Solara Active Pharma Sciences Limited — Q4 FY26

Solara Active Pharma Sciences Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=L6q4pZ_7X7A Published: 1d ago

0:01 1 second Ladies and gentlemen, good day and welcome to Solara Active Pharma Sciences Limited Q4 FI26 earnings conference 0:08 8 seconds call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation 0:15 15 seconds concludes. Should you need assistance during the conference call, please signal an operator by pressing start then zero on your touchstone phone. 0:22 22 seconds Please note that this conference is being recorded. I now hand the conference over to Abhishek. Thank you and over to you Abishek. 0:29 29 seconds Thank you NJO. Good afternoon and thank you all for joining us today for Solora earnings call for the fourth quarter and financial year 2026. Today we have with 0:37 37 seconds us Sep MD and CEO and Shhat CFO of the company to share the highlights of the business and financials for the quarter and financial year. I hope you've gone 0:45 45 seconds through our results release and the quarterly Mr. presentation that have been uploaded on our website as well as the stock exchange website. The transcript of this call will be 0:53 53 seconds available in a week's time on the company's website. Please know that today's discussion must be forwardlooking nature and must be viewed in relation to the risk pertaining to 1:01 1 minute, 1 second our business. After the end of the call, in case you have any further questions, please feel free to reach out to the resolution team. I now I now hand over 1:08 1 minute, 8 seconds the call to sit to make his opening comments. 1:12 1 minute, 12 seconds Thank you, Abhishek. Uh a very nice good afternoon to all of you uh joining in 1:19 1 minute, 19 seconds today's uh Q426 earnings call. I sincerely appreciate uh your time and presence in this call. 1:28 1 minute, 28 seconds Uh Q426 has been very good for us. Our business has delivered the highest revenue, gross margins and EIDA uh in the in the previous eight quarters. 1:40 1 minute, 40 seconds uh in Q426 our overall business has demonstrated a very strong sequential growth Qoq of 12% and an EIDA growth of 1:49 1 minute, 49 seconds 65% QoQ uh the primary driver of this strong performance has been uh undeniably our 1:58 1 minute, 58 seconds base business which continues to gain momentum uh as you know this business has already demonstrated superior profitability it 2:07 2 minutes, 7 seconds operates at 26% AIDA margin with gross margins of 54%. 2:13 2 minutes, 13 seconds This further reinforces the objective we established at the start of the year which was to pivot our business from a phase of reset to one that is defined by 2:22 2 minutes, 22 seconds sustainable, profitable and reliable growth. 2:27 2 minutes, 27 seconds Uh on ibuprofen, we continue to face uh persistent headwinds uh in this business where we recorded a negative eida. 2:35 2 minutes, 35 seconds uh we've appointed bankers to evaluate uh our board has appointed bankers to evaluate strategic options for ibrofen 2:43 2 minutes, 43 seconds and uh we expect this process to finish in the next two quarters. Uh consequent to this the carve out of the polymers 2:51 2 minutes, 51 seconds and the cramps business has also put on hold till such time as we can finalize the strategic options for the ibuprofen business in H127. 3:01 3 minutes, 1 second Uh just coming to a snapshot of our financial performance for the current quarter. Uh revenue has a 12% Qoq 3:09 3 minutes, 9 seconds growth. We delivered uh 32 crores. Gross margins are at 47% with an absolute 3:17 3 minutes, 17 seconds value of 184 crores for the quarter. Uh this is reflects improvement of gross margin by 170 basis points on a QQ basis. 3:28 3 minutes, 28 seconds Um the operating cost for the quarter is flat Qoq driven. This has resulted uh in 3:35 3 minutes, 35 seconds an epida of uh 61 crores which reflects a significant Qoq growth of 65%. 3:44 3 minutes, 44 seconds Uh business contribution from our developed markets uh which is our main stay continues to be at 75% of overall sales. 3:53 3 minutes, 53 seconds Uh a a short note on the crisis in the Middle East. Uh despite the significant crisis we've had in the Middle East and 4:00 4 minutes its impact on global business, I'd like to reiterate that the fundamentals of our base business continue to be strong. 4:08 4 minutes, 8 seconds It continues to be supported by a resilient operating model and a healthy product mix across the developed 4:15 4 minutes, 15 seconds markets. Lastly, I would uh like to thank our shareholders for your continued support, your trust in Solara 4:23 4 minutes, 23 seconds and for continuing to remain invested in Solara. With this, I will uh hand over the call to Saratkumar, our chief financial officer. 4:34 4 minutes, 34 seconds Thank you, Sam. Uh ladies and gentlemen, good morning, good afternoon and uh good evening to all of you and thank you for 4:42 4 minutes, 42 seconds joining me in today's uh U4 FI26 earnings call. As shared by Sunday, uh despite facing headwinds in our 4:50 4 minutes, 50 seconds ibuprofen business, the overall solar business has recorded a strong quarterly result in Q4 of FI26 with the business 4:58 4 minutes, 58 seconds recording its highest revenue gross margin as well as IITA in the previous eight quarters. 5:03 5 minutes, 3 seconds The operating costs for the quarter were uh flat Q on Q and hence uh having a uh 5:10 5 minutes, 10 seconds superior operating leverage. Svada business has plotted an IITA margin of 16% with an absolute IITA value of uh 61 5:19 5 minutes, 19 seconds crores plus which reflects uh significant growth of 65% Q1Q because 5:25 5 minutes, 25 seconds we had quite few subdued quarters in Q2 and Q3 as we continues to focus our efforts on operating cost leverage and margin 5:34 5 minutes, 34 seconds expansion we are very confident of chasing incremental business growth at a healthier margins going forward. 