Dear Members,
On behalf of the Board of Directors of the Company, it gives us immense pleasure in presenting the Fifth Boards Report along with the audited financial statements (standalone and consolidated) for the financial year ended March 31, 2022.
1. FINANCIAL PERFORMANCE
The Company has prepared the Standalone and Consolidated financial statements for the financial year ended March 31, 2022, in accordance with the Indian Accounting Standards (Ind AS) as prescribed under the Companies Act, 2013. Key highlights of financial performance of the Company for the financial year ended March 31, 2022 as compared to previous year is provided below:
(Rs In Crores)
Financial Results | Standalone | Consolidated | ||
2021-22 | 2020-21 | 2021-22 | 2020-21 | |
Gross Revenue | 1,287.10 | 1,645.29 | 1,288.36 | 1,645.65 |
Profit before interest, depreciation and tax | 91.19 | 399.35 | 92.22 | 400.42 |
Profit before tax | (91.66) | 220.96 | (91.11) | 221.50 |
Profit after tax | (58.56) | 220.96 | (58.29) | 221.35 |
EPS (basic) on the basis of RS 10/- per share | (16.29) | 68.86 | (16.18) | 69.00 |
EPS (diluted) on the basis of RS 10/- per share | (16.29) | 64.40 | (16.18) | 64.53 |
2. BUSINESS OVERVIEW
We are a global, R&D focused, pureplay Active Pharmaceutical Ingredients (API) company engaged in the manufacturing and development of APIs and offering Contract Manufacturing and Development Services for global companies. We have a highly compliant manufacturing footprint spread over six large scale multi-product facilities supported by a team of 2200+ employees. Our business is spread across 75 countries with extensive operations in the key markets of North America, Europe, Japan, South Korea and the Middle East and North Africa. We are poised to create strategic value in the B2B space with a basket of high-value products, compliant manufacturing base, long term supply assurance and strong customer advocacy. New programmes were introduced for cost improvement, better site utilisation and operating cost savings. The Company remains optimistic about accelerating all the levers of its strategy and is confident in delivering long term value to our stakeholders. A detailed analysis of the operations of the company for the year gone by is provided in the management discussion and analysis report, which forms a part of this annual report.
3. COVID-19
The fiscal year 2021-22 was challenging in many ways. There was an exponential surge in the Covid-19 during second and third wave cases in many countries, forcing the Government to impose national lockdown in India. The safety of employees was paramount in all the decisions taken by your company to continue or restart operations. The company used innovative methods to support its customers during this crisis. The spread of this virus has compelled your company to revisit its ways of working, including working from home.
4. DIVIDEND
The Board of Directors of the company has not recommended dividend for the financial year 2021-22. During the year under review, your Company has not made any transfer to the Reserves.
I n terms of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the Company has adopted a Dividend Distribution Policy. The said Policy is available on the Companys website and can be accessed at investor page of our companys website www.solara.co.in.
5. SHARE CAPITAL
The Authorised Share Capital of the Company as on March 31, 2022, stood at RS 120,00,00,000/- divided into 12,00,00,000 equity shares of RS 10/- each.
There has been an increase in the Paid-up share capital of the Company during the financial year on account of allotment of 66,500 equity shares consequent to exercise of stock options by the employees.
The Issued, Subscribed and Paid-up Equity share capital of the Company as on March 31, 2022, stood at RS 35,99,62,670/- divided into 3,59,96,267 equity shares of RS 10/- each.
6. EMPLOYEES STOCK OPTION PLAN
The company has formulated an ESOP Scheme titled "Solara Employees Stock Option Plan 2018".
During the year under review, Nomination and Remuneration Committee of the Board (NRC) has granted 35,000 options convertible into equal number of equity shares of face value of RS 10/- each to the senior management personnel of the Company. Statement giving detailed information on stock options granted to Employees as required under the Companies Act and SEBI Regulations is enclosed as Annexure 8 to this Report.
7. MATERIAL CHANGES AFFECTING FINANCIAL POSITION OF THE COMPANY
There are no material changes and commitments occurred, affecting the financial position of the Company, between the end of the financial year and the date of this report.
8. SCHEME OF AMALGAMATION
The Board of Directors of the Company at its meeting held on November 11, 2021 had approved the revised Scheme of Amalgamation (Scheme) for merger of Aurore Life Science Private Limited (Aurore), Empyrean Lifesciences Private Limited and Hydra Active Pharma Sciences Private Limited (Transferor companies) into the Company (Transferee Company) in terms of Section 230 to 232 of the Companies Act, 2013. The Scheme was subject to necessary statutory and regulatory approvals including the approvals of National Company Law Tribunal, the shareholders and creditors of each of the companies.
