Hikal uncovers revenue recognition irregularities, no fund misappropriation

Hikal Limited has reported suspected misconduct by certain employees involving irregularities and altered documents related to revenue recognition. These issues were discovered during a fact-finding review, primarily affecting revenue recognition and supporting documentation for specific periods. The company has clarified that the underlying sales are genuine and backed by customer purchase orders, confirming no siphoning or embezzlement of company funds.

The financial impact is anticipated to be primarily related to the timing of revenue recognition, with potential reversals or adjustments affecting quarterly financial results. Had the irregularities not occurred, sales for Q4FY25 and Q1FY26 would have been approximately 2% lower. Hikal has already reversed revenue of Rs. 80.7 cr for Q2FY26.

The suspected irregularities are believed to relate to Q4FY25, Q1FY26, and Q2FY26. Certain employees in operational functions, including sales & marketing, logistics, and allied functions, are suspected to be involved. Hikal is currently evaluating applicable reporting requirements and will take appropriate steps to report the matter to relevant authorities as required by law and legal advice.