Dr Lal PathLabs' Kolkata labs will start operation by the second half of next year and company’s central lab will come up by September 2017.
Speaking to CNBC-TV18, the company CEO Om Manchanda said that Dr Lal is likely to maintain a growth of 10 percent for next financial year. The company was impacted by demonetisation this quarter, he said.
The company posted 10 percent year-on-year increase in Q3 revenue to Rs 207.50 crore, while profit was down at Rs 31 crore from Rs 60.80 crore in year-ago period.
Below is the verbatim transcript of Om Manchanda’s interview to Latha Venkatesh & Anuj Singhal on CNBC-TV18.
Latha: If you can take us to -- first the margin picture, why the reduction?
A: Normally, a third quarter is a weaker quarter for us and we always see a dip in margins. So, it is not that our cost structure goes up, but we see dip in our sales volumes and sales value that is what we experienced. But if you compare margins of this quarter vis-à-vis last year we are same exactly. So, there is no dilution from year-on-year basis.
Latha: It is not a structural competition from unorganised players that will continue to show in later quarters?
A: No, that is not what it is reflection of.
Anuj: Your profit this quarter down quite a bit year-on-year and quarter-on-quarter. Even if it is seasonal year-on-year should not have had that kind of impact, so what went wrong as far as net a profit is concerned?
A: Net profit if you notice in last year’s numbers there is one time Rs 44 crore reversal that we had taken on account of ESOP of charge, so that actually gave us very high profit last year same quarter. That is why in relation to that profit decline is much more. It is difficult for me to do at a profit after tax (PAT) level but if I do profit before tax (PBT) without reversal then the like-to-like PBT has grown at about 17.4 percent.
Latha: What should we take as normalised revenue growth? Will you maintain 10 percent for the year next year?
A: Yes, obviously, because this quarter we are adversely impacted by demonetisation, so this 10 percent growth is certainly not a reflection of our underlying growth. If you notice our first half we grew at about 20 percent, but obviously that 20 percent had factor of some Chikungunya and Dengue. But our underlying growth is about 17-18 percent. So, we hope to come back to that normal growth which we were experiencing earlier. However, this quarter we got impacted by demonetisation, so gradual recovery is insight. Let us see how this fourth quarter turns out.
Latha: Any expansion plans, should we see revenue growth much better in the year because of expansions?
A: That we should experience probably in the second half of next year because by then our Kolkata lab should be in operation. We are hoping our Central lab to come up by September of 2017, so we should experience some surge post that in second half of next financial year.
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