However, on April 29, 2022, the Board of Directors of the Company decided to withdraw the Scheme as Aurore has not been able to achieve its financial goals set for FY22 due to weak demand for covid products and tactical opportunities. Consequently, the assumption considered in the valuation for the scheme has undergone significant changes. The Board is of the view that it is not financially viable to proceed with the merger scheme with Aurore. The Board believes that the Company should reflect on the course-correction strategy and deliver targeted outcomes with organic growth.
9. SUBSIDIARIES
The details of Subsidiary Companies and their financial position as required under the first proviso to Section 129(3) is given in Form AOC-1 as Annexure-1 as part of this report.
10. CORPORATE GOVERNANCE
Your Company is committed to maintain the highest standard of Corporate Governance and adhere to Corporate Governance guidelines as laid out in the Listing Regulations.
The detailed report on Corporate Governance as per the format prescribed by Securities and Exchange Board of India under Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 along with a certificate from M/s. Mohan Kumar and Associates, Practicing Company Secretaries, confirming compliance with the requirements of Corporate Governance is attached with this report. There are no observations or adverse remarks in the said certificate.
As required by Listing Regulations, a certificate from M/s. Mohan Kumar and Associates, Practicing Company Secretary confirming that none of the directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as directors of the companies is attached to this report as Annexure 7 Pursuant to the SEBI circular no. CIR/CFD/ CMD1/27/2019 dated February 8, 2019, the Company has obtained an Annual Secretarial Compliance Report from M/s. Mohan Kumar and Associates, Practicing Company Secretaries confirming compliance of SEBI Regulations / Circulars / Guidelines issued thereunder and applicable to the Company. There are no observations or adverse remarks in the said report.
11. MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to Schedule V of Listing Regulations "Management Discussion and Analysis" is given separately and forms part of this Report.
12. NUMBER OF MEETINGS OF THE BOARD
During the financial year 2021-22, the Directors met eight times i.e., on April 9, 2021; May 6, 2021; August 4, 2021; August 25, 2021; November 11, 2021; November 26, 2021; February 9, 2022 and March 9, 2022.
13. DIRECTORS & KEY MANAGERIAL PERSONNEL
As on date of this report, the Board has 10 directors comprising of 2 Executive Directors, 4 NonExecutive Directors and 4 Independent Directors. The Chairman of the Board is a Non-Executive Director. The details of each member of the Board as on the date of this report forms part of Corporate Governance Report.
Retire by Rotation:
a) Mr. Arun Kumar Pillai, Non-Executive Director, retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. Your directors recommend his reappointment.
b) Mr. Kartheek Raju Chintalapati, Non-Executive Director - retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. Your directors recommend his reappointment.
Detailed profile of the Directors retiring by rotation is attached as Annexure 5 to this report.
Change in directors and key managerial personnel during the year:
1. Mr. Aditya Puri was appointed as Non-Executive Director and Chairman of the Company on August 4, 2021.
2. Mr. Arun Kumar Pillai was appointed as NonExecutive Director of the Company on August 4, 2021.
3. Mr. Kartheek Raju Chintalapati was appointed as Non-Executive Director of the Company on August 4, 2021.
4. Ms. Vineeta Rai was appointed as Independent Director of the Company on October 17, 2021.
The Company had sought and received approval from the shareholders through postal ballot on October 17, 2021 for the above appointments.
5. Mr. S. Hariharan was appointed as Executive Director & CFO of the Company on March 9, 2022 and he has been designated as Key Managerial Personnel
6. Mr. Deepak C Vaidya resigned from the directorship of the Company on August 4, 2021.
7 Mr. Ronald Tjeerd de Vries resigned from the directorship of the Company on August 4, 2021.
8. Mr. Bharat R Sesha resigned from the post of Managing Director & CEO and directorship of the company on February 28, 2022.
9. Mr. Subhash C Anand resigned from the post of Executive Director & CFO and directorship of the Company on March 9, 2022.
10. Mr. Rajesh Salwan, who was designated as one of the Key Managerial Person resigned from the post of Chief Operating Officer of the Company on March 10, 2022.
Mr. Rajender Rao Juvvadi who joined the Board on
August 4, 2021 ceased to be a director consequent to his resignation from the post of MD & CEO of the Company on April 28, 2022.
Mr. Jitesh Devendra was appointed as Managing Director of the Company on April 29, 2022 and he has been designated as Key Managerial Personnel.
The following are the Key Managerial Personnel (KMPs) as on the date of this report:
• Mr. Jitesh Devendra, Managing Director.
