Vimta Labs Limited (524394) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Vimta Labs Limited Q4 FY '25 Earnings Conference Call hosted by Systematix Group. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Manchanda from Systematix Group. Thank you, and over to you, sir.

Thank you, Navya. Good evening, everyone. On behalf of Systematix Institutional Equities, I welcome you to the Q4 FY '25 Earnings Call of Vimta Labs. We thank the Vimta Labs management for giving us an opportunity to host the call. We have with us the senior management of the company represented by Ms. Harita Vasireddi, Managing Director; Mr. Satya Sreenivas Neerukonda, Executive Director; Mr. Siva Rama Krishna, Chief Financial Officer; and Ms. Sujani Vasireddi, Company Secretary. I'll now hand over the call to Advait Bhadekar from E&Y for the cautionary statement.

Thank you, Vishal sir. Good evening, and a warm welcome, everyone, to Q4 and FY '25 Earnings Call of Vimta Labs Limited. Please note, investor presentation and the financial results are available on the company website and the stock exchanges. Also, anything said on this call, which reflects our outlook for the future or which could be construed as a forward-looking statement must be reviewed in conjunction with the risks that the company faces. The conference call is being recorded and the transcript along with the audio of the same will be made available on the website of the company as well as on the exchanges. Please also note that the audio of the conference call is the copyright material of Vimta Labs Limited and cannot be copied, rebroadcasted or attributed in press or media without any specific and written consent of the company. Now I would request Ms. Harita Vasireddi, Managing Director of Vimta Labs Limited to provide you with the update for the quarter and year-ended 31st March 2025. Thank you, and over to you, ma'am.

Thank you, Advait. Good evening, everyone. Thank you all for joining our Q4 and FY 2025 earnings call today. The financial year 2025 went well for us as the business saw good growth during the year despite the market uncertainties. In financial year 2025, the global economy showed signs of recovery despite geopolitical tensions and tight monetary conditions, both in the U.S. and key Asian markets stabilizing. India's economy remains resilient, driven by robust domestic demand, strong manufacturing output and government-led infrastructure spending. GDP growth forward around 7%, supported by easing inflation and improving rural consumptions. The health care sector saw increased investment, reflecting growing focus on preventive care and research. The global testing inspections and certification market experienced steady growth, continuing to be fueled by regulatory standards, the globalization of supply chains and the heightened focus on product quality and safety. Asia Pacific, particularly India, played a key role in this momentum. Rapid industrialization, infrastructure development and the expansion of sectors such as pharmaceuticals, automotive and medical devices contributed significantly. Technological advances also shaped the industry with increased adoption of digital tools such as AI, IoT and blockchain, enhancing accuracy and efficiency in testing and certification processes. These innovations are enabling service providers to deliver faster, more reliable results, reinforcing customer trust and regulatory alignment. The sector remains resilient and well positioned for sustained growth in the evolving global quality assurance landscape. Before moving on to the quarter and yearly update, I'm delighted to share that Vimta has embarked on an exciting new chapter with foray into biologics contract research and development services. This strategic move is a significant milestone in our growth journey and further strengthens our commitment to supporting the evolving needs of the biopharmaceutical sector. Our new service line will focus on the development of novel biologic entities, biosimilars and peptide-based therapeutics, leveraging both microbial and mammalian platforms. We are building comprehensive capabilities covering clone development, process development, biosimilarity assessment and preclinical scale up. Infrastructure development will be initiated in this quarter with equipment procurement and qualifications targeted for completion by Q3 of FY 2026. We anticipate revenue generation to begin from Q1 of FY '27. With this initiative, Vimta is positioning itself at the forefront of biologics innovation, enhancing our value proposition as an integrated high-quality R&D partner. Now coming to the quarter and yearly update. Vimta Labs has witnessed substantial year-on-year growth of 19.1% with revenue at INR 3,482 million. This was primarily driven by the pharmaceutical services. We are experiencing good traction across all the services we provide, and we would like to highlight that our new life sciences facility is commercialized. We had successful DCP regulatory audit by the Ministry of Health of the Republic of Kazakhstan and cGMP audit by EMA, European Medicines Agency for human health products. Coming to the food testing services, overall performance has been flat, but the momentum is being seen now compared to the first half of FY '25. Recently, the Food division was concurred with Outstanding Laboratory Performance Award of 2024 by CII for the second consecutive year, showcasing the division's consistent excellence in quality, technical competency and customer-focused service delivery. The electrical and electronics testing services experienced growth, and I'm happy that we are coming up with the second chamber to double the capacity. On the environmental testing services, we are currently focusing on the post-project monitoring segment and have been able to grow this segment well during FY '25. Looking ahead, we remain optimistic about the performance across all our service lines. Before moving ahead with the financial highlights, I would like to take a moment to introduce a new addition to the Vimta family, Mr. Siva Rama Krishna Kambhampati, who has joined us as our new CFO and will be based at our registered office. He is a seasoned finance professional with strong academic foundation. He has over 16 years of experience in engineering and pharmaceutical industries. And in his new role, Mr. Siva will play a pivotal role in driving our growth strategy. With this, I would like to hand over the call to Mr. Siva Kambhampati to discuss the financials. Over to you.