5:44 5 minutes, 44 seconds uh towards our uh journey for a healthier balance sheet we have been able to 5:52 5 minutes, 52 seconds reduce our debt by roughly 158 odd crores uh during FI26 u 6:01 6 minutes, 1 second which actually signifies close to 21% reduction in the debt uh uh during the year out of which 113 cr came up from 6:08 6 minutes, 8 seconds the first colony of rights which we had in May 26 six and then balance 45 crores were actually paid off from our 6:15 6 minutes, 15 seconds operational cash flows. Further we have a line of sight to reduce the debt to sub um uh close to 53 odd crores by end 6:25 6 minutes, 25 seconds of May 26 which is predominantly driven by the second and final call money proceeds which we are expecting to be uh 6:31 6 minutes, 31 seconds utilized by end of this month. Uh once again we actually thank you for your support and patience as 6:40 6 minutes, 40 seconds uh as our entire team works uh works towards turning around this company and we are and we are happy to take your questions if any. 6:52 6 minutes, 52 seconds Thank you. Thank you. 6:55 6 minutes, 55 seconds Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If 7:03 7 minutes, 3 seconds you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies 7:10 7 minutes, 10 seconds and gentlemen, we will wait for a moment while the question queue assembles. 7:17 7 minutes, 17 seconds The first question comes from the line of Sajal Kapoor with antif thinking. Please go ahead. 7:26 7 minutes, 26 seconds Yeah. Hi, thank you for the opportunity. 7:28 7 minutes, 28 seconds Uh, hi team. Uh, encouraging performance for sure. Uh I have a few questions um 7:34 7 minutes, 34 seconds please. So Q4 clearly showed momentum in the base business. Um but how much of 7:41 7 minutes, 41 seconds the improvement reflects a structural change in um utilization customer makes and operating leverage 7:50 7 minutes, 50 seconds versus um some of the more temporary factors that might have influenced um Q4 performance such as inventory restocking 7:59 7 minutes, 59 seconds um spot orders or uh favorable product mix perhaps. 8:08 8 minutes, 8 seconds Hi. So, so let let me go first. Hi Sil, uh yeah, firstly uh firstly if you see our 8:15 8 minutes, 15 seconds revenue growth uh we've grown 12%. We've grown from around 8:22 8 minutes, 22 seconds the base. Yeah. So so on the base business we have a very healthy order book and uh you've seen that in our 8:30 8 minutes, 30 seconds numbers as well. So I'm very encouraged uh looking at this order book and the utilization across our facilities that 8:38 8 minutes, 38 seconds uh there is a strong performance and it is not uh factors outside our control that are really uh favoring our business. 8:50 8 minutes, 50 seconds M so Sep I mean what I'm trying to understand is there is no cyclical kind of one of like a spot order or some 8:57 8 minutes, 57 seconds customer um preponing purchases or a favorable product mix that may not repeat. No, no, no. S there there's 9:05 9 minutes, 5 seconds there's nothing one off there and like always our story continues. Despite all the headwinds we are facing and the 9:13 9 minutes, 13 seconds money that we losing on the pushing business, I think our base business is what's driving the momentum is what's keeping the tailwinds on. So uh okay 9:22 9 minutes, 22 seconds again coming back to your question there's no one off here. Yeah. Yeah. Yeah. Yeah. No, excellent. 9:28 9 minutes, 28 seconds And then um so just to just to um continue from there I mean at what um at current 9:35 9 minutes, 35 seconds utilization levels um how should investors think about incremental margins and from the base business 9:42 9 minutes, 42 seconds itself? Um specifically you know what proportion of incremental revenue can convert into IBITA before meaningful new 9:52 9 minutes, 52 seconds fixed cost or capex uh might be required. So I'm just trying to get my head around that you know how much spare 9:59 9 minutes, 59 seconds capacity is still in the system uh we could get some disproportionate benefit i.e the operating leverage uh without introducing uh fixed cost because the 10:07 10 minutes, 7 seconds nature of the business is nonlinear right so the story here is very clear we want to keep our opex days minimal and we 10:17 10 minutes, 17 seconds have to increase year on year but on the same opex days we want to grow our business. So if you look at our our capacities, we are currently using 10:26 10 minutes, 26 seconds around 70% of our capacity. So there is enough capacity uh there's around 30% capacity left that we can utilize. Of course, we can't 10:33 10 minutes, 33 seconds utilize all 100% of it, but there's enough spare capacity that we can utilize. Having said that, uh if you 10:40 10 minutes, 40 seconds remember the few calls we had a couple of quarters earlier, we've become some debotting projects. This is not big capex. These are not green fields or 10:49 10 minutes, 49 seconds brown fields. just uh improving cycle times on the line and so on and those has also started showing up. So we've 10:56 10 minutes, 56 seconds got uh some additional capacity for high margin products while at the same time we do have capacity across our sites uh for the existing product. 11:07 11 minutes, 7 seconds No, that's helpful. And finally, um are you seeing customer relationships kind of deepen in a way that supports a 11:15 11 minutes, 15 seconds multi-year growth visibility for the base business uh through um larger share of wallets, longer contracts or 11:23 11 minutes, 23 seconds integration into uh customer supply chain rather than just near-term order momentum? I mean how do you see you know 11:31 11 minutes, 31 seconds slightly medium-term let's say FI28 onwards? 11:37 11 minutes, 37 seconds So very very good question Sil I think uh you are right uh a lot of our time and attention was taken by the IBF 11:46 11 minutes, 46 seconds business uh to grow this based business we've had to really invest a lot of time and energy with our customers especially 11:54 11 minutes, 54 seconds talking about these products widening our customer base uh increasing our share of wallet so a lot of the story is 12:02 12 minutes, 2 seconds about finding the new new customers primarily and new geography fees for our existing products in the based business. 12:13 12 minutes, 13 seconds That's helpful. That's all from my side. Wish you all the very best. Thank you. Thank you. 12:19 12 minutes, 19 seconds Thank you. Next question comes from the line of Profa with Ambit. Please go ahead. 12:26 12 minutes, 26 seconds Uh congratulations sir on the good set of numbers. Uh can you uh elaborate on what type of strategic options for ibuprofen business are we looking at? 12:35 12 minutes, 35 seconds And uh from the best of my recollection we were supposed to announce something in the fourth quarter regard. We were supposed to give an update regarding this business. 