Krsnaa Diagnostics Limited (KRSNAA) Earnings Call Transcript & Summary

Ladies and gentlemen, a very warm welcome to the Q1 FY 2025 Results Conference Call of Krsnaa Diagnostics Limited. Before we begin, I would like to remind all participants that today's call may contain statements that are forward-looking statements, including but without limitation, statements relating to implementation of strategic initiatives and other statements relating to Krsnaa Diagnostics future business developments and economic performance. While these forward-looking statements indicate our assessment and future expectations concerning the development of our business, a number of risks, uncertainties and other unknown factors could cause actual developments and results to differ materially from expectations. [Operator Instructions] Please note that this conference is being recorded. I will now hand the conference over to Mr. Jainil Shah from JM Financial. Thank you, and over to you.

Good morning, everyone, and welcome to the Q1 FY '25 Results Conference Call of Krsnaa Diagnostics Limited. Joining us today on the call are Mr. Rajendra Mutha, Chairman and Whole-Time Director; Mr. Yash Mutha, Joint Managing Director; Mr. Pallavi Bhatevara, Executive Director; Mr. Mitesh Dave, Group Chief Executive Officer; Mr. Pawan Daga, Chief Financial Officer; Mr. Vivek Jain, Head, Investor Relations. I would like to now hand over the call to Mr. Yash Mutha for his opening remarks. Thank you, and over to you, Yash.

Thanks, Jainil. Good morning, everyone. Thank you for being part of our Q1 FY '25 conference call. It gives us immense pleasure to share our progress. Our vision of LET'S DO GOOD, continuously guides us to expand our reach to the underserved and unserved regions across the country can offer quality diagnostic services to the masses. Leveraging our strong foothold in the PPP space, we are scaling up our operations in the retail space as well, adopting newest technologies and accelerating our growth prospects with the agility and a future focused approach. The recent budget showcased the union government's efforts to encourage the growth of the economy through capital spending in FY 2025. Accordingly, the Government of India is making the required changes in economic policies and programs that are expected to contribute to the holistic development of every economic sector. In the allocation for 2025, the budget for the National Health Nation, [indiscernible] stands at INR 38,000 crores, a notable increase from the revised allocation of INR 33,886 crores in 2023/'24. India's health care sector has become one of the largest industries in the country, owing to factors such as population growth, economic upsurge and increased income among the middle class. The health care industry has evolved significantly in the past decade to meet the growing demand for services and products by the government as well as the citizens. With a market size of approximately USD 13 billion in FY '23 the [indiscernible] industry USD 2 billion by FY '28 with a CAGR of around [ 24% in the last ] 5 year [indiscernible] we do provide for related services and quality services market also see increased demand [indiscernible] as products continue to expand reach actively opening MRI centers in underpenetrated markets across Tier 2 and Tier 3 cities. This aim is to ensure that individuals in remote areas can benefit from advanced diagnostic services thereby ensuring access to high-quality health care beyond metropolitan areas. Adherence to the highest quality standards, certified testing reagents and employing qualified radiologists and pathologists ensures unpatterned accuracy and precision in diagnostic services. We are leveraging our presence in more than 150-plus districts to map ambitious growth plans for improving our penetration across the nation. With a focus on making a positive impact on people's lives, we aim to address the underpenetrated health care market. Our approach to adapt, innovate and extend positions at the threshold of infinite possibilities. An update on the Rajasthan tender as a company, we have fulfilled all our obligations required for the tender and are awaiting the judiciary to take the due course. We would like to ensure that Krsnaa is it on track to maintain its growth and trajectory even without the Rajasthan tender. We are present in 17 states and Krsnaa, as a company is not dependent on any single state or any single business segment or tender of the diagnostic business which makes us dependable to take on any challenges faced in the sector or in particular state without much affecting the overall business of the company. Regarding some recent developments, Dr. Prashant Deshmukh, the CEO, has decided to leave due to personal reasons. Dr. Prashant, who has served us as CEO has decided to step down with his personal reasons and respect his decision to step down and thank him for his contributions during his tenure. We remain committed to delivering value to our shareholders and stakeholders. Our strategic initiatives are designed to ensure sustainable growth and enhance shareholder value. We are confident in our leadership team and our strategic plans, and we are excited about the future and the opportunities that lie ahead. Our focus on the retail expansion, geographic penetration and technological advancements will continue to drive our growth. Some recent developments at Krsnaa. Today, Krsnaa is operationalized in 21 city health centers in the state of Maharashtra with the remaining 18 soon to be operationalized. Additionally, plans are underway to install seven more CT machines this year. An order for Maharashtra for 17 new MRIs and operation of 17 existing CT machines has already been signed and we have planned to install five MRIs by this year-end. Furthermore, a radiology contract for Tele Reporting from BARC has been secured, enabling BARC to provide around-the-clock services with superior quality and timeliness, and agreement to provide five MRIs at the 5 MRIs at the 5 locations in Madhya Pradesh has been signed, out of which two centers are expected to be operational by the year-end. The remaining would be as and when the government provides us with all the necessary infrastructure, the same. The revenue is projected to start from FY '26. In addition, the Assam project, which was established in Q3 FY '24 where we aim to set up 10 laboratories and 1,256 connection centers out of which around 400 collection centers are operational and showing a positive traction. The Odisha project established in Q2 FY '24 is also showing promising traction as well as acceptance. Over the last three months, 20 new CT scan centers and 375 pathology collection centers have been successfully established and efforts are being made to stabilize the operations to ensure that the centers start generating revenue commensurate with the expenses, showing a positive trajectory in this regard. As part of our strategy to enter into the retail space in the diagnostic industry, we have established 40 labs in leased premises. These labs are expected to increase revenues from the public-private partnership as well as generate additional revenues from the business-to-consumer as well as the business-to-business customer segments. This will allow us to leverage the existing infrastructure, which we have created beyond the duration of existing long-term PPP contracts. Furthermore, these labs will help us expand our network of collection centers, franchisees, et cetera. Additionally, to lead our retail expansion efforts Mr. Mitesh Dave, who has recently joined us as the Group's Chief Executive Officer, I would like to now hand over Mr. Mitesh the call to provide his insights on our retail strategy. Thank you.

