Shalby Limited (SHALBY) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Shalby Limited's Q3 and Financial Year '25 Earnings Conference Call hosted by Elara Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Kashish Thakur from Elara Securities. Thank you, and over to you, sir.

Thank you, Manav. Good afternoon, everyone. We welcome all the participants to the Shalby Limited Q3 FY '25 Earnings Call hosted by Elara Securities. Today, we have with us senior management representatives from Shalby. We will start with performance highlights from Mr. Amit Pathak, CFO; and Mr. Deepak Ananth, Global Chief Business Officer. After that, we will open the floor for question and answer for all the participants. I will now hand over the call to Mr. Jigar Todi for important disclaimers regarding any forward-looking statements that may be made in today's call. Thank you, and over to you, Jigar.

Thanks, Kashish. Good afternoon, everyone. Our investor presentation is uploaded on the stock exchange website and our company website, shalby.org. We do hope you have already had the opportunity to go through the presentation. Please note that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. Kindly refer to Slide #2 of the investor presentation for a detailed disclaimer. Now I would like to hand over the call to CFO, Mr. Amit Pathak, for his opening remarks. Thank you, and over to you, sir.

Yes. Hi. Good afternoon, everyone. I'm pleased to welcome you all to the Shalby Limited Quarter 3 FY '25 Earnings Call. Now I will walk you through the financial performance of your company for the third quarter of FY '25. Consolidated revenue of INR 281 crores in the current quarter versus INR 221 crores in the quarter 3 of the last year, we have been grew by 27.4% on Y-o-Y basis. EBITDA of INR 39.3 crores in this quarter versus INR 46.8 crores in the similar quarter of the last year with a margin of 14% in the current quarter versus 21.2% in the quarter 3 of the last year. And it has been down by around 16.1%, mainly because in the current quarter last year, we don't have the PK Healthcare where we have continuing with the EBITDA loss. And another thing, we have taken certain extraordinary hit on this implant business of around INR 4.8 crores. PBT of INR 12.4 crores in quarter 3 of this current year versus INR 30.8 crores in the quarter 3 of the last year with a margin of 4.4% in this quarter versus 14% in the last quarter 3 of the last year. Now revenue for on the overall business for the 9 months is INR 844 crores versus INR 704 crores in the 9 months of the last year. And we have been grew by 19.9% on the Y-o-Y basis. We have continued to maintain the strong balance sheet with a low gearing ratio even with the higher infusion of the working capital in our implant. And currently, we are at around 0.27%, which is well within the debt equity ratios. Now I will running you through the stand-alone performance of the hospital business. Stand-alone revenue of INR 227 crores in the current quarter versus INR 200 crores in the quarter 3 of the last year, we have been grown by 13.3% on the Y-o-Y basis. EBITDA of INR 48.48 crores in the current quarter versus INR 48.4 crores in the quarter 3 of the FY '24 with a margin of 21.5% in the current quarter versus 24.1% in the quarter 3 of the last financial year, and we have been grew by around 0.8% on the absolute number. PBT of INR 35.8 crores in the current quarter versus INR 38.5 crores in the quarter 3 of the last year with a margin of 15.8% in the current quarter versus 19.2% in the quarter 3 of the last financial year. At a stand-alone level, we continue to maintain the strong balance sheet with a positive net cash balance of INR 66 crores. With the operating leverage kicked in and growing with asset-light approach, our stand-alone ROCE resulted to 15% in the current quarter on an annualized basis. ARPOB and ALOS has shown the improvement of INR 42,704 and 3.62, respectively, compared to INR 37,342 and 3.79 in the same period of the previous