Solara Active Pharma Sciences Limited has informed the Exchange about Investor Presentation
Communication Address: Solara Active Pharma Sciences Limited Batra Centre
No. 28. Sardar Patel Road. Post Box 2630 Guindy. Chennai - 600 032. India Tel : +91 44 43446700. 22207500 Fax : +91 44 22350278 E-mail : investors@solara.com www.solara.co.in
April 11, 2021
The BSE Limited Phiroze Jeejeebhoy Towers Dalal Street, Mumbai – 400 001
The National Stock Exchange of India Limited Exchange Plaza, Bandra-Kurla Complex Bandra (E), Mumbai – 400 051
Scrip Code: 541540
Scrip Code: SOLARA
Dear Sir / Madam,
Sub: Investor Presentation - Announcement under Regulation 30 of SEBI (Listing
Obligations and Disclosure Requirements) Regulation, 2015
Please find attached Investor presentation issued by the Company titled:
“ACCELERATING GROWTH: SOLARA AND AURORE MERGE TO BECOME INDIA’S SECOND LARGEST PURE PLAY API / CRAMS COMPANY”
Thanking you,
Yours faithfully, For Solara Active Pharma Sciences Limited
S. Murali Krishna Company Secretary
Encl:- as above
Solara Active Pharma Sciences Limited - CIN : L24230MH2017PLC291636 REGD. OFF: 201, Devavrata, Sector 17, Vashi Navi Mumbai - 400703. India/ Tel: 91-22-2789 2924 / 2789 3199 / Fax: 91-22-2789 2942
ACCELERATING GROWTH: SOLARA AND AURORE MERGE TO BECOME INDIA’S SECOND LARGEST PURE PLAY API / CRAMS COMPANY
STRONG FOUNDATION. ACCELERATING GROWTH.
Safe Harbor
Except for the historical information contained herein, statements in this presentation and the subsequent discussions, which include
words or phrases such as "will", "aim", "will likely result", "would", "believe", "may", "expect", "will continue", "anticipate", "estimate",
"intend", "plan", "contemplate", seek to", "future", "objective", "goal", "likely", "project", "should", "potential", "will pursue", and similar
expressions of such expressions may constitute "forward-looking statements“. These forward looking statements involve a number of
risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking
statements. These risks and uncertainties include, but are not limited to our ability to successfully implement our strategy, our growth
and expansion plans, obtain regulatory approvals, our provisioning policies, technological changes, investment and business income,
cash flow projections, our exposure to market risks as well as other risks. The Company does not undertake any obligation to update
forward-looking statements to reflect events or circumstances after the date thereof.
2
A progressive move to combine two growth engines and build a future ready platform
“As
Solara
continues
its
journey
towards
accelerated growth, the combination with Aurore is
a significant boost. The two entities complement
each other on product portfolio, geographical
presence and customers while amplifying the
strengths on world class quality systems, strong
R&D capabilities
and
robust manufacturing
infrastructure. The entrepreneurial growth mindset
that Raj and his team bring will further strengthen
Solara. The combination will provide a compelling
value proposition for both our generic APIs and
CRAMS customers and exciting opportunities for
the talented teams to grow with the company”
Bharath Sesha
MD & CEO , Solara
Rajender Rao Juvvadi
Founder and MD, Aurore
“I am excited about the synergies the merged entity
brings with the complementary product portfolio
and backward integration of key molecules. As a
large pure play API player, we are in a good
position to leverage our combined scale enabling
us to meet customer needs. We enhance our
differentiation
by
offering
credible
supply
assurance towards our customers. The merged
entity will develop and deliver products with agility
and enable further strengthening of our global
customer footprint. The aggregation of strengths
between the two organizations would significantly
enhance shareholder value”
3
Accelerating to become India’s second largest pure-play API/CRAMS Company
K E Y T R A N S A C T I O N D E T A I L S
D E A L M E T R I C S
► Aurore to merge with Solara in an all-stock transaction and the shareholders of Aurore will have 27% ownership in the merged entity
► The transaction is immediately EPS accretive to Solara’s
shareholders
► The transaction will deliver 100% of Aurore Life Sciences
(ALS) which owns all the IP and 100% revenues and EBITDA of the group, 100% stake of ELS1 and 67% stake of Aurore Pharma Private Limited (APPL)
► Promoter stake holding in Solara will move from 42.57% to
55.15%
Particulars
Pre-transaction
New issue
Solara post-transaction
Equity Shares
3,59,29,767
1,32,94,800
4,92,24,567
Equity Value (INR Cr.)
