Q2 21/22

Oct 25, 2021

Quarterly report

Ladies and gentlemen, good day and welcome to Vimpala Labs Limited Q2 FY 'twenty two Earnings Conference Call hosted by Nirbalmang Institutional Equities. 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. Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Manchanda from Nelmar Mang Institution Equities. Thank you, and over to you, Mr. Manchanda. On Equities, I welcome you all to the Q2 FY 2022 earnings conference call of Vimta Labs Limited. We thank the Vimta Labs management for giving us an opportunity to host the call. Today, we have with us the senior management of Vimta represented by Ms. Harika Vasirety, Managing Director Mr. Satyasrinivas Nirukonda, Executive Director Mr. Narayi Naidu, Chief Financial Officer and Ms. Sujani Vasiretti, Company Secretary. I now hand over the call to the Company management for opening comments. Over to you, ma'am. Thank you. Thank you, Vishal. Good evening, everyone. Thank you for joining us today in our Q2 FY 'twenty two earnings call. We have yet another good quarter. This financial year started well for us in Q1 with a better performance in Q2. Despite the COVID second wave that we saw in Q1, it has been a good half year with a robust performance from the company. We expect to maintain or better this performance going forward into the second half. I will share a few key highlights of the quarter, and our CFO, Narahari, will get into a little more detail on the numbers. The performance for the quarter and half year played out in line with our expectations. The 2nd quarter's consolidated revenue from operations grew by 9.6% over the corresponding quarter of last year at INR 650,000,000 EBITDA for the quarter was up 25.3% at INR 200,700,000 compared to corresponding quarter of last year. EPS is good. It stands at INR 4.3. On the operations side, all our service sectors continue to grow steadily. So we continue to invest in manpower technology and keep building new services to strengthen our portfolio to our customers. Some of you may be aware that we have entered into a public private partnership with FSSAI, Food Safety and Standards Authority of India, to set up and operate the National Food Laboratory at JNPT Navi, Mumbai. It's a 25 years contract. The purpose of the laboratory is to test all the food imports into the country through that region, test for basically the quality and safety of the imported items. We have finished the infrastructure works and have formally inaugurated NFL on 29th September of this year in the esteemed presence of FSXCI's Chairperson and their CEO. The lab will start commercial operations early Q4 after we obtain the NABL accreditation, we are in the process of validating all the test procedures. During Q2, we also inaugurated our diagnostic regional lab in Delhi. Q1, we had inaugurated a regional reference lab in Kolkata. So this is the other one in Delhi that we inaugurated this quarter. The regional labs will take about 2 to 3 quarters to get significant customer traction in those regions. Coming to Electronics and Electrical Product Testing division. We have finally received all the equipment and essential accessories. We are performing trial testing and also preparing for NABL accreditation, which we expect to receive in Q4. ESOPs have been implemented for our staff, and I'm very confident that the scheme will add great value to not only the employees, but also a lot to the organization. So with these few comments and updates, I will now hand over to our CFO. Nal Hari, please take over. Thank you. Good afternoon and welcome everyone to Vinta's conference discussing our earnings results for the Q2 FY 2022, which ended September 30, 2021. I'm happy to take you through the financial performance of the company for the 2nd quarter followed by the half year ended September 2021. During this call, we may be making certain forward looking statements, which are predictions, projections or statements about future events and anything said on this call, which reflects our outlook for future or which could be construed as a forward looking statement, must be reviewed in conjunction with the risks that the company faces. We will proceed discussing the quarter 2 of FY 2022 performance. So revenue from operations is driven by continued business performance. The company delivered a robust result for the quarter ended September 2021. Before I get into earnings detail, I would like to brief on certain one off items during the quarter and half year ended September 2021. During the half year ended September 2021, the company entered into a 24 year BBB agreement with Food Safety and Standards Authority of India to set up, operate and transfer of a national food lab. As a result, the company has received a right to charge the customer for the services to be rendered during the contractual period of 24 years on commencement of operations at LFT. Accordingly, an amount of INR 104,000,000 has been recognized as revenue from operations relating to lab setup services and a corresponding cost of INR 104,000,000 incurred to set up the lab has been recognized as cost of lab setup for the quarter half year ended September 2021. The FOSET treatment is very much in line with the Indian accounting standards. Secondly, there was another one off item. There was a notification by the government reducing the eligible rate of export incentive by 2%. We have been accruing export incentive, which is service export incentive scheme for each and every quarter as and when they accrue. The company had accrued export incentive on its net foreign earnings for the previous financial years. And therefore, there was a need for us to reverse the revenue of INR 12,200,000 for the quarter ended September 