The company's shares fell nearly 4% after the results.

Net profit for the Ahmedabad, Gujarat-based company rose 9% to 1.45 billion rupees ($17.7 million) in the January-to-March quarter. However, that was only due to a deferred tax benefit of 189.7 million rupees.

Excluding that, the company's profit before tax dropped 3.9% to 1.26 billion rupees.

Zydus Wellness said sales rose 11.8% to 7.1 billion rupees, as effective price increases of 7.8% and an improved product mix helped offset inflationary pressures.

However, that was more than offset by a 14% jump in total expenses.

Consequently, its profit-before-tax margins fell to 17.8% in the latest quarter from 20.7% a year ago. Its net profit margins also edged lower, to 20.5% from 21%.

Zydus Wellness, in which generic drugmaker Zydus Lifesciences holds a 58% stake, also declared a dividend of 5 rupees per share. ($1 = 81.7800 Indian rupees)

(Reporting by Manvi Pant in Bengaluru; Editing by Savio D'Souza)