12:47 12 minutes, 47 seconds So uh so I you know this is this is taking us some time. Um in fact we've mentioned uh 12:56 12 minutes, 56 seconds in our report out that we've appointed we've appointed banker to sort of give us strategic advice on this uh ibuprofen 13:05 13 minutes, 5 seconds business has been a drag for us continues to be a drag for us in fact you will see from our numbers that the AIDA it's eaten out of our existing AIDA 13:14 13 minutes, 14 seconds right but uh I I I believe we'll be in a better position to put out the 13:21 13 minutes, 21 seconds conclusion on our on on this uh u on the strategic piece in H1 of uh this 13:28 13 minutes, 28 seconds financial year you have to give us some more time. 13:32 13 minutes, 32 seconds Got it. So uh and one more thing we've also seen uh improvement in realizations in ibuprofen globally uh in this 13:39 13 minutes, 39 seconds quarter. Uh any particular reason why that is not clearly reflecting into our numbers? Have we wound down certain parts of this ibuprofen business? 13:50 13 minutes, 50 seconds Okay. So uh you know uh so you know by the time this particular war had started all this pricing uptick what you're 13:58 13 minutes, 58 seconds talking about which is uh slightly tactical currently in the u due to the ongoing crisis. So this is something 14:06 14 minutes, 6 seconds which is happening of lately but for the for the period Q4 since most of our order book was already secured and those 14:14 14 minutes, 14 seconds all the spices were agreed we didn't have that incremental uh like price ships coming into these numbers. uh so 14:24 14 minutes, 24 seconds Q1 Q1 is something we might have some kind of a tactical say impact of those pricing in Q1 but that is something 14:30 14 minutes, 30 seconds which is too early to say till that time we actually don't have the entire order book got it sir and one last question on this 14:39 14 minutes, 39 seconds ibuprofen business how backward integrated are we in ibuprofen we are not backward integrated or we 14:47 14 minutes, 47 seconds procure uh input materials from outside so uh our Starting material is u IBA. So we are absolutely not backward integrated by any means. 14:58 14 minutes, 58 seconds So we don't manufacture the IBA. We source the IBAC from third person. Got it. Got it. Perfect. Thank you so much. 15:04 15 minutes, 4 seconds That would be all from my end. 15:09 15 minutes, 9 seconds Thank you. Next question comes from the line of Ankura with Antic Shock Broking. Please go ahead. 15:17 15 minutes, 17 seconds Yeah. Uh thank you for the opportunity. 15:19 15 minutes, 19 seconds Uh couple of questions from my side. Uh so in the previous earnings call the company had indicated plans to like uh 15:28 15 minutes, 28 seconds bring the facility back into commercial production within the next 5 to 6 months. So uh could you provide an 15:36 15 minutes, 36 seconds update on the progress against the timeline and like are we on track for submissioning as planned? 15:46 15 minutes, 46 seconds So um Ankur uh as compared to WISA WISA planned commissioning has been actually done long back in 2024 but however from 15:55 15 minutes, 55 seconds 2024 that site has in mob bald. So uh what what we had missing in the last Amy's call as well saying that that once 16:04 16 minutes, 4 seconds we once we evaluate this entire strategic options related to ibuprofen then we will take a strategic call whether we want to move ibuprofen from 16:11 16 minutes, 11 seconds pondi to wis or or we want to reutilize wis for a different set of things as sit mentioned in the call earlier. uh we are 16:20 16 minutes, 20 seconds uh still in the process of evaluating those options and you will have to give us time till H1 uh by when we will have 16:27 16 minutes, 27 seconds a a clear road map of exactly what we do with var. 16:33 16 minutes, 33 seconds Okay. And uh management had also mentioned that the facility would be like repositioned as a multi-purpose 16:41 16 minutes, 41 seconds plant with uh one block being converted into a high potent API manufacturing block. So uh could you elaborate on the 16:50 16 minutes, 50 seconds potential implications for margins over the uh medium to long term like how do you see the business going forward in 16:57 16 minutes, 57 seconds terms of uh margins over the medium term? 17:02 17 minutes, 2 seconds You know the primary driver of this business in the medium threeear horizon if I might call it will 17:09 17 minutes, 9 seconds be our base business from the existing perspective. It won't be driving these numbers. So it's existing business, 17:17 17 minutes, 17 seconds current manufacturing sites that are going to be driving the growth and the the revenue growth and the margin growth. 17:29 17 minutes, 29 seconds Okay. Okay, that's helpful. Thank you so much. 17:35 17 minutes, 35 seconds Thank you. Next question comes from the line of D Satellani with Everflow Partners. Please go ahead. 17:43 17 minutes, 43 seconds Thank you for the opportunity sir. Congratulations on a good setup. 17:48 17 minutes, 48 seconds Mr. Slani, sorry for interrupting. We cannot hear you. 17:54 17 minutes, 54 seconds Can you come a little closer to the mic and speak? Hi. Uh am I audible? 18:01 18 minutes, 1 second Yes. A little can you speak a little more louder? Okay. Thank you for the opportunity. 18:06 18 minutes, 6 seconds Congratulations on the good set of numbers in the growth API business. The growth API segment. I just wanted to know what is the product concentration 18:15 18 minutes, 15 seconds like of the active products that is revenue contribution of the top one or top three or top five molecules and is 18:22 18 minutes, 22 seconds there any single product that is contributing around 10 15% of the growth API revenue. 18:30 18 minutes, 30 seconds So um so thank you for this question. So um we actually don't have a single molecule or say uh single product 18:38 18 minutes, 38 seconds driving the uh most of the growth but uh roughly we have commercialized close to 69 70 uh 70 products in the entire 18:46 18 minutes, 46 seconds entire portfolio what we sell currently of which roughly 18:53 18 minutes, 53 seconds top 15 to 20 products has a mix of close to 75% of the entire business. So we we 19:00 19 minutes are not overtly dependent on any one molecule driving that particular numbers but you know we have a basket of close 19:09 19 minutes, 9 seconds to top 15 products which actually uh drive this margins and numbers close to 75 80%. 