Thank you, Ms. Harita. A very good afternoon to all, and thank you for joining us on our Q4 and FY '25 earnings conference call. I would like to walk you through the financial performance for the quarter and year-ended 31st March 2025, after which we can open the floor for question-answers. Before I start discussing the financials, I'd like to highlight that the previous year figures for P&L items have been regrouped to ensure compatibility with the current periods, basis the announcement of [Technical Difficulty] Diagnotics and Technological Services business on 30th August 2024. Now I'll start with the financial highlights for the quarter. The total income for Q4 FY '25 stood INR 961 million as INR 731 million in Q4 '24, up by 31.4% year-on-year. EBITDA stood INR 347 million in Q3 FY '25 as compared to INR 263 million in FY '24, up 31.9% year-on-year. EBITDA margin for the quarter stood at 36.1%. Profit after tax in Q4 FY '25 stood at INR 183 million as compared to INR 140 million in Q4 FY '24, a growth of 31.2% year-on-year. PAT margins for the quarter stood at 19.1%. Moving on to the full year. Revenue from operations for FY '25 today is INR 3,482 million as compared to Rs. 2,923 million in FY '24, up by 19.1% year-on-year. EBITDA stood at INR 1,262 million in FY '25 as compared to INR 978 million in FY '24, a growth of 29.1% year-on-year, translating into EBITDA margins of 36.2%. Profit after tax in FY '25 stood at INR 668 million as compared to INR 488 million in FY '24, a growth of 36.8% year-on-year, translating into steady PAT margins of 19.2%. On the balance sheet side, we continue to have net debt free balance sheet with cash and cash equivalents including other bank deposits of INR 329 million. Our total debt bank stands at INR 85 million as of 31st March 2025, with a debt-to-equity ratio of 0.02x. CapEx for the year stood at INR 791 million. CapEx guidance for FY '26 will be around INR 900 million. With that, we can now open the floor for Q&A.

[Operator Instructions] The first question is from the line of Ajay Surya from Niveshaay.

My question is if I look at our overall CapEx, so previously, there was a quarter delay in our new CapEx. And also in past for the food testing division, there was some revenue which went away because of shifting of the food division in Nashik. So I wanted to know for the current quarter, if there was such any internal or external factor which impacted our performance. Sir, my broader question on the same is because our potential post -- our complete CapEx is INR 600 crores to INR 700 crores and also we aspire to reach INR 500 crores mark by 2025, '26. So sir, my question is like when do we expect the CapEx which has recently completed to stabilize? And when do we anticipate to achieve the run rate of like maybe INR 120 crores, INR 125-odd crores quarterly run rate?

We are expecting to achieve a run rate of INR 125 crores per quarter by end of this financial year. And the CapEx that we put in during last year was to build additional capacity for our life sciences facility. So that facility can support growth for at least the next 5, 6 years.

And there was no such internal or external factor for the current quarter, which impacted maybe our revenue? Like I wanted to know like how fast can that ramp-up can come in because of the CapEx?

CapEx is provided for -- see our capacities are 3 dimensional. One is the laboratory space, the other one is equipment and third one is manpower. So the CapEx that we spent in building new facilities, that is with a long-term view to support our long-term growth prospects. And the return will come over a period of these many years. And nothing in the Q4 has really impacted other than maybe some departments where shifting into the new facility, but we have done it very consciously slowly so as to have minimal impact on revenues. So nothing significant.