• Mr. S. Hariharan, Executive Director & Chief Financial Officer.
• Mr. S. Murali Krishna, Company Secretary.
14. DECLARATION BY INDEPENDENT DIRECTORS
In accordance with Section 149(7) of the Companies Act, 2013 each Independent Director has confirmed to the Company that he / she meets the criteria of independence as laid down in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the Listing Regulations and that they are not aware of any circumstances or situations, which exists or may be reasonably anticipated, that could impair or impact their ability to discharge duties with an objective independent judgement and without any external influence. In the opinion of the Board, all Independent Directors are independent of the management.
15. BOARD EVALUATION
The Companies Act and Listing Regulations relating to Corporate Governance contain provisions on evaluation of the performance of the Board and its Committees as a whole and Directors including Independent Directors, Non-Independent Directors and Chairperson individually. In pursuant thereof, annual evaluation of performance of the Board, working of its Committees, contribution and impact of individual directors has been carried out through a questionnaire for peer evaluation on various parameters.
16. PARTICULARS OF EMPLOYEES
The statement containing particulars in terms of Section 197(12) of the Companies Act, 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report and is appended herewith as Annexure 6 to the Boards report.
The statement containing particulars in terms of Section 197(12) of the Companies Act, 2013 read with rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report. Considering the first proviso to Section 136(1) of the Companies Act, 2013, the Annual Report, excluding the aforesaid information, is being sent to the members of the Company and others entitled thereto. Any shareholder interested in obtaining a copy thereof, may write to the Company Secretary in this regard.
17. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company has undertaken "Corporate Social Responsibility (CSR)", initiatives in areas of Health, Education and Employability which are projects in accordance with Schedule VII of the Companies Act, 2013.
A detailed report on CSR activities undertaken during the financial year 2021-22 is enclosed as Annexure-2 to this Report.
18. RISK MANAGEMENT
The Company has a risk management framework for the identification and management of risks.
In line with the requirement under the SEBI Listing Regulations, the Company has constituted a Risk Management Committee (RMC), comprising of members of the Board and Senior Management personnel. Composition of RMC is provided in the Corporate Governance Report, which forms part of this Report.
RMC is entrusted with the responsibility of overseeing strategic, operational and financial risks that the organisation faces, along with the adequacy of mitigation plans to address such risks.
Additional details relating to Risk Management are provided in the Management Discussion and Analysis report forming part of this Report.
19. LOANS, GUARANTEES OR INVESTMENTS
Particulars of investments made, loans given and guarantees covered under the provisions of Section 186 of the Companies Act, 2013 are provided in Note No. 47 to the Standalone Financial Statements in the Annual Report.
20. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All the transactions with related parties are in the ordinary course of business and at arms length basis. The transactions with related parties are disclosed in Note No. 40 to the Standalone Financial Statements in the Annual Report. The disclosure of contracts or arrangements with related parties for material transactions is furnished in Form AOC-2 as Annexure 9 as part of this report.
The Company has formulated a policy for transacting with Related Parties, which is uploaded on the website of the Company. Further, there are no materially significant related party transactions with its promoters, the directors or the management, their subsidiaries or relatives, etc. that may have potential conflict with the interests of the Company at large.
21. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed by the Regulators / Courts that would impact the going concern status of the Company and its future operations.
22. AUDITORS AND AUDIT REPORTS
Statutory Auditors
M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No.117366W/W-100018) was appointed as Statutory Auditors of the Company at the first Annual general meeting of the company for a period of 5 years and will hold the office till the conclusion of the 6th AGM of the Company. The Auditors report to the shareholders on the standalone and consolidated financial statement for the year ended March 31, 2022 does not contain any qualification, observation or adverse comment.
Secretarial Audit Report
M/s. Mohan Kumar & Associates, Practicing Company Secretaries, Chennai, is the Secretarial Auditor for the Company.
The Secretarial Audit for the financial year 202122, inter-alia, included audit of compliance with the Companies Act, 2013, and the Rules made under the Act, Listing Regulations and applicable Regulations prescribed by SEBI amongst others.
The Secretarial Audit Report is enclosed as Annexure 4 to the Boards Report. The Secretarial Audit Report does not contain any qualifications, reservations or adverse remarks.
Internal Auditors
M/s. Price Waterhouse Coopers, Chartered Accountants are the Internal Auditors of the Company. The Internal Auditors carry out audit as per the audit plan defined by the Audit Committee and regularly updates the committee on their internal audit findings at the Committees meetings.
The Internal Auditors were satisfied with the management response on the observation and recommendations made by them during the course of their audit and have expressed satisfaction with the internal systems, controls and process followed by the Company.