19:15 19 minutes, 15 seconds Okay thank you so that would be a great help. Another question that I have is in the cramps revenue uh so it's approximately around 100 crores at a 19:24 19 minutes, 24 seconds good margin. What is the growth rate of CRS in FI26 versus FI25? And do we have enough order book or new contract coming 19:32 19 minutes, 32 seconds up in FI26 that would move this materially in FI 27? 19:39 19 minutes, 39 seconds So uh those this uh entire numbers of uh 100 course what you are talking about referring to is the particular uh cramps 19:48 19 minutes, 48 seconds plus polymers business what we had u as a combined entity which was uh supposed to be carved out as part of synthics which we had uh announced earlier. 19:57 19 minutes, 57 seconds However in this entire numbers cramps is something which is very subscale. uh for example our annual numbers uh from 20:05 20 minutes, 5 seconds cramps are close to just u 10 12 odd crores and we don't have a uh that kind of a stronger pipeline to uh give you 20:13 20 minutes, 13 seconds those kind uh those kind of projections on this. 20:18 20 minutes, 18 seconds Okay sir another question I have is that in our base business what sort of steady state aida margins we expect to achieve 20:27 20 minutes, 27 seconds in like next 2 three years down the line? 20:31 20 minutes, 31 seconds uh we have been maintaining that we will be uh close to in the range of 25% plus minus here and there and this is something which we have been 20:39 20 minutes, 39 seconds demonstrating quite consistently for the past few quarters and that is something which should u hold true for next few quarters as well. 20:48 20 minutes, 48 seconds Okay sir, thank you so much. Last question I had in product other than how much market share have in India or and 20:58 20 minutes, 58 seconds would be would we be among the leading players or not? 21:02 21 minutes, 2 seconds Now a few products like uh complex chemicals like uh polymers we are one of the leading players in the world. Um so 21:11 21 minutes, 11 seconds definitely from a market uh market share standpoint we we do have close to 50% plus of that partical entire market 21:19 21 minutes, 19 seconds share but then apart from this most of the other products are something which are pure play catalog generics so we don't have that kind of a market share 21:27 21 minutes, 27 seconds tracking for all those products. Okay sir, thank you for your time. That was all from my Thank you. 21:38 21 minutes, 38 seconds Thank you. Next question comes from the line of Proland Nandu with Edel Wise Public Alternatives. Please go ahead. 21:46 21 minutes, 46 seconds Yeah. Hi team. Uh so Sep uh just wanted to understand when you mentioned that you have appointed banker to evaluate 21:53 21 minutes, 53 seconds strategic options. what all options are included in this uh right uh and what has changed since last quarter because 22:02 22 minutes, 2 seconds uh even in last quarter uh we uh were you know under the process of uh reviewing what to do with this uh 22:09 22 minutes, 9 seconds segment. So uh what is the definition uh of uh you know strategic options what all things are included there and what has changed since last quarter? 22:22 22 minutes, 22 seconds So good good question there. So so We started this process last quarter. You are right. And uh we are seriously 22:30 22 minutes, 30 seconds looking at what options we have. I mean is we have the traditional option of finding somebody who's better than us who can run the business or we convert 22:38 22 minutes, 38 seconds into a multi-product facility where besides ibuprofen we focus on other products as well. So we looking at various kind of options. Uh at this 22:47 22 minutes, 47 seconds point it's too early for me to sort of pin down and say this is what we're going to do. But as soon as we make up our mind on that uh 22:55 22 minutes, 55 seconds uh we we will reach out to we will reach out and we'll let uh people know on what uh group we have selected. 23:03 23 minutes, 3 seconds Okay. But Sep the second option uh you would be the better person to know right whether to change it to some other facility. Uh where will banker come into the picture? 23:15 23 minutes, 15 seconds uh I I think there there's a priority right in the sense that if we do find a qualified uh buyer for this business 23:23 23 minutes, 23 seconds that probably will be option number one that's where the bankers come in failing with we will try we will try and see whether we can exercise option number 23:30 23 minutes, 30 seconds two so we've kept all our options open at the states I mean listen that that business is something we run for 40 odd years we have very credible partners we 23:40 23 minutes, 40 seconds have some mary customers very sticky business so we are very We we are we are very careful about what option we choose and how we go about exercising that. 23:50 23 minutes, 50 seconds Sure. Uh no sep that's helpful. Uh two followup questions right. What I mean uh what can someone who acquires this 23:58 23 minutes, 58 seconds business do differently than what you have done for 40 years uh for someone to look at this asset uh right uh from a 24:07 24 minutes, 7 seconds value generation perspective. And the second related question as you mentioned right there are lots of relationships. 24:13 24 minutes, 13 seconds So what is the uh repercussion on our non-IBU profine business from a customer 24:20 24 minutes, 20 seconds relationship point of view which uh also will go into the consideration of what we do for our IBU business. 24:30 24 minutes, 30 seconds So let me take your second question first because that's an easier question. What are the repercussions? 24:36 24 minutes, 36 seconds uh a even if we decide on one of these options that we talked about and it impacts our existing ibuprofen 24:43 24 minutes, 43 seconds customers, we will make sure that we communicate it accordingly and make sure customers have enough time to change over to an alternate source. Right? So 24:52 24 minutes, 52 seconds we will make sure that we maintain our credibility and reputation in the market. Uh I think I think customers uh 25:00 25 minutes with with an open and transparent communications customers will understand where we come from. 25:05 25 minutes, 5 seconds uh so we do not see it impacting the non-aggrofen business. Um we so so we we do not see it impacting the non-aggrofen 25:13 25 minutes, 13 seconds business. On the first one I think the buyer is in a better position to sort of enter why they would want to look at the facility. I mean look look what I mean 25:22 25 minutes, 22 seconds we we are talking about we we we are not backward integrated. Point number one we don't manufacture the IBA. Uh secondly 25:30 25 minutes, 30 seconds we also don't have access to new technologies which some of our competitors have. So I think if there's somebody out there who would who would 25:37 25 minutes, 37 seconds have the who would have the intent to invest in a new process who would have the intent to backward integrate on this 25:45 25 minutes, 45 seconds manufacturing I personally would still make a very compelling case for that uh for for that company. 