My next question is, so now we have decided to expand into the biologics and peptide CDMO. And sir, if you can highlight more on the opportunity and what type of services will we be offering? And is it different from the existing services of analytical or preclinical, which we offer? If you can highlight more on what type of services? And will the margin profile be similar or because even the CDMO peptide is a high-margin business for our company. So will our margin profile be on similar higher numbers or if you can guide us through?

On the margins, allow me to comment on them specifically in the upcoming quarter. I would just like to really brief share what the services will be. So these are contract research and development services for biologics, wherein we will be offering turnkey solutions for product development, right from clone development up to development and optimization of upstream, downstream formulation processes. We can also provide stand-alone services such as biosimilar assessment and then qualification of characterization methods, et cetera, et cetera. So on a high level, we'll be having capabilities to work on novel biologics, biosimilars and peptides. So these are the services.

For the CapEx guidance this year of INR 90 crores, INR 50 crores will be on the biologic CDMO. Is my understanding correct?

No, that INR 90 crores is excluding this new investment. Here, we'll be investing about INR 40 crores in 2 years. First year, we may spend around INR 25 crores and the next year around INR 15-odd crores.

Okay. And one more question. On the previous con call, we expected a new chamber for the electronics testing division to come by maybe Q4 end or Q1 beginning. So wanted to know the update on the same.

Yes, it is right now under installation. We will finish its qualification before end of this quarter.

[Operator Instructions] Next question is from the line of Vignesh Iyer from Sequent Investments.

So my first question is if I heard it right, the earlier participant had asked a question, you had said we'll reach INR 125 crores run rate by end of financial year, right?

Yes.

So as I was going through your PPT Slide #31 and the key growth drivers, where you aspire to reach INR 500 crores revenue by end of FY '26, that itself is a INR 125 crore run rate starting from, I don't know, on an average from Q1. So I mean reaching that INR 125 crores by end of financial year, is it more of a conservative thing? Or how should we understand it?

So 2 quarters ago, I had made a correction to that information saying that we are hiring diagnostics business. And when we hit this target of INR 500 crores, we were expecting diagnostics business to be one of the prime drivers towards reaching these numbers. But now since we don't have that business unit, we are still going to step up and try and hit that INR 500 crores number as a run rate in Q4 of this year. So that's the correction that I had given almost about 2 quarters ago.

Okay. More like a Q4 exit revenue is something what we arriving?

Yes.

Yes, because the PPT is not been removed. So I was confused.

Thank you for finding that out. We'll update it.

Also, I mean, on this the CapEx that we have planned on the contract -- biologic contract research. So this is done in an existing land parcel we have or is it a new land parcel that we are seeing for expanding into or foraying into this new business?

It is within the existing facility. Nothing new will be built specifically for this. We would have to renovate a little space, which we will now initiate in this quarter.

Next question is from the line of Rahil Shah from Crown Capital.

So my question was on the margins. You've done really well in financial year '25 as compared to previous years. So firstly, what led to this increment in margins? And what can we expect going ahead? If you can provide an outlook on a quarterly basis, that would be helpful, otherwise for the full year FY '26.

Last quarter saw even slightly better margin, and I answered this question. The margins can be expected to be around what it is right now, plus or minus 2%. Our endeavor will be to maintain and further better it, but there is a possibility that it could be plus/minus 2% this current number. And what has led to the increment of margins is, one, our diagnostics business was not doing very well and it was dragging -- it was having a dragging effect on our margins, which is now removed. And also, we have improved our operational efficiencies in our other services as well. So multiple factors are at play here.

Okay. And with regards to growth in the business, which particular vertical or services you're offering is going to be one of the key drivers ahead? And if you can -- like you said, INR 125 crores per quarter the run rate you wish to achieve by end of this financial year. But overall, can you guide a certain percentage growth we're expecting?

So broadly, as I've shared already, 70% of our business comes from pharma now and about 20% from food. So both put together, they are almost 90% of our business. And these 2 will drive our growth during the year.

Would you like to give a certain percentage of growth expecting in FY '26?

We don't normally give a growth outlook like that.

Okay. But it's definitely going to be much better than the previous year that passed.

I think this year, we gave a very good growth rate, and I hope to maintain the same growth rate at least.

Next question is from the line of Ankit Gupta from Bamboo Capital.

