST Rules, 2017. It is alleged that this refund was claimed incorrectly in accordance with the provisions of the GST Act, 2017.
The demand raised amounts to IGST of ₹82,04,24,880, along with applicable interest and a penalty of ₹82,04,24,880, which is equal to 100% of the tax amount (IGST).
During the July to September quarter, Divi’s Laboratories reported a net profit of ₹348 crore. This represents a decline of 29.5% compared to the same period last year.
Although the company’s revenue met expectations, its operating profit (EBITDA) and EBITDA margin fell short of street expectations.
In the given period, the company’s revenue reached ₹1,909 crore, aligning with street expectations of ₹1,886 crore. This resulted in a 3% increase in the topline compared to the corresponding period in the previous fiscal year.
Revenue growth estimates for Divi’s Laboratories varied extensively, ranging from a fall of 5% to a rise of 7.4% year-on-year.
The operating profit (EBITDA) of the company experienced a decline of 22.9% compared to the previous year, reaching ₹479 crore from ₹621 crore.
Furthermore, the EBITDA margin shrank by over 800 basis points, falling to 25.1% from 33.5% in the previous year.