25:52 25 minutes, 52 seconds No seep that was very helpful. Thanks a lot and all the very best. Thank you. 25:59 25 minutes, 59 seconds Thank you. Next question comes from the line of Harit Kadka with Robbo Capital. Please go ahead. 26:08 26 minutes, 8 seconds Hello. Am I audible? Yes, you are. Please go ahead. 26:13 26 minutes, 13 seconds Uh yes, sir. Thank you for the opportunity. Very good. It's good to see uh you know 15 plus% EITA margins in Q4. 26:21 26 minutes, 21 seconds Just wanted to understand like uh what kind of numbers can we achieve for FI27 and FI28 on revenue and EITA basis? 26:32 26 minutes, 32 seconds Do we have any outlook? 26:34 26 minutes, 34 seconds No. No. H we will not give any outlook at this point. I I would like to believe that the good performance in this 26:42 26 minutes, 42 seconds quarter is a start to many such big quarters. But at this point in time, my priority and my team's priority is going 26:50 26 minutes, 50 seconds to be just dig our heels in here and try doing better quarter quarter. 26:56 26 minutes, 56 seconds Right. Okay. Thank you. Good luck. Thank you. 27:03 27 minutes, 3 seconds Thank you. Next question comes from the line of Amlan Chakraorti AK Investing Company. Please go ahead. 27:12 27 minutes, 12 seconds Good afternoon uh team uh Mr. uh uh uh team Solara. I think it's a great set of 27:20 27 minutes, 20 seconds numbers. Uh my question to you is uh very simple. How much percentage of R&D is Solara uh really spending on uh growing its API business? 27:35 27 minutes, 35 seconds So um I'm going to thank you for this particular question. So um R&D is something which which we have spent 27:42 27 minutes, 42 seconds roughly close to 200 crores in the past four five years. However, having said that, at the same time, we are also 27:49 27 minutes, 49 seconds mindful that our our R&D engine has not been able to uh to come up with uh at least one new profiling in the last four 27:57 27 minutes, 57 seconds years as well. So although we have spent our efforts on R&D, we have not been able to uh have uh success from those 28:05 28 minutes, 5 seconds particular efforts. Having said that our our current annual annual rate of spend is close to 25 crores on R&D and now we 28:13 28 minutes, 13 seconds have uh entirely revived that uh R&D engine with uh exactly commercially focused products pipeline for filing 28:22 28 minutes, 22 seconds etc. So this is something which has started in uh just uh late of FI26 and will be mostly uh in play from FI27 28:30 28 minutes, 30 seconds onwards but the fruits of which will be only reflecting through FI29 or say FI30 onwards because once we start filing our 28:39 28 minutes, 39 seconds products by the time it's actually commercialized there's a sufficient timeline of uh two to three years in between. 28:46 28 minutes, 46 seconds Um I have one follow-up question also on this. Uh uh am I audible? Yes. 28:53 28 minutes, 53 seconds Uh previously since you said that we did not invest Solar did not invest much of an R&D. So but we had seen an uptick in 29:01 29 minutes, 1 second the number of DMFs which were being filed. So can we expect that the number of DMFs which will be filed there will 29:08 29 minutes, 8 seconds be an uptick and also gradually uh the u interest of the customers with respect to those DMFS can be expected to rise 29:16 29 minutes, 16 seconds further. Thank you. So, so we have a plan to do four to five DMF filings every year to start with. As Sarah 29:25 29 minutes, 25 seconds mentioned the last four years, we've had uh no meaningful 29:31 29 minutes, 31 seconds DMF filings. So and uh we you know at the end of the day when you engage a customer you need new products to talk 29:40 29 minutes, 40 seconds about right so we have an active DMF filing plan hopefully we'll do four to five this year four to five next year and so on but all this will start uh 29:48 29 minutes, 48 seconds seeing impactful revenues and margins coming in uh around the FI29 FI30 time frame. 29:57 29 minutes, 57 seconds Thank you so much sir for your question for your efforts. Thank you. Thank you. 30:04 30 minutes, 4 seconds Thank you. Next question comes from the line of Pragnesh Paria with Exile Investments. Please go ahead. 30:18 30 minutes, 18 seconds Mr. Paria, please go ahead with your question. 30:24 30 minutes, 24 seconds Mr. Paria, please unmute yourself and go ahead with your question. We can go to the next question which will be since there's no reply from the line of 30:32 30 minutes, 32 seconds separia. We'll move to the next question that is from the line of Djkumar Ready with Alpha Square. Please go ahead. 30:39 30 minutes, 39 seconds Hi sir, thanks for the opportunity. I just wanted to understand how is the company thinking in the cramps division? 30:46 30 minutes, 46 seconds what what are the areas of uh uh therapies which the company is working on and how how should one think about because given that we are uh we are 30:55 30 minutes, 55 seconds unwinding the ibuprofen business now the two main centers of uh solara will be the base business and the cramps 31:03 31 minutes, 3 seconds business right so how should one think about the cramps uh business what kind of modalities therapist the company will 31:10 31 minutes, 10 seconds be working on so So, so uh as I said in one of my 31:18 31 minutes, 18 seconds earlier compete, uh uh comments, the driver of our business over the next three years is going to be our base business. Okay, the CRA's business has 31:28 31 minutes, 28 seconds been subscale for us and Sarah even gave you some numbers around it. So I think what we are going to focus is we are going to focus on catalog generics. We 31:36 31 minutes, 36 seconds are going to focus on polymer APIs. Uh we are also going to focus on certain select intermediates but that's going to 31:43 31 minutes, 43 seconds be what's going to drive the growth in FI27 28 and 29. We are currently not uh 31:50 31 minutes, 50 seconds factoring a lot of cramps driving that growth. CRAS is something we I think we still need to get back to the drawing table and figure out what we are going to do specifically to cramps. 