Congrats for a good set of numbers. Ma'am just wanted to check on the CapEx that we are doing of INR 90 crores for this -- for next financial year. So we have just completed the expansion and a new building at our existing facility, and we are yet to fully not even reach 40%, 50% capacity utilization. So can you talk about the rationale for doing this INR 90 crores CapEx this year? And how will this expand our capacity? And if you can highlight in which areas will we be deploying the INR 90 crores CapEx?

Sure. As I had already mentioned our capacity is 3 dimensional, one is the laboratory space, one is the equipment and the one is manpower. Now what we have created this previous year's CapEx is additional laboratory space. Now to propel our growth, we would continue to be investing in adding more equipment and also adding people. So CapEx for purchasing equipment is a routine activity of the company. And this year, again, we'll be targeting a good growth, we will have to expand on CapEx as well.

Sure. Okay. And on the biologics side, the CapEx that we have announced for INR 50 crores, can you talk about is this just an extension of the services that we are providing on the small molecule side that we are expanding into biologics or we'll also be doing something different that we don't do on the small molecule side.

Ankit, can you please repeat, your voice was very weird.

So I was asking about -- we are doing INR 50 crore CapEx for the biologics and the peptide side. So is this the extension of the services that we are providing for small molecules or we'll also be doing some additional services? And if you can also talk about like this will be largely catering to the generic side or will be targeting innovators also?

We will have capabilities to support both innovators and generics. But given the landscape, especially the domestic landscape, I think we'll be targeting mostly the biosimilar market in terms of business development initially. And service-wise this is the backward integration of the services that we already have, you may know that we already provide biopharma services, analytical biopharma services. We provide preclinical services. We also provide clinical services. So this is a backward integration where we now work with our customer partners to help them in their formulation development also and can help them take it through from formulation development up to preclinical and even clinical research.

Next question is from the line of Kiran from [ Tabletree Capital ].

Many congratulations on a 20% growth on a very difficult year. I think it's a commitment that you are [Technical Difficulty]. Ma'am a couple of questions, a lot of other pharma companies are getting or are putting up dedicated CapEx for specific clients, U.S. clients and other clients as well. So are we putting up any analytic services or any CRO services, cGMO services specifically for any foreign client or this is just -- in that CapEx is for normal growth across a bunch of customers, I mean, dedicated CapEx, so it's normal CapEx?

We have been having dedicated customer-specific contract labs for the last 20 years and as part of that service, we continue to invest in our customer-specific contract labs. So we have investments that we'll be doing this year. We have done it last year. So I would say this is a routine part of business.

Got it. Okay. The second question is on the CRO front, a lot of MNCs and a lot of Indian companies are calling for headwinds because U.S. borrower funding has kind of slowed down. Are we seeing -- I mean, I know we have a lot of scope to grow. But in terms of how we see the landscape for our company, do we see any headwinds from a CRO perspective?

We have seen headwinds in this sector, but we have been able to counter them well. There have also been price pressures in the market. But still we have been able to build efficiencies and we have been able to penetrate more into the market, get in touch with more newer clients. So these efforts are going on well. So net, we are able to do better despite the headwinds.

One last question from my side. I made a percentage, rough percentage, not exact percentage. How much of our turnover coming from clinical trial for testing, rough percent, again, not looking for exact numbers?

We don't share such kind of percentage breakup.

The only reason why we are asking is there might be some regulation and so on so forth that's why we are just a little curious, otherwise we will not.

Last year, we have done just one clinical trial. It was our maiden year, and we have just done one.

Next question is from the line of Kaushal Sharma from Equinox Capital Ventures Private Limited.

So my question is on your CapEx side that you said that our guidance on CapEx is around INR 90 crores for financial '26, and full year CapEx guidance around INR 40 crores, so out of which INR 25 crores for financial year '26. So the INR 90 crores that you were talking around for financial '26, is it included INR 25 crores for biological?

Sorry, can you please repeat? I think we got offline for a little while there. Can you repeat your question form the beginning?

So my question is on your CapEx guidance that you said that our guidance for the financial '26 is around INR 90 crores. And we have the separate guidance for biological segment around INR 25 crores for financial '26. So this INR 90 crore figure include this INR 25 crores?

No, I've clarified already, the INR 25 crores is not part of this INR 90 crores. It is over and above.