2021 to the extent we accrued at higher rate than the current notification, which was belonging into previous financial years. Moving on to the financial performance during the quarter. For financial performance discussion, I'll be excluding revenue and cost of INR 104,000,000 recognized on lab setup. Excluding that, the company delivered its highest ever quarterly consolidated total income of INR651,000,000. Our consolidated revenue from operations stands at INR651 1,000,000, which grew by 6.1% on a sequential basis and 9.6% compared to corresponding quarter. Our consolidated EBITDA of INR 200,700,000 grew by about 19% compared to previous quarter of around 168,700,000 and grew by about 25.2 percent compared to corresponding quarter, which was about 160,000,000 driven by strong underlying performance across almost all the business verticals of the company. Profit before tax stands at $143,000,000 which grew by 31.21 percent. This is before exceptional item of SEIS income compared to previous quarter level of INR109 1,000,000. And the growth stands at 44.5% on a comparative corresponding quarter basis. This was owing to very careful cost management. Moving on to half year performance, our consolidated revenue from operations increased during the half year by 37% to INR 1264 1,000,000. Our consolidated EBITDA for the half year reported a significant growth of 86% at INR369,000,000 compared to previous half year. Profit before tax for the half year stands at INR239.8 million, which is a growth of 3.2x times compared to previous half year, which was about 75,000,000. With this brief summary, I will hand it over back to the operator and would be happy to take any questions. Thank you very much. We will now begin the question and answer session. The first question is from the line of Milansha from Orville Research Consultancy. Please go ahead. Hello? Good for you, Oliver. Okay. Bulunshay, your voice is breaking. May I request you to come in a better reception area? Now is audible? That's slightly better. Okay. I want to understand the expenditure for setup lab, which is 10.4 crore in this quarter. It is going to be next quarter or we are going to set up other lab in other ports, it is any future possibility? We have spent about close to INR10 crores in the setup of this lab. What we have done is to speed up the project, we have internally mobilized some excess capacities that we had at all our different locations. So actual asset cost, if you put in new stuff, would have gone up to maybe INR 20 crores. But because this was an internal mobilization, the investment stands at INR 10 crores. And we don't intend to, at the moment, start any other port laboratories. Okay. But any other ports also have their kind of laboratory? There are 3 NPLs, 4 NPLs actually in the country. The one in Delhi is also in a PPP model that FSSA has entered into with another private partner. The Kolkata Lab NfL, they are managing on their own. And then there is another one, which is in the Chennai port area, which again, they have another private partner. Okay. And what is the probability of revenue after Q4 when we are going to start commercialize from this left side up? We expect a very strong addition to the top line and bottom line. We actually don't give out numbers. But as such, the committee is yet to sit down and fix the prices. And in the port, especially food imports, this tends to be a seasonal business. So quarter on quarter, there could be fluctuations in the number of samples that we get for testing. So as we test the samples, maybe go through a few quarters, we will understand more. Okay. My second question is, is it any base kind of lab coat is available on airport? So we can see the future maybe? I'm not sure that any of the airports have attached laboratories. Okay. Thank you, madam. The next question is from the line of Surubhi Sarogi from SMIF Capital Private Limited. Please go ahead. Hello. Hello. Am I audible? Yes, ma'am. Okay. Sir, my first question is can you give some update on your electronics business? As I was already mentioning in my opening comments, the E and D project is actually close to completion, at least the project stage. We finally received all the equipment parts and accessories. So we are doing some trial testing now. Simultaneously, we are also preparing for the establishment of quality management system and its accreditation by NABL. So we expect accreditation to happen in Q4. And from there on, we'll be able to accept customer samples. Okay. And then can you give some color on the future outlook and your major future plans? We have multiple business verticals. We are into food testing. We are into pharmaceutical testing, right, from preclinical research to clinical research. We support analytical testing services for small molecules and large molecules. So we are into biopharmaceutical and analytical services as well. We do environmental impact assessments. We do clinical diagnostics. And now we are on the verge of starting electrical and electronic product testing. So for us, the future outlook is very bright. All the 4, 5, 6 sectors that I named are the high potential sectors. We expect good growth in all our divisions. Okay. And that's all from my side. Thank you. Welcome. Thank you. The next question is from the line of Beyza Debbo from Nirabalbank. Please go ahead. Yes. Could you share some color on what drove the strong growth of 25% on a quarter on quarter basis for Limpop? Sorry, could you repeat, please? Could you share some color on what drove the strong growth of 25% on a quarter on quarter basis? All the divisions did well because we have started pushing all the sectors or vectors for us. So growth came from across all our business units. Okay. And