32:00 32 minutes Got it. And in the base business how do you see the the growth going forward? I mean what will drive this growth? 32:08 32 minutes, 8 seconds I think two things will matter here. Um one is uh can you expand that business right? One is can you expand that 32:16 32 minutes, 16 seconds business with the existing business as I said all the new filings will come beyond the three horizon right so can you see new businesses with new 32:24 32 minutes, 24 seconds customers. Second is uh going to be about how we drive uh operational efficiency. Can we uh can we improve the 32:32 32 minutes, 32 seconds yields of our products? Can we debottleneck our capacity for high margin products? And the third is going 32:39 32 minutes, 39 seconds to be how do we wisely uh focus on uh how do we optimally use our working capital and uh the free cash that we 32:47 32 minutes, 47 seconds generate. I think these are going to be the three pivots around which uh our growth is going to be centered over the next three years. 32:54 32 minutes, 54 seconds Got it. and and can we sir can we just assume that I mean the aspiration is to grow uh be beyond like 15 20% in this 33:02 33 minutes, 2 seconds business well like as I as I said earlier I don't think we will be an outlook here but um 33:10 33 minutes, 10 seconds we we are we are hopeful that we will be able to repeat this quarter's performance going ahead got it thanks a lot that's a good 33:22 33 minutes, 22 seconds thank you next question comes from the of CA Shalpa Sabu an individual mess up please go ahead. 33:31 33 minutes, 31 seconds Hello thank you for taking my question and congratulations on the good set of numbers. Uh my first question about the 33:38 33 minutes, 38 seconds Ponty plant is already answered. So my second question is that what are your plans on the micro facility? It is a 33:45 33 minutes, 45 seconds small facility and already in a residential sort of an area. So what are your plans on that? 33:52 33 minutes, 52 seconds So uh the maestro facility is a 30 acre facility and on that 30 acre facility in 5 acres we have an intermediate 33:59 33 minutes, 59 seconds manufacturing site. Uh it does manufacturing it manufactures one of the key intermediates of a product that we 34:07 34 minutes, 7 seconds eventually manufacture in mango. So at present we will continue using it as an intermediate site uh manufacturing for our products within our ecosystem. 34:21 34 minutes, 21 seconds Okay sir. Thank you. 34:27 34 minutes, 27 seconds Thank you. Next question comes from the line of Rohit Koti with Marshmallow Capital. Please go ahead. 34:34 34 minutes, 34 seconds Uh thank you for the opportunity. Uh sir, could I uh ask you to please repeat the three focus areas you spoke about in the previous previous question? 34:43 34 minutes, 43 seconds Sure. Three focus areas for us is one is uh expanding the existence existing business which is seeding new customers 34:52 34 minutes, 52 seconds for our existing products. Second is driving operational efficiency uh driving that through uh capacity 35:00 35 minutes debotting, yield improvement, cost improvement and the third is going to be about wisely managing our financial. 35:09 35 minutes, 9 seconds Uh so coming uh a little bit on the financials, we have finished raising the third call uh sorry second call of the 35:17 35 minutes, 17 seconds rights issue. Do we uh expect to raise more capital for growth or for debt paid on over the next two three years in your view? 35:25 35 minutes, 25 seconds So uh after this rights call issue what what has already subsidized we actually don't don't have uh any further plans to 35:32 35 minutes, 32 seconds uh uh raise further capital either through equity or debt at this point of time. 35:39 35 minutes, 39 seconds Understood. So uh do you see the debt I mean so it's been a phenomenal work I think from the peak debt of more than thousand work crores we have used both 35:48 35 minutes, 48 seconds the rights money and the uh right uh uh cash flows generated to pay on debt to uh quite a low level. 35:56 35 minutes, 56 seconds uh for I mean I wanted to hear your views on for a business which is a base business right of that quality and uh uh 36:03 36 minutes, 3 seconds the growth plan that we have uh how much debt do you think would be required I I would assume that it should be a debtree company given the quality of that 36:11 36 minutes, 11 seconds business what we have shown in the presentation of the last two three quarters uh but wanted to hear your views on that um we also concur with with with kind of 36:20 36 minutes, 20 seconds similar views u so we have an internal target of making solar debt free by FY29. 36:28 36 minutes, 28 seconds Understood. So this is a debt free. I I I'm guessing you're talking not just about long-term you're talking about working capital debt free as well, right? 36:36 36 minutes, 36 seconds Yes. Yes. 36:38 36 minutes, 38 seconds Understood. Uh and uh so so I have been invested in the company for the last two odd years or three years and uh 36:45 36 minutes, 45 seconds personally I've been very excited by the team that has been uh that is in place right now. I mean uh from whatever I 36:52 36 minutes, 52 seconds what I have seen online uh everybody from the CEO to Sandep to Shah CFO to 36:59 36 minutes, 59 seconds the commercial officer quality officer all of you are from bigger organizations much bigger organizations than solara uh and and so the uh extrapolation from 37:08 37 minutes, 8 seconds somebody like us is that uh um uh the intent is uh uh interesting going forward or big going forward. So it 37:16 37 minutes, 16 seconds would be nice to hear not a one two-year view but let's say three to five year view. Uh uh we have broadly three legs 37:23 37 minutes, 23 seconds right catalog generics the uh high performance APIs and um the cramps which is very very tiny right now. So over a 37:30 37 minutes, 30 seconds five three to five year view uh how do you see uh the team driving the company forward? Uh the index part was super 37:38 37 minutes, 38 seconds helpful to hear. Uh but anything else like capacity expansions? Uh uh in the three pivots you talked about you talked about more customers for existing 37:46 37 minutes, 46 seconds products but you didn't talk about new products. So could you speak about a long-term strategic vision for the company that you the team has? 37:53 37 minutes, 53 seconds So so let me take uh there are there are a lot of questions in this one question. 