International Finance Corporation proposed investment of USD 15 million in proposed project which costs USD 42 million to expand the Capacity for existing products and create new products. Can you elaborate specifically which capacities of existing products you are expanding and which new products you are plan to manufacture??
Vivimed intends to expand capacities of existing products for both specialty chemical and Pharmaceutical business segments.  The new products which are proposed to be launched would be in segments like Skincare, Sunscreen and Antimicrobial.

When you schedules to start the proposed project and what is the time bound for it? How you planned to raise the rest of the investment (USD 27 million) required for the project? What is the likely annual interest and depreciation cost associated with this project?
Initial activities have already started. The proposed Projects are expected to start commercial production during FY 13. Rest of the investment of USD 27mn will be raised through a combination of Debt and Equity. The Annual interest rate will be pegged at less than 6% and depreciation cost will be in the range of 2.5 to 3 % of total turnover.

How much amount you plan to spend on the R&D Facilities? Further, how much have you planned to expand your of core business products specialty business? Any plan to invest in the proposed dedicated manufacturing facility worth USD 7 million in Hyderabad ?
R&D spend is expected to be in the range of 2 to 3 % of the total sales. 60 to 70% of the proposed expansion will cater to Specialty Chemical business and balance to Pharmaceutical business.  The $ 7 milion proposed dedicated manufacturing facility in Hyderabad is already forming part of the proposed expansion i.e. total cost of $ 42 million

Any updates?
The USFDA compliant facility was mainly for Pharmaceutical Dosage forms and a green field project near Hyderabad. The necessary regulatory permissions for setting up the project are received and the project will be executed during the FY12.

When you could expect the revenues inflows and the real traction in the business in respect of the expansions?
Revenue inflows are expected to be in FY13, and are expected to stabilise / attain traction by FY2015.

What's the strategy of the Pharma business as we see the business is growing from year after year? Else, will your focus is only on the high margin specialty business in future? Kindly elaborate.
Vivimed intends to focus equally on both the business segments. While the specialty chemical business is already in focus, pharmaceutical business would be expanded by in-organic means. Thereby both the segments (Spechem & Pharma) would contribute equally to the top line

Kindly elaborate on the strength and opportunities of H&PC Actives Division and Specialty Pharma Division.
H&PC Global market is approximately USD 8 to 10 mn and the major share is exports. However, domestic market is growing aggressively at 20% y-o-y. Vivimed is only such company based out of India which has substantial focus on H&PC activities and since the manufacturing facilities are based out of India which is comparability low cost based, we have a clear competitive edge over competitive peers. Specialty Pharma focus on research based formulations with Marquee customers. In recent years, we have forayed into CIS regions and have a list of products which have been approved particularly in Oncology segment which will provide a definite competitive edge over the years.

Also kindly elaborate on the strengths and opportunities of James Robinson Ltd and Harmet International. How have the acquisitions of James Robinson Ltd and Harmet International turned out to be? How has it benefited the company over the period of time?
James Robinson Ltd: JRL is a global supplier of hair dye chemical intermediates, Photochromic dyes, Imaging Chemicals. It is a world leader in the development of innovative Photochromic dyes. It has a strong marketing network. It enhanced Vivimed market and brand presence at personal care companies. The acquisition provided Vivimed the potential to deliver enhanced value and new benefits to its customer base with the Personal Care, Photochromic dye, Imaging Chemical markets.

In the personal care, James Robinson's array of Hair Dye Chemicals complemented Vivimed's strong portfolio of active ingredients. Vivimed added strength to James Robinson's R&D activities for innovative and cutting edge technology products in Hair Dye chemicals and Photochromic Dyes. Thus by combining Vivimed manufacturing capabilities with James Robinson's market reach and customer contact lead to a successful Integration.

Harmet International is acquired mainly because of their marketing network and distribution network. Since Vivimed intends to expand its presence in USA, this route was more preferable.

Kindly share details on alliance with International Specialty Products Inc. How will it help Vivimed see increase business traction going forward?
The alliance with ISP is for the complete range of Sunscreen ingredients about 15 numbers, whereas Vivimed at the moment is dealing with only 6 of them. Going forward, Vivimed will manufacture 10 to 15 sunscreen ingredients and with the partnership of ISP aims to become single largest supplier of Sunscreen ingredients globally. The proposed market share for the next 3- 5 years will be in the range of USD 50 to 70 mn.

