Indian Emulsifiers approves ₹51 crore rights issue

The Board of Directors of Indian Emulsifiers Limited has approved a proposal to raise funds through a rights issue of equity shares. The meeting, held on May 16, 2026, sanctioned the issuance of shares with a face value of ₹10 each for an aggregate amount of up to ₹51 crore. The issue will be open to eligible equity shareholders as on a record date, which will be notified later, subject to necessary regulatory and statutory approvals.

In conjunction with the fund-raising activity, the board constituted a Rights Issue Committee. This committee, chaired by Mr. Yash Tikekar and including members Mr. Rajaram Gordhanlal Agarwal and Mr. Rajesh Madhukar Joshi, has been authorized to appoint intermediaries and oversee the process.

Investment in Chemical Brothers Enterprises

The board also approved an investment in Chemical Brothers Enterprises Private Limited for a total consideration of ₹600 lakh. Indian Emulsifiers Limited will acquire 3,70,370 fresh equity shares, representing a 10.99% stake in the target company's paid-up share capital. The subscription price has been fixed at ₹162 per share based on a valuation report by an independent IBBI-registered valuer.

The transaction involves a related party, as Mr. Yash Sunil Tikekar, the promoter and director of Indian Emulsifiers Limited, holds a 75.83% stake in Chemical Brothers. The board confirmed that the transaction was conducted at arm's length, and Mr. Tikekar did not participate in the discussion or vote regarding this item.

Strategic Rationale and Financials

The acquisition aims to leverage Chemical Brothers' existing customer approvals in regulated industries such as mining explosives and personal care. This move is expected to reduce qualification costs and time for Indian Emulsifiers Limited. Additionally, the investment will help consolidate export revenues and simplify the group structure by eliminating related party routing over time.

Chemical Brothers Enterprises Private Limited reported a turnover of ₹5523.28 lakh for the year ended March 31, 2025. The company operates in the wholesale trading and distribution of chemicals, serving customers in over 15 countries across North America, South America, Europe, and Asia.

Financial History of Chemical Brothers

Year Turnover (₹ In Lakhs) 2022-23 5062.59 2023-24 4997.67 2024-25 5523.28

The completion of the acquisition is expected to take approximately six months. The company proposes to utilize the proceeds from the rights issue to fund this investment.

Indian Emulsifiers Limited has submitted its Statement of Deviation or Variation under Regulation 32 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, for the quarter ended March 31, 2026. The filing, dated May 14, 2026, confirms that there is no deviation or variation in the utilisation of proceeds from the company's Rights Issue, as against the objects stated in the Letter of Offer. The statement has been duly reviewed by the Audit Committee and is accompanied by the Monitoring Agency Report from Infomerics Valuation and Rating Limited.

Rights Issue Overview

Indian Emulsifiers Limited raised funds through a Rights Issue during the issue period of October 24, 2025 to November 21, 2025, with allotment completed on November 24, 2025. The issue comprised up to 61,11,111 fully paid-up equity shares of face value of Rs. 10 each, offered at a price of Rs. 80 per Rights Equity Share (including a premium of Rs. 70 per Rights Equity Share), in the ratio of one Rights Equity Share for every two fully paid-up equity shares held by eligible shareholders on the record date of October 10, 2025.

Parameter: Details Mode of Fund Raising: Rights Issue Issue Period: October 24, 2025 – November 21, 2025 Date of Allotment: November 24, 2025 Amount Raised: Rs. 48.8888 crores Monitoring Agency: Infomerics Valuation and Rating Limited Report Quarter: Quarter ended March 31, 2026 Deviation/Variation: No

Fund Utilisation as at March 31, 2026

As of the quarter ended March 31, 2026, the company has utilised Rs. 46.01 crore out of the total Rs. 48.88 crore raised, leaving an unutilised balance of Rs. 2.87 crore. The unutilised funds are currently held in the company's current account (Account No. 002120110000663) with a market value of Rs. 2.87 crore as at the end of the quarter. The following table details the allocation and utilisation against each stated object:

Object: Original Allocation (Rs. in Cr.) Funds Utilised (Rs. in Cr.) Unutilised (Rs. in Cr.) Incremental working capital requirements: 19.45 19.45 - Construction of new factory premises: 5.94 4.50 1.44 Purchase of equipment/machineries: 11.36 10.53 0.83 General Corporate Purposes: 10.63 10.63 - Issue related expense: 1.50 0.90 0.60 TOTAL: 48.88 46.01 2.87

Delay in Utilisation and Management Declaration

The Monitoring Agency Report notes that the unutilised amount of Rs. 2.87 crore is attributed to operational reasons. As per the Letter of Offer dated October 01, 2025 (Page 48), in the event that utilisation of net proceeds in a scheduled financial year is not completely met, the same shall be utilised in the subsequent financial year in accordance with applicable laws. Accordingly, management has declared via a management declaration dated May 11, 2026, that the delay in utilisation of Rs. 2.87 crore is due to operational reasons and that the same will be utilised before December 31, 2026. The completion date for all objects has been revised from FY2025-26 to December 31, 2026.

It is further noted that during the preparation of FY26 provisional financial statements in March, the CFO identified that certain payments were mistakenly debited from the rights issue account instead of the operational cash credit account due to a bank system-related error. The issue was promptly identified and reversed, and the company clarified that there was no intentional misuse of rights issue funds or any undue benefit derived. The incident was isolated in nature and occurred amidst a high volume of banking transactions.

Monitoring Agency and Audit Committee Observations

The Monitoring Agency, Infomerics Valuation and Rating Limited, has confirmed nil deviation from the objects and nil range of deviation in its report for the quarter ended March 31, 2026. The utilisation details have been verified by Dave & Dave, Chartered Accountants (FRN: 102163W), vide CA certificate dated May 08, 2026. The Audit Committee has reviewed the statement and offered no adverse comments, and the statutory auditors have similarly recorded no comments. All government and statutory approvals related to the objects have been obtained, including in-principle approval from NSE (SME Platform). No major deviations were observed over earlier monitoring agency reports, and no events affecting the viability of the stated objects were reported.

New Manufacturing Unit: Key Object Details

A significant portion of the Rights Issue proceeds is directed towards establishing a new manufacturing unit at Plot C-3, Lote Parshuram MIDC. The facility will support the company's expansion into specialty chemicals, including Esterification/Transesterification, Sulphation, Quaternization, Phosphorylation, Emulsification, Imidazoline, Wax Emulsion, Amphoteric, Polymerization, Poly-quaternary compounds, and a variety of specialty emulsifiers. The total construction area is 1118.20 Sq. Mtrs., with a construction cost of Rs. 5.94 crore as per the estimate provided by M/s. M.L. Kendre & Associates, Chartered Engineer. An additional Rs. 11.36 crore from net proceeds is earmarked for plant and machinery, civil works, and installation costs at the same facility.

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