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Vimta Labs Ltd
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Ladies and gentlemen, good day, and welcome to Vimta Labs Limited Q1 FY '21 Earnings Conference Call hosted by Systematix Institutional Equities. [Operator Instructions]I now hand the conference over to Mr. Vishal Manchanda from Systematix Institutional Equities. Thank you, and over to you, sir.
Thanks, Aman. Good morning, everyone. On behalf of Systematix Institutional Equities, we welcome you to the Q1 FY '21 Earnings Call of Vimta Labs Limited. We think the Vimta Labs management for giving us an opportunity to host the call. Today, from the Vimta management team, we have with us Ms. Harita Vasireddi, Managing Director; Mr. Satya Srinivas Neerukonda, Executive Director; Mr. Narahari Naidu, Chief Financial Officer; and Ms. Sujani Vasireddi, Company Secretary.I'll now hand over the call to the company management for their opening remarks.
Thank you, Vishal. Good morning, and I appreciate all those who have joined us now on the FY '24 First Quarter Earnings Call. We are pleased to share the quarter's update with you.Before we delve into the updates, let me take you through the general economy and the industry landscape. The global economy appears to be stabilizing and turning the corner, yet inflation remains still a pressing concern. While the U.S. economy seems to be moving towards the soft landing, the situation in Europe remains critical, which is impacting the clinical research industry to some extent.Closer to home, the slower growth of the Chinese economy furthers potential implications for the global economy. However, there are some reliefs on the cost side, with supply chain hurdles easing.Within the testing, inspection and certification industry, the trends have been working in our favor, contributing to positive results for the quarter. Stringent government regulations in testing worldwide have driven strong demand in the testing, inspection and certification market.In the Indian market, the demand across this segment remains robust. However, during the quarter, the food segment was impacted to some extent due to the cyclone we had in Gujarat, which hit the coastline and disrupted shipping traffic in the Indian Ocean. Operations at ports were also suspended for a little while for some time, till the situation improved. So that kind of impacted our revenues in the food testing.Coming to the quarter update; our total income for the quarter stood at INR 841 million, which is 5.1% growth on a year-on-year basis. We witnessed growth in all our pharma services. The food business, however, was impacted, like I said, by the cyclone. Our electrical and electronics services also, we saw a nice upward slope. Likewise, in the environment testing also. Diagnostics remained stable.It is worth noting that Q1 is typically a slightly weaker quarter for us and especially for food as well, but the impact was compounded because of the cyclone, which contributed to further slower growth in food testing than we initially anticipated.I will let our CFO discuss the financial details -- in detail in his commentary. On a positive note, our CapEx plan for the Life Sciences facility is progressing swiftly, and we are confident of completing the same by end of this year. Once operational, this specialty will enhance our capacities in the Pharma division, which is currently constrained. This in turn will drive growth in the upcoming years.Our estimated CapEx for the year is around INR 90 crores, part of which will be allocated towards the building construction, while the rest we will utilize for equipment replacement, upgradation and any new technology investment. To summarize, the demand environment remains strong, and I'm confident that we will see good sequential as well as year-on-year growth in the coming quarters.With this, I would like to conclude here my opening comments and invite our CFO, Narahari, to discuss the financial highlights for the quarter. Over to you.
Thank you, Ms. Harita. Very good morning to all. Thank you all for joining us for our Q1 FY '21 earnings conference call. I would like to walk you through the consolidated financial performance of Vimta Labs for the quarter ended 30th June, 2023, after which we can open the floor for questions and answers.I'll start with the consolidated financial highlights for the quarter. Total income for Q1 FY '24 stood at INR 841 million as compared to INR 800 million in Q1 FY '23, up 5.1% Y-o-Y basis. EBITDA remained strong and with an EBITDA of INR 252 million in Q1 FY '24 as compared to INR 248 million in Q1 FY 23. Growth of close to 2% on a Y-o-Y basis.Lower EBITDA growth was on account of higher employee costs to a certain extent, which was a result of [ ENI ] increment cycle. EBITDA margins for the quarter stood at 30%. Profit after tax in Q1 FY '24 stood at INR 122 million as compared to INR 120 million in Q1 FY '23, a growth of 1.3% on a Y-o-Y basis. The lower PAT growth was [ according ] to higher depreciation expense during the quarter, which was of the acquisition which we made during Q4 and Q1.PAT margin for the quarter stood at 14.5%. On the balance sheet side, we continue to have net debt pre-balance sheet with cash and cash equivalents, including other bank deposits [indiscernible]. Our total debt stands at INR 137 million as of 30 June, 2023. Working capital during the quarter remained stable.We incurred CapEx of INR 280 million during the quarter. While our CapEx projection for the full year would be around INR 900 million, which includes our project CapEx of close to INR 600 million.Before I conclude, I would like to highlight that we continue to repay debt, and our total debt as of 30 June, 2023 is at INR 137 million, resulting in a very healthy debt to equity ratio of 0.05x.With that, we can now open the floor for Q&A. Thank you.
