• Net sales grew 7% to Rs 367.8 crore for Q1FY'15 compared to Q1FY'14 EBITDA margin improved 159 bps on a y-o-y basis to 15.8% while net profit fell 14% to Rs 17.1 crore.

• Revenue growth in Q1FY'15 was primarily due to the continued traction in the healthcare businesses. Sales growth in the healthcare business (76% of Q1 revenues) was 14.6% y-o-y driven by the momentum in the API business and better traction in the FDF segment. Specialty chemicals business (24% of Q1 revenues) declined (9.9)% y-o-y as the company strategically reduced volumes from low margin, high volume products to focus more on the core home & personal care segments

• However, EBITDA margin improved 159 bps on a y-o-y basis to 15.8% due to improved profitability across both the Specialty Chemicals and the Healthcare segments. Specialty Chemicals segment margins improved significantly compared to Q1FY'14 despite decline in sales as portfolio rationalization and cost optimization efforts started to yield results. Healthcare segment margins improved due to the ongoing revenue productivity, better product mix and cost optimization initiatives

• Finance costs increased 86.7% on y-o-y basis to Rs. 18.4 crore due to higher rupee borrowings on account of acquisition of APMPL and foreign currency fluctuations

• Effective Tax Rate stood at 26.0% for the quarter.

Healthcare Segment

• EBIT margins increased from 7.9% in Q1FY'14 to 8.5%, an improvement of 61 bps. Efforts on higher revenue productivity and cost optimization have started to yield results

• In the API (Active Pharmaceutical Ingredients )segment, manufacturing volume has shown consistent improvement over the last year based on the current generic product pipeline as well as scale-up at a key CMO account

• In the FDF (Finished Dosage Formulation) segment, after the recent PIC/S approval, production has started at the Jeedimetla facility. Expect meaningful revenue contributions in H2FY'15

• In the FDF segment, Vivimed has now started sales to the US generic markets with one ANDA from the Alathur facility. Three new acquired ANDAs (Abbreviated New Drug Application) to be commercialised from early CY2015

• Branded FDF business remained stable with increased off-take expected given new product launches, broader portfolio and better MR productivity

Personal Care Segment

• Overall, sales declined y-o-y as the company strategically reduced volumes from low margin, high volume products to focus more on the core home & personal care segments. Typically, the business is seasonally stronger in the second half of the financial year

• Key segments such as hair dyes and skin care remained stable; oral care generated significant revenue growth

• Hair care, sun care and skin care are expected to lead segment growth through a combination of new product launches, increased market share and new customer acquisitions in H2FY'15

• New distributor appointments have started to make revenue contribution in the underpenetrated markets – LatAm and AMET

• Focus on Tier II clients and penetration with existing clients is ongoing

• Revenue visibility for key products in the sun care and hair care segments is strong. New product launches and customer ramp-ups are expected to drive growth in H2 FY'15

Home Care Segment

• Strategic defocus on trading of specialty intermediates resulted in loss of sales of low margin products

• Partly offset by encouraging off-take in preservatives as a new product starts to make contributions

• Outlook remains strong with likely off-take from new products such as BZC in the coming quarter

Industrials Segment

• Photochromic sales showed increasing traction during the quarter (+18% y-o-y) due to new technology launches and better market share at existing customers

• Imaging Chemicals business continues to face industry challenges

• Outlook of this segment is strong with greater volumes expected from current as well as new customers

"We are pleased to report that Vivimed started the year on an encouraging note with improved operational and financial performance. Our ongoing revenue productivity, better product mix and cost optimization initiatives have started to yield results which is reflected in the 159 bps improvement in EBITDA margins. In the healthcare segment, Vivimed continues to strengthen its CMO engagements in the API segment. After the recent PIC/S approval, we have started production of several finished dosage formulations for supply to the CIS markets and expect meaningful contribution in the second half of the fiscal year. As our US FDA approved Alathur facility gains traction from the US markets, we expect increasing revenues from this business during the year. In the Specialty Chemicals segment, management has strategically defocused the high volume, low margin products which is reflected in the sales decline of 10%. Despite this our EBIT grew by over 19%, with a margin improvement of 493 bps. Outlook for this segment remains strong and growth will be driven through a combination of new product launches, increased market share and new customer acquisitions. Our past investments have started to yield results and we expect to move to the next level of growth for Vivimed from here."