Okay. And my question is on your laboratory facility that earlier call you said that new life science facility in Hyderabad will be commercialized from Q3. So what is the status of this laboratory?

We have commercialized this new facility. Now 70% is already capitalized and remainder will be capitalized in this quarter. One division has already moved in and the second division is in the process of moving in and doing their qualification, which will be completed in this quarter.

And there is additional capacities as well like EMI/EMC chamber for electronic testing that would be installed by Q4 or early next year. So what is the status of this?

The new chamber is under installation right now. We will complete its qualification during this quarter.

Okay. And what is our asset turn in our business so that we can understand our revenues?

Sir, can you please repeat?

Asset turnover ratio.

Asset turnover ratio?

Yes.

For us, we look at a 1:1 return when we are investing in CapEx. And more or less, our investments have yielded this average.

1:1 return. And I have seen your receivable days as well, seeing stretch over the period. So what is the reason and what is the normalized receivable days in our business?

Your voice is very muffled, sorry.

So ma'am I was talking about your receivable days it's been stretch out. So what is the normal bus? What is the normal receivable days in our business?

Our DSO is currently around 110 days. So this is what it is. Over the years, the DSOs have been increasing, but that's been the trend of the industry.

Okay. So in industry, the receivable days is around 100 to 110 days. Is it right?

Yes. See, our various sectors have various DSOs, but average DSO for the organization stands around 110 days right now.

Next question is from the line of Kevin Daftary from Siddhant Partners.

So firstly, congratulations on the good set of numbers. And I just have 2 questions. First, out of this revenue that we have, I think 70% from pharma and probably 20% food. Can you help me understanding what percentage of this would be from, say, U.S.? And second question, with respect to some headwinds that you mentioned, you have been able to sort of minimize the impact. But do we see any headwind in terms of our business, which could impact directly maybe in next 1 or 2 years?

Just to answer your first question, overall, our export revenue has been around 36%, but most of our exports is through our pharma services. And coming to headwinds, very difficult to say. I think the whole world right now is going through some uncertainties. We will have to wait and see maybe we'll get a better idea in the next quarter or so.

Sure, sure. Just can you elaborate on this first question, like 36% is export. I didn't understand when you said it is through...

So overall, at the company level, 36% of our revenues come from overseas. And I was just trying to clarify that the export revenues are mostly through our pharmaceutical services.

Okay. Pharmaceutical services. But any ballpark around what would be sort of exposure to U.S. among in this revenue?

Exposure, about 60% of these revenues are from U.S.

Next question is from the line of Dhwanil from iWealth Fund.

Congrats on a good set of numbers. Am I audible?

Yes.

Ma'am, just wanted to check on the CapEx again. Sorry to repeat this. But earlier, when we had said that we had put up close to 2 lakh additional square feet for a CapEx of INR 80 crores, right? So in that, the equipments were already included, correct? So now further we are doing more INR 90 crores.

That was only on the buildings.

Okay. So that INR 80-odd crores, INR 75-odd crores was only for the buildings.

Last year, the sum that you're talking was on the building. It was not for equipment. Now this year, we are saying we will be having additional CapEx spend. This will be mostly for equipment.

Got it. Got it. And currently, ma'am, the new unit or the new facility which we have commercialized, so that already has equipment in place, right?

No. That is just laboratory space that we have created. We will be buying in equipment as and when we need those additional capacities.

Okay. Okay. So once we buy that, post that, our revenue recognition should happen, right? For the new equipment, ma'am we won't be able to do any sales, right?

Yes, yes. Yes. That's correct. As and when we are growing, we will have to add more resources. And for us, the resources will be equipment and people.

Got it. Got it. And ma'am, just wanted to check on our overall expense. So if I'm seeing this quarter, so we did INR 94 crore, INR 95-odd crores of sales, right? And there was sequential INR 5 crores of total expense, which has increased for us. So if you could just help us understand where was this? And going ahead, how should we see this? Because I think employee cost was INR 4 crores increase in 7 quarters and your other expense also went up by INR 3 crores.

Yes. So to answer your question on employee cost, yes, there is an increase. That is for 2 reasons. One is the regular -- the increase from the previous year in terms of increasing manpower and also the increment. In addition to that, in current year, what has happened is we had to make some additional actual valuation related to GRAT fee and ESOP valuations. So this has contributed to the increased manpower costs in current quarter.