Thank you, Mr. Yash. A very good morning to everyone, and it's my pleasure to interact with you all as the Group CEO of Krsnaa Diagnostics Limited. Let me start with a brief introduction about myself with over 30-plus years of experience in diversified business segments from FMCG to OTC to pharma, followed by diagnostic and other health care spaces. I really have witnessed the significant changes which has happened in diagnostic space in a decade -- in the past decade and also have successfully delivered results in my [ practice ] as well. My diversified experience helps me to get into and to understand more robust infrastructure that Krsnaa carries. When I looked at Krsnaa Diagnostic, a vast and state-of-art centers spanning across length and depths of India and reaching even the most remotest corner. I see an extraordinary opportunity to build a substantial retail business. This unparallel reach, uniquely positioned Krsnaa to penetrate under-served markets and deliver from acute to critical diagnostic services and where they are needed the most. The potential to leverage this expensive -- most expansive infrastructure to create a formidable retail presence was the key factor in my region to join Krsnaa. After spending over 20 years in different corporates and now a month with the Krsnaa, I'm generally impressed by the management's vision, their flexibility for the new ideas, their unraveling passion for sustainable growth. And our collective vision is to revolutionize health care accessibility across India and driving significant growth and delivering exceptional value to our investors. Together, we are poised to embark on a transformative journey that permit this remarkable financial returns and profound societal impact. India's diagnostic landscape is evolving very rapidly due to the increasing prevalence of the noncommunicable and [ complex ] diseases, driving the demand for evidence-based treatment and preventive health care solutions. Since its inception, Krsnaa Diagnostics Limited has focused on the PPP model and establish itself a trusted and affordable service provider with a strong brand presence among the masses. We have sold millions of patients positioning ourselves as a leader in diagnostic services. We are investing in efficient technological enabled network to accommodate the growing volume of samples and enhanced patient accessibility and experience. Our focus remains on prioritizing our pan-India network to meet evolving consumer preferences and expand our market share in the states where we are present. Geographical expansion, portfolio diversification and digital transformations are our strategic priorities to drive significant progress leveraging our core strength in diagnostic services, we are prioritizing network synergies and manpower to meet the growing quality -- qualitative consumer needs. We are focused on enhancing end-to-end retail capabilities from digital space to offline channel to serving patients at home, at their comfort and to capitalize on wellness space as the increasing demand for regular check ups, as people becoming more health conscious. This will help us growing regions where we are already present and have less facilities set up through the PPP contracts, diversifying into the retail will improve margins and lead to a better working capital cycle. We will leverage e-commerce to enhance our market presence and digitalize our operations efficiently. Our new user-friendly website will be launched soon to enhance our user experience. We have ambitious plans to unlock growth opportunities, make a positive impact on people's lives and contribute to the advancement of the health care industry. With that now, I would like to request or invite Mr. Pawan Daga, who is our CFO, to update you all on the current financial numbers. Over to Pawan.

