Ladies and gentlemen, good day, and welcome to the Vimta Labs Limited Earnings Conference Call hosted by Nirmal Bang Equities Private Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Manchanda from Nirmal Bang Equities. Thank you, and over to you, sir. Thanks, Mike. Good morning, everyone. On behalf of Nirmal Bang Institutional Equities, I welcome you to Vimta Labs Q4 FY 2022 Earnings Conference Call. I thank the Vimta Labs management for giving us an opportunity to host the call. Today, we have with us the senior management of the company, represented by Ms. Harita Vasireddi, Managing Director, Mr. Satyasreenivas Neerukonda, Executive Director, Mr. Narahari Naidu, Chief Financial Officer, and Ms. Sujani Vasireddi, Company Secretary. I now hand over the call to the company management for opening comments. Over to you, ma'am. Thank you, Vishal. Thank you. Good morning to all. Thank you for joining us in our Earnings call covering Q4 and full year FY 2022 results. We are very pleased to have this opportunity to update you on our progress and answer your questions. Overall, for us, the financial year 2021/2022 operationally has been quite robust, where we substantially increased our sales and profitability. Q4 and across the entire year will remain a major milestone for our food testing services and electronics and electrical testing services. As you may all know, we won the 25 years contract with FSSAI to set up and operate National Food Laboratory at JNPT, Navi Mumbai. This is in a PPP model. NFL obtained accreditation for 70% of testing scope in the fourth quarter and will be going in for a second phase of accreditation in June. Post accreditation, the lab operations commenced and is steadily delivering the revenue. Likewise, during the quarter, we have also commenced the commercial operations of our new service area, that is testing of electronics and electrical products. We strongly believe that our core strategy of service diversity continues to make our business more resilient and enables long-term sustainable growth. We continue to focus on our key business drivers, which are quality, knowledge, technology, and service innovation. We had two good U.S. FDA remote record reviews with no observations. We continue to invest in expanding and upgrading our technologies to meet the service requirements. I will share a few key highlights of the quarter, and later on our CFO, Mr. Narahari Naidu, will get into a little more detail on the numbers. As I said, sequentially, we have increased our revenue numbers quite well. We achieved consolidated revenue from operations of INR 740.9 million, with a growth of about 10% from the previous quarter and 23.8% over the corresponding quarter previous year. We achieved an EBITDA of INR 234.8 million for the quarter, with a growth of, again, 10% compared to previous quarter and a growth of about 39% compared to corresponding quarter previous year. With respect to full year performance, we achieved a consolidated revenue from operations of INR 2,782.8 million, which is a growth of about 32% year-on-year. In many ways it turned out to be a very good year. On the operations side, most of our service sectors continue to grow steadily, which lays a good path to meet our short-term as well as long-term growth objectives. We entered the new financial year this year with higher order books. Visibility is good, and accordingly, we are moving towards adding additional lab space to our existing facility at Genome Valley in Hyderabad. We are estimating to incur about INR 60 crores of investments for this expansion in the next two years. This is basically to have a facility that will augment the growth of the organization. With this, I conclude my opening comments and request Narahari to please take over. Thank you. Thank you, Ms. Harita Vasireddi. Good morning, everyone. Thank you, Vishal Manchanda, for organizing the call. Thank you for joining us for our Q4 and full year results conference call. We are pleased to take you through the consolidated financial performance of the company for Q4, followed by the full year ended March 2022. I'll begin with the commentary on the revenue from operations. Revenue from operations for Q4, FY 2022 is INR 740.8 million, as compared to INR 673.4 million in Q3 FY 2022. This translates to a growth of 10% sequentially and 23.8% on a YOY basis. EBITDA for the quarter grew by about 10.2% sequentially and 38.7% on a YOY basis. For the quarter, cost of materials decreased by 4.2%, which is significant compared to previous quarter, driven by higher revenue from operations. The employee benefit expense commensurate with the increase in revenue from operations. However, a positive impact of economies of scale from higher revenues were to an extent offset by higher general expenses, largely due to higher travel and commission. And also additionally, there was an extra depreciation, which was coming from a capitalization of a new product line, which is electronics and electrical division. Profit before tax for the quarter is at INR 160.9 million, which is a growth of 54% compared to corresponding previous quarter. Moving on to full year performance. Revenue from operations for FY 2022 stands at INR 278.2 million as compared to INR 210.6 million in the previous financial year. This translates to a growth of 32.1%. EBITDA for the full year has grown by about near to 50% compared to previous financial year. For the full financial year as well, the cost of materials decreased by 4.3% which is again substantial, driven by higher revenue from operations. The employee benefit expense for the full year in percentage terms decreased by 1.6%, which also includes employee compensation expense on grants of options to the tune of INR 29 million. The finance cost for the full year has decreased, mainly due to the change in mix of products, largely due to availing of multi-currency loans as well as significant reduction in working capital utilization during the year, which is better reflects the investment in the company. During the financial year, we repaid a debt of about INR 106 million. At the end of the financial year, after the repayment of the debt, there's a positive cash of INR 108 million at the end of financial year. The profit before tax after providing for exceptional item of INR 12.2 million stands at INR 556.8 million, which is a growth of 95% compared to previous financial year. The net profit for the full year increased by about 93.1% and stands at INR 413.3 million. The better profits, realization for the full year has increased in return on capital employed, which stands at 24.72% compared to 17.56% in the previous financial year. With this brief summary, I would like to hand over back to the operator and would be happy to take any further questions. Thank you. Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. We have the first question from the line of Ankit from Bamboo Capital. Please go ahead. Yeah, thanks for the opportunity and congratulations for a very good set of numbers. Ma'am, if you can broadly talk about, you know, how has been you know segmental performance over the last year. I know you don't disclose the numbers, but you know in terms of qualitative if you can give us insight on how has been the growth in pharma, food, diagnostics and environment. If you can broadly you know explain about last year's growth. What has been the major growth driver for us during FY 2022? As such, we do not segmentalize our revenues for our service verticals. We treat it all as testing and contract research revenue. I won't be able to get into the specifics of it, but I can just say that 60% of our business is from the pharma contract research and testing services, and the rest is distributed in food, clinical diagnostics and the environment business. Of course, the latest one is electronics and electrical. Sure. For us, all the sectors are doing well, fairly well. Electronics and electrical, which we call E&E. E&E is still a baby for us. It started its maiden operations only in the last quarter. We are yet to enter into the market and test the waters thoroughly. Sure. Ma'am, you are on a targeted revenue guidance of INR 550 crore-INR 600 crore over the next three years. Given how our strategy is evolving on the diagnostic testing side, you know, if we are not able to achieve the kind of growth that we are expecting from diagnostic, do you think the other segments growth will be sufficient enough to cover for the lack of growth or, you know, the lack of growth which might be there on the profit side? How confident are we staying true to, you know, achieve our targeted growth of INR 550 crore-INR 600 crore revenue in next three years? We are very confident about that goal that we have set for ourselves of about 500+% growth by 2025. Now the last year's performance gives us more confidence with respect to that goal for us. Diagnostics, yes, will be a key driver in us reaching there, but then we have multiple service verticals. Even if one or two do not do as per expectations, we have confidence of pushing majority of the service vectors very strongly to reach those targets. Sure. Last question on, you know, order book and visibility. In your opening comments you spoke about having significant higher order book and, you know, revenue visibility. Don't just give us the number, but in terms of, you know, compared to last year, how much would be increase in our order book in terms of percentage, if you can probably give us some view on that. Yeah. See, half of our services are kind of retail in nature. Now, there the order books are not going to be there. That's the nature of the business. Half our business is based on projects. Like for example, environment you know services are project-based. Our pre-clinical and clinical research services are project-based. Environment we are seeing at least a 20% increase in our order book, and likewise for the pharma projects. Sure. Pharma also we are seeing 20% increase in order book on pre-clinical and clinical side. Yeah. Okay. Last question and- Pre-clinical research environment. Last question was on the recognition at the JNPT lab that you have set up. Like, how this revenue has been recognized, because we have, you know, incorporated another company subsidiary for that. But, you know, I was looking at the numbers, but these numbers, I'm, like, not sure if you can tell us how has been the revenue from those services and have we broken even in the past two months since we have started operations there? Okay. Our wholly owned subsidiary's name is EMTAC Laboratories. It is in the field of offering safety and quality testing services, environmental testing services for electronics and electrical products. With our EMI/EMC chamber capabilities that we have set up at EMTAC Lab, both these companies together offer a very nice package for the electronics and electrical industry. Till now, through EMTAC we only had safety and environmental testing, but once you add the EMI/EMC capabilities, it's a very good offering that we provide to the industry now. The EMI/EMC facilities should also augment the sales in EMTAC because they are complementary in nature. We should see good growth even in EMTAC during the coming years. Coming to National Food Laboratory, JNPT, where, like I said, the operations started in Q4. We have accreditation for about 70% of the scope. 30% scope is remaining, which is phase II for us. Once we complete that, phase two accreditation, that's when we have the full accreditation scope for testing, and we'll be able to realize the full potential of the samples for that laboratory. Sure. Like, it will be reflected in our consolidated revenues from going forward, like the numbers for the laboratory that you have set up at the entity? Yes. The revenues for quarter four also includes the revenue recognized through NFL lab setup. This will be part of our consolidated as well as standalone revenues. Sure. Okay, and have we broken even there or we are just incurring some operating losses since we have just started the laboratory? As such, we are not seeing profitability that way, but of course we'll be having profits through that lab setup. Sure. Sure. Thank you, and wish you all the best. Yeah. Thank you. Bye. Thank you. We have the next question from the line of Abhishek Shah from Valcore Capital. Please go ahead. Hi, ma'am. Thank you for the opportunity. Just sort of adding a little, just confirming, you mentioned that 70% of the volumes that we looked at, that we were looking at in the FSSAI lab, those are already recognized as of Q4. Is that understanding correct? Yeah. I said 70% scope. Scope is different from volume. Volume-wise, we are recognized for almost catering to about 80% of the sample inflow. Some samples in the scope, they deliver lower volumes. The imports are lower for those food categories. The other products for which we are accredited, you know, they have higher volumes of imports into the country. We have focused on higher volume products first. That is phase one, which is completed. Now remaining are the ones which are lower in volume, which we will be taking up in phase two. All right. Ma'am, just another data point. How many samples are we targeting for FY 2023 against this scheme? We don't target any sample. That all depends on the imports for the country. 