Relative Value per share (INR)
5,055
1,870
6,926
1,406.93
1,406.93
The valuation was conducted by a SEBI approved valuer and the fairness opinion was provided by ICICI Securities Limited
Category
Pre-transaction
Post transaction
A U R O R E S N A P S H O T *
Public
57.43%
44.85%
Promoters
42.57%
55.15%
Total
100.00%
100.00%
Revenue FY21 (INR)
545 Cr.
EBITDA (INR)
175 Cr. (32.1%)
Manufacturing sites
R&D Centre
2
1
PAT (INR)
95 Cr.
Employees
700+
► With this transaction, the existing promoters align all their
API interests in the merged entity
*The financial figures are as per management account of FY21
1Empyrean Life Sciences
4
Aurore’s strategic capabilities are highly complementary to Solara’s growth model
BACKGROUND
EXPERIENCE
PHILOSOPHY
CAPACITY
R&D CAPABILITY
• Aurore Group consists of Aurore Life Sciences (ALS) and its ownership in Aurore Pharma Private Limited (APPL)
• ALS owns all the IP and 100% consolidation of the revenue and EBITDA of the group
• APPL is one of the
manufacturing units acquired from Mylan (now Viatris) and counts Viatris as a key customer
• Formed as a partnership between Rajender Rao (Raj), the family office of Arun Kumar and ilabs
• The leadership team at
Aurore brings a combined domain experience of over 50 years in the API space
• Two facilities in India with
• Dedicated center in
a combined manufacturing capacity of 800 KL
Hyderabad, India with a team that comprises of leading scientists
• Raj founded RA Chem Pharma, a leading pharmaceutical company in 2003 which grew to ~ Rs.4,000mn revenues by FY2017
•
iLabs Group is an India centric sector investment fund
• Core operating
• Flagship facility in
philosophy with an all- time compliance of quality systems, environment, health and safety
• Portfolio selection based on anchor customer “ask”, niche products with complex chemistry
Hyderabad in approved with USFDA, EDQM, WHO Geneva, COFEPRIS, KFDA amongst other regulatory agencies
• Well-equipped with the infrastructure to support advanced research across all therapeutic segments
• Strategies on route of synthesis to make competitive products and help achieve faster delivery to market
5
Strategic Rationale: Better financial outcomes with significant asset synergies
1
Strengthened Financial Outcomes
Robust balance sheet provides opportunities for sizeable investments
• Combination is Margin and EPS accretive.
• Assets turn at Aurore is ~2x and that of the merged entity increases from 1.5x to ~1.7x
• ROCE for the merged entity increases by 200 basis points to cross 20%
• Operating leverage will drive incremental free cash generation & help Solara to attain transformative growth
• Strong Balance Sheet with Net Debt/EBITDA ratio ~ 1.0x providing significant leverage
Aurore’s capacity demands meets Solara’s recent capex investments
• Aurore has created 800KL capacity and will need more capacity as it expands its market footprint and product basket
• Solara’s significant capex outlay to build capacity in Vizag will meet Aurore’s need for capacities and enable faster
ramp up
• Aurore’s intermediates presence will help in supply chain de-risking by backward integration for key KSMs
• Scale provides opportunities for supply chain efficiencies
Asset and cost synergies
2
6
Strategic Rationale: Bolstered CRAMS presence with increased product mix and R&D velocity
3
Accelerates CRAMS growth
CRAMS business triples in revenue from the addition of Aurore’s CRAMS portfolio
• The nascent CRAMS business of Solara is ~INR 75 Cr. and benefits from significant addition of Aurore’s CRAMS
revenue of ~INR 150 Cr. to reach a meaningful size
• Customer profile of CRAMS business is now significantly diversified providing runway for future growth
• Existing Aurore partnerships with innovators for high value molecules can be leveraged
40+ new products from Aurore and 3X R&D velocity
• Well balanced product pipeline / portfolio with a good mix of high volume (Amlodipine, Valacyclovir) and niche
products (Nafamostat Camostat, Levothyroxine) complements Solara’s similar strategy at a different scale
• Aurore’s strong track record of filings (15+ products a year) will accelerate Solara’s offerings up to 25+ new
products a year
• Aurore has completed sizeable investments in developing portfolio of ARV products which allows Solara to enter a
new space
4
Product diversification & accelerated R&D
7
Strategic Rationale: A wider push to customers with a strengthened APAC presence
5
Larger customer base and higher share of wallet
Improved product portfolio will enable Solara to grow further with its marquee customers
Solara and Aurore’s customers will benefit from the combination which offers sizeable cross selling opportunities
Increased product portfolio will provide more opportunities for partnering with customers
Solara’s strategic customer focused approach will leverage Aurore’s product portfolio and strengthen long term
relationships with customers
•
•
•
Solara’s focus market of APAC, benefits from Aurore’s strong presence in the region
• Solara’s stated position is to significantly increase its APAC region sales with particular emphasis on Japan & Korea
• ~29% of Aurore’s sales is from this focus region. Transaction will make the combination one of the largest API
suppliers in the region1 with revenues in excess of INR 300 Cr.
