Vivimed Labs hit by decline in operating margins; PAT drops 23% but revenues up 25%

Vivimed Labs Ltd, which manufactures active pharmaceutical ingredients (APIs), finished dosage formulation (FDF) and retail branded formulation, saw its margins shrink in the first quarter in the business segments of speciality chemicals and pharma, which put pressure on its earnings.

The firm’s revenues rose 25.3 per cent for the quarter ended June 30, 2013, to Rs 340 crore over the year-ago period, led by growth in its pharma business. However, margins in both speciality chemicals and pharma units were hit, affecting the bottom line of the company.

“During the quarter, we delivered an impressive revenue growth of 25 per cent year on year and 16 per cent quarter on quarter. This was led by strong traction in the API business and consistent growth in the home & personal segment,” Santosh Varalwar, managing director and CEO of Vivimed, said in a release.

Vivimed reported a big boost from its pharma business which saw growth of 31.5 per cent and generated sales of Rs 242.4 crore for Q1 FY14. The business of speciality chemicals saw growth of 11 per cent to Rs 98.3 crore.

Earnings for both these segments showed a decline, though. The decline in the segment profit of the pharma business matched the growth in its revenues at 31 per cent. The company’s pharma business generated profit of Rs 19.18 crore for Q1 FY14. Profit from the speciality chemicals segment declined 23 per cent to Rs 14.9 crore.

This decline was reflected in the overall decline in the company’s net profit and EBITDA. Vivimed’s EBITDA and net profit for the quarter ended June 30, 2013, declined 21.2 per cent and 23.5 per cent, respectively, year on year.

The company clocked a net profit of Rs 19.98 crore for Q1 FY14, compared to Rs 26.12 crore for Q1 FY13. Its EBITDA declined from Rs 61.9 crore in Q1 FY13 to Rs 48.8 crore in Q1 FY14.

The company, which has been expanding inorganically, has made several other acquisitions earlier. It acquired Hyderabad-based Finoso Pharma for $2.8 million in February this year and struck a deal a few weeks ago to acquire a manufacturing unit of Actavis in Tamil Nadu.

In 2011, the company made two domestic acquisitions as well – Hyderabad-based Octtantis Nobel and Kolkata-based Klar Sehen. In the same year, it made an overseas acquisition of Spain-based Uquifa SA for $55 million.

Vivimed actively started looking for these acquisitions after it got an investment of $26.68 million from Kitara Capital and NYLIM Jacob Ballas in 2011.

(Edited by Sanghamitra Mandal)

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