Solara Active Pharma slips 15% after Rajender Rao resigns as MD & CEO

Shares of Solara Active Pharma Sciences hit a 52-week low of Rs 545.75, sliding 15 per cent on the BSE in Monday;s intra-day trade, after the company announced that Rajender Rao Juvvadi has resigned from the position of Managing director and CEO (MD & CEO) and directorship of the company with effect from April 28, 2022.

Jitesh Devendra, former CEO and Managing Director (MD) of the company will return to Solara as MD, to steer the reset strategy of the Company, it said.

In the past two trading days, the stock has declined 21 per cent,and has corrected 71 per cent from its 52-week high level of Rs 1,859.30, touched on May 19, 2021. In comparison, the S&P BSE Sensex was down 0.80 per cent at 56,602 points at 11:01 AM.

Separately, the company's board has also decided not to go ahead with the proposed merger with Aurore, to enable the company's focus on its core competency and organic growth. 

In April 2021, Solara had announced to merge with Aurore Life Sciences (Aurore) and build Solara into India's second-largest pure-play API Company. The merger was designed to further accelerate Solara’s Global reach by combining the two companies.

"When the transaction was announced, Solara and Aurore delivered their highest ever EBITDA performance, and the momentum was expected to continue. Aurore has not achieved its financial goals set for FY22 mainly due to weak demand for covid products and other tactical opportunities," Solara said in a press release.

Consequently, the assumptions considered in the valuation for the merger scheme have undergone significant changes. Further, there are uncertainties in the merger scheme process due to disputes raised by one of the minority shareholders at a step-down subsidiary of Aurore, the company said.

Meanwhile, for January-March quarter (Q4FY22), Solara has reported profit after tax (PAT) of Rs 1.8 crore against loss of Rs 140 crore in previous quarter (Q3FY22). The company had posted PAT of Rs 56.6 crore in the-year ago quarter (Q4FY21). Revenue grew 249 per cent QoQ, but down 19 per cent YoY, at Rs 367 crore.

"While there was a situational impact on Ibuprofen revenues, the order book trends for the business remained healthy. Our actions in strategic areas of developing the non-Ibuprofen product portfolio, CRAMS business, and new customer addition have yielded favorable results. From an operational standpoint, we continue to focus on developing new products and market extension filings, which can be serviced from the currently under-utilized multi-product facility at Vizag," Jitesh Devendra, the newly appointed MD of the Company said.