• Aurore complements Solara’s China focus by addition of 7 DMF submissions taking total submissions to 14
6
Greater market presence in APAC
1 Excludes India
8
Strategic Rationale: Enhanced product footprint in the US market
7
US presence bolstered
•
•
Solara’s leadership position in the US gets further augmented by strong filings of Aurore
Aurore has filed 20 DMFs for US market. These products are complementary to Solara’s existing filings
4 DMFs have been triggered for source variation / ANDA filings resulting in near term upsides for Solara in US
Solara is well positioned to benefit immensely by leveraging the individual strengths
Manufacturing sites
R&D Centre
Manufacturing sites
R&D Centre
Manufacturing sites
R&D Centre
Merged Entity
6
Commercial products
60+
Employees
2,500+
•
•
•
2
DMFs
90+
No. of scientists
200+
2
Commercial products
40+
Employees
700+
1
DMFs
20+
No. of scientists
110+
8
Commercial Products
100+
Employees
3200+
3
DMFs
110+
No. of scientists
310+
8 manufacturing sites with a combined reactor capacity of 3,000+ KL and regulatory approvals from global agencies
3 R&D centers in India with capabilities to develop over 25 products every year
Strong product portfolio – more than 100+ commercial products and more than 50+ in the pipeline resulting in higher “share of wallet” for customers. Key products are backward integrated
9
Transaction Summary:
TYPE
TIMELINE
POST TRANSACTION LANDSCAPE
• Aurore to merge with Solara in an all-
• Subject to statutory, regulatory,
• Post the deal, the company shall
stock transaction
creditors and shareholder approvals
operate as Solara
• Aurore shareholders will own 27% of the
• Deal Effective Date: 1st April 2021
• Consequent to the proposed
merged entity
• Accounting of the merger as per IND
AS 103 – Business Combinations
2022
• Estimated deal closure date is March
transaction, Solara promoter group shall also include identified shareholders of Aurore
• After the transaction, existing and
incoming promoters together shall hold 55.15% in the merged entity
TRANSACTION ADVISORS
Solara’s advisors: Project Manager - Transaction Square LLP; SEBI valuer - Niranjan Kumar; Legal Advisor - DSK Legal and Anagram Partners; Fairness
Opinion - ICICI Securities Limited; Due Diligence - Ernst and Young & J Sagar Associates
Aurore’s advisors: Transaction Advisor - Intellecap Advisory Services Pvt Ltd; Legal Advisor - IC Universal
10
CORPORATE OFFICE 3rd & 4th Floor, Batra Centre, No.28, Sardar Patel Road, Guindy, Chennai - 600 032 Tel.: +91 44 4344 6700 / 2220 7500 Fax No.: +91 44 2235 0278
REGISTERED OFFICE 201, Devavrata, Sector 17, Vashi, Navi Mumbai - 400 703. Tel.: +91 22 2789 2924 Email: investors@solara.co.in CIN: U24230MH2017PLC291636
Fax No. +91 22 2789 2942 Website: www.solara.co.in