Vivimed Labs Ltd - Rs 74.00

Incorporated in 1989, Vivimed Labs Ltd (VLL) is a speciality chemical manufacturer with prime focus on the Home and Personal Care (H&PC) segment. Its extensive range of speciality chemicals caters to segments including oral care, sun care, skin care, hair care, natural extracts, preservatives, anti microbial, anti oxidants, anti-aging molecule etc. In short company’s primary strength is in synthetic organic chemistry. Remarkably, VLL is the worlds 2nd largest manufacturer of Triclosan - an antibacterial used for oral care and one of the top three companies for Avis – a chemical which improves UV absorbing ability of Sunscreen. Of late thru acquisitions of Creative Health Care and merger of associated company VVS Pharmaceuticals & Pharmaceuticals Pvt Ltd, VLL has entered into the speciality pharma business as well. Infact today, VLL is an active player in CRAM (Contract Research and manufacturing) segment providing vendor partnerships ranging from molecular research to collaborative manufacturing. It holds a unique position in the international H&PC industry with supply-chain relationship with global leaders including - Unilever, L'Oreal, Procter & Gamble, Johnson & Johnson etc. Having exclusive tie ups with global logistics companies, VLL has been offering shipment, warehousing, redistribution and door delivery services to large global majors. It has global network of offices, representatives and distributors across America, Europe, Far East and the Asia Pacific region.

As of today, VLL has two speciality chemicals plants – one in Bidar (Karnataka) and second in Hyderabad(AP). Apart from these it has three other pharmaceutical finished dose plants one each at Hyderabad (AP), Kashipur (Uttaranchal) and Haridwar (Uttaranchal) where it manufactures all types of solid oral, liquid orals, topical applications, small volume parenterals, cytotoxic etc. As the demand for end products in H&PC industry (like skin care, hair care, oral care products) is growing substantially, VLL is also witnessing robust demand for its chemicals. It has been constantly expanding its capacity and has chalked out capex plan for coming years as well. It has already bought land in Uttranchal for Greenfield expansion and another 23 acre land in Hyderabad to set up state-of-the-art R&D centre and pilot plant. Meanwhile its CRAM division, is focusing on exploring joint ventures / strategic alliances with manufacturers and IP companies in the specialty chemicals sector to partner in areas ranging from custom synthesis to commercial production. It offers contract manufacturing services from less than 1 metric tonne to more than 100 metric tonne. On the other hand its R&D section, is busy in researching and collaborating for creating new drug delivery systems with special thrust on anti-obesity dieting products, anti arthritic drug, anti-wrinkler, an anti oxidant, an anti cancer drug and an anti acne products. Notably, it has undertaken new formulations in urinary disorder and psoriasis treatment and the results are very encouraging.

At the same time, VLL is also growing inorganically and has recently acquired 100% stake in M/s James Robinson,UK which is an international manufacturer and supplier of speciality chemicals used in hair dyes, pharmaceuticals and photographic films/prints to ophthalmic sunglasses. With manufacturing plants in UK, Germany and India, James Robinson now a 100% subsidiary of VLL also offers a novel range of photochromic dyes for a wide variety of applications including ophthalmics, plastics, coatings and inks, and fluorescent dyes for both textile and non-textile applications. To fund the acquisition and expansion plan, VLL has raised roughly Rs 60 cr thru FCCB of US$ 15 million in June 2007 to be converted @ Rs 185 per equity share. Not a single FCCB have been converted as on date and even after re-setting the conversion price lower the chances of conversion is less. For FY08, on a consolidated basis VLL reported a turnover of Rs 181 cr and PAT of Rs 16 cr i.e. EPS of Rs 17. Considering its Q1FY09 nos and acquisition of UK company, VLL is estimated to report a consolidated sales of more than Rs 225 cr and net profit of Rs 17 cr. This leads to an EPS of Rs 18 on current equity of Rs 9.40 cr whereas diluted EPS works out to Rs 13 on diluted equity of Rs 12.65 cr. Investors are strongly recommended to buy at current levels with a price target of 110 Rs within 12 months.

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