Okay. And on the other expense, employee...

Okay. So other expenses as a percentage of total revenue, so the component of other expenses is relatively lower. But then the other expenses include the travel and facility costs, so that varies depending on the requirement of incurring these expenditure in terms of travels.

And also there's a new facility under operation now, which is yet to be fully occupied and utilized. So the new facility also our operational cost will go up a little bit.

Got it. And ma'am, overall on the demand side because I think earlier also when we had spoken, so just on that, incrementally, the sales has been a little bit slower in terms of growth, right? So just on the demand side, ma'am, how are you seeing going ahead? We've got the overall guidance, but just on the demand, ma'am, if you could help us understand. And between the 2 segments, the pharma and food, how is the overall opportunity shaping up for us?

Demand side for pharma is pretty healthy, especially for the sale of activities that we do and the growth opportunities that we are looking at. Demand for now is quite healthy. So we are also optimistic about growing in this year and the coming years. Food, we saw a significant headwind in the first half of last year, and that has normalized after the first half. Q4 also tends to be typically a high quarter for food because there is seasonal business involved. But Q1 also, again, it doesn't look -- it looks much better than what we saw last year in Q1 and Q2.

Got it. And just last question, ma'am, can you give us the quarter number for pharma and food separately, what we did?

No, we don't do that.

Next question is from the line of Umesh Matkar from Sushil Financial Services.

Congratulations on a great set of results in this uncertain environment. So my question was on clinical trial front, how things are going on. We had signed first deal a few quarters back. So just wanted to get a sense on this. So are we seeing extension of it or added any clients on the clinical front?

Clinical trials, we are seeing traction in our Too early to comment on anything more than that. For now, I just want to say that the first trial that we started last year is near to completion, and we have successfully done that to the satisfaction of our customers. And we are looking forward to onboard some more trials during the year.

Next question is from the line of Viral Bhansali from Pearl Investments.

Congratulations on a good set of numbers. Most of my questions got answered. Just one last bit. Ma'am, what is the quantum, like the size of the orders, a typical size of orders of the contract -- the clinical trial, sorry, I'm clinical trial segment. What is the typical size, like just a ballpark number of each order?

Clinical trial order sizes can vary depending on the therapeutic area, depending on the protocol design, whether it is 60 patients or 400 patients. So N number of factors dictate the size. And we have seen that this could be as low as INR 30 lakhs, INR 40 lakhs to as high as tens of crores. So it's quite wide and varied.

You mean rupees, right?

Yes, yes rupees.

Okay. So I mean, can the size of these orders grow as we develop a niche for ourselves in this space?

Not necessarily. Any CP provider would be open to do all kinds of clinical trials. Sometimes if you're offering a trial to a nutraceutical customer, the trial value could be much lower when compared to a pharmaceutical customer. There is no specific bandwidth for this.

So how are we placed as compared to Veda in the same space?

We are a new entrant, I would say. We are not comparable with them yet.

But are we in the position to offer the same scale of services that Veda is currently offering?

CT, there is no scale issue as well because these are most patient trials, right? We'll be doing these trials at the hospitals. So there's no scale issue here.

Okay. So it's more about having a lot of such work done. So the experience gives you more orders, more such orders in the future. Am I right?

Yes. That is there. Yes.

Okay. So how is the clinical trial landscape looking to you like how much can we scale up? Like can we reach a revenue of, say, 10%, 20%, 30% of our total revenues from clinical trial space, considering it's a big field. It's a big space.

This is Srinivas. So when we say clinical research at Vimta, it is 2 essential parts of it. One is the healthy volunteer trials for which we have been the pioneers in the country, and we continue to do that service for the last 5 years. Our main markets are U.S., Europe and India. So there, we have 180 beds. And here in -- we are one of the top 5 players in the country doing the clinical trials for generic molecules. The PK studies or VAD studies, what you would generally call them. Coming to clinical trials, as Harita mentioned, we are a new entrant into it. It's only been 2 years. The landscape is big. It's a global requirement. Now with the growing complex products which are coming in the peptides or biologics, biosimilars, right, and complex generics, this requirement is going to grow. Again, the West is looking back at India for getting some of their multi-country trials done. So that also gives us a leverage. So we have entered into it. We have the experience. We have all the setup which is needed for it. And the good part of clinical trials is there is no capacity constraint because this is done at hospital sites. And India with the population base and the number of hospitals, all the key segments, disease segments, the patients are available in India to enroll. So it's just about reaching out and exploring more such trials. So if you look at the global reports on clinical trials, I mean, it's an essential requirement of any pharmaceutical biotech or medical device company.

