SRL Diagnostics earns about 3 percent of its revenue from overseas operations and the company aims to increase it to 8-10 percent in the next five years.
“We recently opened a large laboratory in Congo and have the board mandate to expand in the Gulf region. We have a laboratory in Dubai and in the next six months we will be setting up two laborataries in Abu Dhabi and Sharjah,” said Sanjeev Vashishta, CEO of SRL Diagnostics.
Currently the company has five laborataries in Dubai, Sri Lanka, Nepal and Congo and will add another five overseas labs in next six months.According to Vashishta, the company will use internal accruals for expansion and has no fund raising plans at present.
“Each year we are investing about Rs 50 crore in capital expenditure. We will be generating about Rs 150-160 crore in cash from operations this year. Next year the cash generation will be more. We are a zero debt company and will use internal accruals for expansion,” he said.
Within India the group runs 738 lab units and has over 7,450 collection centres. In FY16, its standalone revenue grew by 8 percent to Rs 898 crore, while its earning before interest tax depreciation and amortisation increased by 25 percent at Rs 182 crore.
Africa has emerged as a big focus area for SRL Diagnostics with experts saying labs with international accreditation and consistent internal quality controls are few in the region.
Tests offered at these units are limited and samples for certain high-end and low volume tests are sent to Europe or South Africa. This is because sending of samples abroad is cheaper than for than importing equipment and kits required for these tests.
“We have opened collection centres in Kenya and Nigeria and are looking to set up labs in other countries. We are looking at Tanzania and Mozambique,” Vashishta said.
According to him, SRL Diagnostics offers both expertise and low costs that can attract business currently dominated by European and South African labs.
SRL Diagnostics’s peers like Metropolis Healthcare too are expanding presence in foreign markets.“We have ten labs and twenty collection centres in Kenya, Ghana and Uganda. We will continue to expand in emerging markets of South Asia, Middle East and Africa,” said Ameera Shah, Managing Director of Metropolis Healthcare.
SRL Diagnostics expansion plans follow the Fortis group plans to consolidate its hospital and diagnostic businesses into separate listed entities.
In August the promoters approved a scheme to demerge and transfer the diagnostic business from Fortis Healthcare to another listed firm Fortis Malar.