when should we expect the Food Lab set up with the private partnership with FSSAI to start contributing to revenue? Q4. Like I was mentioning, we are in the process of submitting our application to NABL. Once we submit the application, they take a month or so to review it and then come for an audit. So the entire process might take 2 to 3 months. Okay. Thank you. Welcome. Thank you. The next question is from the line of Neha Mehta from Pagya Equities. Please go ahead. Hello? Hello? Go ahead ma'am, you're audible. Yes. So I just my question is in connection or continuation with the previous participant. I just wanted a sense on which would be the fastest growing business segment for the next 3 to 5 years. Until now, I believe pharma was dominating. So what is what this segment will go will do well in the future? That's a very nice question. For us, yes, pharma has been growing very well, very strongly year on year. Food and Diagnostics, both these services also we expect to grow quite rapidly. Electronics and Electrical Testing Products division, it's going to be a maiden year this year. So we hope things will be good, but we'll have to travel and see how that goes for us. Okay. And last call and given the update, you mentioned that we've opened our we've expanded our diagnostic business. So just wanted to understand that the growth is coming from COVID cases only or there is any non COVID factor also that is playing? In Q2, there is no COVID cases impact. The numbers are really low across the country. There is no impact of COVID in Q2, positive impact. And going ahead, where do you see the growth coming from? It will happen across food, it will happen across pharma, it will also happen from diagnostics. We have also expanded our environmental division. We have 2 satellite operations set up in Calcutta and also Noida. So environment will also grow for us. Okay. And are CapEx plans for all these things for the next 3 to 5 years? We plan CapEx on an annual basis. This year, we have spent about INR12 crores and we might spend an equal amount in the second half. So can we assume a similar run rate for in the future? We want to maintain it, yes. Okay. That's it from my side. I'll join back in the queue. Thank you. The next question is from the line of Charulata from Dalal and Borsha Stockbroking. Please go ahead. Yes. Hello. Congrats for the good set of numbers. I wanted to know if you could give a recap of the different divisions, revenue contribution from different divisions? And also some if you could throw some light on the growth in EBITDA? We don't bifurcate our revenues like that. For us, it's one it all falls under the testing and research services. So we won't be able to share any bifurcation as such. Okay. And what has given the growth in EBITDA? Growth in EBITDA is partially because of the growth in the top line and also we had some establishment of some new long term partnerships. So large projects also add to the EBITDA. Okay. And how many scientists do you have? For us, the total strength is about 1300 and our scientific population is 70% of that number. Okay, right. Fine. Thank you. All the best. Thank you. Thank you. The next question is from the line of Dikshit Doshi from Whitestone Financial Advisors. Please go ahead. Yes. Thanks for the opportunity. My first question is regarding the growth. So if I exclude the Tenkor Road, that one off from the revenue, our revenue grew by 10%. And if I see our pre COVID level, we used to grow at 15% to 20% prior to 2019 for at least 4, 5 years. Now let's say this year we might end up with if our Q2 performance continues for second half as well, we might end up at 2.40 crores, 2.50 crores revenue this year. And given that electronic business will start from Q4 onwards and even this FSSA will start from Q4. And the recently started diagnostic centers led in Kolkata and Delhi will also get mature by year end. What kind of revenue growth percentage we can envisage for FY 'twenty three and 'twenty four? We don't make any forward looking statements. All parts, I want to hear. I keep mentioning in these calls that we have a target for 2025 to be at least a 550 crores to 600 crores company. So we just have to break up that growth into these 3, 4 years and take it from there. Okay. So at least we can expect that in near future we will start growing again at those pre COVID level of 15%, 20%? The numbers, I think, that you're referring to in those areas were annual growth numbers. But if you see quarter on quarter, I think we are doing pretty good. Those numbers are we can even better those numbers. Okay. Okay. And is there any further plan of expansion in diagnostic in H2? This is the first time actually we are significantly expanding our footprint in a B2C market because in addition to putting up the 2 regional labs, we have also set up a few customer collection centers, company operated collection centers. So for us, again, this is a water testing year. Depending on how that pans out for us, we might take up the expansion plans much more aggressively in the coming years. Okay. And one last question from my side. In terms of pharma business, so obviously, even in Q1, when there was second wave of COVID, there were difficulties in terms of importing the animals and also difficulty in terms of signing up the patient. So how are we seeing the trend now? The animal imports problem has been resolved. We have been able to actually double our canal capacity. So we have one of the largest large animal capacities in the country now. So that is resolved. The second one was? Yes. So second one was related to clinical trial, the patient recruitment for the clinical trial. Yes. Sabine, we are actually at present not doing any clinical