60% of the imports, food imports, for our country happen through the JNPT port. It is public information that is available. Sometimes it is a little seasonal, so we can go and look at that information. Great. Ma'am, how many employees have we put in the FSSAI lab? There are about 50 people employed at the NFL lab as of now. Got it. Ma'am, do you expect any further ESOP costs to come in in FY 2023? Or- The entire vesting is spread across five years. We expect some sort of cost to be booked in future years as well. Going forward, it may go down because the initial years will be taken in. Got it. Ma'am, one last thing was, other expenses are from INR 9 crore-INR 12 crore. You know, can you just, does it have any one-off or, this is expected to sustain? Yeah. This includes commission from the revenue recognized for NFL lab setup. Also there is, you know, provision for bad debts and bad debt write-off during the quarter. That is the major increase. Quarter four also we have experienced higher travel of our BD team, which also slightly resulted in increased travel and communication expense. Right. Of the INR 12 crores, what will be the one-off? I mean, which may not be a copy paste for the coming quarter. This could be a recurring scenario, but may not be at the same level, because bad debts is something we periodically evaluate and take a call based on its recoverability. We will not be able to exactly say this is a one-off item. Got it. Lastly, ma'am, just a suggestion. I think we missed the conf call last time. You know, the presentation really helps investors gain some comfort if there is at least a quarterly conf call. I'm sure one hour a quarter is not you know an issue for you. I would really appreciate if that consistency is maintained for investors. It just adds as a support system for us while being invested in this company for you know the next four, five years. That's just a suggestion from our side. Thank you. We will be putting up our investor presentation on the website next week, and we will try and update it with every quarter's results as we go forward. All right. Also the request of the conf call, if you can keep a consistency every quarter. I think last year we skipped it, during the AGM quarter as well. Just a request from our side. Yeah. Our plan is to do this once in six months because we also noticed that there's not much to share within just, three months period, which is very short period. If there is, some good news, exciting news, then we are always happy to actually come and share it with you. The plan is now to do it at least once in six months. As such, we have an AGM connect, so that makes it about 3x in a year, which we thought is sufficient. All right. It'll be every six months as such, plus the AGM. Depending if there is any other news that you want to share. Fair enough then. Thank you so much. That's all from my side. Welcome. Thank you. We have the next question from the line of Kapil, who is an individual investor. Please go ahead. Good morning, everyone. Thanks for the opportunity, ma'am. I have two questions about the business. One is our government is working on this Health Star Rating on the packaged food. Does Vimta see any business opportunity in this and the size of business opportunity? I'm sorry, I didn't get the name of the initiative that you mentioned. Please repeat. This health star rating on the packaged food, right? Government is saying that health star rating is mandatory on all this food. Does Vimta has any role to play in that, in the testing? We do offer packaged material testing. It is done mostly, quite rigorously on the pharma side. Food industry is slowly beginning to do it. You are right, if there is a regulation that is coming in, of course, the regulation push is a little slow in the food industry. If there is a regulation, then we will automatically see an increase in testing requirements around it. Okay, thanks. Good to know. Second question is regarding EMI/EMC business, which is recently opened. So are we already generating revenue from that? If it is going to have a good revenue, is Vimta planning to expand this business to other cities like Bangalore, Chennai, Delhi, where most of the hardware is made? Yes, our revenues have started in Q4. Yes, we also have plans to expand these services into other cities going forward. Like you rightly mentioned, Pune and Bangalore would be one of the next best options to consider when we think of expanding into other locations. Okay. Ma'am, just one last question. How much as a percentage of total revenue are we expecting from electronics testing business in next two, three years? Is it going to be 30%, 10%? Or what revenue does Vimta see from this electronics testing business improving? I'm sorry, I won't be able to share that number. Like I always say, we do not segmentalize our revenue. We will not be able to give that kind of bifurcation. Okay, thanks, for all the answers, ma'am. This was very helpful. Welcome. Thank you. We have the next question from the line of Sunil Kothari from Unique PMS. Please go ahead. Congratulations, ma'am, and really good set of numbers in each earnings time. Ma'am, my request is to have some really detailed presentation on our company's capability and ability to make investors understand what exactly we are doing and how and what scope we have. That will be really helpful. I think you are promising since long that we'll be updating and putting a presentation. Just how you confirm those things. I'm sure it will be very useful for us as an investor. My question is, you have some objective to reach some revenue by 2025. This INR 60 crore investment will be enough to reach there, or will it require some more? As of now, this is the investment that we see in terms of facility expansion. Okay. This is mostly again to augment the growth of our pharma sector, where we have seen very nice encouragement from the industry during the last few years. This is mostly for that. As such, as the business grows, we will have to keep on adding capacities. We will have to keep on adding the knowledge base in the company in terms of manpower. Those investments will continue. We will not be able to reach the 500+ growth target with the existing resources, obviously. Right. Current year and next year, we are planning to invest around INR 60 crore. Yes. This is for our new building set up. All right. Are there any other CapEx, ma'am? CapEx we always take up on a year-to-year basis, looking at our prospects for the upcoming years and the regulations that keep coming into the market. Can you say the current year CapEx number for 2022-2023? We have planned approximately about INR 50 crores-INR 60 crores. 