37:58 37 minutes, 58 seconds Uh firstly thanks a million for staying invested in Solara because I know with Solara it's been like a year. There are quarters we do fairly well and then 38:07 38 minutes, 7 seconds there are others we don't perform to expectations. So thanks for staying invested. 38:11 38 minutes, 11 seconds Um we've spent a lot of time putting a good team together. If you if you remember Sarat and I joined this company in February last year we followed up 38:20 38 minutes, 20 seconds with hiring a very very experienced chief commercial officer who joined us towards the end of the same month. Then we hired a chief uh human resources 38:29 38 minutes, 29 seconds officer uh towards the middle of the year. So I think we have a good team in place, a good team that can steer this 38:36 38 minutes, 36 seconds company uh to to to good results. In terms of capacity, uh we are not planning to take up any green field 38:44 38 minutes, 44 seconds projects. There's no big capex that we're going to invest in our existing facilities itself. We have around 30% cap capacity available. So I think it's 38:54 38 minutes, 54 seconds going to be all about how smartly and wisely we can use this capacity for our high margin products. So I think the the 39:04 39 minutes, 4 seconds uh the thing here is going to be how do we make use of opics leverage? How do we how do we operationalize our business? I 39:11 39 minutes, 11 seconds think uh those are going to be the key drivers. So we are very hopeful though I will not give you a three five year outlook uh with a good team in place 39:18 39 minutes, 18 seconds with capacities available and with uh all the uh new seedings that we've done in the market with our existing business 39:26 39 minutes, 26 seconds I'm really hopeful that we can keep this momentum going. 39:30 39 minutes, 30 seconds U so in terms of the outlook I'm not looking for the numbers at all looking at more strategic direction in terms of what will you focus on more in terms of 39:39 39 minutes, 39 seconds uh areas or products uh was the idea uh and when you speak about the 30% extra capacity available uh I assume it is in 39:47 39 minutes, 47 seconds the x ibuprofen specialities is that right yeah that that is right that is right because ibuprofen is a dedicated facility anyways we can't we can't do 39:56 39 minutes, 56 seconds much else there understood and and in terms of the areas you'll focus I mean uh so 30% sounds nice today but over a 3 to 5 year 40:04 40 minutes, 4 seconds horizon I'm guessing it will fall short of the aspirations we have so do we have space in the existing non uh existing facilities in the base business to 40:12 40 minutes, 12 seconds expand capacity brownfield expansion if required so what we are doing is while we're not putting big capex we're putting incremental capex right incremental 40:20 40 minutes, 20 seconds capex and trying to debottle certain lines which run high margin products but we are falling short of uh incremental capacity so we keep doing this 40:28 40 minutes, 28 seconds incremental fixes And uh it's always nice to be in a position where all our facilities are filled and we're looking for new capacity. So I I would really like to be 40:37 40 minutes, 37 seconds in that position. Uh but for now I have the capacity and we have the immediate fixes that we've done through deboting exercises. In terms of the only other 40:46 40 minutes, 46 seconds lever that I haven't talked about and since you mentioned a fiveyear horizon, the only other lever that I haven't talked about is R&D. Um which as I said 40:55 40 minutes, 55 seconds we intend to provide four five new BMFs every year. uh starting this year and uh those products will see start seeing the 41:03 41 minutes, 3 seconds light of the day in the FI 29 303 31 time frame. So in in a fivey year horizon we should see a growth momentum coming from new R&D products as well. 41:16 41 minutes, 16 seconds Thank you Mr. Coty. Please rejoin the queue for more questions. Next question comes from the line of just breed Sync an individual investor. Please go ahead. 41:26 41 minutes, 26 seconds Hello and am I audience? Yes. 41:32 41 minutes, 32 seconds So I wanted to ask what has been done in last one year since you guys have come in the scene. What the reason or steps that have been taken in last one years? 41:44 41 minutes, 44 seconds Sorry, I didn't get the second part of the question. Am I audible? 41:50 41 minutes, 50 seconds No, I I you're audible. I heard the first part of your question. Can you repeat the second part of your question? 41:56 41 minutes, 56 seconds No, I wanted to ask what the decisions and steps that have you taken last one year or so. 42:04 42 minutes, 4 seconds Okay. So the five things uh we have done in uh the last one year uh obviously the first one was to study the ship. Uh I 42:13 42 minutes, 13 seconds think what this company needed was uh a very healthy order book. So we've uh we've really worked on uh getting more 42:22 42 minutes, 22 seconds customers to the table, finding new geographies for our products. So a lot of effort in the background has gone in increasing our market share, increasing 42:29 42 minutes, 29 seconds our share of wallet as somebody mentioned. The second thing is uh as I was mentioning uh earlier is about 42:37 42 minutes, 37 seconds reigniting this R&D engine because we put we've been we put roughly 25 crores every year in R&D and uh we would like 42:44 42 minutes, 44 seconds to see meaningful DMFS being filed. Uh so we we intend to have four to five DMF trial. In fact we filed our first DMF uh 42:53 42 minutes, 53 seconds in the first week of April. So there is already some traction there. The third is uh about how do we optimally 43:01 43 minutes, 1 second utilize our capacity. So we initiated a lot of deboting exercises where we had good products with high margins but we 43:09 43 minutes, 9 seconds didn't have the capacity. So we initiated capex and uh projects on these. Third, the fourth thing that 43:16 43 minutes, 16 seconds we've done is obviously judicious you the limited working capital that we have. Right. So with that uh we are uh 43:23 43 minutes, 23 seconds maintaining the fine balance between uh uh continuing our manufacturing uh trying to pay off vendors as much as 43:31 43 minutes, 31 seconds we can and uh uh having money available for capex spends as well. So these are uh four areas uh that we've been working 43:40 43 minutes, 40 seconds on and the fifth one uh which is uh also a very important one is driving the organization towards performance and 43:47 43 minutes, 47 seconds there is a big people component in this as well. So we are trying to align people to be building a performance-oriented organization. 