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Vimta Labs Ltd
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Ladies and gentlemen, good day, and welcome to the Q3 FY '23 Earnings Conference Call for Vimta Labs Limited hosted by Nirmal Bang Institutional Equities Private Limited. [Operator Instructions] There will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Bhavya Sanghavi from Nirmal Bang. Thank you, and over to you, sir.
I would like to thank the management of Vimta Labs for giving us an opportunity to hold this call. Today, we have with us the senior management of the company represented by Ms. Harita Vasireddi, Managing Director; Mr. Satya Sreenivas Neerukonda, Executive Director; Mr. Narahai Naidu, Chief Financial Officer; and Ms. Sujani Vasireddi, Company Secretary. I now hand over the call to the management for opening remarks, post which we can take questions from the participants. Thank you, and over to you, ma'am.
Thank you. Good morning, everyone. Thank you for joining us on our Q3 results conference call. We are pleased to have this opportunity to update you on our business performance and answer any questions that you may have. I will share with you financial and operational highlights and updates for the quarter and also 9 months. And then our CFO, Narahai Naidu will get into a little more detail on the numbers side.
Overall, we had growth for the 9 months ended December 2022. We achieved a consolidated total income of INR 2,391.1 million. This is a growth of 15.5%. Q3 revenues are slightly lower when compared to previous quarters. This is majorly because a few projects are slided into the next quarter and hence the slight dip in revenue. We think of this as a small aberration.
For the quarter ended December 2022, we achieved consolidated total income of INR 785.1 million, which is a growth of 15.4% when compared to Q3 of previous year. The outsourcing market in year 2022 for the industry we serve, they remain very strong and particularly good growth momentum led by the pharma and food industry.
Future outlook of these markets is also very positive. Our reach into overseas market is also progressing, and we continue to have a strong order book and pipeline. On the operations side, we have successfully completed a U.S. FDA inspection of our clinical research operations. We also went through the WHO inspection of our pharma and medical operations.
In Q3, we continue to invest in newer and medical technologies and also capacity. The [ facility ] expansion project that we have undertaken at our Life Sciences facility to augment the future growth is progressing as per schedule. We continue to channelize our efforts and to achieve both short-term and long-term growth goals and remain confident on the results. Normally, we said we told our investors that we would connect with you once in 6 months, and we will make that quarterly connect in case there is a need for us to clarify a few things for you.
So that's the reason we have taken up this Q3 results. The results are slightly lower, but we are happy to address any questions and concerns that you have. With this opening remarks, I will now conclude and request Narahai to please take over.
Good morning, everyone. Thank you, Bhavya for organizing the call. Thank you all for joining us for our Q3 conference call. We are pleased to take you through the consolidated financial performance of the company's quarter 3, followed by the 9 months year ended December 2022.
Our consolidated revenue from operations from quarter 3 of FY '23 stands at INR 773.8 million as compared to INR 673.4 million compared to the same quarter last year. We get the growth of 15.2%. This is excluding the revenue from Service Concessionaire Arrangement.
Profit before tax for the quarter stands at INR 140.8 million, which is a slight decline of 9% compared to same quarter last year, majorly due to increase in G&A expenses. Overall, trend towards travel business promotion has increased during the quarter.
Increase in employee benefits expense commensurate with the increase in revenue from operations and also includes the amortization of ESOP expense of INR 9.4 million during the quarter. Moving on to 9 months ended December '22 performance. Revenue from operations for the 9 months ended December 2022 stands at INR 2,363.7 million as compared to INR 2,041.9 million in the corresponding 9 months ended FY '22.
This translates a growth of 21.9%, of course, excluding the revenue from Service Concessionaire Arrangement. EBITDA for the 9 months stands at INR 735.1 million, recording a healthy growth of 26% on a Y-o-Y basis. The depreciation and finance cost for the 9 months ended December '22 has increased, majorly due to the capitalization of our electrical and electronic testing operations during quarter 4 of the previous financial year and addition of large equipment during the current year. The company is having a positive cash balance of about INR 256 million at the end of December 2022.
The profit before tax for the 9 months ended December '22 stands at INR 484.4 million, a growth of 22.8% compared to the corresponding 9 months ended December 2022. With this brief summary, I will hand it over back to the operator, and we'll be happy to take any questions. Thank you.