trials. What we do is bioavailability and bioequivalence studies. So right now, we don't have any trials going on for us. Diagnostics, yes, in Q1, we still had lower footfalls in terms of patient sample testing, but it was more than well compensated by the COVID testing numbers. In Q2, that's normalized. We don't have COVID. So it's the other business that is happening now. Okay. Okay. Thanks. That's it from my side. Thank you. The next question is from the line of Ranveer Singh from Suniti Securities. Please go ahead. Thanks for taking my question. Just wanted to understand that food lab you have set up. So what kind of investment we have made in this food lab? We have invested about close to INR10 crores. And that investment part is complete now? Yes. The equipment and everything are set up, they are qualified. Any residual investment might happen in Q3. Okay. So in this Food Lab, you mentioned there would be some strong revenue coming up from this lab. So whether that though you will not be able to give her number, I understand, but whether this division is likely to be a prominent division in our overall revenue breakup? Ladies and gentlemen, thank you for your patience. We have the management line reconnected. Sir, you may go ahead. Go ahead, please. Yes. So I was asking investment in Food Lab, what we have made, you mentioned that there will be some strong flow of revenue. So whether this revenue would be a prominent part of our revenue going forward, this is going to be a significantly contributing to our overall revenue or how this is going to if I take 2, 3 years down the line, so what kind of contribution we can expect from this facility? The revenue is entirely dependent on the number of samples that we test in the National Food Laboratories. Like I was saying earlier, this is to mainly cater to the imports. The imports, although they are not growing at any double digit numbers, but still they are quite stable. Going into the future, it's very difficult to predict which way the imports will go. India is saying that there will be a lot of self reliance that we will develop. But my guess is the food imports, even though we might become a strong exporter, the imports might still continue at those levels. So we should expect the revenues to continue or even grow with the economy in the next 25 years. Okay. And apart from this facility is dedicated to this port facility or we can use this facility for other clients also? We can use this facility for other clients. Okay. And secondly, on diagnostic side, our diagnostic business setup is similar to other peers like Thyrocare or some. So this is related to preventive healthcare checkup or do we have some other origin to this diagnostic business? It's very similar to the peer group. You mentioned Thyrocare, so it's quite similar to that. Okay. So it's like a hub and a spoke model and we'll be setting up for reference lab in different cities and then collect some sensors, that is the way we will be going forward? Correct, yes. Okay, fine. And what is the investment in this diagnostic business so far? It's not a very CapEx intensive business. It's more as our sales reach out. So not very significant. Okay. So that 12 crore CapEx in first half was related to what, this one maintenance or some growth CapEx? That is distributed across all our business units. It could have included even diagnostics. It would have gone to pharma, food, all the business units put together. Okay. Similar to the case for next year also, that 24 crores, 25 crores annual CapEx should be across segments, that's what you're saying? Yes. Typically, we tend to use up all the depreciation amount. Okay. Okay. Fine. That's it from my side. All the best. Thank you. Thank you. Thank you. The next question is from the line of Sunil Jain from Nirmal Bang. Please go ahead. My question related to the 10.4 crores, which you had recognized as a revenue. So against that, how much expenditure has been recognized and how much is the profit impact? Yes. So as you rightly said, we have recognized about $104,000,000 at the revenue from operations level, which is nothing but the cost what we had incurred to set up this lab. The cost what we incurred is $104,000,000 So on a net net basis, there is no impact on bottom line. So there is a similar amount of recognition at revenue as well as cost, which is €104,000,000 So if I exclude that from the revenue and cost both side, then your margin seems to have moved up very sharply in this quarter. Any specific reason for that or how we can read it? You're absolutely right. So margins did improve that is because we had whenever there is an incremental revenue there is economies of scale. Yes, but from INR61 crores, if I exclude this revenue, then it's INR65 crores from last quarter to this quarter, but the profit recognition is much higher than the INR4 crores. So the EBITDA improved by around 400 bps for the quarter, I mean on a sequential basis, which is from the operational efficiencies during the quarter. Okay. There is no exception at all because of operational? No, there is no exception in the EBITDA level or PBT level. Exception has been shown separately. There is one line item in the result sheet, which is about 12,000,000. Yes, yes. And apart from that second question related to this food lab, what will be the revenue sharing with government or with this and or it will be more of a profit sharing, how it will be working? It's a top line share. We went through our bid process, so it's a top line share. Okay. And these are all having a similar margin to company level or it will be a lower margin business? It should be better. Better. Okay. And because of this lab, any our existing business will get transferred to this