Concall Summary: Solara Active Pharma Sciences Ltd Q4FY20

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Business updates

  • Have stopped production of Ranitidine because USFDA has found NDMA impurities increase in some formulations when stored at higher temperatures. This molecule contributes 7% of our overall sales
  • Looking at a positive outlook from a customer who has started lifting API’s and things should look good from H2FY21
  • Have added nine newer markets for its products
  • Pharma companies looking at diversifying supply chains, increased focus on healthcare and focus of government to develop domestic API sector should be beneficial for the company

Participants

  • Ashmore Capital
  • Antique Stock Broking
  • DSP Mutual Fund
  • Unifi Capital
  • Vriddhi Capital
  • Equirus

QnA

  • Have taken full provisions of Ranitidine sales in Q4 so in next fiscal there should be no impact
  • Have started operations across all locations in a phase-wise manner following all regulations posted by authorities
  • Still confident of earlier guidance and hoping to maintain the same rate of revenue growth of 15% and EBITDA growth of 20%
  • Have commissioned the Vizag facility and there is an improvement in the order book for some of the key API’s
  • The gross block at Vizag that has been added is around Rs 200 crores
  • There are multiple problems in every state but in the last one-week at least getting raw materials for manufacturing has been easier
  • This year estimated spends on CAPEX is expected to be in the region of Rs 50-60 crores only
  • The inventory as on year-end is higher due to the inability to do any production for the last few days of March
  • The target asset turnover ratio for FY21 which the management is working towards is 1.9 times
  • There is an incorporate deposit made with a group company and Rs 50 crores has been deposited at current rates of interest and the money is expected back in June
  • Have not got any request from customers to lower prices due to the fall in crude prices
  • There is a high probability that the CRAMS business will also start contributing to the revenue growth because clients have started making inquiries
  • The overall debt level will be in the same range in FY21 as well
  • Currently CRAMS is less than 10% of the overall revenues but looking at increasing the share of CRAMS in the overall business
  • Expecting a fund infusion through the warrants in the current FY
  • Looking at newer products filing and also CRAMS business that can make up for the lost capacity of Ranitidine
Also Read on FinMedium:  Concall Summary: Kaveri Seeds Q4FY20

Image Source: Company website

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Karan Sharma
The Concall Summary Guy | CFA | Investor
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