This new biosimilar foray, the biologics foray that we are making, it would essentially be a part of the clinical trial segment.

No, the one we have announced today is mainly on the process and product development support for our clients in the space of biologics. Our clinical trials already is, I mean, equipped to do trials for biologics or biosimilars.

Okay. So it's a holistic thing. And clinical trials will be one segment of the entire biological testing space, biologics testing space.

Yes.

Next question is from the line of Ajay Surya from Niveshaay.

Ma'am this question is again on the CapEx. We mentioned that INR 75 crores was for building and now a majority of this INR 90 crores will be deployed into equipment. And this will also be done as and when needed. So ma'am, can you please highlight what would be the current capacity utilization of the existing equipment put in at the new facility? And also on the INR 90 crores, if you can help us on the deployment part, like how much do we plan to deploy in maybe the first half or the second half? If you can break this up, that will be really helpful.

That nitty-gritty, please excuse me, I will not go into it because it's -- I don't think very relevant. We will keep investing in CapEx or capacities as and when we need it across various BUs. So how each BU will move will depend on how revenues or pipelines are moving for us. But I just want to explain on the new facility a little bit for you. When we invested INR 75 crores, it was in building a infrastructure. We did not buy any equipment and put there. What we did is we moved some of our existing services from the legacy building into the new building, okay? So this created more space in the legacy building, which we are going to use entirely for pharmaceutical services. Earlier, it was housing -- food, it was housing electronics testing. So now what we have done is we have created a new space for food testing. A different space for electronic testing, and we have also created more space for preclinical testing. What this has done is it has opened up a few quadrants to expand our analytical services for small molecules and large molecules. And we are using these spaces to create facilities for expansion, not only for the analytical, but also we'll be now setting up the development labs in these vacated spaces. So that's how we are going to do. There is no new equipment that has been brought and kept idling anywhere. We buy equipment as and when we need additional capacities because the lead time for most of these equipment is around 1 to 2 months only.

Okay, that helps. And my next question is on the pharma analytical side, we saw almost like the top 20 pharma companies. And I would like to know like what would be our market share in this division across the whole industry? And again, if you can clarify like we also mentioned about maybe facing some headwinds. And then there was also some comment on there is healthy demand and we also aim to maintain the margins. So I'm unable to understand like the industry level situation which Vimta is currently. So if you can maybe clarify like the headwind is mainly on the pricing front or is it on the demand? And even in the demand, is it between the small molecules or the large molecules which we deal in?

Okay. Two things are happening simultaneously here. One is the market dynamics, which we are not -- where we do not have control. So there, we are seeing that companies are going slow in their pipelines. So that's one aspect. That is external, we have no control on it. There is an internal aspect where we are continuously putting our business development efforts. We are going out more into U.S., more into Europe. So when we are doing that, we are able to connect with more prospects and convert them as our customers. So both of these are happening. So that's why I said net, there has been a growth.

Okay. And ma'am on the market share, like what would be our market share on the pharma analytical side?

Very difficult to quantify. On a global scale, it's quite negligible. And India, it is difficult to get a figure on this because there is not enough research out there.

Maybe ma'am, if you can then share on the repeat customer rate for both our maybe the pharma analytical side and the preclinical side because the clinical we have just recently started. So maybe on the repeat customer rate, if you can maybe highlight?

Our repeat business is very strong. It is upwards of 90%. But again, that is a number of clients who are coming back to us year after year. It's not necessarily comparable revenues from each client. Today, somebody might spend a certain amount on our services, they would have spent another amount in the previous year. What we see is are they coming back to us repeatedly for these services or not. So in that context, our repeat business or our customer retention is upwards of 90%.

Okay. And ma'am, again, one last question. We also increased the borrowing power to INR 300 crores in this Board meeting. So this new CapEx, which may be that sums up to more than INR 120-odd crores for this year. So are we going to use any external funding for this?

