SOLARA - SOLARA ACTIVE PHARMA SCIENCES LIMITED Share Price

Question: "First is on the gross margins, which have declined even after adjusting for the deferred delivery of our higher margin products and are now below the guided range of 53% to 55%. So could you help us understand the key reasons behind this and also are we confident of reverting to the guided margin range over the coming quarters?"

Answer: "Our gross margin, even adjusted for deferred sales, averaged around 52.5%, down from 54%. The decline was influenced by changes in product mix. Despite this, we anticipate maintaining a healthy gross margin above 51% and are confident we can reach the 53% to 55% range in upcoming quarters depending on the product mix for each quarter."

Question: "What is driving this increase and should we consider this particular INR121 crores as the new run rate going forward?"

Answer: "The increase in fixed costs, which now stands at about INR121 crores, stems from annual inflationary hikes and regular operational costs. We expect this cost base might stabilize between INR117 crores and INR120 crores based on our production volume, so you can consider this as a new run rate."

Question: "How long was the shutdown and what was the period for the same?"

Answer: "The shutdown occurred in August and lasted 3 to 4 weeks to facilitate major upgrades at our Mangalore facility aimed at enhancing production capabilities."

Question: "What about the other part, sir?"

Answer: "The revenue drop in regulated markets is largely attributable to the shutdown of our Mangalore facility, which produces higher-margin products essential for these markets, impacting our overall revenue."

Question: "How long will it take for us to reach our historical peak of INR450 crore revenue per quarter?"

Answer: "We aim to achieve that revenue level sooner rather than later. While achieving INR450 crores is an aspiration, our current focus is on optimizing our EBITDA, making strategic product choices to enhance our profitability."

Question: "Any guidance for this financial year with respect to EBITDA and revenue growth?"

Answer: "While we haven't set formal guidance, we previously indicated a 10% sales increment and approximately 15-20% growth in EBITDA for FY26. We intend to maintain this outlook for now."

Question: "Could you talk a little bit about our plans for launching new products and key ones which could drive growth for us for the next 2, 3 years?"

Answer: "New product development is a vital part of our growth strategy. We've identified several new products that we are currently working on. However, given industry timelines, these products will take about 2-3 years to reach the market."

Question: "Why was preventive maintenance not planned to avoid a Q2 hit?"

Answer: "While we typically plan for a brief shutdown for maintenance, unforeseen issues arose, leading to an unanticipated extended closure due to extended refurbishments and external factors such as weather challenges."

Question: "How will we manage our liquidity situation given the current liabilities?"

Answer: "We recognize our liquidity challenges and are actively addressing them. We aim to improve our liquidity in the next two quarters by decreasing overdue creditor amounts and optimizing working capital."

Question: "Do we have any update on the Vizag facility?"

Answer: "The Vizag facility remains largely mothballed at the moment. We will initiate operations once we secure partnerships on the CRAMS side that can justify its reopening."