50-60. Great. Ma'am, last question is, what is your major priority and focus area which you would like to, as a management focus on to, make this growth and this, the opportunity which is visible and feasible to make, I mean, exploit those fully. What is your focus area which you would like to, give a thrust and, to overcome any hurdles? We have five major business verticals. First one is pharma, under which we have analytical, preclinical and clinical research. That covers the entire drug discovery development spectrum for us. As I have already mentioned, it's a major component of our overall revenue. That will remain to be our focus area and thrust area. Second one is our food business. We have done very good investments during the period of 2014-2016. We will be driving that business aggressively as we have done so far. That will also remain our focus area. Clinical diagnostics, until very recently, we were primarily content with what we were doing in just these two states of Telangana, Andhra Pradesh, and a little bit of business in Uttar Pradesh. We decided we want to go, expand our geographic reach here and also convert our business, which is majorly a B2B into a, B2C kind of business. There we have started our expansion plans. We are testing out our, you know, various models in the market, so that will also remain our focus here for upcoming, focused, service for the upcoming year. E&E we just started, so obviously we will put a lot of, focus and effort behind this. The fourth one remains environment. It is not a very large, component of our business. The growth prospects are not as high as in all the other sectors. There, that one segment alone, I would say that, we do not see any big numbers happening there. Even in that business, we have expanded our reach and set up satellite offices in Delhi and Kolkata. That is also yielding us good returns in environmental testing. Okay. Ma'am, this B2C experience of laboratory testing diagnosis, how confident you are about the success? Your voice was getting broken. Can you please repeat? Yeah. Ma'am, regarding this, B2C diagnostics laboratory business, how is your experience about the competition? What's your gut feel about success, major success? As a B2C, our first step, baby step that we have taken is in Hyderabad location. Here our brand is known, so there is a good acceptance in most of our B2C centers that we have opened up. In newer areas we have not put too many. We have put one in Varanasi. That we are not seeing you know, our experience is not great there. We realized that we have to do a lot more marketing before we really open up more B2C centers. Okay. Great, ma'am. Thanks a lot and wish you good luck. Thank you. We have the next question from the line of V.P. Rajesh from Banyan Capital. Please go ahead. Yeah, hi. Good morning. Am I audible? Yes, we can hear you. Okay, wonderful. Congratulations on a great set of numbers, ma'am. Just wanted to hear your comments on the diagnostic business. If you can just give a sense of how it performed in fiscal year 2022 qualitatively and just say, you know, what you are thinking about it in the next financial year. Thank you. Diagnostics, we were actually expecting it to perform better. It really didn't perform to the level of our expectations. Having said that, you know, we have gone into new territory, that is, in Delhi and in Kolkata. There, it is going to take a little more time. We have very strong players in that market. Our efforts are sincere, you know, aimed at getting more penetration into the market. We feel this will take a little more time. Okay. In terms of capacity utilization, what is it looking like for you in that business? Our Delhi and Kolkata labs capacity utilization is only probably around 30%-40%. Again, capacity is quite elastic. Now we have only deployed low volume instrumentation there. The moment our volumes scale up, we will be able to quickly replace them with high volume instrumentation. Okay. What is it in Hyderabad? No, no. At Hyderabad, it's a central lab. Capacity utilization is steady. It remains around 75%-80%. I was mostly talking about the new regional labs that we have set up in Kolkata and Delhi. Right. Right. No, I understood that. Thank you so much for those comments. Appreciate them. Welcome. Thank you. We have the next question from the line of Nageswaran Rajah from NR Samdani office. Please go ahead. Yeah. Hi. Very great. Good morning once again to all of you and congratulations on an outstanding performance. In fact, every KPI right from revenue to bottom line, everything seems to be looking extremely good. My questions are two. Such an outstanding performance, is it sustainable for the coming years? Is one question. The second is, what drove such outstanding performance in, you know, FY 2022? First of all, thank you. Thank you for that, nice encouragement. Yes, we are also very pleased with our performance in this year, and we believe in sustainability. Therefore, we focus on all the parameters, that first of all make us stronger inward, and we believe this inward strength radiates into outward, strength in the market. We continue our focus on our quality systems. We continue investing in new technologies. We continue to have very close nose, to the ground in the market just to get a feel of where the trends are moving. So far we have remained a first mover in terms of new services that we are able to very quickly get to the market and get the first mover advantage. I have no doubt that the growth that we are experiencing now will continue in the coming, you know, years. Unless, of course, the market situation suddenly change and challenges come up. It's not unknown. I mean, it's not as if these things won't happen for us, but our multi-basket of services makes us very resilient. Our experience during the COVID years itself validates the multi-basket business model that we have. We are very confident on our growth strategy that we have set for ourselves. Happy to hear that. In fact, I at some point of time was one of the customers for you as part of PepsiCo. I used to be one of the leaders in PepsiCo who would actually interact, you know, with your setup. Very happy to hear that. What about the margins? I think your margin has substantially grown. Would you see that, you know, margin level sustaining in the coming years? Margins should sustain because as the volumes go up, margins should get better. Again, margins quarter-on-quarter might vary with the mix in the services that were pushed in that quarter. Food for us is a seasonal business. The margins in food will not be as high as what we would normally see in pharma. There will be slight fluctuation, but I strongly believe that we are at a margin range that is that we can aim even for the upcoming years and achieve. Awesome. Happy to hear that. One last question. I don't see enough cash in your balance sheet. However, you do have a certain CapEx plan. Where and how would you fund the CapEx? We will be able to manage the CapEx from our operating inflows. We don't see a challenge there. We do have working capital facilities with our bankers, which we are currently not using at all. We have enough bandwidth to manage our CapEx plans for the year. Okay. All right. Thank you. Welcome. Thank