year. ARPOB on a Y-o-Y basis has been grown by around 14.4%. The number of occupied beds. We are operating at around 646 numbers in terms of the occupied beds in the current quarter versus 590 in the quarter 3 of the last year. And it has been increased by 10% on the Y-o-Y basis at an occupancy rate of 46% in the quarter 3 of the current year. The payor mix for the current quarter is in line with the historical trade and we are maintaining 35% of the self-pay, 42% for the insurance and 23% for the government and others. The revenue of Shalby Sanar for the current quarter is INR 24 crores versus INR 25.74 crores in the last quarter of the current year with a marginal decrease of 6.3% on the quarter-on-quarter basis. The ARPOB and ALOS of Shalby Sanar is INR 85,529 crores and ALOS is 3.5 days, respectively, in the quarter 3 of the current year. Shalby Sanar is presently operating at 24% of the occupancy level, and it will increase gradually in coming quarters. The current quarter, 55% of the contribution of Shalby Sanar has been comes through the international patients. The overall international business has remained at INR 16.7 crores. The contribution from Sanar is INR 13.3 crores and the other hospitals are INR 3.43 crores in the current quarter. At Shalby, our undivided focus has been demonstrated on clinical excellence through successful execution of many diverse critical surgery in several of our hospital units. We also take pride that Shalby has successfully completed 26 transplants, which include 11 kidney, 10 liver, 5 BMT during the quarter 3 of the current year. In January 2024, the Shalby Tissue Bank has successfully inaugurated by our Home Minister of India, Mr. Amit Shah. Further, our SOCE franchise business delivered an adequate performance in the current quarter. The total revenue from the FOSO business is INR 2.57 crores, which has grew by 82% on a Y-o-Y basis. And FOSM is around INR 0.71 crores, which has been grew by 4.4% on a Y-o-Y basis. Now we should talk about our Home Care business. We served around 7,217 patients in the current quarter versus 6,840 patients in the quarter 3 of the last year, which has been grew by around 5.5% in terms of the patient count. Revenue from the Home Care business is INR 3.6 crores in the current quarter versus INR 3.4 crores in the quarter 3 of the last year, which has been by grew 4%. As a part of our social commitment, we continue to spread awareness about the importance of health and well-being through various social media platforms and created 110-plus health care videos. We also conducted more than 310-plus health care campus and 120-plus health care talks across all our units during the last quarter as a part of our various community outreach program. Shalby also takes pride in nurturing young talent through Shalby Academy vertical with 1,000-plus registered in various health care programs during the quarter 3 of the current year. We would like to inform that Shalby Academy has successfully completed 200-plus enrollment for Team Indore and 50-plus enrollment for the team Jabalpur in paramedic’s stream. Total Paramedics Enrolments for the current year is 385-plus enrollment as of December 2024. So far, 87 students certified through AHA and SCOELS Ahmedabad. Trained 30+ BPharma for 1 month students at various -- at our various centers as the guidance of general physician with the collaboration with Sharda School of Pharmacy, Gandhinagar. Now for our implant business, our SAT implant unit at the U.S. has delivered the EBITDA profit of INR 74 lakhs in the current quarter due to the high sales and low cost. Our operational efficiency has improved quarter-on-quarter basis with the optimization of the procurement cost. Shalby Advanced Technology U.S. has delivered a revenue of INR 26.8 crores in the current quarter versus INR 21.5 crores in the quarter 3 of the last year with a growth of 25% on a Y-o-Y basis. Now I will hand over the call to Deepak to share insight about the implant business. Over to you Deepak.

