Capitaline

Analyst Meet / AGM 22-Nov-12

Conference Call

Vivimed Labs

Expects jump in revenues and profit from Specialty Chemicals in H2'FY'13 and especially in Q4'FY13, due to operationalisation of new capacities

Vivimed Labs recently announced results for the quarter ended September 2012 and held a conference call to discuss the results and its future growth strategies.
Highlights from the Transcript:

During the quarter, other income was higher due to one off item (some grant that was received in Spanish company from government).
On Standalone basis, the forex gain is around 2.4 crores and forex loss is Rs 2 crores during the quarter.
The fall in margins is due to closure of the facility at Jeedimetla for about a month coupled with issues with regard to Triclosan. Also, due to lesser contribution in August month where it is a vacation time (three and half weeks of vacation). Normally, the typical run is about €4.5 to 5 million that comes from that particular factory, and this one month, which always was less than half of that.
The Specialty Chemicals business continues to be stressed again in Europe and America on the back of substantial scale down of Triclosan (antimicrobial) by its major users Constantin in Spain. However, the Colgate is in final stage of completing the process approval and most likely will qualify in about 30 days, which might give additional volume going forward.
The mix of volumes in terms of Triclosan, but other segments particularly, the Hair Dye segment not very encouraging in Europe but compensated by a lot of interest in Asia and in China.
Notably, the Sunscreens season just begun and this is expected to have good impact in Q3 and Q4, and it has bagged some good orders for first time away from earlier orders from Henkel Europe and L'Oreal.
The API business, after post UQUIFA, was creating additional capacities for API in India, which is coming up. However, Because of delays coming from Vizag Greenfield project, it initiated a project in Bidar, Karnataka in existing facility for another plant and this is expected to be completed by June 2013.
Also, the Intermediate business for UQUIFA which supposed to start production from same facility originally to be started in September 2012, due to some delays of commercial production will probably begin from December and scaling up will probably start in Q4'FY'13, which would complement UQUIFA's bottom line and top line.
It is investing on new R&D facility in Hyderabad and acquired premise in Alexandria in Genome Valley which is almost ready for operations in coming quarter.
The Pharmaceutical business Sales impacted for one month in August due to shutdown of plant for fixed approval (Audit) and further it expects the approval to come in the near term which will give the edge going forward. The impact is only one-time; it is not a regular feature. Also, The Specialty Chemicals business does witness some pressure during the quarter.
The UQUIFA has a strong API background and has got a strong pipeline going forward, the three things it decided to do post acquisition were- 1) create a Pharma Intermediate plant within India and then complement UQUIFA by trying to supply in-house Intermediate which will bring down costs. 2) There are certain products are targeted to move to India from Spain. 3) To complement UQUIFA with its innovative pipeline and innovation things for which, it already invested on a pool of franchises in India hiring, right now in Spain taking about another 30 which would really complement in terms of analytically regulatory filing in terms of new products.
It has filed 47 Type-II DMFs with USFDA and few prominent products it has filed are Pantoprazole, Omeprazole, Esomeprazole and Etofenamate.
There were no preferential were given to Kitara (normal shares) and Compulsorily Convertible and Preference Shares (CCPS) were given to Jacob Ballas, which will get converted in March or April 2013.
The Specialty Chemicals typically depends upon major customers and products approvals.
The Specialty Chemicals business always better in H2 and also further with few capacities going to operationalise by December 2012, it expects jump in revenues and profit coming from Specialty Chemicals in H2'FY'13 and especially in Q4'FY13.
There is 50% capacity utilization in Spain, in both the plants, and Mexico, by and large is over 90% capacity utilization
It expects 30-35% growth from Specialty Chemicals going forward and expressed that Pharma business will not be a commodity business. It indicated that it has enough plans to see that revenues and profit growth for the company over next two years.
The tax rate expected to be in the range of 18 - 20% for FY'13 and even future guidance will be in similar range.
The CAPEX is expected to be in the range of Rs 100-120 crore for FY'13 and Rs 80 crores already been spent.
The Company expected to see debt coming down after 2014.

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