you. We have the next question from the line of Aman Vij from Astute Investment Management. Please go ahead. Good morning, ma'am. My first set of questions are on the pharma business. On the pre-clinical side first, yeah, if you can talk about briefly, like you had explained nicely last time. What is the current market size in India and what is the growth looking like for the industry? Are there any significant changes in the dynamics of requirements of such studies? If you can talk about the same as well as who are the top three players in India in this? To estimate the Indian market size, I don't think we have exact numbers because most of the players, they are not listed companies. It's very difficult to capture the amount of business that we are doing in India. Pre-clinical business for us is not only India-oriented. We work in the overseas markets also, especially U.S. and Europe. The global market is actually very nice. I don't... I'm unable to recall the exact growth rate, but I'm sure the CAGR that is projected for the next five years is 10%+, and it's a very large market. Ma'am, are we among the top three players out of India, either export or domestic in pre-clinical? If yes, then if you can talk about who are the other one or two players? I think we are definitely among the top players in the market. The biggest player I know in India is the Eurofins Labs in Bangalore. You are talking specifically about pre-clinical, right? Yes. Ma'am, rough estimate, they will be like 2x our size, 3x our size, or maybe 30%, 40% kind of bigger than us. I've not really looked at their numbers of late, but I'm sure you'll be able to find them. Eurofins is also a listed company, I think. In India, no? Yeah. No, no. In India, it is not. India numbers they don't disclose much. That is why just according to your estimates, are they much ahead of us? It won't be right for me to comment on the numbers without knowing the exact numbers. Sure, sure. Ma'am, let me get it from this point of view. In terms of capabilities, are there any capabilities which we don't have which players, global giants like Eurofins has, or we are equally, if not better, in our capabilities in pre-clinical part? Capabilities-wise, we have been predominantly focused on the pharma services with respect to pre-clinical. During the last two years, we have built scientific assets to even support the agrochemical and specialty chemical industry. Whereas I think Eurofins, which was erstwhile Advinus. For them, it's the other way around. They were mostly focused on the agrochemical and then later got into pharma services. I'm thinking there would be a very nice overlap of our services with theirs. I don't think we would fall short in terms of capabilities. Maybe experience, because that's a much older organization in this field than Vimta. Experience-wise, they might have more studies in their track record. Sure, ma'am. Sorry. Because I'm little new on this part, pre-clinical part. When a customer is looking for a CRO player, there will be Eurofins who is a global giant. How do we compete with a global giant who has a history also of 10 years, 20 years working versus we are trying to offer this agro chem and specialty chem. Is it like we are +1? They don't want to risk all their business to one player, so we get the business. Or do we have some capabilities which where we win because of our scientists, because of our cost advantage? If you can explain a little bit on this part. Costing-wise, I think, we are comparable to any top CRO in the country. I think where the service differentiator comes is the service that you provide to the customer and inputs you are able to give on the study design. There, I think we are very strong. Our service is quite speedy, very effective. We are very true to the timelines that we commit to our customers, and our client retention is very, very high on the pre-clinical side. It's mostly word of mouth that helps us. It's a small industry all said and done, the pharma world. We have very good reputation in pre-clinical services, especially. Harita, if I may add to it? Yes, please, Sreenivas. The history of Vimta is not new in preclinical. We have over two decades of experience in this study. We were only the second lab apart from Eurofins, which was called Advinus earlier, Rallis was the original name, that had a GLP certification. We had a GLP certification way back in the late 1990s. The vast history, the service portfolio, the models that Vimta offers is much wider than what, you know, our other labs in India offer. That's why we've become a very good discovery partner for both the domestic companies and also small and mid-size biotech companies also. It's a very unique setup that Vimta has in the preclinical. Thank you. Sure, sir. Final thing on pre-clinical before I move on. This export business which we do, is it predominantly pre-clinical or there are other portions also in this part? Export business is linked to all of the service sectors. Except for clinical diagnostics, all the other service sectors of Vimta have export revenues. Okay. It's not only pharma. It has other food and other portion also. Yes. Sure, sir. Ma'am, you had explained that we have good traction in the clinical part, the BA/BE studies part also. The order book is, like, 20% higher. We had discussed last time about the bed capacity, where we are and maybe we are close to the full utilization. Any plans of expanding now, given you have clear visibility on this part? And also, are you seeing any increased competition in this part? If you can talk about this thing. This business is quite a mature service segment in the country. We don't see actually the number of CROs growing. The net remains the same because even if new ones come up, there are some old ones that are getting shut down. The price is more or less driven down almost to the ground and is remaining stable there. As of now, coming to your question, we do not have any plans of expanding the capacities here. We still think that the capacity that we have will take us through for at least this year and the next year. But if suddenly we see a very strong rise in our pipelines, then of course, we will be able to react quickly and add to the capacity. Ma'am, you had explained that we are in touch with couple of customers on the clinical trials, the PAP part, the cytokinesis or something like that you had explained. I think, because of COVID or other reasons, that has still not fructified. Any visibility on that front you have, maybe by H1 or by Q1, Q2, we will finally have such orders. Our clients have actually not moved on those projects yet. We are continuously in touch with them. As and when they are able to, you know, prioritize those projects, that's when these things will move. As of now, it is status quo for us. Ma'am, we