Thank you, Amit, and good afternoon to everyone. Let me start saying that the -- during the third quarter of this financial year, our implant business made significant progress. Shalby MedTech Limited generated a revenue of INR 22.6 crores, which is up by 58% on a year-on-year on consolidated basis. Shalby Advanced Technologies generated revenues of INR 27 crores, which is up by about 25% year-on-year basis with contributions from U.S. and OUS at 33% and 67%, respectively. Like Amit mentioned, the EBITDA of Shalby Advanced Technologies in quarter 3 is INR 7.4 million, which is INR 74 lakhs versus INR 19 lakhs in quarter 3 of financial year '24, which grew by 290% year-on-year. The total constructs sold has grown by 16% from 2,637 units to 3,071 units in quarter 3 and grown by 56% from 6,227 units to 9,715 units on a 9-month basis. The average COGM, that is cost of goods manufactured per component, excluding material, has decreased by 15% quarter-on-quarter basis and 44% year-on-year basis. Shalby Global Technologies Private Limited -- PVT Limited generated a revenue of INR 3.4 million from the Indonesian market. The components purchased and sold is 160 units in quarter 3 financial year '25. We are actively focused on bolstering our team with skilled professionals, transitioning our sales mix to retail customers from wholesale, enhancing operational capacity and efficiency, expanding our product pipeline through extensive research and development efforts and significantly reducing procurement costs. The reception of our Shalby Advanced Technology implants and hospitals across all markets that we have launched has been highly positive, and we've been receiving additional orders from the Indonesian market. With our key strategies firmly in place, our team is fully dedicated to executing these plans flawlessly. Shalby is well positioned to achieve double-digit growth with sustainable profitability while also expanding and deepening our presence by opening up new geographies. These efforts will ultimately drive the creation of sustainable value for all stakeholders at Shalby. The four different pillars that we focus for this whole year was sales. Like we spoke a little bit about Shalby Advanced Technologies sales growth at 25% over last year quarter 3. Indonesia, we have sold over 1,200 units in this year with a revenue of INR 30 million in the 9 months of this year. Response has been great, and we'll be adding more surgeons into the kitty. India is growing at 253% over last year and 28% growth over the previous quarter. We have added more than 18 sales members in India across geographies and 5 new distributors in this quarter. U.S. business, 5 new surgeons doing their first case in this quarter, and we have onboarded 7 new distributors in this quarter. As we speak right now, we are looking at Latin America in 5 countries, Russia, Iran, Malaysia as actively as our next growth phase with expansion in Japan. Our second pillar was COGS reduction. Our COGM has gone down by 16% over the previous quarter, and we are currently at $65 against the $77 of last quarter. This has been done by changing -- change in the vendors of raw materials and increasing our capacity in the plant. Capacity increase in dual supply chain system is our Pillar 3. Our plant manufacturing has grown significantly from manufacturing 2,700 components in April to 7,500-plus components in September. This has allowed us to produce more to take care of the demand as well as drive the COGS down. Looking at more new vendors for raw materials coming on Board in quarter 4, we will have a good capacity soon to expand for global business. The last pillar being new products. The team has been working for today, next year as well as 2 years down the lane. SAP India has been established, and we have hired about -- we have hired more than 15 engineers. We received 2 weeks back, the U.S. FDA approval for the well-awaited TKR, TiNbN, which will be called as the Duraniom, and we are on track to launch many products soon. Just 24 to 36 hours back, we've also received the CDSCO approval for launching robotic surgeries in India. We also received our bone cement approval in the previous quarter, and we have successfully launched our product in the Indian market. 15-plus engineers have been hired across the globe to get started on multiple new product initiatives. That's it from the implant business. Over to you, Amit.

Deepak, we lost you. Are you audible?

Yes, yes, I'm audible. I said that's it from my end, and over to you Amit.

Thank you. So we also like to share a couple of clinical excellence. So Dr. Nishita will share within the products. Over to you Dr. Nishita.

Hello. Good afternoon all. I'm Dr. Nishita and I will be happy to share some clinical excellence and procedures done in quarter 3 at group level Shalby, clinical updates and research effort units during quarter 3 FY '25. Our commitment towards augmenting Shalby medical programs has made notable strides in advancing our growth initiatives for single specialty to multi-specialty by various brand awareness campaigns and through digital platforms. To share, we have been purchasing into high-end equipment, equipment like EBUS, which is an endobroncoscopy -- which is an endobroncoscopy for lung cancer, hemostasis and inflammation. Some of the excellent things or rare surgeries we have done is one we have found out with a donor with ‘Aend’ blood group, a 20 years old male donor presented with a rare ‘Aend’ blood group which previously diagnosed as the O negative blood group outside. A pedigree analysis was done and then the sample was sent to Australia for molecular confirmation and then it was discovered as Aend blood group. Aend is a very rare subtype of A blood group, meaning its incidence worldwide is less than 1% of the population. And in India, it is less than 10% till now. Other than that, we have been doing a lot of interventional surgeries where the surgical procedures are avoided and it -- we are done through international invention. So 122 international surgeries took place in quarter 3. The 34 international surgery took place in Shalby SG, 24 at Surat and Naroda Hospital. Highest procedures done by EBUS TUBNA machine, which we have principally purchase at thyroid microwave ablation, uterine angiography, embolism and radial EBUS procedures. We have also operated a patient with [indiscernible] lobectomy, where with the smallest incision, 2.5 centimeter minimal incision was done and the procedure was done. Postoperative, the patient was walking in 4 hours. As already informed, we had 26 transplant and for the clinical research trial also, we have done 13 ongoing research and 10 upcoming research for the quarter 3. Thank you.