[Operator Instructions] The first question is from the line of Dhwanil Desai from Turtle Capital.
Ma'am, my first question is you talked about disruption on the food side because of the cyclone. Any way you can quantify that number either in terms of revenue or number of days of risk disruption or number of tests, whichever...
Unfortunately, I won't be able to do that although we have that information, because of the confidentiality in this kind of information, and that's an understanding we have with our partner.
Okay. Okay. But is it safe to say that had it not been there, we would have grown by 15% Y-o-Y basis?
The slight step that you see, would have actually been much, much better for sure.
Okay. Got it. Second question, ma'am, is -- I think in the AGM, we talked about that we reaffirmed our guidance of doing INR 500 crores plus in FY '25-FY '26 and also with some improved margins. So if we want to achieve those numbers, we need to grow at 15%, 18%. So by -- for the rest of the year, we need to grow at a substantially higher base, maybe INR 90 crores kind of a quarter. Are we positioned for that?
Our efforts are definitely on for that. Coming to the INR 500 crore target that we have, we are very confident that we are on the mark. So typically, like I said Q1 is slightly challenging, but then Q2 onwards, it gets better, Q3 much better and then Q4 is [ evening out ]. That's how it is.
And ma'am any core from the NFL scale up, how it is progressing quarter-on-quarter? Do you see any uptick with respect to your own projections where you are? Some color on that.
We are pursuing continuously with the government body. Efforts are on, but we are yet to see a very good outcome out of those efforts. So we will continue.
Okay. So even without that scale up of the required level, we are confident of doing INR 500 crores?
Yes.
Okay. Okay. And essentially, then the push is coming from the pharma side, right? That is what will be driving the growth for us to take to INR 500 crores?
Food also, because we are not entirely dependent only on the NFL revenues, we have our other core food testing business, which is growing healthily year-on-year.
The next question is from the line of [ Aman from Aman Investments ].
Okay. So my question is regarding our testing business. As we have mentioned in the last investor call, we are getting good traction in some in TIC sectors. So are we associated with any standard [ groups ] in India for the testing of automotives, energy segment, liquids, oil and gas, pharmaceuticals?
No, we are not associated with any board.
Okay. You're not associated. Okay. Just a follow-up, we feel -- how has the traction been in this quarter compared to the previous quarter?
We have seen better traction, pharma also -- [ we see ] has better traction. Further, we may continue to have that counter effect because there is still a lot of rains in the country, and that does impact some in the testing business.
And just to follow up, I think [indiscernible]. Just wanted to know where you [indiscernible]. Our government has also regulating the subsidy of the fertilizer segment and the price is also normalizing as compared to the [ large DRIP ]? And also the government is wanting to lift the embargo of the fertilizers? Do you see any downfall in the testing samples that have been affected, and our business volumes and profitability going forward?
I don't envisage that impacting us directly. The inflation aspect could have some impact in general, but not on us directly.
Okay. And our costs normalizing at the bank rates or I think bank rates have come to level where they are going to be actually reduced? Are our costs also like employee costs, we have seen an increment in that? Can you normalize going forward to achieve this INR 500 crore turnover and 30% EBITDA margins?
Employee costs have gone up significantly after COVID. But I'm hoping that they would stabilize around this level. Coming to bank rates, we actually, in fact, enjoy pretty good rates from the bankers.
What is the average interest rate?
Are we allowed to share that, Narahari?
So yes. So that is not a problem. So our average interest rate is around 9 percentage currently, but we are still working for...
Also -- what is the incremental employee costs you have seen? Because it's an early cycle or the cycle is going on, what was the percentage of increment on those costs?