We will now begin with the question-and-answer session. [Operator Instructions] The first question is from the line of Viraj Mehta from Equirus PMS.
Can you discuss segment-wise how is the traction that you are seeing? Also, if you can talk about the government projects, the tale of -- have we seen 50,000 samples, where are we in that journey? If you can talk a little bit about both of these things?
Sure. Coming to segment-wise traction. The food and pharma segments are doing very well, especially food, I think, is progressing very well for us. Electronics testing, we have had very good response from the industry on the variety of industries, that we have reached out to, have been very encouraging for us, and we are quite optimistic on growing the electronics testing division as per our plan.
Coming to Diagnostics, we lost a little bit of ground last few quarters. We have now begun to gain back a little bit of that ground, but it still remains to be a tough market. Our environment business is doing well. Year-on-year, their growth is quite satisfactory.
And yes, that covers all our business verticals. Coming to the national food laboratory, the revenues remain consistent. We were expecting the inflow of samples to grow, but the government is taking a lit bit of time to correct that for us. So we still await their action on that.
What will be our rough daily samples that we are doing at this point in GLP?
[indiscernible] That is a previous number. We are not authorized to share it by our government partners.
We have the next question from Dixit Doshi from Whitestone Financial Advisors Private Limited.
My first question is regarding the growth. So you've mentioned in the opening remarks that Q3 revenue compared to the Q2 was slightly lower, also because of some projects moving into the Q4. So how do you see considering the order book? And how do you see the growth in, let's say, FY '24?
And just a related question to that thing. Earlier, we had a target of around INR 500 crores by FY '25. And let's say, if we -- mostly, we will be around INR 300 crores to INR 320 crores by end of this year. So do you want to revise that target?
Ladies and gentlemen, the line for the management seems to have disconnected. Please stay on the line while we reconnect with the management. Ladies and gentlemen, thank you for your patience. We have the line for the management reconnected. Mr. Doshi, if you could please repeat your question.
So my first question is regarding the growth. So you did mention that Q3 there was slightly dip over Q2 in terms of revenue, also because of some slipover of the -- some contract into Q4. So considering the current order book and everything, how do you see growth going forward?
And also earlier, our guidance was around INR 500 crores top line by FY '25. This year, we may end up at around INR 300 crores to INR 320 crores. So how do you see -- do you want to revise that target? Or you still feel optimistic about reaching that target?
On INR 500 crores by 2025, we have not specifically said by FY 2025. So we want to take the spectrum between 2025 to 2026. So we won't be revising that as such, and we are confident that we will reach that target.
The projections -- our estimates for next year is that we will be able to continue the good growth rate that we have experienced in the last couple of years. So that will continue into FY 2024. If you have been following the earnings call, you may recall that I've talked about some capacity constraints. So ideally, the new capacities that we are adding now should have been added by now, but for the COVID situation that we experienced a few years ago.
So -- but for that, there is actually no change. We will be adding those extra spaces and capacities by end of 2023. And so that will further help us stay on the target. Order books are strong.
Okay. And so not holding for you any number. But considering, let's say, whatever order book or like you mentioned that we are also expanding into the export market and the newest capacity is coming. So is it fair to assume that on a medium-term basis, 15% to 18% kind of growth is still possible?
That's the number we have been having, and we are very optimistic that we'll be able to maintain those numbers.
Okay. Now in terms of diagnostic business. So obviously, the competition is high and we are not performing as per our own expectation. So how do you see it going forward? And you were earlier mentioning that we are talking with some players for outsourcing their lab setup business, lab setup also. So anything on that?
Within Diagnostic, we have made progress. We have been pursuing hospital laboratory management and also independent laboratory operations management, we've had a good success there, and we continue to pursue the strategic line to grow [indiscernible] business.
[Operator Instructions] The next question is from the line of Aman Vij from Astute Investment Management.
My first question is on these few projects which have slided in the next quarter. Could you quantify the amount?
It would be about INR 2 crores to INR 3 crores.
Okay. So then that is not substantial, right?
And still, we were expecting Q3 to be much better compared to Q2. So any other segments which grew less than from what you were expecting?
No particular segment as such, we have had a slow movement wherever we have projects, we've had slow moments like in Pharma, there was a little bit of flatness. Now we are shifting more towards large projects. So little shift towards the end of the quarter can really change the numbers there.