Thank you, Dr. Nishita. So now we can open the forum for the Q&A.

[Operator Instructions] We have our first question from the line of Rohan Vora from Envision Capital.

So the first question was on Sanar. So basically, I wanted to understand the profitability on Sanar. So what was the EBITDA this quarter for the 9 months? And what is the guidance on profitability for Sanar?

Yes. I think Mr. Kapoor will be happy to take that question.

Hello. Hi. Good afternoon, everybody. Am I audible.

Yes, sir, we can hear you.

Okay. So EBITDA this time, as Amit has stated earlier, the EBITDA that was a slight reduction in revenue. That's why the EBITDA losses still continue. And the slight reduction in revenue was due to some changes in the doctors' profile because we got a couple of doctors leaving and new doctors joining in place of them like liver transplant, bone marrow transplant and medical oncology. So we have got three doctors in these three specialties getting changed in last quarter. And we have got the new replacements and they will take about a quarter or 2 to get stabilized as they have moved from large institutes to this place. And going forward, we expect maybe from fourth quarter onwards or maybe first quarter of next financial year, there should be EBITDA positive.

Yes. And apart from that, as you asked, the 9-month EBITDA loss is close to around INR 4.3 crores for this financial year. And you can see on the 25% of the operating level where we are operating, we clock around INR 70 crores of the top line in terms of the revenue from operations. And where our -- if you can see if we are going to achieve another 10% to 15% on the occupancy level, where we are right now around 25%, we are going to become the EBITDA positive. So Sanar, we are going to see -- it will become the EBITDA positive very shortly. However, if we are talking about -- if we are talking about the EBITDA positive trend for the Sanar, we are hopeful it will come in this quarter and next financial year, we are very sure that we are going to deliver the positive EBITDA because now everything has been streamlined as doctor -- as Mr. Kapoor has said, due to the turbulence of the doctors, we have seen the lower revenue, which has hit the EBITDA. Another thing I just want to share from my side on the PBT level, if we are talking about PBT level, we are at close to around INR 24 crores of the loss in the 9-month basis. Basically, if you can see there are two components, which is coming around after the EBITDA, one is the depreciation and other is the finance cost. So depreciation is close to around INR 11.6 crores for the 9 months and finance cost is around INR 8.6 crores.

And sir, just wanted to understand the overall tax -- effective tax rate that we are looking at this year and the next year because on a positive PBT, we reported tax expenses and then a loss. So just wanted to understand how that will transpire in future.

So you're talking for Sanar or entire consolidated numbers?

Sir, overall.

So overall, we have around 36% kind of tax rate. If you look on the stand-alone hospital, we are close on 36%. Overall basis, if you can see in the consolidation, the tax rates are more than 100% kind of thing on the PBT level. This is because we have taken a very conservative approach where we have stopped creating the deferred tax. We have stopped recognizing the deferred tax on the -- currently on the loss-making entity, which is the Shalby Advanced Technology, which is the kind of breakeven or PK Healthcare or you can say Shalby is also on the PBT level is a loss. Shalby Advanced Technology, PK Healthcare and MMDL. So it's a conservative approach. We don't want to create the deferred tax and then after we will reverse when they will start generating the profit in the next year and year thereafter. So that is the reason you will see a very abbreviated number in the tax that will continue for a couple of quarters. On the consolidated number, it will continue for the next 2, 3 quarters at least. However, if you can see for the stand-alone, it will be ranging between 36% kind of thing.

Sure, sir. And just in connection to this, when are we planning to move from this old tax rates to the new tax rates?

