SOLARANSEfinancial year 2025May 21, 2025

Solara Active Pharma Sciences Limited

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111turns

13analyst exchanges

4executives

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Management on call

Arun Kumar

FOUNDER AND NON-EXECUTIVE

Sandeep Rao

MANAGING DIRECTOR AND

Sarat Kumar

CHIEF FINANCIAL OFFICER– SOLARA ACTIVE PHARMA SCIENCES LIMITED

Abhishek Singhal

INVESTOR RELATIONS – SOLARA ACTIVE PHARMA SCIENCES LIMITED

Key numbers — 40 extracted

37.8%

well. Since you've been watching our results, you've seen that our gross margin has expanded from 37.8% in FY '24 to 51.5% in FY '25, an increase of almost 1,370 basis points. On EBITDA as well, EBITDA

51.5%

been watching our results, you've seen that our gross margin has expanded from 37.8% in FY '24 to 51.5% in FY '25, an increase of almost 1,370 basis points. On EBITDA as well, EBITDA margin has expande

1,370 basis point

that our gross margin has expanded from 37.8% in FY '24 to 51.5% in FY '25, an increase of almost 1,370 basis points. On EBITDA as well, EBITDA margin has expanded from negative numbers in FY '24 to 16.5% in FY '2

16.5%

basis points. On EBITDA as well, EBITDA margin has expanded from negative numbers in FY '24 to 16.5% in FY '25, an increase of almost 2,360 basis points. Our contribution from our profitable markets

2,360 basis point

TDA margin has expanded from negative numbers in FY '24 to 16.5% in FY '25, an increase of almost 2,360 basis points. Our contribution from our profitable markets, which is the regulated markets, continues to be

76%

arkets, which is the regulated markets, continues to be strong. We are currently clocking that at 76% of our overall business that is attributable to the regulated markets. We've been successfully ab

10%

e foundation that we've laid out in FY '25. And we expect the business top line to grow by around 10% and the EBITDA to grow around 15% to 20%. And lastly, before I hand over the mic to Sarat, I'd

15%

FY '25. And we expect the business top line to grow by around 10% and the EBITDA to grow around 15% to 20%. And lastly, before I hand over the mic to Sarat, I'd like to give an update on CRAMS and

20%

5. And we expect the business top line to grow by around 10% and the EBITDA to grow around 15% to 20%. And lastly, before I hand over the mic to Sarat, I'd like to give an update on CRAMS and polym

INR1,300 million

o glad to report to you all that as a company we have reduced our operating cost base by close to INR1,300 million year-on-year, which reflects roughly 22% reduction in our operating costs. And from a quarterly e

22%

reduced our operating cost base by close to INR1,300 million year-on-year, which reflects roughly 22% reduction in our operating costs. And from a quarterly exit run rate of close to INR130-odd crore

INR130

ects roughly 22% reduction in our operating costs. And from a quarterly exit run rate of close to INR130-odd crores in FY '24, we are currently at INR109 crores cost base in FY '25 Q4. As we continue ou

Guidance — 20 items

Abhishek Singhal

opening

“The transcript for the above call will be available in a week's time on the company website.”

Arun Kumar

opening

“And while it's been a very difficult year from an operating standpoint for Solara, especially given where we were in FY '24, I believe that, in spite of having missed the guidance both on revenue and EBITDA, we have come back strongly as a company very focused on operational excellence, compliance track recording, getting our cost structures ready.”

Arun Kumar

opening

“We have an outlook which supports growth on revenue, so we hope to break the tepid or flat growth that we had in FY '25 to get back Solara to a more solid footing.”

Arun Kumar

opening

“Obviously, we are disappointed, but I think it has got all the elements of a very successful FY '26 going forward.”

Sandeep Rao

opening

“And while we had all the efforts in place to improve the quality of the overall business through our focus on margin expansion, it is regrettable that we significantly missed our revenue and EBITDA guidance for the full year and for the exit quarter.”

Sandeep Rao

opening

“We attribute this miss on Revenue and EBITDA guidance to intense competition that we've seen on the Ibuprofen range of products.”

Sandeep Rao

opening

“Going forward, we will re-pivot the company to what we call as profitable growth with continued focus on market expansion.”

Sandeep Rao

opening

“And we expect the business top line to grow by around 10% and the EBITDA to grow around 15% to 20%.”

Sandeep Rao

opening

“Now going forward, we will initiate the next steps with respect to securing shareholders and various statutory approvals in the coming quarters.”

Sarat Kumar

opening

“Now coming back to our results of Q4 and FY '25, although as part of leadership team, I equally regret the fact that we had missed on our revenue, as well as EBITDA guidance by a fair margin.”

Risks & concerns — 3 flagged

And while it's been a very difficult year from an operating standpoint for Solara, especially given where we were in FY '24, I believe that, in spite of having missed the guidance both on revenue and EBITDA, we have come back strongly as a company very focused on operational excellence, compliance track recording, getting our cost structures ready.