Similarly, in Environment, usually, Q3 is low -- but Q3 is very strong. But there, again, we have had a few projects shift. The impact was only to that extent. And yes, we were expecting a better Q3.
But again, like I said, it is a little slow because of shift of projects and also capacities. We have been continuing to add those capacities for the repeat of technologies, the inflation, qualification, all that got slightly delayed. And then we had the regulatory inspection couple of them that also slightly lowered the operation speed during those few days. So all that cumulatively had a slight impact on Q3. Nothing concerning in my opinion.
And ma'am, we have done quite well with the inspections. We have successfully done that. So going forward in Q4, do you expect the run rate to continue? Or do we think we can scale on that?
Actually on the margin side, ma'am. Because margins we were expecting that 30% kind of thing will be new base. But this quarter, it was lower after many quarters. So if you can talk about the same.
Sorry, but the voice was very blurred. I couldn't really understand the last few sentences. Can you repeat?
Yes. I was saying that Q3, we understand there were delays, there were inspections because of that, maybe on business, we couldn't fully implies our capacity. But Q4 things, are they normalizing? Are we seeing the good growth that we have continued for the last couple quarter? Than on margin side, we were experiencing that 30% kind of margin will sustain, which has sustained for the last couple of quarters. But this time, we saw a depth. So if you can talk about Q4 when things normalize or we will still -- for 1, 2 quarters, we might face some pressure on margin also?
Q4, we expect to see a step up, both on the top line. And also we expect that that will give us some [indiscernible] bottom line. Yes, but we are quite positive about Q4.
Sure. Now coming to the segment, right? So on electronic testing segment. If you can talk about what is the number of customers today and how many of these are MNC clients. And also what is the employees working in the division as of today?
The number of customers, we are slowly attacking about 100. Some small, some big. We work with large organizations, MNCs. I won't be able to take any names, but at least 10% to 15% of our clients are very large companies, both MNCs and also large organizations within India.
And what is the number of employees who are working in this division as of now?
Just for Electronics?
Yes, just testing. Electronics and Electrical testing.
The team is very small as of now. It's just 8 people.
And we are expecting it to scale this quarter or maybe next year?
Can you repeat, please?
We are expecting the same size to scale this quarter or next year as well as if you can talk about the utilization level because we were expecting to start the second shift.
We are already utilizing a part of the second shift. The numbers we will add as we need more reporting.
Sure. Coming to the food side, the acquisition was done last quarter. And I think we were expecting -- we were supposed to have this joint committee for allotment of higher sample. So has that meeting happened? And if that meeting has happened, the delay is for 1 quarter or there can be further delays for the ramping up because now we have all the acquisitions we acquired.
Yes, the meeting has happened. Unfortunately, for us, as soon as the meeting happened, the CEO has also changed that addressed [indiscernible]. So we are facing those issues there. Hopefully, there'll be a review again after another quarter, and then -- we keep pushing from our side and government takes time.
Sure, ma'am. On the Pharma side, so we did a very successful U.S. FDA approval. So if you can talk about has the -- the order book has been growing at 20% plus. So is it still growing that fast? And also what we understand in the next 1, 2 years, a lot of [indiscernible] are getting off-patent. So will this lead to a strong tailwind for all the studies, if you can talk about the same.
Coming to [indiscernible] coming off-patent. There is going to be a patent cliff around 2024 to 2025, and this is largely related to large molecules. And we see that in the way our order books are also slowly now changing. Primarily, our business has been focused on small molecules, but we also have a large molecule capability. And we see the demand for large molecule capability increasing on both the preclinical end and analytical end, and also impact actually the clinical research end.
And then the order book growth, sir, is it still that strong of 20% plus like you have highlighted in this division? Or has it slowed down a little bit because of some recession and global slowdown?
Which division, sorry, your voice is not at all clear. I'm struggling to understand.
Ma'am this will be better. So on the Pharma division, I'm talking about the order book historically last couple of quarters has grown at 20% plus kind of number -- the order book, not the actual amount. So is the growth still that strong or the recession is impacting the pharma industry anyway?
We don't see any negative impact on our order book. They remain strong.
Sure. Final question from my side. On this Electronics and Electrical testing side. When we have [ restocked ]. We have got the CAB status under the telecommunication engineering center, so will this help the telecom subsegment, the testing segment grew significantly in the next couple of quarters? And what is the current breakup? Is it mostly telecom as of now? Is it non-telecom? If you can talk about the same?