So we are regulating currently, we are under the MAT, which is getting exhausted into the current financial year. And then after, we are going to take a call into the next financial year.

So the next year will be in the 25% tax rate for...

Definitely. That will be there on the stand-alone.

We have our next question from the line of Yash Darak from RSPN Ventures.

Am I audible.

Yes, please.

So yes, could you please provide me a breakup of revenue from surgeries and revenue from non-surgeries on a consol basis, if it's possible?

Look, we should not see the surgery based on the consol number because consol stand-alone give you the more appropriate number because in the consol from the hospital front, if you can see, we have just the PK Healthcare. However, if you want a ballpark number, how much is revenue from the surgery and the revenue from the non-surgery business. We can give you the count. Right now, we don't have the handy revenue from surgeries number. So surgery count, if you can see, we have -- the arthroplasty is close to around 3,123 and the non-arthroplasty is 4,342. The overall surgery is 7,400. If you can ask me just to -- for your interest, if I will say, in terms of the revenue, if you are talking for the stand-alone INR 220 crores of the business, what we have INR 211 crores is coming from the different specialty and the remaining revenues is coming from the pharmacy, which is around INR 4.8 crores and the FOSO and FOSM and Academy. Usually, the split between the surgical and medical revenue is 2/3 and 1/3, respectively.

Okay. Got it. Got it, sir. Secondly, if you could give -- if I missed it, if you could provide any revenue from Sanar -- if you could provide any revenue from Sanar and breakup of other expenses as the other expenses have been increasing, what will be the ongoing run rate of the other expenses?

So revenue from Sanar, we have already mentioned, if you are seeing for this quarter that is revenue from operation in Sanar is close to around INR 23 crores kind of thing and revenue from the other hospitals, which are under the Shalby stand-alone, the revenue from operations are INR 220 crores. If you are seeing the other expenses, if you are talking about in terms of stand-alone entity, if you can see compared to the Y-o-Y basis, where we are around other expenses of INR 14 crores versus INR 20 crores in this quarter. The reason for this is the Ortho trend event. You have -- I think you have seen we have conducted the Mega Ortho trend event in the current quarter, where we have spent close to around INR 2.3 crores in terms of the expenses. Another thing is coming in terms of the advertisement, marketing expenses, which has been increased by INR 1.1 crores on the Y-o-Y basis. And third thing in terms of the repair and maintenance, which is close to around INR 1.5 crores on the Y-o-Y basis on our different locations.

Sir, how much of this do we see as an ongoing run rate?

So Ortho trend is a onetime event. So you have to factorize that expenses, which is into the quarter 3. So that was INR 2.3 crores, you are not going to see into the current forthcoming quarters.

Okay. My last question would be with regards to the structure of Shalby business, that is Shalby MedTech. So that is my doubt the implant business is Shalby Advanced Technologies or is it Shalby MedTech?

So Deepak, can you take this question?

Sure. So the way the structure is Shalby MedTech is the parent company, which is the implant company and Shalby MedTech Limited is the 100% parent company of Shalby Advanced Technologies, which is in the U.S. So Shalby MedTech company happens to be the parent implant company.

Because when we report revenues from implant business, I think they are from Shalby Advanced Technologies in the financials when you provide the segment information.

Correct. We are reporting the number of the Shalby Advanced Technology U.S. because that is the manufacturing unit.

So the MedTech implant company, it also sells the implants and what does the Shalby Global do?

So the parent company imports the implant from the U.S. entity. That is the Shalby Advanced Technology, and they are selling into the Indian market.

We have our next question from the line of [ Azam Shah ] a shareholder.

Just one question. The gross debt has been increasing reasonably on a frequent basis. If you would just give the reasons with regards to reduction in debt out, how do you see the gross debt progressing here on?

So you're not very clear. Can you just repeat your question again?

So the gross debt has been increasing quite reasonably, if I'm not wrong, INR 50-odd crores. If you could give the reason for the increase in gross debt and the increase in finance cost? And how do you see it progressing forward?