— Arun Kumar

As regards why our ibuprofen franchise is getting severe competitive pressure is because there is an excess capacity currently, mainly coming out of India, India with new plants and with newer plants, newer technologies.

— Arun Kumar

We are into difficult chemistry, okay, so let's not get -- the segregation of polymers is that there are not many people making polymers.

— Arun Kumar

Q&A — 13 exchanges

Thank you for giving me the opportunity. I have a few questions actually. I think, as you guys also mentioned, I think, clearly last 2 quarters have been a little bit of a not-so-good results, for investors' point of view. I think, from some of us who have been holding and who have been invested for a while, I think somehow I don't feel that I appreciate or understand the problems that you are facing with ibuprofen quite well, so I will really appreciate if you can, in a way, also tell us really what exactly is happening. Is it demand issues? Is it higher competition? What kind of price pressu

Arun Kumar

Yes, sure. So, this is Arun here. So, I'll answer your second point, first. It's not true that we haven't spoken about. Sandeep has very clearly articulated that our focus on ibuprofen has shifted from plain ibuprofen to derivatives. And we are gaining market share in that space. So that has been addressed. As regards why our ibuprofen franchise is getting severe competitive pressure is because there is an excess capacity currently, mainly coming out of India, India with new plants and with newer plants, newer technologies. And obviously the routes of synthesis used by the newer players are fa

Good evening, sir. I wanted to...

Arun Kumar

We can't hear you. Can you speak up?

One second. Can you hear me now?

Arun Kumar

Yes...

Yes. Sir, wanted to understand about gross margin. What are the efforts we have taken that led to significant gross margin expansion despite competition in ibuprofen?

Arun Kumar

So, like Sandeep alluded in his opening statement, the gross margin improvement is in programs in products that have been recently launched or launched last year where we get higher market share, newer product launches. And existing products' greater market share or -- and getting -- and not being fully invested in ibuprofen. If you don't sell a lot of ibuprofen at low price, automatically your base gross margins will improve. So, we'll continue to focus on that this year and build from where we left off as a gross margin standpoint. And sir, what is the sustainable gross margin for this busin

Sir, your sales have been declining since the last 3 quarters. When do we start seeing sales grow quarter-on-quarter?

Arun Kumar

Well, we hope to start getting that sorted as early as this quarter. In 1Q '26, we should expect quarter-on-quarter growth. Yes. Got it, sir. Also, sir, could you give us an idea of what kind of new products you have launched in the last year? We don't give product specifics, as a policy, ever. The company doesn't do that, for competitive and other reasons. So, if you could talk about broad nature of the products, if you could describe it that way. No. It’s Catalog generics. Okay, got it. Sir, the way you have described issue in your ibuprofen business, it seems like the issue is structural, s

A couple of questions from my end. Firstly, what is the nature of the CDMO of the business that we have? Is this contract manufacturing of patented drugs for innovator companies? Or is this contract manufacturing of complex drugs? If so, like what portion is...

Arun Kumar

That's now more the second. More of the second. That's more of the complex drugs contract manufacturing. Yes, correct. Do you have any percentage that you could like throw some light on for that breakup maybe? It's a very small business for us. It's just about INR100 crores. Okay, sir, okay. And what sort of growth do you expect in the CDMO business over the next 2 to 3 years? And what's the margin profile of that business that you expect? It's a little too early. We are in the process of working through our models and capital investments and stuff like that. And we will very soon proceed alon

See my first question is on what the cost of money will be...

Arun Kumar

Can you please speak up? Yes, yes. What will be -- the cost of finance for the financial year '26? For financial year '24, I think it is more like 11% to 12%, right? We are close to INR110 crores and INR990 crores debt, so what will be -- the cost of money be for the next financial year? We are expecting this to reduce by about 200 basis points. Okay. And next, my second question is -- so you're guiding for revenue growth of 10% and EBITDA growth of more than 15% to -- like in the range of 15% to 20%, so it is more on the operating cost reduction that we are actually planning this on. Or aroun

Firstly, I appreciate on the results for '25. I think overall you're able to improve the top line and also reel in the margins. I have just one question. I want to understand the change in management which happened currently. I think CEO have changed currently. And the CFO who joined last year got changed. So just want understanding on how this new management is going to be, whether they are going to stay in the long term. And what are the plans?

Arun Kumar

You should ask them. They're on the call. The opportunity, I said in my opening remarks I think this company has an excellent platform. There's a lot of discipline in the platform. And if we can re-pivot it to growth, which we're all working towards, with the theme of profit maximization and debt correction, I think the future is bright. So Sarat and I are here for the long term. That's all we can say. Perfect. Congrats on that. And I hope you accomplish what you told.

Yes. Sir, what will be the capacity utilization currently?

Management

60%. Pardon... 60%. 60%. 60%. And sir, I also wanted to understand. During your opening remarks, you said debt will be around INR650 crores by May, which we are actually seeing on the balance sheet. Can you just confirm, what is the -- what will be the actual numbers post this money is received? Sarat, do you want to address that? So, once we actually utilize this particular money, what we received from first call money of the rights issue, debt will come down to INR647 crores by end of May '25. First call money, we will be receiving in next 1 or 2 weeks... No. It's there already in the bank.