The division is still in infancy stage. Too early to break it up. Basically, our EMI/EMC capabilities span a wide range of products. Telecom is just one of them.
Okay. So -- but we were expecting to do the second level of CapEx. So will that happen in FY '24? Or do you think it will only happen in FY '25? The first CapEx, we have done INR 25 crores on -- in this division.
There will be a minor amount of CapEx that we go into it because now we are still in our learning phase here. The small meeting of our capabilities will need a certain investment year after year. It depends on what are the customer requirements, what are the products that are coming up in the R&D pipeline across various industries. So that meeting -- that CapEx investment will be continuous for us.
The next question is from the line of Ankit Gupta from Bamboo Capital.
And I just wanted to have more clarification on the guidance of INR [ 500 ] crores. So what we are now seeing is an -- we are passing to reach that kind of number by FY '26, is it like that?
Sorry, can you repeat your last sentence?
What I'm asking is the INR 500 crore revenue that we were aspiring to reach. Are we now targeting to reach that number by FY '26?
I wanted to clarify that our goal 2025, when I made that, announced that goal, I didn't specify a financial year because we wanted the flexibility to achieve it within 2025 or take the 2026 up to March. So I want to retain that flexibility. So please don't be reset over there. It's just a few quarters here and there. But we are very soon on targeting that number. Our confidence is very good on that number.
Sure, sure, sure. And anything on update on the CapEx when the new facility is expected to come on stream for us?
The new facility, we hope to finish all the infra work by sometime between October to December. As soon as that is done, we'll be moving in our implementation there qualifications, all that will take about another 3 months' time.
So by end of -- we'll certainly be ready to start operations there any time between January to March of the next year.
Sure. And will we also require some of the regulatory approvals that FDA and other regulatory authorities approval or would you be part of our existing facility?
Yes, we won't need any other approvals. It's all in the same facility. So...
Sure. Okay. Okay. And then on the JNPT Food Lab that you had, have you reached breakeven there or you are hardly making any profit or?
Mr. Gupta, the line has a disturbance. You're not very audible or clear, sir, if you could...
I'll try to go to a better reception. Is it better now?
It is slightly, but not as clear as it should be, sir.
Is it better?
Much better, sir. Please go ahead.
Sure. So I was asking about the JNPT Food Lab, ma'am. Have we reached breakeven there? Or now we are entering some manual losses because the scale-up has not happened as per our expectations?
The impact P&L will look at one. So we don't break it up and look at each one separately.
Sure, sure. But do we expect that given the kind of something issues mostly from the government side that you have faced in the current year, at least in FY '25, maybe next by Q2 of FY '24, sorry. By Q2 of FY '24 will be hopefully, all this government issue has been get resolved, and we should see a ramp-up in the lab. What is our expectations from this lab in terms of growth for next year?
I'm really hoping that we will have improvement in the number of sample volumes being allotted to and we are working or pursuing rather the government quite intently on this. And I hope some change will happen.
Fair enough. And you have highlighted that FY '24, you highlighted that food, except for JNPT, is doing pretty well for us. So if you can highlight what is happening on that side? And what is fueling our growth on the food excluding JNPT Lab?
Can you Come again?
Yes, I was asking about Food division doing well for us. Ma'am highlighted that Food is doing well for us. And if you can talk about what is fueling this growth? And how do you see growth in the segment for us over the next few years?
Food is doing very well. And in fact, the last 5, 6 years Food have seen a steady growth. Year-on-year, the growth has been good. The number of clients sale that we are working in a number of projects that we have been doing is quite satisfying for us. And we think that Food will continue this growth even into the next 4, 5 years, comfortably.
So -- and we were expecting that apart from pharma to other segments, which will drive our growth will be Food and Diagnostic. Diagnostic, we do understand the kind of challenges we are facing. But are we still hopeful of food touching this -- crossing INR 100 crores kind of revenue in FY '24 or '25?
That's definitely our goal. INR 100 crore number is definitely our goal, and I think we are progressing very well towards that goal.
Sure, sure, sure. And then just last question on the margin side. You highlighted that this quarter, we had some one-off costs and the revenue also got -- a small portion of revenue also about to FY '24. Do you expect from at least in FY '25, '24, we'll be back to 29%, 30% kind of EBITDA levels?