So look, the thing is gross borrowing, if you can see, is mainly increasing in our implant companies, okay? As Deepak has just briefed that we have got the approval for [indiscernible] approval we have just received. And there are a couple of products which are also into the pipeline, which approval is pending. So as you can see, the implant business is expanding heavily, there is a -- we are doubling our revenue. We are very aggressive in terms of the revenue forecast for the next year. We are investing into the inventory. So the major investment, if you can see for the Shalby group point of view, hospital, per se, we don't have the debt. We have the hospital business, the cash is, we are not borrowing anything for the hospital. But for the next couple of quarters, we have keep investing into our implant business.

We have our next question from the line of Raja Kumar Vijayanathan, a shareholder.

Yes, I have about 3 questions. So the first question is on the implant business. Why quarter-on-quarter, it has shown only flat. There is no growth at all. And in the previous call, you mentioned that you are expecting significant jump in revenue for Q3 and Q4. If you can just give some color on this?

The implant business at a consol level has grown by 58% from previous quarter. And it has also grown by 25% year-on-year. So I mean, if you can tell me exactly where is the thing, I can come back to you because from a growth standpoint, there is a growth in the business...

No, I'm talking about the segmental revenue that you're showing manufacturing of implants, INR 267 million revenue in current quarter vis-a-vis INR 277 million revenue in September quarter?

Okay. So that is stand-alone Shalby Advanced Technology. So that's primarily because of -- in the U.S. market, there is -- there are two things. The plant also had a little bit of low in terms of manufacturing because of Christmas holidays. The market was also -- the U.S. -- in the U.S. market, Christmas is usually a dull month. So that's the reason why you see revenue dip, which will get picked up in this quarter.

Okay. And where do you stand -- I think you gave like a 5-year outlook of $100 million business from this business. Do you still stand to that number because that number looks very ambitious considering your current numbers?

It is ambitious, but I think we're on the right path towards this. And I mean, it's a very large market. It's a global $30 billion market. So $100 million coming in from a $30 billion market is not that difficult. It's just that the base needs to be strong. So right now, as an organization, what we are doing is to build the right base, right? Our COGS have come down -- coming down quarter-on-quarter. Our revenues have started growing. We're starting building our new portfolio. We have dual supply chain system now in most of the places. So on the financial, we don't bring that up very strongly, pressing the accelerator for scaling up may not be the right thing to do. I think we are on the right track to build the base very strong in the next 6 to 8 months' time. And from there, I think acceleration can happen quickly if we get our act together. So what I'm saying is $100 million is still -- it is an ambitious number, but it is still a possibility.

Okay. And any path to breakeven because you continue to lose about INR 8 crores of money every quarter. So what is the path for breakeven for this business?

So it is -- so basically, if you look at it, the money is being spent majorly on three things, right? One is in terms of building inventory, we have to put up a decent amount of money on capital expenditure. We have to spend money on marketing. There is a good amount unless and until -- because this is not known to people, unless and until we go out and tell people we are present there, it will not happen, right? So in this thing, there is a function of only two things, just to keep decreasing the COGS and keep increasing the sales and we'll match up there. So I think that's the track that we are, right? I mean if you look at quarter-on-quarter, you will see the COGS going down. If you see quarter-on-quarter, the sales going up. And that's the only way it will happen. This is a medical device business. So for -- like any health care for people to start using it for the patient to start feeling unless they see those results, unless the surgeons start feeling those products, the take-up will not happen. But the good part is that there is a lot of positivity on our product. People are happy. The surgeons are happy. We're getting positive response from wherever, whichever countries, whichever markets that we've launched.

Okay. So when do you expect this business to break even?

I think we will touch end of next year close to solid single to double-digit EBITDA. And that's what I think next year, same time, I should -- I feel we should be in a good single to double-digit...

Okay. Okay. Yes. So the next question is on the hospital business. Sir, your performance for this current quarter, if I compare with the previous similar quarter, even we have not kind of matched with that performance. So would you like to give any color on that why our bottom line performance is not in line with the previous year quarter? Because last call, you mentioned that you had some floods -- because of the floods, many of the planned surgeries could not be executed in Q2, and you said that you were expecting a significant bump up in Q3, but that has not kind of played out. So if you could just give some color on this current quarter?

