Solara Active Pharma Sciences Ltd

Dear Members,

On behalf of the Board of Directors of the Company, it gives us immense pleasure in presenting the Seventh Board's Report along with the audited financial statements (standalone and consolidated) for the financial year ended March 31, 2024.

_. FINANCIAL PERFORMANCE

The Company has prepared the Standalone and Consolidated financial statements for the financial year ended March 31, 2024, 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, 2024, as compared to previous year is provided below:

_. BUSINESS OVERVIEW

We are a global, 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 2100+ employees. Our business is spread across 70 countries with extensive operations in the key markets of North America, Europe, Japan, South Korea and the Middle East and North Africa. New programs were introduced for cost improvement, better capacity utilization, operating cost savings, inventory right sizing and talent development. The Company remains optimistic about accelerating all the levers of its strategy and is confident in delivering long term value to our stakeholders.

_. DIVIDEND

The Board of Directors of the company has not recommended dividend for the financial year 2023-24. During the year under review, your company has not made any transfer to the reserves.

In 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 Company's website and can be accessed at investor page of our company's website https://solara.co.in/wp-content/ uploads/2023/07/Dividend_Distribution_Policy.pdf

3. SHARE CAPITAL

The Authorized Share Capital of the Company as on March 31, 2024, stood at 120,00,00,000/- divided into 12,00,00,000 equity shares of 10/- each. There has been no increase in the Paid-up share capital of the Company during the financial year. The Issued, Subscribed and Paid-up Equity share capital of the Company as on March 31, 2024, stood at 35,99,62,670/- divided into 3,59,96,267 equity shares of 10/- each.

_. FUND RAISING

On May 9, 2024, the Rights Issue Committee of the Board at its meeting approved the issuance of 1,19,98,755 Equity Shares of face value of 10 each at a price of 375 per Equity Share (including a premium of 365 per Equity Share), to existing equity shareholders on the record date (May 15, 2024) on ‘rights' basis for an amount aggregating to 449.95 Crores. The issue will be on partly paid-up basis with 3 calls, i.e., application money, first call and second call. The issue opened for subscription on May 28, 2024 and will close on June 11, 2024.

–. 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 2,50,000 options convertible into equal number of equity shares of face value of 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. The details under Regulation 14 of SEBI (SBEB) Regulations, 2021 is available on the Company's website and can be accessed from the weblink: https://solara.co.in/ investor-relations/general-meeting

_. 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. However, as stated in point 5 above, the Company is proposing to raise funds through a rights issue which is currently open for subscription.

_. 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. During the year under review the Company has divested its entire shareholding in Sequent Penems Private Limited to Symbio Generrics India Private Limited for a consideration of 12.50 crores and consequently, Sequent Penems Private Limited ceased to be a subsidiary of the Company with effect from April 25, 2024.

. 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.

__. MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Schedule V of Listing Regulations "Management Discussion and Analysis" is given separately and forms part of this Report.

__. NUMBER OF MEETINGS OF THE BOARD

During the financial year 2023-24, the Directors met eight times i.e., on May 12, 2023; July 5, 2023; August 14, 2023; October 19, 2023; November 14, 2023; February 14, 2024, February 23, 2024, and March 8, 2024

__. DIRECTORS & KEY MANAGERIAL PERSONNEL

As on date of this report, the Board has 9 directors comprising of 2 Executive Directors, 3 Non-Executive Directors and 4 Independent Directors. The Chairman of the Board is a Independent Director. The details of each member of the Board as on the date of this report forms part of Corporate Governance Report.

Retiring 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. Jitesh Devendra resigned from the post of Managing Director of the Company on July 5, 2023.

2. Mr. Poorvank Purohit was appointed as Managing Director & Chief Executive Officer of the Company on July 5, 2023, and he has been designated as Key Managerial Personnel.

3. Mr. Kartheek Raju Chintalapati was appointed as Non-Executive Director of the Company on July 5, 2023

4. Mr. S Hariharan resigned from the post of Executive Director & CFO on July 31, 2023.

5. Mr. Nirmal P Bhogilal resigned from the directorship of the Company on July 19, 2023.

6. Mr. Aditya Puri resigned from the directorship of the Company on August 5, 2023

7. Mrs. Vineeta Rai resigned from the directorship of the Company on August 5, 2023

8. Mr. P.V. Raghavendra Rao was appointed as Chief Financial Officer of the Company on October 26, 2023, and he has been designated as Key Managerial Personnel. Mr. P.V. Raghavendra Rao resigned from the post of Chief Financial Officer of the Company on February 15, 2024.