Ankit, so yes, as you rightly said, the quarter 3 has been an abrasion, but we expect our EBITDA margins to come back in line with quarter 1 and quarter 2 of our current financial year.
Okay. So quarter 4 also, we'll see some pressure on margins? Or will you see improvement?
No, we are not forcing any interest on margins. We are being a step-up from quarter 3.
The next question is from the line of Aman from Aman Investments.
Yes. So first all, congratulations on a sustainable results. Ma'am, I had a couple of questions. First, with respect to Crop care in our Agriculture division. As we do various markets in search and scalability, do you believe the newly [indiscernible], will it be more efficient than the traditional fertilizer bag with the government is providing subsidies for -- and will it also reduce the subsidy? And also, are we seeing samples and testing coming from manual [ urea ] as well and also can it be made commercially viable?
Our crop-share business mostly is from overseas and honestly, we have not felt any impact of the local regulations on our business from these companies.
Okay. Okay. And also our newly added divisions of electronics and investment, so recently, India is starting to be the next exporter of traditional oil industry and companies such as [indiscernible] also has come into picture because of the rising raw material prices. Do you believe that the oil industry is also coming into play like electronic price and other things? Are they coming for samples?
And also do -- and if we are coming -- are they coming from small players like SMEs and MSMEs or two large players who are providing these gadgets their machinery, technology and other testing devices to be tested in our lab?
We see the R&D flaring in the electronics industry. It's -- there's a lot of hype around it, and we do sense that energy in the industry. There's a lot of start-up ecosystem also. So our samples or rather our customers are both from the small companies and also large companies.
Okay. And so if you can just -- can be a little bit number specific, how do you see it? Are the numbers are increasing or they are sustained like previous quarters?
This is a very new business for us. The numbers are very small. So I don't want to comment on growth, I think we should wait to see how this pans out for us the first few years and then get into this conversation.
Okay. And also, are we looking into revaluing our fixed assets because most of our fixed assets have been an historical cost in more than 10 years. Are we looking to revaluing the assets line or plant in property to just strengthen our financial positions in the coming quarters?
So the replacement is an ongoing activity. So whenever we feel that there is a specific asset, which is offset we generally replace. So considering the historic trend of replacing fixed assets with the amount of depreciation that we expect to continue. This is excluding our basic project CapEx plans.
Okay. Okay. So in near term, we are just looking to maintain it at the historical cost, if I'm not wrong?
Yes.
Okay. Sir, and also, are we as mentioned by ma'am, in last investor call and also thank you for organizing this because -- after the call and this one, they have conducted to the quarterly as well. I hope this continues in the quarterly calls as well. So Ma'am, as mentioned that we have new collaborations in diagnostic sector as well, are we seeing in terms of -- to be translated in terms of revenue and profitability to be coming in coming quarters?
First, coming to the first one around calls. Our intent is to commit at least once in 6 months. If there is a need with respect to the results or anything with respect to our operations or business, then we will come for a quarterly call as well.
Coming to Diagnostics. We have been able to establish a few good partnerships. We have some [indiscernible] currently being operational. Now these are new cities for us. So we are in the process of setting up our business development and sales activity there. So it will take a little time for us to mature or actually make a good progress in these markets. So we hope that will happen in the coming quarters.
Okay. And going forward, are we looking to raise equity in terms in the markets, whether it be right issue or potentially to just in our CapEx in terms of electronics because those sectors we as an investor rather as an analyst, we feel that company can do even well because PV is coming also in a big picture, electric vehicle.
So their components also have to be tested and we are a little bit export-wise, we are equated. But with technology and CapEx size, we are not still now. So do we look forward to just raise enough sufficient fund to just match up with the demand with other [indiscernible] in testing business? And specific to automobile as well -- and specific to automobile business?
Okay. So we do have current capabilities to test electrical vehicle components. We are actually doing a few components testing already. And right now, we have one chamber to do these testing. And in the next year, as depending on the demand, we could even add another chamber.
If you can give specific which component? Is it battery or is it the resistors? Or which particular component or are we doing the whole EV vehicle as a whole? And whether it's a car or a scooter or a motor vehicle?
I wouldn't know what components they are [indiscernible] technical. But we are getting components from 2-wheelers.