Thanks you, Mr. Mitesh. Good morning, everyone. I will now present the financial highlights for the quarter ending June 2024. In the first quarter of FY '25, our total revenue from operations experienced a multiple upsurge reaching INR 170 crores, making an impressive 22% year-on-year growth. Shifting our focus to operational performance, our Q1 FY '25 EBITDA reaches to INR 44 crores, signifying a commendable 39% year-on-year growth. We maintained a healthy margin of 26%. Additionally, our net profit amounted to INR 18 crores with a corresponding margin of 11%. The PAT for Q4 FY '24 after adjusting the depreciation benefit of INR 3.97 crores due to change in accounting estimates for the entire last year which was accounted in Q4 FY '24 would have been INR 15.8 crores resulting of -- in a PAT growing by 14% in Q1 FY '25 when compared to Q4 FY '24, demonstrating a healthy growth. Taking a closer look at our balance sheet. We currently hold a gross debt of INR 170 crores, while maintaining a cash and cash equivalents worth INR 240 crore as of June 30, 2024. It is worth mentioning that our company continues to unfold our net debt free status and net worthy accomplishment. We can now open the floor for the question-and-answer session. Thank you.

[Operator Instructions] The first question is from the line of Bala Murali Krishna from Oman Investment Advisors.

So in the recent presentation, I have seen that the Odisha, I think we are going to implement from a 600 collection centers.. I think the project was already completed. How this payment, any update on that front?

So the Odisha collection center that you see in the presentation, these are the additional [ basic ] or primary health centers that we have to further set up in terms of our tender, and that is where the current expansion is going.

And any update on the Rajasthan tender?

So like we discussed on the Rajasthan tender, we have done all that is necessary as a company to fulfill our obligations even when there was appealed by the government to reform the application that was also taken by the High Court and it was decided in our favor. And currently, we are waiting for the High Court to take the next steps. But as we mentioned, Krsnaa continues to grow with or without Rajasthan and our growth momentum is as what we have been discussing.

So lastly, on the Maharashtra [indiscernible], I think this is the on that -- the assets will be on the government side. So this will be asset-light so can't expect -- so can you expect how the margins in such kind of contract, Sir?

So basically, there are two models within the Maharashtra tender. One is both on the installation of the equipment and where we will be operating the government equipment. So considering radiology as the business vertical and with this kind of compression, of course, the margins will be better and that is what we expect, which will help us continue in the growth momentum for the margins as well as the revenues in the upcoming quarters.

And in the past few order wins or tender wins, we're not mentioning the duration of the contractor. So is it possible to provide the details like Odisha and Assam and with Maharashtra tender and apllicant for contract period, You're not mentioning if it is not possible to publish could you will share that detail?

So Maharashtra is about total of the 15 years. Odisha is about 12 years and Assam is about 5 years. I'm sure the [ vacancy ] will be there, but this is the current state of the tenure of these various contracts. So it gives us a long-term visibility of revenues to come.

And Madhya Pradesh a recent one? [indiscernible].

Madhya Pradesh is about 10+2, which is about 12 years.

And any update on the pipeline tender, so are expecting something from Madhya Pradesh and some of the Southern region, so have you participated in any other new tenders or [indiscernible] pipeline tender?

So currently, it's work in progress, and we'll be hopefully able to announce the result.

The next question is from the line of Aditya Khemka from InCred PMS.

Yash, I am referring to Slide 3 of the presentation deck where you have split the EBITDA into existing centers and new centers, revenue and EBITDA split you guys have given. I have a few questions around the split. Number one, how much of our -- how many of our centers are classified under existing centers? And how many of our centers are new. And in the same debt, what is the tenure that you consider to call a center existing? And what is the tenure for a new center?

Aditya, so the specifics of these, we can provide in [ auction ]. But just to give you from a background perspective, basically, from a PPP project there are different time lines of how the projects achieved maturity. If you see most of the projects should probably in the range of 3 to 5 years will be in the mature center and between 1 to 3 years are in the new centers.