Percentage of increment, we are on par with the industry. The industry has been around 7% to 8%, and ours is also around that same level.
And just talking about the business part. Last investor call, you had mentioned, we have seen SLM moving in the diagnostic business. We are planning to reach out to other cities as well. But still it's in the maturing stage as mentioned [indiscernible]. Where do you see the traction going forward? Are we seeing the diagnostics to be in every part of India, cities branching out except Hyderabad and Telangana?
We are pushing forward on our strategy to have more SLM and LOMs. So that continues for us. But our direct presence as Vimta, that's something that we are not pursuing.
Okay. Then any range, because it might not be an exact figure you would be able to share with me. But any range of revenue are we targeting going forward in the diagnostic business, because it's 25% to 30% of [indiscernible] profitability?
No, I won't be able to share that because we don't give out segmentalized revenue.
Okay. And just wanted to understand your thoughts on this business, like you have say large molecules, which are turning out to be a good one. Are you seeing a separate business, or are you seeing some businesses revolving around these large molecules, which you're particularly interested in?
Yes. All the top...
Can you just comment little elaborately, so we can understand what type of business model will be built around it?
The business model will be similar to what we have around the small molecule, wherein we cater right from preclinical services to clinical research services. And of course, the entire analytical complement end-to-end, that is what we support on. So for large molecules also, it will be the same services. Preclinical to clinical research?
I mean is it directly related to pharma or will it be in the research and development kind of schema?
It's pharma only.
It's pharma only. Okay, then. And are we tied up with someone with the research team? You cannot name them, then just say the overall revenue pool and the profitability going forward in these sectors?
Our profitability is much better for the large molecules.
Any range which we are targeting, because INR 500 crores required us to do INR 120 crores to INR 125 crores quarterly. So any numbers which you can quantify with -- EBITDA margins will be able to reach those numbers?
EBITDA margins, as I had explained before, with the scale-up in economy, we want to try and better them by at least 200 basis points, while -- as we reach towards our INR 500 crores mark.
The next question is from the line of Omkar Kamtekar from Bonanza Portfolio.
So wanted to know what is the cash flow from operations, the number for the cash flow from operation, [indiscernible]?
Yes. So during the quarter, our cash generation is close to INR 17 crores, added lot of operations.
Okay. And the INR 90 crore CapEx that we are going to incur during the year, so the amount -- the sort of CapEx incurred during Q1 of INR 21.8 crores. So the INR 90 crores, was this part of the INR 90 crores, or the INR 90 crores is going to be over and above for the new clients, that were acquiring?
So the INR 90 crores would be inclusive of project CapEx, which we had earlier mentioned with a budget of INR 60 crores. So the INR 90 crores include INR 50 crores, what we are estimating to be incurred for the project building and INR 40 crores, INR 45 crores would be general CapEx funding.
Okay. Okay. And with respect to the debt reductions, we reduced the debt approximately 1.3x. We have a substantial amount of cash. So wanted to understand, though we -- although debt equity very much under control, why have we not accelerated the or reduced the debt when you have the cash and [indiscernible] in case. Just want to understand the reason behind that?
Yes. So our plan is to fund the CapEx out of our internal accruals. So the existing cash balance would be largely used to fund our project CapEx and also we are estimating a good amount of cash accruals over the period of next 9 months. So whatever the cash balance which you have, the majority would go into project funding.
Okay. Okay. And finally, is it possible for you to give what percent of the total revenue is from domestic -- from India and from exports. So I just wanted to understand, if that the revenue breakup geographically can be given. So how much export revenue are you generating [ or more ] domestic revenues?
So our mix typically is in the range of 25% to 30%. So that has continued during quarter 1 as well.
So 25% is exports you are saying?
Yes. export of 25% to 30%. That has been a trend over the past few financial years, and we have seen it continue in Q1 as well.
Okay. So are we planning to increase that share, or are we satisfied at the moment with becoming [ self-sufficient ]?
We want to definitely grow exports, that's our endeavor.
Okay. And the margin profile of the export business, how are they? I mean are they better than the domestic businesses?
Better, better.
The next question is from the line of V.P. Rajesh from Banyan Capital.
Just a few questions, as some of them have been already answered. So in terms of the vertical split for the revenue this quarter, if you can give some color as to how much came from pharma/lifesciences versus foods versus diagnostics and any other?