2-wheelers, okay. Okay. Ma'am, as mentioned by you, this quarter we have seen a little bit of degrowth, reason mentioned was the delayed billing and others. It has been shifted to either quarter 4 or the coming financial year. So do you estimate that the revenue for the fourth quarter will be in the range of INR 90 crores to INR 120 crores. Just not to be very specific [indiscernible] assured of that numbers which I have quoted?
No, I have never made those projections.
No, you have not made. I'm just giving you a number which you can -- which you feel like the company will be able to achieve provided H2 is always better than H1.
Yes. But I won't be able to give a specific number.
Okay. Ma'am, because H1 I think each quarter, we have done roughly about INR 70 to INR 78 crores of turnover. So as H2 will always be better. So we are expecting in the line it to be INR 90 crores to INR 100 crores of quarterly turnover. So okay then -- so that's one.
And the last question, and I'll come again later. Do you feel that as we are in the part of this market research and scalability also -- have you seen -- do you see that financially viable also new plans are coming? Like have you seen any testing samples which have come -- which are totally different from the industry which we are in, but they have potential and we are planning to ensure it into -- do you feel that these type of products are coming on?
Can you be a little more specific, please?
Yes. Okay, then -- so we are into crop care and agricultural division to be specific. So do you feel that any product which is coming, which can be more in the terms of cost in manufacturing mix? And also it's more sustainable, efficient in terms of the current -- what we are getting supplied in the market? Do you feel any substitutes or alternatives are coming to the products for testing and they are commercially viable in our plant as well?
We get hundreds of products. So I don't think I'll be able to comment on that question at all.
Okay. Okay. And I just wanted to get your opinion. What do you feel as we are into contract with [indiscernible]? What do you feel about packaging sector, ma'am? Do you feel any alternative materials to like sustain more sustainable packaging apart from paper and cardboard, which you already have a plastic, which is more [ degradable ] in nature coming up? Or what do you feel about the packaging sector as a whole? Whether we are seeing a transition from totally single-use plastic to renewable plastic. What is your opinion on plastic sector, packaging sector to be specific?
We don't do a lot of plastic testing. We do a little bit of testing with respect to pharmaceutical product packaging and food product packaging. That's a very small component of our testing activity. So I won't be able to comment or answer your question.
Okay. Just on the financial side. If you can just give me what is the total loan book standing as on date of 31 December?
So can you come again? So you want to understand the outstanding business?
Yes, outstanding loan book, totally noncurrent asset, noncurrent loans to be specific.
So we are close to INR 25 crores of outstanding in our books and on December 31, 2022.
Okay. And also can you give the split of unsecured and secured loans?
Yes. So everything is secured for us. So there is no unsecured loan within the INR 25 crores. [indiscernible] INR 5 million, which is unsecured [indiscernible].
Okay. And those are from the promoter side, if I'm not wrong.
These are from the [ directors ].
Okay. From the directors. Okay. I'll just come back again for the questions.
The next question is from the line of Sunil Kothari from Unique PMS.
And really -- it's a real good divesture for having a call on a little, say, a little bit lower quarter and we wanted to clarify. It's a really great job you're doing. And my larger question is I'm -- since last 3, 4 years following you, and I heard you on your calls and you are very comfortable with your guidance and your business appraisal and all these things. Wanted to understand, during the last, say, 2, 3 years, you must have expected some segment to do maybe some numbers, some better performance. Some must have done better or some must have below your expectation. Would you like to comment on the segmental larger picture, how do you see opportunity where you feel you have challenges, where you required to overcome those challenges? That would be really great.
And thank you for that question. Other than diagnostics, we are into food and pharma, clinical research, preclinical, electronics, environment. So other than diagnostics, we are optimistic about all other services. Diagnostics has been 2 feet forward and 2 feet backward. So retaining our current position there itself is a huge challenge, and we are staying there very strong.
I believe we should have made some progress there. But we continue to push. We are not giving up our efforts in any of our service areas. So this also we will keep fine-tuning our strategies as per the competition that we see around us.
So overall, you see that whatever expectation you build and your capability you've build, more or less, other than diagnostics, things are coming as per plan. .
Yes. Diagnostics, we were hoping will take us a little bit faster towards INR 500 crores. But now that is not growing at the speed that we are expecting it to grow. But then we are able to leverage our other very mature services, so we are able to push them more.