9. Mr. Rajendra Kumar Srivastava was appointed as Independent Director of the Company on November 14, 2023.

10. Mr. Rajiv Vijay Nabar was appointed as Independent Director of the Company on November 29, 2023.

11. Mr. M Mohan was appointed as Executive Director of the Company with effect from February 14, 2024, and he has been designated as Key Managerial Personnel 12. Mr. Arun Kumar Baskaran was appointed as Chief Financial Officer of the Company on March 8, 2024, 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. Poorvank Purohit, Managing Director & Chief Executive Officer

- Mr. M. Mohan, Executive Director & COO

- Mr. Arun Kumar Baskaran, Chief Financial Officer

- Mr. S. Murali Krishna, Company Secretary

__. 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.

During the year under review, a meeting of Independent Directors was held on February 14, 2024. This meeting was conducted without the presence of other Non-Independent Directors and members of management. During the meeting, the Independent Directors evaluated the performance of the Non-Independent Directors, the Chairman, and the Board as a whole. They also assessed the quality, quantity, and timeliness of the information flow between the Company's management and the Board of Directors.

_3. 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.

Performance Evaluation Criteria for Independent Directors:

The performance evaluation criteria for independent directors are determined by the NRC Committee. An indicative list of factors on which evaluation was carried out includes participation and contribution by a director in meetings, commitment, effective deployment of knowledge and expertise, integrity and maintenance of confidentiality and independence of behavior and judgment. Performance evaluation of the Independent Directors was done by the entire Board, excluding the Independent Director being evaluated. The Directors expressed their satisfaction with the evaluation process.

__. 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.

_–. 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 2023-24 is enclosed as Annexure-2 to this Report.

__. 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 organization 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.

__. RELATED PARTY TRANSACTIONS

All related party transactions or arrangements entered into by the company during the financial year were on an arm's length basis and were in the ordinary course of business. In Compliance with the provisions of the Act and Regulation 23(2) of the SEBI Regulations, 2015, all related party transactions had been placed before the Audit Committee for prior approval.

Pursuant to Section 134(3) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 information pertaining to related parties are given in Form AOC-2 as Annexure-9 of the report. The Policy adopted by the Company can be viewed at website of the Company at https://solara.co.in/wp-content/ uploads/2023/07/Solara-Policy-on-Related-Party-Transactions.pdf

_ . 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.

__. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All the transactions with related parties are in the ordinary course of business and at arm's 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.

__. 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.

Statutory Auditors

M/s.DeloitteHaskins&SellsLLP,CharteredAccountants (Firm Registration No.117366W/W-100018) was reappointed as Statutory Auditors of the Company at the Sixth Annual general meeting of the company held on September 15, 2023, for a period of 4 years and will hold the office till the conclusion of the 10th AGM of the Company. The Auditor's report to the shareholders on the standalone and consolidated financial statement for the year ended March 31, 2024, 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 2023-24, 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 Board's Report. There are few observations in the Secretarial Audit Report and the following are the responses to the same.

The Company is in regular compliance with the regulations of SEBI (LODR), however in some occasions there was some delay due to some technical glitches in the Stock Exchange portal while uploading the documents.

Ms. Vineetha Mohanakumar Pillai (immediate relative of a designated person, belonging to the promoter group) had sold 25,000 shares during the closure of trading window without obtaining pre-clearance from the Compliance officer. With regard to said transaction the Company has reported the same to the Audit Committee and the Stock Exchanges.

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 Committee's 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 2023-24. 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 Board's report.

__. 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.

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.

Credit Rating

During the year under view, CRISIL has reafirmed credit rating of CRISIL BBB / Negative for long term debt and CRISIL A3+ for short term debt.

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 Company's website at https:// solara.co.in/wp-content/uploads/2023/07/Solara_ Whistle-Blower-Policy-1.pdf

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 Company's website at https://solara.co.in/wp-content/uploads/2023/07/ Solara_Nomination_Remuneration-Policy.pdf

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/wp-content/ uploads/2024/08/Draft-Annual-Return-FY-2023-24. pdf Draft Annual Return for the financial year ended March 31, 2024, is also uploaded in the above section. Upon filing the same with Registrar of Companies, filed return shall be updated.

Other Confirmations

During the year under review, the Company has not made any application under the Insolvency and Bankruptcy Code, 2016 and no proceedings are pending under the Insolvency and Bankruptcy Code, 2016 during the year. During the year, there was no one-time settlement done with the Banks or Financial Institutions.

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 2023-24.

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 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 2023-24. The Internal Committee of the Company has filed annual return for the calendar year 2023. The following is the summary of the complaints received and disposed-off during FY24: (i) No. of complaints filed during the financial year: Nil (ii) No. of complaints disposed-off during the financial year: Nil (iii) No. of complaints pending as on the end of financial year: Nil. Further, the Company also organizes and conducts various training programmes, from time to time, for awareness on the provisions of POSH Act.

__. 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.

_–. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

As stipulated under the Listing Regulations, the Business Responsibility and Sustainability Report (BRSR) describing the initiatives taken by the company from environmental, social and governance perspective is provided separately and forms integral part of this Annual Report. BRSR as a part of Annual Report is available on the company's website.

__. CAUTIONARY STATEMENT

Statements in the Annual Report, particularly those that relate to Management Discussion and Analysis, describing the Company's 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.

__. 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.