can't target any other clients meanwhile, because if their project is stuck, we can still try to build capabilities by targeting your clients. It's always very difficult to win the first project in any new, you know, service line. For us clinical, these are the first we had. Once we are able to deliver this and demonstrate that we are doing a good job in it's not very easy to go into the market and get more projects. Our efforts are anyways there, as you know rightly put up. We continue to try, but getting those first opportunities. We got an opportunity especially because it was COVID. Maybe the other players who would normally take up such projects couldn't you know deliver those, so they came to us and for us it was the same situation. The projects have continued to be on the back burner for these customers, and we'll keep pushing. Sure, ma'am. Coming to this food side, if you can explain the non-NFL part of the business which we have been doing for last couple of years, not including the JNPT lab I'm talking about. Is there a sudden change in the industry dynamics? Because I think this year we did quite well in this. I may be wrong. If you can correct me on that part. If you can explain, do we see very strong growth in excluding JNPT part also? Yeah. Food business has been growing for us steadily. The growth rate is quite good year-on-year. Despite a challenging, I think, early Q2 and also the previous year where food business was quite affected for us because of the pandemic situation. Our food business steadily grew. Now coming to, you know, its future growth prospects, I believe that the growth rates that we are experiencing will continue. But here we are talking about growth. Those growth rates on a bigger size numbers. So if you look at the absolute growth numbers, then I think we are going to experience bigger absolute numbers in the coming years. Sure, ma'am. On the JNPT part, if you can explain. So, we had, say, rough targets of, I think the number that was mentioned was 1 lakh for three-year samples. So that is approximately, say, 30,000 samples a month or for a year, or say 3,000-4,000 samples kind of a run rate. So are we... Is this the peak utilization only we can get or? Because I think our capacities are maybe 3x of this number. So, any ways we can maybe use this facility to do other food testing? Or do you think the traction from import itself is strong enough to scale this number much ahead than the historical traffic or? Now, coming to NFL volume, we have to understand the FSSAI. FSSAI distributes the samples through, you know, its own mechanism to all the labs in the region that support the import sample testing. Now, FSSAI has come up with its own food laboratory in Mumbai, which is the PPP that we have entered into with them. The objective is to do majority of the sample testings at NFL. But there will still be some samples that will go into the market because those laboratories survive based mostly on these samples only. I think the government is trying to take a very balanced view, especially in these early years, so as to not cause any great disruption for the existing businesses there. They are trying to walk that fine line. Now, how they will fine-tune that balance going forward is actually information that we don't know. They are not going to obviously share those things with us. It's vaguely dependent on how FSSAI will move those samples into their own lab, NFL lab, in the coming years. We have to experience it. Even, I have to experience those things, and I think we will take a year to really understand the mind of the regulator. That part, you have explained very well. Meanwhile, aren't we allowed by the contract to use this facility because the people are there? The business opportunity, I think, in India is there. Can't we utilize the same lab till the time the government figures out all those things to do other food testing for, I don't know, maybe export also, maybe some other kind of food material, if you can talk about it, ma'am? We are allowed to do other samples there, but the lab is mostly designed to handle high volume of samples. One-off samples like what we normally, you know, have in our other seven laboratories, there we will not be able to get efficiencies to deliver those small size sample sets. That's one thing. If we are able to hit some large volume samples in that region, we will definitely take those up at the NFL lab. Sure, ma'am. On the accounting part, Sir was explaining the portion of government, the government take. Is it included in other expense or when we will record the revenue, we'll net it off and then record it? How will it work? This is included as part of other expense. Okay. The government portion, the increase in other expense can be linked to this increasing scaling of our JNPT business. Yeah. One reason for the expense increase for the quarter is the commission, what we have provided. Sure, sir. ESOPs, I think, is an employee expense. Yeah. Ma'am, finally on the electronics business. Ma'am, if you can briefly talk about are we targeting only a particular sector like defense? If there is an opportunity to target others also, what is the feedback as of now? Yes, it's very early days, but the typical order size will be in lakhs or will it be in crores also? My point is, do we require, say, 100 customers to eventually fully utilize our capacity or even 10, 15, 20 customers should be enough over a period of time? That's a very nice question. First I'll address you know the part about what industries we'll target. Hyderabad is a hub for defense component manufacturers because there are defense government institutes here, so there is a very nice ecosystem of suppliers in Hyderabad. That'll be our target number one. Coming to the size of the projects, they can be mostly in lakhs, but it will be great to have customers in the size of crores. It is quite possible to have you know such a customer, provided we become a strategic partner for one of the MNCs for their R&D projects in India. Both are possible, but typically I would say the probability is more on having project sizes which are in lakhs. Ma'am, just one clarification. When we talk about defense, is it mostly import related? Is it R&D or even, say, if India is talking a lot about, trying to manufacture in, defense sector, will we get benefit of all these three opportunities? Which opportunity are we looking at? I think it's mostly for our domestic consumption. With manufacturing increasing, we should get more traction in this business provided we get more customers. Yes. Sure, ma'am. Thank you so much for answering the question patiently. Ma'am, on the quarterly concall part, yes, we understand sometimes there isn't big updates. Ma'am, you can always have a half an hour call. The reason why I'm asking is because we have