Okay understood. And secondly, I was noticing that our new center margins are improving, However, they are still only at 12% compared to mature centers at 38%. Is that a result of the fact that most of our mature centers tend to be more radiology and most of our new centers are more pathology? Or is there room for the improvement of the 12% margin to go to anywhere close to 38%?

I think you partially said correct. So the reason why some of these new centers are at lower margins, of course, having a higher [ preferably ] share of these centers. And you said that -- you've been saying earlier as well, the margin will continue to grow and which will be almost comparable to the margins that we are seeing may be slightly lower than compared to radiology, pathology has a lower margin profile but it won't be significantly lower. And as we've been maintaining and as the centers are ramping up, we see this margin profile also improving quarter-on-quarter. Also Aditya G, like last couple of years, only we have plugged in around our pathology big projects, state like Himachal, Punjab, Assam and Odisha and the BMC one. So the major shares of the pathology has been started in last couple of years.

So most of the pathology business -- in fact, all of your pathology business, therefore is under new centers, right?

Right. Correct.

And your existing centers would be how much already? Then in that case, as I understand the business's, pathology although seems to be a lower margin business tends to be a higher ROC business, correct me if I'm wrong. And the biology seems to be a lower margin lower ROC business but a higher-margin business. So could you guys provide a split of your ROCs between the existing and new, is that possible at your end?

I think that we can't [indiscernible] Yes, I said we'll provide the detail option and we'll ask Vivek, our Head of Investor Relations to share that with you.

Perfect. One last question. So on the Rajasthan thing, I understand there is a delay in procedural delays in the court decision. But for the last two, three quarters, I have been slightly confused on how the CapEx would work out if we win the Rajasthan project. Do you guys have any further clarity on what we last discussed on con call as to how the CapEx of Rajasthan would be funded? Or is that still something you guys will work out once you get the project?

No. As we [ entailed ] in the past has been -- we already have certain commitments from the OEM manufacturers in terms of vendor financing, where they are ready to provide these equipments on a paper use kind of a model. So those commitments have been valid. As we get -- once we get the final confirmation, it will help us negotiate better and then we'll be able to see. But as of now, we have these commitments for which we can immediately go and deploy these assets with very limited cash outflow from the company's results.

Sorry, I had one more question. On the B2C business, is the pricing different from our B2G business for the same plan from where we might be disposing the results of the B2C clients as well because we're using the same equipment if I understand correctly? Or is the pricing slightly different for the B2C customer versus the B2G customer?

I'll just -- Mitesh Dave probably he'll answer that question.

So considering the B2G versus the B2C or the retail strategy around the pricing, they're going to be a differentiated pricing, but it will still be in line with our overall hypothesis through which we build up this entire Krsnaa Diagnostic Limited, which would be more affordable, accessible assured regarding to the quality spaces.

And Mitesh, for you what is the end game for the B2C business. I mean we have seen the doctor largely [ metropolis ] the FRS of the world grow at a dramatic pace over the past two decades. Mitesh, now obviously, historically, doesn't have the retail mindset. They have the B2G mindset and this year here, when you look at the B2C piece, obviously, currently, the size is eligible. But as you ramp it up, as you grow it, what are the key performance indicators for you? Where is it that the company needs to focus to deliver on the B2C side?

So multiple pieces, I would like to answer very straight and simple and keeping the answer simple for now. Due to the overall state of our infrastructure that Krsnaa currently carries across the length and depths of the India. The overall quality parameters and the capor the [indiscernible] that Krsnaa enjoys and the overall reach that they have to the Tier 3, Tier 4 town, it forms of the formidable retail opportunity to cater on. It's too early to benchmarking or looking up to something, a #2 share. But yes, if I look at the overall size around the addressable market size, it is close of 40,000-plus crores in the areas where we are currently present. So that makes it a huge playground to play around and that we will be capitalized.

The next question is from the line of Lokesh Manik from Vallum Capital.

Just a couple of questions from my end. One is the breakup in the revenue from pathology and radiology for INR 170 crores, what impact numberly -- of you could share that, please.

Could you just repeat the question, please? You are not very be clear.

Yes, my question was more bookkeeping it was for breakup of revenue between radiology and pathology for this quarter?

Yes. Pawan this side. So our radiology contribution is 55% and pathology, 45%.

And any reporting would be what percentage of the overall revenue?