We don't provide the split of the revenues. We take it as one segment.
Okay. And any commentary on the electronics business, how is that coming along?
As I mentioned in my opening remarks, we see a nice upward slope in electronics testing, especially the EMI/EMC testing.
Okay. And ma'am, with the semiconductor talks that are going on about India getting a fab, et cetera. How do you think about that opportunity? Is it going to increase our business on the electronic side or it's too early to talk about that?
Definitely. They would be one of our customers.
Okay. So okay. And the EMS businesses are becoming more public here in India and that particular business is growing, so that should also be positive for us? Is that correct?
Sorry, I didn't understand what was that? EMS?
Yes. Electronic Manufacturing segment, which is -- those kind of businesses are coming up now quite a good -- at least a few of them got public in the last 12 months. So I was just curious, are those type of companies also our customer or potential customers?
Yes. All the electronic goods, it could be home appliance or an industrial appliance or a telecom product or a WiFi product or a different component, all these products would need EMI/EMC testing.
Okay. Okay. And finally, for this year, what kind of growth expectations you have over the last year?
For the whole company, you mean?
Yes, for the whole company, I'm just trying to get a sense like -- given you talked about how the Q1 was expected by one-offs. I'm just curious if that metric has changed for us, or are you still thinking of growth as you were before this Q1?
We are firm on our intent to maintain the growth rates, given the small capacity constraints that we have. I wouldn't say actually, small, they are significant. This year, we may not be able to push much more. But next year onwards, where we'll have more capacity, we are thinking the growth will be at a much higher pace.
Okay, okay. And is it fair to conclude from your comments that post food business that you said could be perhaps a little weak in Q2 as well? Will pick up in Q3 and Q4, or how should one think about the uptake on that business?
Yes, Q2, so far, we have crossed the month of July. July has not seen any upturn in food. That was the reason I made that comment.
Right. But is it seasonally weak as well? Or this is also an aberration? That's what I'm trying to understand.
Yes. Seasonally also, it is a little weak, but we see it more weaker this time and we think it's largely because of the disruptions that have been caused by rains in many parts of India.
[Operator Instructions] The next question is from the line of Pratik Kothari from Unique Portfolio Managers.
Ma'am on this question on food again. So is it because of this disruption, the samples which were picked out to test have reduced or let go in the time being?
We don't know exactly what the reasons could be, but the inflow of samples into NFL and even from our other [ routine ] customers is typically low in Q1 because they are still new in their budget, so samples come out only maybe around Q2. But in Q2 also, we are yet to see all that firing up from different customers. So hopefully, things will change in the next couple of months.
So you're seeing a slowdown in samples of shipments at the [indiscernible] just to ask.
Both. We see this in both places.
Right. And if you can just talk about broadly the demand environment that we are seeing in our pharma and diagnostic buses?
Demand is very strong in pharma. Diagnostics also is growing quite nicely. Quite disruptive at the moment, a lot of players. So in both segments, there are ample opportunities. Pharma, we are more upbeat about the opportunities that we have, because they are a very good match for our capabilities. And our expansions are also pharma focused. And we see good opportunities coming for clinical research, as well as preclinical, and a lot of analytical work also coming our way. Of course, there is a good number of competition also. So there is a counter effect from competition as well. But overall, I think we have enjoyed a very good position in the market. We are well known, reputed, respected in the pharma industry. And we have a very -- we are the preferred choice, CRO for many companies. We enjoy strong partnerships in this industry. So the demand is good, and we are also upbeat about our own ability to take advantage of such a demand in pharma.
Right. So the short-term capacity would be a constraint on the demand [indiscernible]. But at least from next year onwards, that could [ clear though ]?
Yes. The constraints are not 360 degrees. There are some avenues where we are still able to have ample capacities. But there are some important segments, where the capacities are quite constrained. There are both situations in this for us.
Correct. And just a clarification on the commentary. Except food, our growth still was double digit?
From Q-on-Q?
From quarter 1 of last year to this quarter year-on-year?
Yes, yes, yes. The growth definitely has been in double digits.
The next question is from the line of Dhwanil Desai from Turtle Capital.