Can you move to the next question?

Management

I just had one question. Trump recently announced the "most-favored-nation" policy. I want to understand. How does this impact Solara? And because I understand you've recently expanded and -- from 3%...?

Arun Kumar

Most favored -- the MFN formula is mainly for branded pharmaceuticals and not -- it is not linked to APIs. So, there won't be any direct impact, right? No. Okay. Unless there are tariffs, which we don't know as yet.

Yes, yes. So, my question to Mr. Arun Kumar was -- see. I know you have a pretty good polymer business, so could you please let us know, what kind of synergies does this have with the CRAMS business where you are stepping into? Like you...

Arun Kumar

We mentioned that first of all -- we are telling you that the CRAMS business -- and there was alluding to somebody -- an earlier question of another investor or an analyst. We are into difficult chemistry, okay, so let's not get -- the segregation of polymers is that there are not many people making polymers. It's a complex process. And polymers, therefore, is more -- the high non- Catalog generic APIs is what moves to the so-called CRAMS and Contract Development business. Got it, got it. And this also -- does this have some synergy with the peptide business which you are entering into? No.

Thank you all for joining today. And if you have any questions, please feel free to write to Sarat or to Sandeep or to our Investor Desk. Thank you, appreciate your time.

Sandeep Rao

Thanks a lot, everybody. Thank you...

Speaking time

Arun Kumar

Moderator

Darshil Pandya

Sarat Kumar

Anand Mundra

Akash Jain

Abhishek

Jasdeep

Nigel Mascarenhas

Abhishek Singhal

Opening remarks

Abhishek Singhal

Thank you, Zico. A very good afternoon to all of you and thank you for joining us today for Solara Active Pharma Sciences' earnings conference call for the fourth quarter and full year ended financial year 2025. Today, we have with us Arun, Solara's Founder and Non-Executive Director; Sandeep Rao, MD and CEO; and Sarat Kumar, CFO, to share the highlights of the business and financials for the quarter. I hope you've gone through our results release and quarterly investor presentation, which have been uploaded on our website as well as stock exchange website. The transcript for the above call will be available in a week's time on the company website. Please note that today's discussion may be forward looking in nature and must be viewed in relation to risks pertaining to our business. After the end of this call, in case you have any further questions, please feel free to reach out to the investor relations team. I now hand over the call to Arun to make his opening remarks.

Arun Kumar

Thank you, Abhishek. And good afternoon, everybody, and thank you for joining us today. I'm taking this opportunity to introduce our new leadership team that we brought in, in February. And both Sandeep and Sarat will introduce themselves. And while it's been a very difficult year from an operating standpoint for Solara, especially given where we were in FY '24, I believe that, in spite of having missed the guidance both on revenue and EBITDA, we have come back strongly as a company very focused on operational excellence, compliance track recording, getting our cost structures ready. And while we were heavily impacted by the Ibuprofen franchise that has been our mainstay, I think the growth in our other businesses have been more or less made up for the negativity around the Ibuprofen loss of sales. And our focus on staying invested on high-gross-margin business, shifting the company back from a very low regulated market to a now very high-end, historically higher than our average, regu

Sandeep Rao

Thanks, Arun. And good morning, good afternoon and good evening. And thank you all for joining in today for our Q4 '25 earnings Call. I sincerely appreciate your presence in this call. To introduce myself. I am Sandeep Rao and I have taken charge as Managing Director and CEO of Solara Pharma from the 21st of February this year. At the outset, I want to thank the Board as well as Arun for providing me this opportunity to lead Solara as we enter the next phase of our journey, which is pivoting to growth from resets. To give a little more about my background: Prior to this, I spent more than 25 years in the pharma space at Biocon and legacy Mylan Viatris. Joining this new team along with me is Sarat Kumar, our Chief Finance Officer, who is also on this call. I would also like to thank our shareholders for their continued support and trust in our company. Now specifically getting down to FY '25. With respect to our results, at the outset, as Arun mentioned, I'd like to say that we've had a

Sarat Kumar

Thank you, Sandeep. Good morning, good afternoon and good evening, ladies and gentlemen. And thank you for joining in today's Q4 Earnings Call for Solara Active Pharma Sciences Limited. I'm Sarat Kumar and I'm glad to address you as CFO of Solara. First of all, I would like to take this opportunity to actually thank Arun, Sandeep and the Board for their trust and providing me with this opportunity wherein I can help Solara pivot towards growth along with our leadership team. In terms of my brief introduction, I have roughly 18- plus years of working across industry, in multiple finance roles, both in India and overseas. And I have also had an exciting stint with one of our group companies, Strides Pharma, for roughly 6 years-plus. And then more recently, I was working as CFO of BioCina, a PE-Backed Biotech CDMO based out of Australia. Now coming back to our results of Q4 and FY '25, although as part of leadership team, I equally regret the fact that we had missed on our revenue, as wel

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