Tele Reporting will be in the range of 8% of overall revenue. And these numbers are keep changing quarter-on-quarter because of this seasonal impact and the project we implement and how the projects ramp up.

No, that's fair enough. But 55%, 45% is a good range should I take for this quarter -- to take for this quarter?

Yes, 55% radio 45% pathology is a good range to take this number, that's correct.

The next question is from the line of Pranay Khandelwal from Alpha Invesco.

I had a bookkeeping question. Can you give me the absolute receivable number for Q1 FY '25 and also the receivables days.

Again, slightly not able to hear you very clear.

Am I audible now?

Yes. Now you're audible.

Yes. So I wanted to know the absolute receivables number for the quarter and the receivable days.

Pawan -- this is Daga. So our receivable days for the quarter, which are in the range of 100 days and which is somewhere in the range of, in absolute terms, INR 190 crores. So we have seen a good recovery from postelection period which we have mentioned in the last quarter. So postelection, everyone -- officers are resumed to their regular workforce and now we started receiving the collection. So we have seen the significant collections happen in the July month or June month.

So on higher margin for [indiscernible] things are looking better. That was the major receivable setup, right?

Yes. So on the margin, we already received INR 38 crores to INR 40 crores by July end. And we see a further receivable will be received in a couple of weeks or maybe in a month kind of period.

So they were received in July end. So that means that by -- so that will reflect in number in the quarter 2, right? This INR 190 crores of current receivables already also includes -- the INR 190 crore number is as of Q1, right?

Yes, yes. Correct.

So 40 crores has already been received from that as well?

Yes, yes. So why it is in July because the post election results and other thing, everything stabilized by June and everything is operationalized in a regular manner. So we started traction by June end and itself, but majorly it's reflected or started reflecting to July mid kind of.

And also, can you guide on the CapEx for this year. How much has been done in quarter 1? And what are you looking at for the rest of the year?

We are planning to spend INR 170 crore for this year. So approximately INR 22 crores has already spend in the Q1. So we have lined up for other radiology projects of Maharashtra and Uttar Pradesh and some CT scan of Maharashtra which has to be deployed in this quarter. So these are the updates so far.

And are we still on track for the 30% growth guidance that you have given or other?

This is Yash. In terms of growth guidance, we are committed to achieving 25% base gross margin and as rationally to be around 30% but considering 25% as a comfortable growth that we should be able to achieve by end of this year.

So 25% in the goal, 30% is aspiration. Okay all right.

The next question is from the line of Bharat from Equirus.

So I just want to get a sense on the new infrastructure, which we are putting that -- for the retail franchise.

Bharat, sorry. So your voice is very low, Bharat.

So I was asking this -- in your opening remarks, did you mention that you will be opening a new store -- a new centers, a new laboratory for the franchise -- for the retail franchise?

No, no, no. We will not be setting up new franchisees. We will be leveraging the existing lab networks or the radiology centers we have. And for that, we will be able to increase the presence in the retail side.

And when we are saying that there will be a differential pricing for the retail. So will it be -- is there a possibility that government [indiscernible] they will look it in a different way or having 2 different sort of [ prices due ] to the trend sort of businesses? Can we bill different for the retail customer and a government customer. That's the question.

Yes. So basically, that is from a PPP tender perspective, there has been restrictions on receiving or processing private patient, in the [indiscernible] centers, we still have private patients. Considering that the retail expansion plan that we're doing, where we are integrating or leveraging the infrastructure, again, that will be for different legal entities. So for say there are no restrictions or limitation on us charging higher or differential rates, considering that there will be also a differentiated experience that the customers will get.

The next question is from the line of Saloni Bavishi from Val-Q Investment Advisory.

Am I audible.

It's a bit low. Go ahead.

My first question on the bifurcation that you have given for the revenue under -- between the new and the old centers. Could you just let me know how much percent of that is from the new and how much percent is from the old centers, like the number of centers?

I think Sonali, this question in terms of the number of centers, we'll be able to provide you offline. We don't have it at the moment with us but Pawan and Vivek will provide you the details.

And the second question is on the fees to of hospital, the line item in our quarterly results. Can you just help me with how do I deal that line item, like how can I model it and the range as to what it will be in?

Yes. So Saloni, here again on the fees hospital, as we've been saying in the past as well. This number will reduce, initially it is higher for new projects but then it keeps on reducing, currently, the level that we're seeing about 7% to 8% is what we see as stable in the percentage of expense as a -- when we compare it to the revenues. So this trend is what we expect to continue in the upcoming quarters as well.