Just one clarification, you talked about some capacity constraints, but a very strong demand environment. So is it a one-off or likely scenario that we will not be able to get the business while the demand is strong, and the next year when capacity comes back with us, because the demand environment might have changed. Or is that the project that we are kind of bidding for or talking about with customers, are of the nature where actually certification of that into revenue will happen next year, and we'll be able to utilize the capacity? Can you give some color on that?
Demand, I don't think will go up and down. I think it is continuously growing. We have a temporary constraint, which we will be addressing. So by Q4 of this year, we will have those additional capacities. And I want to reiterate that there is not a constraint everywhere. There are constraints in some services. But then there are also services which we have ample capacities to push. So we will be just fine tuning the way we work on our pipeline.
Okay. Okay. And also, can you give some idea about the status of the CapEx? I think it was to be operationalized in Q4 at the end of Q3 and Q4. So after you operationalized, do you need any certification or any kind of a regulatory clearances on how long it will take for us to actually start utilizing that facility?
It's in the same campus where we have our current pharma infrastructure, so we won't be needing any additional approvals from anyone, but there will be a lot of validation activities that will go on, of the infrastructure as well as the equipment that we will be shifting from one building to another. So there will be a lot of time that goes into validations. That could take 2 to 3 months.
Okay. So actual utilization will come by FY '25?
Yes, do you want to see a little deposit coming in Q1 itself, hopefully, but definitely by next year.
The next question is from Alisha Mahawla from Envision Capital.
I just wanted to -- you mentioned this [ capacity thing ] for the Pharma segment. Are we expecting to commence in Q3 or Q4, and then the validation of 2, 3 months? When is the capacity coming and when the validation?
The capacity for us is 3 dimensional. One is the space itself, and the second one is the equipment for these people. So what we are doing now is adding more space, because today, we are completely maxed out on space. Now the space that we are building is almost double of what we have right now. It's not that we are going to use the whole space. We will be increasing the space as and when there is a demand for more work. So that's when we add more people and more equipment. So it's not something that's like a switch that we will switch on, once the building is available. It will be gradual, like before. But so far, the constraint has been safe, and this constraint will be removed, once we have that new facility.
Since space would be available from...
The space will be available from Q4.
And then we'll get in the equipment and the validation? So that should take another 2, 3 months after that.
Yes. Not everything will take 2, 3 months, because we will be doing it in a phased manner.
Got it. And so the growth for the current year on the pharma side, like you mentioned earlier in the call also, there is a slight capacity constraint Q1 was impacted Q2 also because of excessive rains currently taking kind of [Technical Difficulty]. So how are people -- how confident are we of achieving a double-digit growth, which will be critical for achieving the revenue target of INR 500 crores?
We are very confident.
Could it be possible for you to give some color on what segment will it come from? Because you even have a slide in your presentation where you have given industry growth rates and none of the segments seem to have a higher than 10%, 11% growth rate, but you're talking of significantly higher growth rates. So any color on where are we expecting the growth to come from?
The industry is very large. The numbers are massive and even a small percentage there means a lot more opportunities for companies of our size. And pharma is going to drive the growth in addition to food. Food, we see this as a temporary aberration. So late Q2 onwards, it should start being better. So pharma and food will continue to drive the growth. We also have environment and our electronics business, although they are not a big portion of our revenue pie, they'll also add to the growth. So we are, at the moment, not concerned with the growth rate for this year. I'm very confident we can maintain what we saw in the previous years.
And just one last question, can you give a revenue breakup of how much [Technical Difficulty] environment?
Unfortunately, I won't be able to share that, because we present all our numbers under one segment only.
Even something directionally, a ballpark, just to get some sense?
Ballpark is around 60% from pharma, and 40% from non-pharma.
The next question is from the line of [ MK Reddy ], as an individual investor.
My question is regarding some of the investments which have been done in the previous year, which have not yet been fructified for us? For example, investment in...
Your voice is very low, and it's not clear to us.
Regarding the investments of new entity of INR 10 crores and the investment in EMIC of INR 40 crores and B2 and we also set up this -- quotes for the clinical diagnostics. Just want to understand what is the ramp up in this, because we have an expression target of INR 500 crores for FY '26?