or no? No, no. Okay. Fine. Okay. And the size of business you are not sharing. Okay, fine. Great. Thank you very much. Welcome. Thank you. The next question is from the line of Vinay Nayar from MK Global Financial Service. Please go ahead. Yes. Thanks for taking my question. My first question is related to you mentioned that you're targeting a revenue of INR 600 crores by in next 2 to 3 years. So with the CapEx, which you had mentioned of around INR 10 crores to INR 15 crores, is it achievable or you would be requiring additional CapEx for that? And secondly, pardon if my question is very basic, but if you can give me some understanding about the competition and the industry per se, I mean, what is our market share and who are our closest competitors, if you can throw some light on that? Okay. That's a very big question, the second one. I'll answer the first one first. Yes, we have an ambitious target of reaching close to INR550 or INR600 crores by 2025. This would require additional infusion of CapEx. It depends on which business units we'll be pushing hard to reach there. The second one is about market and our share. We operate in multiple verticals. On the pharma side, analytical, especially, we are the leader in the market, all the U. S. Oriented business. We work with practically everybody who is in that market. Market share wise, we have honestly not done any specific marketing. But if I were to take a good guess, then I would say that U. S. Oriented services, we probably have the lion's share. We have good number of competition in Hyderabad, in Bombay and the Bath, but I think we take the lion's share there. Coming to clinical research and preclinical, again preclinical, we are one of the premier research centers, one of the preferred ones in the country because of our strong regulatory track record. We have strong competition from 1 multinational and then there's a few half a dozen local players. So pharma side, we could be enjoying a share of maybe 10% to 15%, so that would be my guess. Okay. Clinical research, bioavailability, bioequivalence market is a big one. There are many players. I think there must be at least around 100 or 150 service providers. So market share there might not be very big for us, but we are one of the premium laboratories. We work with highly quality conscious organizations. Most of our business comes from overseas for these services. Then coming to food, highly fragmented. There are hundreds of NABL accredited labs, small mom and pop type of setups as well. So given the number of players, I think if you just divide among the top maybe 8 to 10 players, then I think we have a good share there, maybe 10%. Environment, we are a leader. There also you have good number of laboratories, but the revenues are pretty small for a lot of them. So we might be in the top 5 labs who do environmental studies. Coming to diagnostics, we are not big at all there. There are very big companies there. So our market share might not even be worth mentioning at this point of time. So in the rest of the business segments, the competitors you're talking about, even the largest one would be somewhere close to the revenue size would be somewhere similar to what you're reporting, right? I mean, no one would be like a INR 1,000 crore plus revenue generator, I mean, if I'm understanding you correctly? And which In all the rest of the segments, apart from the diagnostics, the rest of the segments which you were talking about, you said that either it is segmented or there are or you are the market leader. I mean, either it's segmented or the ones which are specialized, there you are already one of the market leaders, which means that in I mean even amongst your competitors, no one would be like more than a INR 500, INR 600 crore revenue enterprise. Am I right in my assessment? Not entirely because the unique mix of services that we have are not exactly matched by the competition. So it's very difficult to compare like that. Okay. But just to give you an example, if I compare you to the recently this company based in Ahmedabad who had filed for an IPO, would you call them your competitor, VIDA Clinical Research? So just for my understanding, so that I am also able to analyze it better. So We complete go ahead, please finish. Yes. So I just wanted to understand, is VIDA like competitor in one of your segment or it's a competitor as a whole? Just one of our segments. They do only BABE studies. Okay. And in the rest of the segments, you're saying that individual each segment has prominent players and you are one of them. That is what you meant to say, right? I mean, you are amongst the leaders in all the rest of the segment. That is what you said, right? Like in clinical research, you would be like I'm sure VIDA is also somewhere around INR 200 to INR 250 crore revenue company. I don't know about the other players in the other segments, but going by what you have told me, I mean, it's very clear that you are amongst the industry leaders in most of the segments. Am I right? Yes. Okay. That answers my question. Thanks a lot. Thanks a lot. Welcome. Thank you. The next question is from the line of Aman Vij from Astoria Investments. Please go ahead. Yes. Good afternoon, ma'am. My first question is on our clinical research pharma business. So in terms of number of sites, could you talk about where do we rank and any plans to do addition in terms of number of beds? Number of beds, we might be in the top 10, definitely. And yes, we do have thoughts about expanding it, but not necessarily in the state of Telangana, but maybe we'll look towards north when we do that. And the current bed number is around 180 to 200? Correct. And the utilization level, ma'am? It's 100%. Okay. So this expansion can be true then if we are already exciting? Yes. We I think we think there is a possibility of requirement of expansion maybe time in next year. And if you can give roughly, if you have to expand by, say, similar capacity, 200 baht, what is the nominee CapEx for such expansion? The CapEx in these studies, there are 2 halves of the service. 