The next question will be from the line of Lalitabh from ITI.

Congratulations on a great set of numbers. First of all, regarding your Rajasthan order that we had, I just wanted to know what is the present situation that we have in terms of -- Is there any additional provisions or any accounting treatment or any provision that requires [ to with them ]? Secondly, how do you see...

Sorry, we can't hear you clearly, if you can please keep closer to the mic.

Am I audible now?

Yes, this is better.

So congratulations on a great set of results. I just wanted to know regarding your Rajasthan order. So is there any accounting treatment or any provision that remains for us to be taken on our books going forward? And secondly there was some additional performance security measures that were required to be provided from buyers. So how do you see that? Is that a one-off kind of thing on that, that is a kind of a trend that we can expect going forward also with other states as well? And thirdly, sir, if you can just give a road map because you very helpfully shared that the margins from the new centers and the mature centers are roughly 3x of each other. So if you can just show or share next six months, what will be the split between your new and matured centers. Maybe six months or one year will be very helpful.

I think there are three questions. On the first question on the accounting treatment for Rajasthan, I think Pawan will give you -- so Pawan decides. So there is more expenditure incurred in relation to the [Foreign Language]. Hello am I audible?

Yes sir, you are. The line from the current participant seems to have disconnected. So shall we move to the next question?

Yes, please.

The next question is from the line of Anmol Das from Arihant Capital Markets Limited.

So my first question is regarding the radiology, 168 CT and MRI center, so just wanted a bookkeeping number of the total number of CT scan machines, MRI machines and the centers where both of the machines are. And I also want to request if you can give split of radiology revenue outside of CT and MRI [indiscernible].

So the split of 73, the thing. So the centers, 17 centers where CT and MRI both will be there and 39 center of PPP, which only CT will be there. Out of that, 31 will be installed and operate or 8 will be only operation. So this is the split between Maharashtra radiology centers.

No, I was talking about the 168 total radiology center that you have mentioned? So the split between that.

That we can provide you offline. Will it be okay for you?

Okay, Sir. Sure. Another thing regarding clarity. Actually, I want to understand if I haven't understood the Rajasthan [ tender ] completely, is this a part where the case is hanging because of the government asking for more bank guarantees from the company side or what is it?

Basically the government is not asking for any additional bank guarantee, whatever bank guarantees are required to be supported by the company. The company has already submitted it long back. This is currently -- since the government has signed a recall, we filed a case against them and [ contestant ] has also opened in favor to say that the government should go ahead by executing the agreements, and therefore, content petition is also been filed against the authorities. But this is currently under the judiciary problem as and when the outcome comes, we will inform everyone. Per se to address your question, there's nothing which is pending from the company that needs to be done.

And trying to understand regarding the case here. So it has been like a one year by now. So what is the time line by which the case in the High Court will be resolved? Or if that time line passes away, then this entire tender will be nulled -- nullified.

See, like everyone, we are eagerly awaiting that this matter has to be solved at the earliest. But considering the judicial process, which is something beyond our control, so really can't comment on the time line. So while we pray and hope that it will get resolved soon. In terms of the revenue, as I said, we continue to grow whether Rajasthan is there or not, which is like any other tender for us, and we continue on a growth momentum of 25%, that we spoke earlier. This tender, even if which way it goes, it will be over and above what Krsnaa is currently planning an aspiring to do. So it really does not affect our business prospects at all.

I understand that this doesn't -- it comes into your future whatever your internal projections are. But when we are considering is the Rajasthan contract commenced any between INR 300 crores to INR 400 crores of revenue potential and also wanted to know if you in this tender like today, then how long will you take to operationalize 1200-plus centers in the state?

Sorry, can you just repeat the last part?

So how -- I mean, if you win this tender today. So then how long will you take to open the new 1290 collection centers in Rajasthan in the [indiscernible] stage.

Yes. See, we have been saying this in earlier calls as well, if Rajasthan comes, it will take anywhere between 9 months to 12 months for the entire ramping up or scaling up of the center because this is across the state. And as and when we get nearer to the details, we'll provide more updates in terms of the ramp-up plan as well. And in terms of the size, other than the size, Krsnaa has other opportunities also, which we are currently pursuing, which are equally same or even bigger. So as and when -- and as I mentioned earlier in the call, as in when this happens, we'll be updating everyone about the same.