So coming first to the NFL, which is in the [ MCT ]. The return on investment despite healthy despite the lower volumes that we are seeing currently. Even at this level, the lab is making a decent profit. Now EMI/EMC is a new baby. It will take some time to mature, and we expect to see a good ramp up this year itself. And next year onwards, we might even have to add a little bit on the capacity side with respect to the chambers. So the industry is also really upbeat, especially in Telangana, we see a lot of investments in this area. So that's actually a very good kind of environment for our services.Coming to the third one on diagnostics rates, not at all CapEx-related investment, it's more on leasing some space and putting some people and rental equipment there. So the investments are not significant.
Yes. With respect to our wholly owned subsidiary, EMTAC Laboratories, on report says -- it has reported a turnover of INR 56 crores, and we have been talking about the subsidiary in the past 3 years. So just want to get a view on this [ annual report you have published ]?
Yes. EMTAC is doing well. We wanted to first bring the company to a stable state in terms of its customer base and which it enjoys as of now. We haven't really pressed the company much in terms of revenues by infusing a lot of capital there. So that we will do now, gradually, I think we will start significantly in this year and then ramp up. Because so far, when we took over the company, we took over with some minimum assets, and we have been trying to ramp up the sale with the same assets. Now we have a little more grip on the operations and the market and stronger relationships within the market. So we will be investing there and also pushing that organization for higher revenues.
So that INR 50 crores, INR 10 crores will be NPT and [ stage fund ] CapEx investment for EMIC and the acquisition cost for EMTAC also, [indiscernible] mainly not be ramped up as per our expectation?
EMTAC and EMC are both new businesses for us and we think that they will take a few years to mature. The market is just building around us. And it will take a few years. So whenever Vimta has invested, it has invested with the foresight, it has been ahead of the curve. So we are going ahead of others, in trying to establish our leadership position before a lot of competition enters the market. And that's our strategy even for EMI/EMC. So we got to have some patience with the return here, but we think this is -- this can easily be scaled up to another INR 100 crores service of our -- just like food and pharma.
Yes. In annual report, which I have seen, there is an amount of one we are receiving from customers, responding what is [ the nature ] of launches for pharma projects or any other non-pharma?
You want to take that, Narahari?
Sorry, your question is not clear. Can you please report for me?
In our annual report, there are some amount of advances we are receiving from customers to the tune of INR 4 crores. Just wanted to understand what is the issue there? Are these advances and are these related to pharma projects or non-pharma?
So in few of the pharma projects we work on advanced basis. So the advances received are largely pertaining to pharma. And this is part of our cash generation during the quarter, which is part of the operating cash flow, which we'll be investing, whatever the cash accruals as mentioned earlier. So we'll be using it to fund our project CapEx. And if there is any surplus leftover, then we'll be looking in other CapEx.
And another question is regarding the pricing for pharma projects. [Technical Difficulty] projects are [ creative ] services [Technical Difficulty] time taken on those projects.
So the pricing is not fixed for us. I mean it is very subjective. The pricing differs -- the model differs for each project for us.
Regarding pharma, which has been in hyper growth shape in the past few years. We have done this major CapEx prior for 2018. Just wanted to know, is there any intention of setting up any food labs, with the scaling of this business?
We don't intend to set up any more food labs, at least not in this year.
The next question is from the line of Omkar Kamtekar from Bonanza Portfolio.
Yes. Okay. A small update with respect to the capacity utilization, can you give us a ballpark figure of the overall capacity utilization, blended level?
I won't be able to give a specific answer on that, honestly.
And can you just give us a small leverage of the China issue, that you had mentioned in the opening remarks. With respect to specifically the food and agricultural sources, because even a few of the fertilizer companies who have [Technical Difficulty] in the quarter, have had some impact of the dumping from the China products in the agriculture business. So with respect to that, can you please give some understanding of how China can create an issue in that specific area?
Our export has remained quite stable. Exports have remained quite stable, and they are stable I'm assuming because of a stable demand from outside our country. So what -- our fee is the testing fee. So it depends on what is going out of the country in terms of the quantity of exports. So our fees won't get impacted. The demand for the export remains stable.
Okay. Okay. And finally, with respect to the CapEx. So generally what I have seen that, approximately -- just correct me if I am wrong, it would take approximately 3 to 4 years for the entire CapEx of the huge -- on the new plants to mature, and we're looking at approximately at a fixed asset turnover of -- in the range of 1.7 to 2x. So say, when the entire -- when the project becomes completely online and is working at full capacity, the new CapEx is slated to somewhere -- would generate its own INR 180 crores, and the overall total revenue, say, 3 years, 4 years timeline might exceed INR 600 crores to INR 700 crores. Would that be a fair assumption. Including on top of the...