Cost Auditors and Cost Records
Mr. K. Suryanarayanan, Cost Accountant (Membership No.24946) has carried out the Cost Audit for the applicable business for the year under review.
Pursuant to the provisions of Section 148(3) of the Companies Act, 2013, the Board of Directors had appointed Mr. K. Suryanarayanan, Cost Accountant (Membership No.24946) as Cost Auditor of the Company for the financial year 2021-22. Proposal for ratification of remuneration of the Cost Auditor is placed before the shareholders.
The company is maintaining cost records as specified under sub-section (1) of section 148 of the Companies Act, 2013.
Reporting of Frauds by Auditor
During the year under review, neither the Statutory Auditors nor the Internal Auditors has reported to the Audit committee under Section 143(12) of the Companies Act 2013, any instances or fraud committed against the company by its officers or employees, the details of which need to be mentioned in the Boards report.
23. INTERNAL FINANCIAL CONTROLS
The Company has in place well defined and adequate framework for Internal Financial Controls ("IFC") as required under Section 134 (5) (e) of the Companies Act, 2013.
During the year under review, such controls were tested and no material weaknesses in their design or operations were observed.
24. OTHER DISCLOSURES
Nature of Business of the Company
There has been no change in the nature of business of the Company during the year under review.
Public Deposits
The Company did not accept any deposits within the meaning of provisions of Chapter V - Acceptance of Deposits by Companies of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.
Vigil Mechanism / Whistle Blower Policy
The Company in compliance with Section 177 of the Companies Act, 2013 and Regulation 22 of Listing Regulations has established a Whistle Blower Policy in place as part of its vigil mechanism. The policy provides appropriate avenues to the directors, employees and stakeholders of the Company to make protected disclosures in relation to the matters concerning the Company. Protected disclosures are appropriately dealt with by the Whistle Officer or the Chairman of the Audit Committee. The policy is also available on the Companys website at www.solara.co.in
Policy on Directors Appointment and Remuneration
The policy of the Company on Directors appointment and remuneration, including the criteria for determining qualifications, positive attributes, independence of a director and other matters, as required under Section 178 of the Companies Act, 2013 is available on the Companys website at www.solara.co.in
Insurance
The assets/ properties of the Company are adequately insured against loss due to fire, riots, earthquake, terrorism, etc., and against other perils that are considered necessary by the management.
Annual Return
Pursuant to Section 92 of the Companies Act, 2013 and the rules made thereunder, Annual Returns filed by the Company for the prior financial years has been uploaded on the website of the Company and can be accessed at https://solara.co.in/investor- relations/annual-return/
Draft Annual Return for the financial year ended March 31, 2022 is also uploaded in the above section. Upon filing the same with Registrar of Companies, filed return shall be uploaded.
Secretarial standards issued by the Institute of Company Secretaries of India (ICSI)
The Directors state that the applicable Secretarial Standards have been followed during the Financial Year 2021-22.
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
Particulars in respect of conservation of energy, technology absorption and foreign exchange earnings and outgo as required under section 134 of the Companies Act, 2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is attached as Annexure 3 to this Report.
Disclosure under the Sexual harassment of woman at workplace (Prevention, Prohibition and Redressal) Act, 2013
The company has put in place an anti-sexual harassment mechanism in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee have been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. The Company has not received any complaint of sexual harassment during the year 2021-22.
25. DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134(5) of the Companies Act, 2013 the Directors of your Company confirm that:
a) in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures.
b) they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period;
c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.
d) they have prepared the annual accounts on a going concern basis
e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating properly; and
f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
26. BUSINESS RESPONSIBILITY REPORT
As stipulated under the Listing Regulations, the Business Responsibility Report (BRR) describing the initiatives taken by the company from environmental, social and governance perspective is provided separately and forms integral part of this Annual Report. BRR as a part of Annual Report is available on the companys website.
27. CAUTIONARY STATEMENT
Statements in the Annual Report, particularly those that relate to Management Discussion and Analysis, describing the Companys objectives, projections, estimates and expectations, may constitute ‘forward-looking statements within the meaning of applicable laws and regulations. Although the expectations are based on reasonable assumptions, the actual results might differ.
28. ACKNOWLEDGEMENT
Your Directors would like to express their grateful appreciation for the assistance and co-operation received from the Banks during the year under review. Your Directors also place on record their deep sense of appreciation for the continued support of customers, suppliers, employees and investors of the company.
For and on behalf of Board of Directors
Jitesh Devendra | S. Hariharan | |
Place: Bengaluru Date: April 29, 2022 | Managing Director | Executive Director & CFO |