1 is the clinical part and the other is bioanalytical. Clinical part doesn't need a lot of investment. The biannualit depends on how many mass specs you wish to deploy. It all depends on that. So I'm just saying for a rough approximation, if we have to set up similar facility like we already have, what will be the CapEx required in the new region? Then just on the bioanalytical side, if we have to build equal number of instruments, then it might cost about INR 10 crores to INR 13 crores. Sure, sure. Yes. And then the fact sorry, we are in top 10, not in top 5 or top 3, because I had the assumption we should be in at least top 5. Clinical research, no. We may be in the top 5. But the top 1 and the 2 players, their capacities are really high. So even the 3, 4, 5 are probably at our shoulder level only. Yes, yes. They have like 400, 500 beds, but they also cater to we have some beds outside India also, if I am Correct, yes. But we are we will be focusing only on domestic expansion. But now, yes. Yes. Yes. So, and then second question is if you look at our 4, 5 business segments, so CRO Part A, if you remove that. So ma'am, diagnostically, I think the second biggest, so which we in that 4, 5, 4 year vision of CHF 500, CHF 600 top line. So you had earlier talked about CHF 100 crores each from the newer segment. Which segment do you think will cross that threshold of CHF 100 crores cost according to you? Food, I think. Food should go first. Okay. And followed by, ma'am? Diagnostics. Sure. And the final question is what is our CapEx plan for Tokyo CapEx plan for this year, FY 2022 as well as in next year? Next year, we would be planning only towards the end of this quarter. But this year, we have already spent INR 12 crores. We might spend equal amount in the second half. Thank you so much. Welcome. Thank you. The next question is from the line of Milan Shah from Urumil Research Consultancy. Please go ahead. Hello. Thank you for considering my question and this is for Mr. Naidu. So, I requested Sorry, your voice is cracking. This is for Mr. Naidu because in 3rd call, I asked Medan to update our website because I am doing a PMA service for client. And our site is not going to update any news. It happening last 2, 3 quarters. So my request to update this one or maybe make a very prominent website for our company. And second, every company are going to make a presentation for after declaring the result. So it is very useful to understand for client also. So it is very possible then do it. Notice, sir. So we are in the process of launching our new website. So probably in a fortnight or a couple of fortnights, we'll be launching our new website. Okay. Congratulations in advance. Yes. Thank you. And regarding maybe if possible then do presentation for quarterly result because when we are going to make a presentation of because all customers are not going to understand our business model. The line for the participant dropped. We move on to the next participant. The next question is from the line of Dilip Sao, an individual investor. Please go ahead. Yes, thank you. Yes, it's regarding the investment we have made in the new food laboratory. You talked about a 10.4 crores investment, but that's using your existing resources. And if it hadn't been that, it would have been INR20 crores, if I heard it correctly. We typically do 1.5 to 1.8 times asset turn in our regular business. And can we say that on a 20 crore kind of investment, the asset turn will be 1.82 times for the new food laboratory? For us, it typically tends to be around 1 to 1.5 only depending on the service line. So that we can expect. So around 30 odd crores of business for assuming that we had a similar kind of trials. That's what in near future may not be quarter or 2, maybe year or 2, it will happen. Like I said, we are yet to start the operations committee, FSSA and MVMTA committees yet to freeze on the prices. We are yet to explore the volumes because you do get some numbers when you are bidding, but you will have to experience them. So once we go through a few quarters, I think we'll be in a better shape to respond to that question. Sure. No problem. Coming back to the Diagnostic business, we had a RRL in Hyderabad and then Calcutta, not Delhi. We have 3 RRLs now. But we have 40 odd customer collection centers. I'm just trying to understand the business model. This is not this is different than the ratio of RRL versus collection centers. So is it predominantly a B2B business for us? Or how is it? Is it a B2C business? It is predominantly a B2B business. What we have in Hyderabad is the main reference laboratory. The ones that we set up in Delhi and Calcutta are mini versions of this, but they are having a good size of menu at these two locations. They have biochemistry, microbiology, molecular biology or everything. Now our collection centers are 40, but we have a lot of franchisee network. So we get samples from clinicians, which work with our franchisees. So the number of franchisees that work with us is in higher numbers, close to 500, 600 plus. Okay. Now if I remember correctly, you had said in Q2 last year or Q3, you had reached a INR10 crore kind of revenue for diagnostic business. Obviously, that would have dropped because of COVID and all getting relaxed now. So, reaching INR 100 crores for diagnostic means you'd be growing around 25% to or more in next 3 