Mathematically, your numbers seem to be good, but we have to actually implement our strategies and see how that goes. Once we touch our INR 500 crores, our next step will be INR 1,000 crores. So we will be stepping up our efforts.
Okay. And finally, on the margin side, the margin, the margins that you had said that -- pretty difficult, a 200 basis point increase in the margin over the next few years. So that would be a best case scenario or a base case scenario?
I think given what we see now, that could be a possible case scenario with high [indiscernible].
I would like to clarify one thing here. So our CapEx to sales ratio is typically in the revenue of 1 to 1.1, because you mentioned 1.7 to 1.8, which is on a higher side. Just want to correct that.
Sorry, I was looking at some -- the [ 6% net block ]. So your net block currently is INR 168 crores. So on that, if I take -- so on a broad level...
You might be computing the same on the CapEx additions as well, that's the reason.
Yes. 1 is to 1.1 on a gross level, that makes more sense. I got the gist.
The next question is from the line of Aman from Aman Investments.
[indiscernible] just a quick question. And last, finally, I will make a request. I just wanted to understand, do you see the [indiscernible] segment also, like what we will be analyzing, we will be having certain changes to this analyzed stations, and is data [Technical Difficulty]? Is it softer? Are we feeling that we [indiscernible]? It is in the medicine sector or is it in [indiscernible] or are you planning to take on the other sectors? Or are you going to be a research organization for other companies to do that test?
The beginning part of your question was not audible to me.
[Technical Difficulty] quick questions and kindly I request you to [indiscernible]. I just wanted to understand the patient [indiscernible], as you pointed out in last conference call, the development of new patients was, [indiscernible] patients taking surveys, taking other details and just using the data on certain things. So just wanted to understand, what is the position of that development?
I don't clearly understand, maybe I am not able to correlate what you're asking?
[Technical Difficulty] So next, I just wanted to understand our -- past in the conference call you mentioned one of the competitors that [Technical Difficulty]. Do you have any plans, any projections of possibility of it to be our vertical as well?
As of now, no.
As of now, no. Okay, ma'am. Ma'am, you also mentioned we are doubling the capacity. Do you see any -- or have you got any letter of interest or long-term contracts? Just would these figures be sustainable in the future?
We don't need anything like that. We have never depended on those things so far.
And in Pharma, are they depending on certain few countries or is it diversified into government and private sector?
It's mostly private sector in pharma.
Mostly it's private sector.
There is no government sector.
And are we planning to bring governments on the central stage?
No, no.
Okay. I just wanted to understand the profits which we have planned for this year? Because there is a huge debate going around what will be the cap, when we are done on the building [indiscernible]. Was the land has been purchased for developing the capacity, or it's going to be [Technical Difficulty]?
It shouldn't be existing land that we have the facility.
Existing land. And the building will be constructed for INR 30-odd crores on that?
INR 60 crores.
Okay. INR 60 crores will be constructed and there will be doubling of capacity. Now also, just one request came about, if possible, [indiscernible] for the time? And secondly, with the management for their exclusive judgment, because can we have an open forum for investors, which we are -- at least something where investors can actually come physically and see the complexities and also visionaries, actually understand the business model, understand the opportunity which Vimta has, because you rightly pointed out last investor call, between [ Bangladesh and all ], Vimta is building its brand, which is more important nowadays, as clients has the [indiscernible]. So that we will get to know the legacy which SP sir has also built. Can we consider that as a request from all the investors? At least you can have an open forum, where 1 or 2 days investors can physically come and the management will also be willingly participating in the investor discussions.
I'll actually make it better than that for you. You can come any time.
Ladies and gentlemen, that will be our last question for today. I now hand the conference back to the management for their closing remarks. Thank you, and over to you.
Thank you all for participating in the call today. I appreciate all the good questions that you've had. I also wish to place on record my thanks to Systematix and Vishal to you and also our partner, [ VNI ]. Thank you.
Thank you very much. Ladies and gentlemen, on behalf of Systematix Institutional Equities, that concludes today's call. Thank you all for joining us, and you may now disconnect your lines. Thank you.