The next question is from the line of Pallavi Deshpande from Sameeksha Capital.

This is regarding the line item if you split the hospitals. So how much revenue do you get from private hospitals , I believe it was 30% earlier? How much is this now?

Could you please speak a bit louder?

Yes, this is regarding the fees paid to hospital items. So how much revenue do we get from the private hospitals. It was mentioned earlier on the call, it was 30%, how much it is now?

The fees to -- fees paid to the hospital is a combination of revenue shares that we have with private hospitals as well as revenue share that we pay to certain of our business partners. It is not just the private hospital. And with regards to the actual contribution or the revenue share, I think Pawan will provide the details offline in a bit.

Okay. So secondly, what is the employment guarantee we give -- we've given for the Maharashtra tender. So I understand you have a certain employment guarantees, all of them. So what's the number per center in terms of employees?

No, no, there is no requirement of an employment guarantee per se. But of course, whenever we win any tenders, this helps us generate employment for people in those regions, in those towns and cities and villages. But there's no guarantee that we have to get to the remaining number.

And sir, lastly, when this Punjab and Himachal Pradesh contract come up for renewal.

There is a long duration yet. We've just implemented. So Panjab is almost about 12-years plus. So there's a long time for these tenders to come for renewal.

And you can just later get back on this fees paid to the private hospital. I mean how much is the revenue from the private hospital?

Sure, I think Pawan and Vivek will provide you the details.

The next question is from the line of Amruta Deherkar from Wealth Managers India Private Limited.

Most of my questions have been answered, I [ want to ask ] some more. One is regarding Krsnaa retail. So am I right as we are currently focused on pathology plans, like in the pathology services under Krsnaa retail and radiology services are yet to be added?

Mitesh Dave here. So yes, our ambitious aim for the future is having integrated service on the radiology and pathology both to the entire society or the infrastructure where we are present. We'll start with the pathology and gradually we will move towards the radiology and then the integrated services.

So the 40 labs what which are under retail space right now, they are under the PPP contract or do we have any private lines?

Correct.

Or do we have any private labs?

So we don't have any stand-alone private labs per se. These are all labs under different PPP contracts or agreements across the country.

My last question is regarding -- in Rajasthan, we had 5 operational labs. And as of June, we see that there are 5 operational labs there. So did one contract get over or like which is that, Panjab we see from 30 the number has [ reached ] to 31? Or have you shifted a location or anything like that?

No. Some of these labs are the ones that we had established as part of the previous Rajasthan pathology project, and we continue to serve some of the markets there.

And then when the contracts are over, it will be [ thanks ] for rebating?

Yes, some of these are tied up with local medical conditions there. So we have long-term duration of these contracts, and they continue to serve them.

The next question will be from the line of Harsh Shah from [indiscernible] Family Office.

So congratulations on a great set of numbers. So I just wanted to understand the retail model better. So as I'm understanding that initially when we had like a PPP center, we also had private walk-ins to our lab, right? So how this retail model will be different than that.

Could you repeat the question, please?

Yes. So I wanted to understand the retail expansion that we are doing better. So like initially, when we had a PPP center in any hospital, we also had a private walk-in there to that center, right? So I wanted to understand how this retail expansion will be different than the like model that we had earlier?

Mitesh Dave [ side ]. So talking around the overall retail modeling. So first of all, as you rightly mentioned, today, with the PPP set up, there are certain percentage of the private patients which are walking in, but that has the restrictions with the particular geography. When we are talking of catering the overall addressable market size, where all Krsnaa's retail -- Krsnaa's infrastructure's presence, it adds up to close to INR 40,000 crores and which needs further more expansion and furthermore getting into the space where private patient or patients which are looking for a far more integrated radiology healthcare pathology services. So entire this model will be get unveiled in the -- by the end of this quarter or something and when we will get into the market for rollout.

So like the -- so this is -- there will be a little difference in the services that will be offered to the private patients and the government patient?

Not really. There won't be the difference in any services, quality. However, experience, there will be a differential experience that we are trying to build on. We are [indiscernible] one of the best quality service providers.

The next question will be from the line of Dhwanil Desai from Turtle Capital.

So my first question is my -- understanding is that the difference between the consol and stand-alone is largely the Punjab revenue right? Is that [indiscernible] product?

Yes.