Sure. So before I will highlight a couple of things about the hospital, I just want to add a couple of questions which you have asked for the implant, which Deepak has answered. So I will just touch upon two things where you are talking in terms of the segmental revenue for the implant also. If you can see on the 9-month basis, the revenue for Shalby Advanced Technology has improved from INR 52 crores to INR 79 crores. So which is a substantial increase if you are talking in terms of the growth of the sales, where we have just received the approval for our new products. So you can understand once the new product registration will be there in India from the next -- quarter of the next -- I mean to say quarter -- after the quarter 1 of the next financial year, we are going to see the leap in terms of the sales for Shalby Advanced Technology. So that will be there. Definitely, we are going to see. And another thing, if you can see the profitability, definitely, you can see that we have the INR 6 crores of the loss into the last quarter of the same financial year. This quarter, you can see the loss of INR 8 crores. I have already given in my commentary that we have made a provision against certain implants, which is the slow-moving kind of thing, which is close to around INR 4.8 crores. So you are going to see the impact around that also. Now coming to the hospital, if you can see hospital on the Y-o-Y basis because quarter 3 is always a seasonal business for us. So we have done INR 195 crores of the top line from the hospital business. And this quarter, we have delivered INR 220 crores. So there is a double-digit growth, which is historically we have given into the normal pace. So the pace has continued in terms of the growth, in terms of the top line. But where we are talking for the bottom line, definitely 24% to 21% of the bottom line, which is slightly has been reduced, which is mainly one thing is because of around 1.7% increase in terms of the cost because of the payor mix and other things that has been increased. And during the quarter, I've already highlighted we have already have around INR 2.3 crores of the Ortho trend event. If that will not be there, then our OpEx has not increased by 1%. So that delta of 2% to 3% is because of that.

So totally, what is the amount of one-offs you have in this quarter, sir?

Can you repeat again?

For the Hospital segment, what is the total amount of one-off that is dragging the bottom line?

One-off would be in the range of INR 6 crores to INR 8 crores in this particular quarter. See, I think what is important to note is that for the implants business, what we did in the full financial year of FY '24 in terms of the revenues, in terms of the constructs sold, all of these have been able to -- we've been able to achieve in the first 9 months of this year. And this quarter, the additional quarter is going to bring in additional 35% to 50% kind of growth on last year's number in the implants business. On the Hospital front, as Amit bhai mentioned, we are looking at -- I mean, we've already achieved a 15% kind of growth if you look at any parameter, whether it is inpatient growth, whether it is outpatient growth, whether it is the surgery count. And if I include the acquisition, the growth is more than 18% on a year-on-year basis. So that is that the numbers. Of course, because of the losses of Sanar Hospital in terms of EBITDA, as Mr. Amit Bhai mentioned earlier, essentially, it's a INR 3 crore EBITDA loss for the quarter and a total of INR 9 crore loss at the PBT level. So all these numbers of Delhi have been affecting the total hospital performance for us. But we are expecting that in the coming few quarters, as Mr. Kapoor mentioned, we should be able to come out of this.

Okay. Great, sir. Sir, lastly, this Slide #19, which you have given, maturity-wise hospital performance. So this is a very good slide, sir. Only request is if you could also give numbers for the previous quarter, it will be easier for investors to understand how the progress is each of the buckets because your slide is stand-alone, so we can see what is -- are we improving or so the comparative slides we have given, that would be helpful?

Sure, we will.

Yes. And lastly, this ROCE number, which you're giving, again, you're giving only for the stand-alone hospital business. So again, from an investor standpoint, we are looking at the overall business. So it would be better if you give the ROCE performance also on a consol basis.

You can refer our slide. We are giving for the consolidated also. Even the 5 years trend on the ROCE is also given for consolidated as well as stand-alone basis in our investor presentation.

No. So the return on capital employed is given only for stand-alone, sir. It's not given for consol.

So I will suggest you to go to Slide #4, the ROCE is given for the quarter. If you go to Slide #5, you can see the ROCE for the last 5 years, 6 years have been given there.