set up two new businesses in the last quarter, and there was hardly any update we could get. Maybe for one year till the business stabilizes, you can, if possible, do it quarterly. You can change the time period, right? There is no fixed amount. Many companies do a half an hour quarterly call, and maybe half yearly they can do one hour call. Because there's lot of moving parts in our business, we are also testing waters, so the only way we can get updated is through such concalls. In worst case, if you can't do con call, at least have a quarterly presentation upload so that we can get an idea about updates that have happened in the quarter. We will definitely put up a presentation that is updated every quarter. On the calls, your input is well taken. We will definitely consider it. Sure. Thank you so much, and good luck. Thank you. Thank you. We have the next question from the line of Phillips, who is an individual investor. Please go ahead. Yeah. Yeah, thank you for the opportunity, and congratulations for a very good set of numbers. My question was, in I think last to last con call, you had said that there were logistical issues regarding our exports business in terms of engaging the client as well as clients sending samples, et cetera. My question is, you know, are we on track now the COVID years are over? Can you give me some color on the export business, how it is shaping up, what kind of proportion of our revenue comes from exports? I think that reference was mostly made in connection to the imports of animals. We import animals for our preclinical studies, so those things have now, you know, come back to normal state. No issue there. There was a little challenge in getting timely standards as well, which we mostly import, so that is also no longer a concern. Coming to export business, China should have actually, you know, been better for us by now, but during these last two years, that's a market that we could not access and therefore could not grow. Okay. Is export a substantial portion of our revenue? Going forward, is it going to be? Historically it's been around 27%-30% for us. It is our constant endeavor to make these numbers higher. As our pie is growing, we see that, you know, the exports and domestic business both are growing parallelly. Sure. My second question was regarding EMTAC. It has been two years since we have acquired this business. Still, you know, not a substantial traction there. Can you please elaborate on some of the initiatives we are taking both in terms of capability building, filling the competency gaps as well as, you know, geographical reach out to customers in this business? The pandemic year, especially, the year 2020 was very difficult for this organization. They couldn't reach out to the customers, so we couldn't actually push any new business coming in. What we have done during period is look at our scope of services, did a little more analysis of fitment to the market need. We went ahead and expanded our scope, added a few more tests, and a few products to the scope. That way we have strengthened our capabilities. Going out into the market, it's been difficult. I mean, we were able to. We had the customers, but most of the customers were not really operating. That issue was there. This year we hope we will be able to push these services nicely, especially because of the complementary MNC capabilities that we have at Vimta. Yeah. Okay. Thank you. That's all. Thank you. Welcome. Thank you. We have the next question from the line of Tony Desai from Total Capital. Please go ahead. Hi. Good afternoon, ma'am. Ma'am, two questions. You know, a lot of questions have been answered. The first question is that, our aspiration of reaching INR 500 crore plus number, I mean, in that, whatever numbers or calculations that you have internally, is diagnostic a very significant part? I'm asking this question because we are still testing waters, you know, trying out lot of things on the business model side. If it doesn't work out the way we expect, will we see significant change in our numbers or aspirations for FY 2025? As of now, diagnostics is a significant portion there. If that doesn't work out for us, and I'm not really thinking in those lines yet, if that doesn't work out for us, then we will come up with plan B. There is a plan B, sort of. You have other considerations which can still take you to INR 500 crore. Like I said, I so far have confidence on the service mix that we have decided for ourselves, targeting for ourselves to reach that number. So far, we do not have any hesitancy that something could be off, but we have enough buffers built in to manage any dips in any of our service sectors. If something doesn't go well, then obviously we have to switch gears and push something else. Okay. That I cannot comment at this point of time. Perfectly understood. Okay. Second question is, more of a clarification. We are putting up this INR 60 crore for a new facility. This is in addition to the INR 25 crore-30 crore typical CapEx that we do every year. In next two years, the total outflow for CapEx would be INR 100+ crore. Is that a right understanding? Yes, possibly, we have. Our estimate would also be the same. Ma'am, can you give some more color, without getting into specific numbers, but without JNPT, is the food service business growing at, you know, upwards of 20% or we are yet to see that kind of a traction in the retail food business? 20% is on the higher side, but we are very close. Okay. Got it. Ma'am, last question is that, you know, I think from all our interactions, one thing that is quite clear is that we have, you know, whenever we are a first mover for the first two, three years, we get an opportunity to get good pricing, which helps us in margin. Other players enter and as we scale up volumes, the pricing, you know, we need to revise pricing downwards in many of our areas. In that context, what gives you a confidence that we will be able to maintain this 29%-30% kind of a margin? We were expecting some price compression on the pharma analytical side. We have been able to counter the price reduction with very good increase in volumes, thereby maintaining our margins. Okay. Is this a right understanding that essentially what we are betting on is the operating leverage playing out with higher volumes and kind of sustaining the margin in spite of price decrease? Yes. Okay. Got it. Thanks. That's it from me. Welcome. Thank you. We have the next question from the line of Dixit Doshi from Whitestone Financial Advisors. Please go ahead. Yeah, thanks for the opportunity. Can you hear me? Yes, we can hear you. Yes. Just firstly, clarification, you mentioned that, you know, whatever volumes of import come at JNPT, FSSAI distribute the volume to the many labs. In the RFP, the volume was mentioned at 3,000 samples