years. Am I missing something here, 25% to 30% growth in the diagnostic business you will see in next 3 years? The number that you have, TANCLOS is wrong. But at the same time, I won't be able to correct you with a specific number. So growing from where we are into that, it will be a very challenging task. But I think we are geared up with our strategy. We are geared up with the team to reach our targets. Okay. Thank you very much for answering my question. Thank you. The next question is from the line of Suneel Kothari from Unique Portfolio Management. Please go ahead. Thanks for opportunity. Madam and team for such a good and qualitative better number. Ma'am, my question is on cash flow. We have two items which talks about impairment loss on receivables and bad debt written off, which is almost INR 3.5 crores for half year. Would like to understand from you the strategy we want to follow and to tighten our receivable systems to not lose this type of money maybe annually INR 5, 6 crores, which is a big amount for us. So your thought process on that? And secondly, we have paid some INR5.2 crores for purchase of intangible assets. If you can talk a little bit more on which is this intangible assets and related to that? Yes. So I'll be answering those two questions. On the first thing, there is a provisioning of INR1.7 crores for the first half of the financial year. This is in line with the India's requirements, which is as per expected credit loss method. On the second line item, there is a write off. So we had been very prudent in terms of assessing the receivables and providing for that and when it is needed. So it's a continuous exercise. So accordingly, we have written off certain receivables. On the action plan, the entire management team is very closely working on to improve the situation. So I'm sure that going forward, we'll be able to improve the situation on the receivables. There are a lot of internal efforts which are being or internal resources which are being deployed to improve the situation. Having said that, this is very regular in nature. So there's nothing alarming when it comes to the provisioning as well as write off. That's on point number 1. Point number 2, investment deployed for purchase of intangible asset. This is what we had incurred the cash what we incurred in setting up the lab, what we had already discussed of National Food Laboratory. The total investment comes to around INR 10.4 crores. There is something which we had incurred out of cash. There is something which we had pulled out of our existing resources and transferred it to set up this lab. Thus, you know, both the questions are answered. Okay. So total investment we made is INR10.4 crore. Out of that, this INR5.2 is intangible related? Total INR10.4 is classified as intangible, but cash impact is 5.2. There is some transfer from our existing assets, which is about 5.2. Yes, understood. Thanks for this clarification. My question is to Ma'am, is this almost 3.5 crore roughly we are losing on this impairment and this better. So on the size of company to lose 6 crores, 7 crores per year, I don't think it is acceptable to you or your management. But I wanted to understand your thought process, what steps we are taking and how you feel this is acceptable? Typically in our industry, 1, 1.5 percent is not at all alarming. And like our CFO was mentioning earlier, we just follow the formulas in order to provide for the provisioning. As such, there is no lack of control over this item. Things got a little sticky, especially on the retail business during COVID because we were not traveling. Our teams couldn't travel. Our teams couldn't last question, would you like to throw some light on your ambition to have some type of EBITDA margin maybe over the next 2, 3, 4, 5 years? Or is RAME maintainable or is there scope to improve it there? We want to maintain it and in fact try and better it. Okay. Thanks Vijay. Good luck, man. Thank you very much. Thank you. Thank you. The next question is from the line of Viral Bansali, individual investor. Please go ahead. Yes. Thanks for the opportunity. Hi, Harita. Hi, Nan Hari. Congratulations for a brilliant set of numbers. And it is really refreshing to see Vimta so aggressive again after having seen it so aggressive in the between 2,000 and 2010. So that's a very refreshing change from Vimta even without the 10 crores onetime revenue that Vimta has had. My question is regarding the JNPT lab, which is which you which Vinta won on the PPP basis. So what is the I mean, the Ghaziabad lab went on 15 minimum revenue share that was mentioned in the RFP. So what could be the revenue share for JNPT Labs? You're asking us to share with you our secrets, Viral. I won't be able to share that because it won't help me in the next bid, right? I understand. Yes, I was like I was coming to that only. So because I think that the RFPs for Chennai and Mumbai were floated together. Yes, we bid for both, but the size of the JNPT lab is much, much more bigger than the Chennai lab. 66% of the imports happen through JNPT. And the model that we have entered into with SSI here at JNPT is not similar to the one that they have at Gazia Bhatt. They are slightly different. Okay. Yes, because Gazia Bhatt is an ICD, I guess. Yes. It's not a port. So that's the volumes will be 1 10th, maybe 1 15th over there. Yes, yes, much less. Yes. So now based on the figures mentioned in the RFP, JNPT does close to pre COVID levels, close to around 1 lakh samples for consignments of import consignments of food every year. And the charges at that time, like before COVID were around 5,000 for everything apart from milk and the beverages part and INR 2,000 for the visit in case you have to visit the client's