So my question is that if I look at those numbers, they are stagnated segment is around INR 7 crores, INR 8 crores per quarter. And when we were implementing this Punjab thing, I think we were aiming for much higher revenue. So any challenges we face or we are facing on the Punjab side?

If you're comparing only this substracting numbers directly from console to stand-alone and directly try to derive the number of subsidiaries, so which is not basically the correct way. So basically, we have a revenue-sharing agreement between the holding companies and the subsidiary company where we share the revenue being the assets has been deployed by the holding company. So the transaction between the revenue -- transaction between the holding and subsidiaries are based on the arm's length price which is a revenue sharing agreement because the assets have been deployed by the holding. So the -- this is not the right way to look at and find out the Punjab number.

And on the growth perspective, I think Punjab continues to be on a growth trajectory. We had initial delays in setbacks. Having said that, we have much beyond all of that now. If you see on a month-on-month, we are seeing a very good trajectory in terms of growth. Plus there are newer ways that we are trying to ensure that the growth momentum continues and achieve the number that we had in the initial quarter.

Sir, second question is on the retail part. I think you have mentioned in the opening remarks and presentation that finally the aim is to increase the margin and reduce working capital. Now generally, what we have understood is that when we set up a diagnostic business in ultra competitive space. Generally, you start with investing money and that means lower or negative margins. But given that we have infrastructure in place and we are trying to replace that. Are you saying that on a steady-state basis, let's say, in six months to a year, we will be reaching industry average margin in our retail product. Is that a right way to look at it or something else?

No. I think directionally, it will be right to say that we should be targeting to achieve those margins. But I think one year -- this financial year will be too short of a period because as Mitesh has just joined, he'll be taking some time to do [indiscernible] network, stabilizing the operation. But basically from next year onwards, we will be able to target or re-look at for those kind of margins.

Sir, even I'm asking this question, [ we've shift at ] below all trading guidance around 25% EBITDA margin rate. But if I kind of do the layered approach and go [ hiking ] into the details, our existing centers are doing 38% margin, new centers are 12% and improving. And if the new foray also goes in line with industry average, then how is it possible that we will not improve margin some 25%? I mean, what am I missing in this entire please?

Of course, the margin profile will improve. As I said, a combination of the existing PPP current -- matured projects, the new projects that are ramping up and with the retail, the margins will improve. But also, you have to understand the fact that when we launch into retail with the new kind of model that you're building, there will be some initial expenses that led to incur, what is very heavily, but they will become. So [indiscernible] from a margin profile wise, it will be 25%, but direction is of course the better margin profile as we go along.

We are not high -- this Mitesh Dave side. Considering the existing margins that we have at a personal magnetic level will continue to be same and even [indiscernible] it further as and when the quarter goes by. Parallelly, we will also aim to stabilize the retail space in the coming 6 to 8 to a year's time. And once it gets stabilized and start moving on, it will further add up to the existing growing margins.

And one question on Maharashtra. I think this quarter, we implemented 22 CT's right, in Maharashtra from what I get from the presentation. Is that my understanding correct?

Yes.

So that's a very good achievement in terms of execution. So given that we have done this in the Q1, how should we look at the entire FY '25 for -- out of 73, how many we would like to operationalize?

So further, [indiscernible], as in the pipeline, you already mentioned, the MRI will be deployed in a phase manner. So this year, we have targeted to set up an operational 5 MRI. And another, like another 8 CT plus 6, 14 cities will be deployed in this year basis balance will be once and we get a confirmation from the authority and the sites here and another parameter, we accordingly keep you updated quarter-on-quarter how the moments are happening on this project.

So you have 32 plus you will have 14 CT and 5 MRI, right, for FY '25?

Yes. So far.

And last question. So I think a clarification more. I think you say that for Rajasthan, if the tender comes up, you have already arrived at some understanding with vendors for vendor financing. And hence, it may not be a very large cash outgo. Is that what you say?

Correct. So that is where we are staying. Currently, we have certain commitments from some of these large main vendors, with whom we will work and some financing arrangements. As and when the decision comes to, we'll be able to give you much more clarity.

Ladies and gentlemen, due to time constraints, that was the last question. I now hand the conference over to Mr. Yash for closing comments.

Thank you. Thank you, everyone, for joining our Q1 FY '25 earnings call. We hope we were able to address all your queries. If there are any unanswered questions, please feel free to reach out to our Head, Investor Relationships, Mr. Vivek Jain. We look forward to interacting with you in the future quarters. Thank you.

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