Slowdown, regulatory hurdles hit Vimta Labs top-line
Company fails to execute projects worth Rs 30 crore in the last financial year
Global economic slowdown and regulatory hurdles hit the top-line of Hyderabad-based Vimta Labs Limited as the company failed to execute projects worth Rs 30 crore during the last financial year. Vimta is a contract research and testing company.
“We failed to execute projects worth Rs 30 crore last year due to delay in getting approvals and some regulatory issues,” chairman SP Vasireddi told Business Standard.
“Clinical research is a lengthy process. You need regulatory approvals from importing samples to conducting research. The current regulatory market is not proactive in the country, and this in turn is affecting the clinical research market,” he said. In India, the Drugs Controller General of India (DCGI) is the apex body, which gives approvals for projects.
According to Marketresearch.com, a research agency, the clinical trial industry in India is expected to touch $1.09 billion by 2014, from $400 million in 2010.
“India was on the global map for clinical research in the last couple of years. But now, global customers are moving away and investing in other Asian markets including China, Vietnam and Thailand,” Vasireddi said.
According to the company’s annual report, gross revenues for 2010-11 stood at Rs 96.04 crore, as against Rs 55.41 crore in the previous year. During the year, domestic sales went up 32 per cent while export sales declined 13.76 per cent as compared with the previous year.
Reduction in export sales was stated to be “predominantly due to unprecedented regulatory developments in the clinical research industry causing inordinate delays in receiving clearances resulting in execution of projects for overseas customers.”
During the first quarter of this financial year, Vimta reported a net profit of Rs 48 lakh as against a net loss of Rs 1.44 crore in the corresponding quarter last year. Its total income grew 7.5 per cent to Rs 26.38 crore, as against Rs 24.54 crore.
Pointing out to the growth in revenue, Vasireddi said, “The business picked up in the first quarter and also the market condition is getting better. In the first quarter itself the market picked up.” The company expects to cross the Rs 100-crore revenue mark by the end of this financial year.