43:55 43 minutes, 55 seconds Does that help just thank you Mr. Singh? Please reject queue for more questions. 44:03 44 minutes, 3 seconds Next question comes from the line of Ketan Archeda and individual investor. Please go ahead. 44:09 44 minutes, 9 seconds Hi uh thank you for the opportunity. um team I'd like to ask uh since the visak facility is uh moth world so I'm 44:16 44 minutes, 16 seconds assuming that uh we are not generating any revenues from there uh but at the same time um is there any expenses that 44:23 44 minutes, 23 seconds we are incurring on on that facility and if yes uh how much are those expenses 44:30 44 minutes, 30 seconds yeah so uh kam as you rightly said this particular entire site has been mothball walled since 24 however we have certain uh bare 44:39 44 minutes, 39 seconds minimum most expenditure for that particular side which is to the tune you know of 12 to 15% 44:46 44 minutes, 46 seconds annually sorry you said 12 to 15 kores uh annually 44:53 44 minutes, 53 seconds annually okay okay fine and the other uh question I have is with respect to the options that you are trying to work out 45:00 45 minutes uh for the ibuprofen uh business now you mentioned that you know um one of the reasons why you would want to kind of you know uh or look at buyers who could 45:09 45 minutes, 9 seconds either bring in uh technology change or you know backward integration which we 45:15 45 minutes, 15 seconds are not uh doing right now we we are not backward integrated so my question is um 45:24 45 minutes, 24 seconds why wouldn't we think of doing those things uh and you know I mean if it would be helpful for the business 45:31 45 minutes, 31 seconds wouldn't uh be prudent for us to kind of you know change the technology make it backward integrated of course it will need some capeex to be done but uh isn't 45:39 45 minutes, 39 seconds that a profitable or it could be a profitable option for us? 45:45 45 minutes, 45 seconds uh so ibuprofen at the end of the day is a commodity business right I in one bucket 45:53 45 minutes, 53 seconds I have a commodity business which is ibuprofen and on the other bucket I have a base business that is giving me 23 25% every I think 46:01 46 minutes, 1 second sorry your voice sorry your voice is very muffled okay I'll try and speak a little louder can you hear me now 46:09 46 minutes, 9 seconds yeah this will be better thank you so much okay see at the end of the day ibuprofen is a commodity business right and a 46:16 46 minutes, 16 seconds business that has continuously generated negative equidas scores it's not today it's been happening for the last few quarters so from there I see I see two 46:25 46 minutes, 25 seconds businesses I see one commodity business which requires investment and it gives me negative returns and on the other hand I see a base business that gives me 46:34 46 minutes, 34 seconds 54 55% gross margins and 23 25% eida my I would like to invest money available 46:41 46 minutes, 41 seconds on the base business so I can grow that business to something a lot more meaningful than the current uh based business. So that's where I think uh we would like to focus our energies. 46:54 46 minutes, 54 seconds Okay. And uh then you know on the other hand we also have the uh the derivative IU derivatives which is profitable for 47:01 47 minutes, 1 second us if I'm not wrong. Uh so once we uh kind of you know hive off the IBU business um you know what impact that uh 47:10 47 minutes, 10 seconds will that have on our derivatives business. 47:14 47 minutes, 14 seconds So uh a capable derivatives business is something which we intend to continue as it is. Uh that is something which we are uh not looking at any strategic options at this point of time. 47:26 47 minutes, 26 seconds No uh what I was trying to understand is like you know um is any part of the IU profane that we are generating is being used captively for our derivatives 47:34 47 minutes, 34 seconds business and if yes then uh after the hiding of assume we kind of you know hive off in whatever manner uh in the 47:42 47 minutes, 42 seconds future uh that how would we then uh take care of the uh the cap capital share that we were having right now. So two 47:50 47 minutes, 50 seconds options there either whoever we hire it off to continuous manufacturing the person for us or we can go to buy the 47:59 47 minutes, 59 seconds only two meaningful options we have but you are right the business is the better part of the IP business 48:10 48 minutes, 10 seconds okay okay and and my last question is the base business that we have right now if I compare it uh with the 25 uh FY25 48:18 48 minutes, 18 seconds numbers we've kind of grown grown at about 600%. Um, is there a possibility that you know I mean this business can grow at a better rate? 48:28 48 minutes, 28 seconds That's that's my goal. I want to grow that business at a better rate which I think requires a lot of management time, 48:35 48 minutes, 35 seconds attention and resource which is I'd like to invest more time in that business. I I think the schedule went far better 48:42 48 minutes, 42 seconds than the 6% low in the revenues and the loss margin that we All right. All right. Thank you. Thank you so much for clarifying my questions. 48:52 48 minutes, 52 seconds Wish you all the best. Thank you. 48:57 48 minutes, 57 seconds Thank you ladies and gentlemen. That was the last question for today. We have reached the end of question and answer session. I now hand the conference over to the management for closing comments. 49:08 49 minutes, 8 seconds Thank you everybody and I'd like to uh reiterate thank you for your support. 49:12 49 minutes, 12 seconds Thank you for staying invested in us. Uh your team is working really hard to make sure that we build on the Q4 performance 49:21 49 minutes, 21 seconds and hopefully show u quarters as good or better than this in the future. Thank you. 49:30 49 minutes, 30 seconds Thank you on behalf of Solara Active Pharma Sciences Lut concludes this conference. Like if you're joining us, you may now disconnect.