The company has forayed into formulation exports to Russia / CIS countries and had envisaged a four-fold growth in the export sales for the year 2010-11. How has been the performance so far? Is it in line with expectations? Kindly provide with the insights regarding the future.
The growth in the export sales envisage attributes to the fact that four new products were registered during FY 2011 and also ongoing project for creating capacities for regulatory markets.

How strong is the company's R&D? What is the company's R&D strategy? What is the strength of your R&D team? What are its successes so far?
R&D Strategy is to focus on research of Niche and Specialty chemicals which has a global market and growing Indian market and create value for prospective Indian companies intending to use in high end consumer based products.

Our Company believes in integrating its R&D efforts and therefore, instead of conducting research in isolation, work in tandem with the customer's road map.

• Strengthen credibility and faster time to market.
• Interface between Client and Organization.
• Address key concerns.
• Extricate complex solutions.
• Forge research partnerships.
• Provide cutting-edge solutions.
• Our Company's R&D certified as a GLP Laboratory by CSIR a Govt. of India undertaking

How many new products were launched during FY 2009-10 and in the current year FY 2010-11 so far? How many will be launched during FY 20011-12? How much % of your sales comes from new products?
The contribution from the new product launch for the last few years is in the range of 15 to 20%.

Vivimed has registered strong performance (sales as well as profitability) for the nine months ended December 2010. What were the key growth drivers? Is such growth sustainable?
During FY11 the strong growth drivers were, introduction of new sunscreen enhanced off-take of AVIS and consistent Organic growth in other product categories. As there are no one off cases and growth has come from array of products, this is Sustainable.

It is understood that it would be wrong to compare a pharmaceutical company on a sequential quarter basis, however, though the company seems to have grown fast, its sales and net profit has pretty stagnated in the December 2010 quarter compared to September 2010 quarter? Does it mean that the company will find it difficult to sustain the growth speed in the future due to high base?
The growth in this sector typically comes from either new product launches or increase share of business from customers or due to some seasonal impact of product sales. Hence a comparison of consecutive quarters may not be the right yardstick. However, year on year comparison could indicate trends in growth. As is visible from the projections for the next three years, the business is sustainable at 30 to 35% growth and also can accelerate with alliances and collaborative manufacturing and marketing models which have been adopted recently (example ISP).

How has the company managed to impressively improve its OPM? (OPM improved substantially from 18.9% in December 2009 quarter to 22.9% in December 2010 quarter and from 18.8% in the nine months ended December 2009 to 21.4% in the nine month during December 2010). Is this growth trend sustainable? Where is the company likely to stabilize going forward? What is the company's target regarding OPM?
OPM is a cumulative effect of product mix and product margins. Typically the products that have been introduced during last four years have registered phenomenal growth as well sustained its margins. Going forward, if this balance is maintained in terms of new product launch and consolidation of previous ones OPM will be definitely sustainable.

What will be the impact of high and rising oil prices on your raw material costs and your ability to pass on the same?
The impact of crude on prices is definitely passed on to key chemicals and more so for solvents which are directly petroleum derived. The proportion of solvents is usually 10-15% of the raw material cost. On the overall pricing typically the raw material cost is approximately 45-65%. So to that extent any upward momentum of raw material prices will have an impact on overall costing of product.

The company has four Subsidiary Companies including one step down subsidiary. How are each of these performing? What are their prospects? How are they expected to contribute to the consolidated results going forward?
The company has 4 subsidiary companies.

Vivimed Labs Europe Ltd, an independent 100 % subsidiary based out of UK previously known as James Robinson Ltd (UK). Post Vivimed acquiring this company it has shown very good trend of profitability.

Vivimed Labs USA Inc., the company was formed in 2009 and primarily the distribution company Harmet International acquired by Vivimed is merged into this. Going forward, due to increase market presence, own technical and sales support teams; there will be steep growth in top line and bottom line.

Vivimed Holdings Ltd: It's a holding company which was used for acquiring the UK business and does not have any other activities.

Creative Health Pvt Ltd: This has been in existence over last three years and based on capacities available has performed consistently and maintained its top line and bottom line consistently.

We are expecting a contribution of 40% to the consolidated revenue from all the three subsidiaries UK, USA and India.

Who are your major customers?