Highlights of the Concall

• Global API sales is expected to grow at a CAGR of 5.9% from 2010 to 2015

• Drugs with global market size of $224bn to go off-patent by 2015 driving generic sales

• Indian pharmaceutical industry to reach $20bn in 2015, a CAGR of 12.3%

• Global personal care ingredient market to grow to $15bn by 2015 and India to $800mn

• Net Sales increased 16% q-o-q and 25% y-o-y in Q1FY'14 to Rs. 343.9 crore. Net Sales in Q1FY'14 increased due to strong traction in the API business and consistent growth trend in the Specialty Chemicals business which helped offset the subdued performance of the branded FDF business
• EBITDA decreased 21.2% y-o-y but increased 8.0% q-o-q to Rs. 48.8 crore and margins stood at 14.2% lower than 22.6% in Q1FY'13. EBITDA margins were primarily impacted by a negative WIP charge in the API business and lower utilization levels in the domestic FDF business; normalized for the WIP charge consolidated EBITDA margins would have increased sequentially
• Net Profit increased 33.3% q-o-q to Rs. 20 crore and margins stood at 5.8% compared to 9.5% in Q1FY'13 and 5.1% in Q4FY'13. Net Profit margins improved sequentially as tax rates normalized in Q1FY14

• Healthcare formed 71% of Q1FY14 sales
• 30% revenue growth driven by the API business – ramp up of a key CMO account and better client penetration
• Process improvements, new product development and efficient procurement to remain key focus areas for enhancing segment profitability in the API business
• Utilization rates in the Domestic FDF business impacted by prolonged wait for regulatory audits from the CIS markets and impact of regulatory ban on a portfolio product
• The recent acquisition of a US FDA approved FDF to provide immediate access to regulated markets; immediate revenue opportunity with two ANDAs

• Skin Care: Healthy traction across existing customers with increase in off-take and cross selling of newer variants
• Hair Care: Approval of a new product underway in Middle East markets; Increased sales with existing customers in Europe with new set of products
• Sun Care: New opportunity tapped in APAC geography for a leading product. Other product extensions seeing an increase in user base in LatAm and Europe

• Two high profile order wins with significant revenue potential of $28 million over a period of 24 months in the sun care and haircare segments

• Cross selling efforts across existing customer in multiple geographies resulting in growth for Antimicrobial segment
• Specialty intermediates growth trajectory remains stable

• Photo Chromic business continues to face challenges based on technological access
• Focus is to fix process and on newer geographies across Photo Chromics and Imaging chemicals

Commenting on the performance, Mr. Santosh Varalwar, MD and CEO of Vivimed Labs said:

"During the last few months we have seen some important corporate and business developments at Vivimed across our business segments. At the end of July, we acquired a US FDA approved finished dosage formulation facility from Actavis that provides us with immediate access to the regulated markets. In addition, it also delivers revenue opportunities through two commercially valuable and marketable ANDAs that form part of the transaction. This is an important development in our Healthcare segment as it is our first US FDA approved FDF facility and continues to move Vivimed up the healthcare value chain. In the Home & Personal Care segment, we received two orders with a total revenue potential of $28 million over multi-year period, from leading consumer companies. These are both high profile and important wins for us, reinforcing our positioning in a competitive market.

During the quarter, we delivered an impressive revenue growth of 25% y-o-y and 16% q-o-q. This was led by strong traction in the API business and consistent growth in the Home & Personal segment. Vivimed's innovative products and focus on targeted R&D enables us to strengthen our long standing relationship with our blue chip customers."