Very logical. And then you mentioned that there is some capacity concern. And I think that was the -- that is or that was the reason since last, almost 5, 6 quarters, we are in the range of plus, minus INR 75 crores -- INR 2 or INR 3 crores, whether it's a 72 or 78 something. So capacity, I think you must be overcoming now. by when you feel that capacity will not be challenged, but you have to capture more business from the customer.
Yes. We -- in spite of having capacity constrained, we continue to remodel our existing facilities to squeeze more in the same space, and that effort has been going on for us in the last almost for 1 year. So that will continue for another 9 to 10 months because we will have our new facilities soon with us by early 2024.
So capacity-wise, coming to preclinical, that's a huge need that we see, and we will be addressing that need with the new facility. And also for analytical services, pharma analytical and even for good actually, we see a need to expand our capacity, and that also will be fulfilled with the expansion that we have taken up.
Now this expansion has been taken up with along-term vision. So it's -- at least we think the capacities of the space will be good for us at least for the next 5 years. So the growth will also have commensurate.
And regarding CapEx, if you can disclose the first 9 months capital expenditure for maintenance and capacity? And if you can say the numbers for the next year?
Next year plans, we have not yet finalized. We are in the process actually right now. So I'll have that information during the -- May conversation that we will have. This year, the number, here I'll ask CFO to share those numbers.
So for the 9 months ended December '22, we have incurred close to INR 27 crores of CapEx. Out of this, about INR 22.5 crores we invested in lab equipments.
Okay. That is called maintenance CapEx?
Please come again?
Does INR 22.5 crores related to maintenance CapEx? Or is it capacity addition CapEx?
So it's a combination of replacement and capacity additions.
Great, great. And Ma'am just last question. Recently, European has announced some big labs at Genome Valley. Do you see this is a competitive expanding scenario? Or is it because opportunity is increasing, the size is increasing of opportunity? That is the reason -- how you analyze, European this new announcement?
Hyderabad has become a very hot hub for pharma industry and also the related supporting industries. I think the attractiveness of Hyderabad especially is very strong. So that's why we see players like Europeans coming here that will definitely bring the competition closer to home, but then their services are not an exact map to ours. So there are some overlaps. And wherever there is an overlap, yes, there will be a [indiscernible] capital.
We have the next question from the line of Ranvir Singh from Nuvama Wealth.
[indiscernible]
Sorry to interrupt. The line is not very clear. You are not audible. If you could please use...
Is it okay now? I think most of questions have been answered. But a little bit on -- you mentioned the INR 2 crores, INR 3 crores kind of revenue has been deferred to fourth quarter. Assuming that even INR 2 crores, INR 3 crores would have fallen in this quarter and then also on Q-on-Q, would have been very flattish. So I think the similar question has already been asked. But specifically, I wanted to understand which segment has actually has this shortfall and which we are expecting to come back in subsequent quarter?
The major projects have been in the field of pharma and environment that have moved slightly.
Okay. Okay. And as far as -- in previous question, you mentioned competitive scenario is now getting stiffer after coming off a bigger player here. So overlap -- certainly will happen. So how do you see that further our growth would be affected? Or do you see that there will be -- still we will grow that you have been guiding?
We don't think our growth will be impacted.
Okay. Okay. Fine. And just coming back to there. That on 75 of revenue, between INR 75 crores to INR 76 crores or INR 78 crores has been for the past few quarters. Going forward, we see that now we'll come back in terms of EBITDA margin also. So whether product mix is going to change or it is just operating leverage will have a bigger operating leverage in the fourth quarter?
Product mix could change. Food business is a seasonal business. So there, there could be little change. Environmental business is also seasonal business that also puts impact. Diagnostics to certain extent, it has an off season and then it has a non-off season. There are seasonal impact across our service basket. So that impact will be there for us quarter-on-quarter.
Okay. And for FY '24 also, we are likely to retain this kind of EBITDA margin?
Yes, we will be retaining those and hopefully even better growth with the growth in top line.
Ladies and gentlemen, that was our last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, ma'am.
I wish to thank all the participants and questions that were asked. We look forward to connecting with you again after our last quarter results. Thank you, and good day. Bye-bye.
On behalf of Nirmal Bang Institutional Equities Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.