No, not as of now. So the borrowing that we have increased is just as a placeholder. But the current CapEx requirement, whatever is there, that will be invested through internal accruals. And little debt for the biologics segment, INR 25 crores, probably that will be meeting by raising a small debt, but mostly through internal accruals.

Next question is from the line of [ Vilin ], who is an individual investor.

Congratulations on a good set of numbers. Just again on the revenue guidance, as you have articulated really well the overall target that the company aims. So if I understand correctly, barring something global headwinds, we are on a target to achieve INR 125 crore exit run rate in the Q4, and that would place us a better revenue growth compared to last year, obviously, to the caveat that any unforeseen global event happens. Is that the correct summary, ma'am?

That's the correct summary.

Okay. And also the last question is on the CapEx. So this INR 90 crore CapEx, that will be irrespective of the demand environment or that is a flexible number depending on the demand environment. That number may change a bit.

That number will certainly depend on our growth.

Next question is from the line of [ Rajit Vora ], who is an individual investor. Due to no response, we'll be moving to the next participant. Next question is from the line of Veer Rajesh Vadera from Niveshaay Investment Advisors.

I want -- most of my questions were asked. So I wanted to ask around competitor side in pharma, analytical and clinical and preclinical. As of now, like Veda Clinicals have lower margins. So could you comment on the competitive side?

We can't comment on competitors' lower margins. We don't have enough information to comment on that.

Okay. And pricing side and all like competitive power, I mean?

Our prices are competitive in the market. That's all I can say.

Okay. And is there any intensity in competition or there are few players like…

Yes. There's a lot of -- number of laboratories have come up in the recent past. So there is definitely going to be a continued price pressure.

Next question is from the line of [ Pratik Dheria ] who is an individual investor.

So most of my questions have been answered. So I don't have any questions.

Next question is from the line of Kiran from Tabletree Capital.

Sorry, last question, ma'am, from my side. This INR 300 crore borrowing is a very huge number. I mean we've known Vimta for about 10, 15 years. We're looking at numbers. You've never had debt of more than INR 40 crores, INR 50 crores. And obviously, we have decent cash for our CapEx. So it's not an approval for INR 100 crores or INR 50 crores or INR 150 crores. It's an approval for INR 300 crores. So are you seeing any major shift in customer buying patterns? Are you seeing any major CapEx that you're going to foresee in the next year or 2 for getting an approval on such a huge number? I mean, I could understand as a permission, INR 100 crores, but INR 300 crores is a big number for Vimta management. So I'm just wondering it's completely away from our nature. So just wanted to get clarification on that.

Just to correct, as of now, our overall borrowing increased to INR 300 crores. Earlier, it was INR 175 crores. Now there is an increase of INR 125 crores only. That makes the overall borrowing power to INR 300 crores. It is not that we have increased the borrowing of INR 300 crores now.

That is understood, sir. I was just saying, I mean, that is a significant increase. I mean it's not -- I mean, from whatever little we know about the company, it's not in the company's DNA to get such a huge borrowing approval. So that's why I'm asking why?

Yes. If you see based on our earlier discussions, the overall CapEx spend guidance for current year '25, '26 will be around INR 115 crores, including INR 25 crores of investment in biologics. So although we are not envisaging to cater to this requirement through debt, there could be a requirement of borrowing for this purpose around probably INR 30 crores to INR 50 crores. So we need to have a placeholder and the borrowing -- enough borrowing limits with us to be able to meet the requirements. We cannot go to our shareholders and request for increasing borrowing power as and when needed. So that is why we had got this increase as a placeholder. Whenever there is a requirement, accordingly, we will take the necessary approvals and invest.

Next question is from the line of Kevin Daftary from Siddhant Partners.

Just 2 questions. One, is there any plans in terms of inorganic growth that company is looking at? And my second question is, should we connect for more detail offline with the new CFO? Or is there any dedicated IR?

CFO is always available to answer any specific queries that we couldn't discuss on this call. And the first one inorganic is definitely a strategy. And it will happen when opportunities concretize for us. But as of now, it is nothing concrete is there.

Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments.

I wish to thank everyone for joining us on this call today. All of you have congratulated us. I very much appreciate the congratulations. And I want to also thank Vishal from Systematix, Advait, for being on this call. Thank you. Bye.

On behalf of Systematix Group, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.