per month. That is, for this lab, right? They have given an indication of volume, but there is no commitment to the lab. Yeah, let's say pre-COVID, this lab was handling 3,000 samples a month. Sorry, I didn't understand. Can you please repeat? I'm not asking for the future commitments by the FSSAI. Prior to the COVID, this lab was doing around 3,000 samples a month. That is a fair understanding? No, no. FSSAI did not have any lab of its own. It was sending samples to private labs. This 3,000 samples a month mentioned in the RFP, what was that? That's the volume that is experienced from the imports. That's the existing volume. That's the market for import sample testing. Okay. My second question is, in the diagnostic center, how many centers we have currently, diagnostic business? We have nine locations. The largest is in Hyderabad. Then we have substantial menu at Kolkata and Delhi. Rest of places, we have a much smaller menu. Totally nine locations. Okay. I know you don't share the percentage what we have committed to FSSAI. Is it fair to assume that it will be more or less near to the Ghaziabad or it will be substantially higher than that? Ghaziabad and JNPT lab are not comparable business models. Okay, fine. That's it from my side. Thank you. We have the next question from the line of Nitesh Jain, who is an individual investor. Please go ahead. Go on. Yeah. Congratulations on the amazing set of numbers. Just a few questions. While you don't give the revenue breakdown of your different verticals, could you at least tell, in the March quarter, right, the number of samples that got tested at JNPT? Sorry, your voice was not at all clear. Okay. Why you do not give the revenue breakup? Can you give the number of samples that got tested in June 2022 to the March quarter? No, we will not be able to share that information. Okay. At least on the pharma side of the business, right, you said you're doing very good. Was there a good revenue jump from the December quarter to the March quarter? Are you seeing traction quarter on quarter? Your voice is not clear, sir. On the pharma- Mr. Nitesh Jain, I would request you to go off the speakerphone and come on the mic because your voice is not very clear. It's on the normal phone. On the pharma side of the business, right, you said you're seeing a very good traction in order flow also. Are we seeing a great increase in the business from the December quarter to the March quarter? What I wanna ask is there a quarter-on-quarter increase in the growth that you're seeing? Yes, there was an increase. Okay. Is it not possible to tell the number from how much would be the increase, if it increased? No, that is very competitor sensitive information. Okay. On the FDA front, you said that you got two approvals, right, and two inspections and they got done. Does that substantially help us in our exports this year? They are not called approvals. The approvals are given to our customers for the applications they file with U.S. FDA. For us, we just go through such reviews or audits and, the expectation is we perform well because from there comes the customer confidence in us to work more with us. Okay. Thank you. That's all from me. Thank you. Welcome. Thank you. We have the next question from the line of Yogansh Jeswani from Mittal Analytics. Please go ahead. Hi. Thanks for the opportunity and congratulations on a good set of numbers. Most of the questions have been answered, but few follow-ups I have. Ma'am, in the beginning of the call you mentioned about having a significant order book compared to what we have had so far. If you look at the margin profile that we have logged for last three, four quarters, that has improved considerably from, you know, 22 odd% to 28% and above 30%. This order book that we have, do we have margins in this buildup which are in line with this 28%-30% range or do we see some dip there? We don't anticipate any dip. As of now, no. Okay. Great. Ma'am, in terms of the capacity addition that you mentioned, for INR 60 crore, and you said for next two years the growth will be taken care of from this. So beyond that, beyond this capacity addition, do we have more scope to increase in the same facility or will we be maxed out, of course? I just want to clarify. We will be beginning the construction of the new facility this year. It will take two years to complete the facility and make it ready for occupying it. We are actually getting future ready by starting to build it now. Yeah. Did I answer your question completely? Yes, ma'am. That was answered. Ma'am, next thing would be on the EMTAC investment that we have done. How much more investments do we need in this subsidiary? Any numbers that you could share? They might have a CapEx investment of about INR 70 lakhs to INR 1 crore during the year. It again depends on the customer that we are able to build for that organization. Depending on the interest for the services we will add respective CapEx. Okay. This will be a very small and a gradual scale of business then in the overall scheme of things. Yes. Yes. Understood. In the FSSAI business that you have mentioned on the call, you also mentioned that there currently are many labs which are already doing this. In terms of margin profile, is this business margin diluted because there is already a lot of competition? Or is this business also on similar margin scheme? Margin should be better here because the volumes are higher. Now if you know, pick a particular product, you will get at least 10, 15 of the same samples every day. Obviously your margins of testing that sample is better. What is a typical order size in terms of value? We have no orders here. These are individual samples that are just allotted by FSSAI. Okay. What would be the value of these transactions? Typically, what would be the average value of these transactions? The variety of inputs that we have coming in is quite large, and each product has its own standard specs against which we have to test. The range of prices will be quite big. Okay. Understood. In terms of our customer concentration, I just wanted to understand, is there any significant concentration? Typically, what would be the contribution of our top three or top five clients in the total sales, if you could shed some light on that. Our 10 customers contribute to about 25%-30% of our business. Top? Sorry, there was a disturbance in the line. Yeah, top 10. 25%-30%. Okay. Thank you, ma'am. That's it from my side. Thank you. That was the last question. I now hand it over to the management for closing comments. Thank you, and thanks everybody for their wonderful questions. We look forward to again connecting with you maybe in the AGM. Until then, goodbye and have a nice day. Thank you. Thank you. On behalf of Nirmal Bang Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.