end. So are these charges now there or maybe we will see we can see an upside potential to these charges? The charges have recently been revised. They have been doubled in fact very recently. Okay. So I don't want to get you into any uncomfortable situation about the numbers, but I can get a sense of numbers from based on 1 lakh sample to here a year. So any idea if the Kolkata lab is going to be put on the block in a similar way? They have no plans of going in for a PPP there and nothing that we are aware of at least. Okay. So coming back to the JNPT lab, since you have provided 10.4 crores for the infrastructure setup over there and RSP mentions that the lab is on a setup operate and transfer. So what I presume is whatever you have set up, you have built it to the JNPT. So the infrastructure so FSSI, sorry. So whatever infrastructure that you've built belongs to FSSI, you just be Venkata will just be the operator of it. You have the license to operate for next 25 years and then transfer it back. Is that correct? Correct. The site was provided by them. Of course, it was an old hostel building that we got. So we had to do a lot of modification. We put our equipment, our people. And then at the end of 25 years, if you are not able to renew the contract, then we transfer it on an as is basis minus the people, of course. Just to add to that, so this revenue, what we had recognized is more of an accounting treatment. We haven't invoiced anything on FSSA for that. So this is more of an asset recognition in the form of intangible, which is routed through P and L. Okay. So we are not going to receive any payment on this? No, because this is RHA, this is the asset what we had recognized, but there is a corresponding right to receive the revenue for the next 25 years. This in line with the accounting principles where we had recognized intangible and the corresponding revenue and cost. Yes. So basically that comes as an intangible asset. And so we bear the cost for it and we create that as an intangible asset? Absolutely. You're right. Okay. So based on what you said that the prices have almost been double and the samples are based on the RFP, the samples are close to 95,000 a year and obviously, I expect some growth year on year or lakh samples or so. That can be a significant amount of Imtaz revenue coming next year, FY2023. Am I correct? Yes. Okay. And my last question is regarding the capital work in progress that I see is INR 25 crores right now as on 30 September. So can you give us a break up on this capital working growth in progress? See, this is this largely represents our E and D vertical what we call it, which is our electronics division, which is yet to get commercialized. We are expecting this to be commercialized in the second of the quarter or early quarter 4. So we are in the last leg of getting accreditations, qualifying the assets. So there is technical clearance which is awaited for this. So the entire amount of INR 45 crores belongs to E and D vertical. So the electronics business? Correct. Yes. And then my last question is regarding recently there was a government notification which mandates compulsory testing of egg and egg powder exports from India by a national laboratory. So can Vimta get a share of this in the export market? Is that a possibility? If they have specified that RRL, reference lab NRL sorry, national reference lab take it, then there are identified labs for each product, then that would go to that particular lab. But if it is a tendered project, then we could have a chance at it as well. I'm not really aware. Okay. And it was just a recent one in September. Uh-huh. Okay. So now regarding the export front, like for example, the RFP, I'm just quoting what I had in the RFP and maybe wrong, correct me if I'm wrong, okay? The RFP suggests that Vimpak can also use the laboratory, the National Laboratory set up with JMPT for other services, for giving providing other services to its client. So is there a possibility of getting a significant chunk of this business, but since we are already since we already have a brand name of SSAI and we are at the port. So is there an opportunity to put business on this? There are plenty of opportunities, but for us the capacity is limited because it's just a 12,000 square foot lab that is set up right now. If we have to expand the capacities then we have to work with FSSAI and do that. But right now I think that we'll be using the entire capacity running the lab in multiple shifts to handle those volumes. Yes, but considering that there is also a food park coming up in the JNBT area itself. So Yes, like I said, we have a lab close by in Pune. So maybe we will have to send it there depending on the capacity utilization and the time of the opportunities, timing, it all depends. And do these guys, SGS, Intertek, Eurofins, subcontract the testing part for the export consignments? I wouldn't imagine because I think all of them are full scope labs like us. One off rare tests maybe they do, I don't know. Okay. So there is no possibility of getting a significant chunk of an export market since we are already at the JNPP? No. No, right? No. Fine. Thank you. Thank you so much. And please keep up the excitement and enthusiasm that Vinta has once again got it. Good luck. Thank you. Thank you. Thank you very much. Ladies and gentlemen, that was the last question for today. I will now hand the conference over to the management for closing comments. I just want to thank again everyone who have participated in the call. I appreciate all the questions that have come in. Thank you very much. Good day. Thank you very much. On behalf of the Nirmal Bank Institutional Equities, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.