We have our next question from the line of Bino Pathiparampil from Elara Capital.

A couple of questions pending. One on this profitability and EBITDA margin on the stand-alone business, you made a few comments. So going forward, should we look at this 21%, 22% as the sustainable levels?

Yes. So we are going to sustain the profitability. As I mentioned, there is a one-off kind of OpEx has been there in terms of the Ortho trend event. And apart from that, as an organization, we are always going ahead with a lot of cost optimization process where we are optimizing in terms of the cost and other things. So we are going to see the improvement going forward also.

Okay. And comment on further bed expansion plans, anything look forward to?

Yes. So expansion plan, I think there are -- I'm sure the question is around what are the potential growth areas for us. And the potential growth areas really are that in the existing bed capacity, we are going to be able to nearly double -- more than double the top line. We have that kind of capacity within the existing facility with a very minimal CapEx of between INR 50 crores to INR 100 crores. We will be able to generate this kind of revenue in the coming years. So we are expecting a double-digit growth going forward for the next 4 to 5 years. And as I said, increasing our in-house capacity will give us that growth on the hospital side. On top of that, we are adding two linac bunkers, one in our facility in Ahmedabad, another one in our facility in Surat. So again, they will be providing high-end radiation within the oncology segment. That is another area of growth that we are expecting. The third is we are also planning and we are already working on introducing high-end bone marrow transplants in some of our other units outside Delhi. So that is going to be another area for us. Besides that, as we have announced earlier, we have the potential to expand in our existing facility in Delhi. So the works on that are going on in terms of how much FSI is left and what can be used on that. And essentially, we are optimistic we'll be able to add significant capacity from the existing setup. And of course, the last one is the Asha Parekh Hospital in Mumbai, which has been announced earlier. And basically, the works for that are also going on. So that is another one on the hospital side. As mentioned earlier during the commentary, we have launched our bone bank, which was inaugurated by the Honorable Home Minister of India, Mr. Amit Shah, in January this year. Essentially, that is going to be another major area for us in terms of growth. The reason being that today in India, largely doctors are using the synthetic bones. And these are not only expensive, but also imported into the country and with much lower clinical outcomes compared to the natural bone, which is preserved. So this is a very high-end bone bank that we have set up. It is the largest bone bank in India, and it is the most comprehensive bone bank of Gujarat. And with this, we will not be -- we will not only be supplying and working with our other units, but we'll be partnering with a lot of institutes in India as well. So these are the potential growth areas for the hospitals business. I'm sure Deepak wants to add in terms of how we are going to be looking at growing the implant business because there are a lot of initiatives we've taken, as he has mentioned. But over to you, Deepak.

Thank you, Shanay. From a growth standpoint, multiple things. One, it's going to be driven through a lot of sales and marketing activities with our current portfolio that we have. But we have just launched our bone cement about 2 months back into the market, getting really good response for that from the Indian market. We are also looking at some partnerships which are country-specific, whether it is to do with Indonesia and with India, where we can introduce some products which can generate revenue profitability as well as go to market faster, which could be our cementless stem, cemented stents, some -- the robotic as well as power tools and dual mobility. Having said the same thing, we also just received a week back our U.S. FDA for the awaited TKR, TiNbN, knee, which is going to be branded as Duronium. So that has the -- that would drive a lot of growth for us at a global level in almost every country. So we're pretty gung about what lies in the future, including Ambition Knee ready for launch by end of this year. So yes, so pretty much kicked up. So a lot of growth across geographies, across products, across markets are going to come our way on the implant business.

We have our next question from the line of Ankur an Individual Investor.

Yes. Am I audible.

Yes you are.

Yes. Sir, my first question is that what kind of growth can we expect in the financial year '26, sir? In terms of revenue and profit and EBITDA?

Look, as I earlier mentioned, we continue to deliver the double-digit growth for our hospital business. So the trend will continue because apart from that, there's a lot of activities which we have sounded that we are going to start in terms of the radiation and other things. So we are very optimistic we continue to deliver the double-digit growth in terms of the hospital. Implant, as we mentioned, we are growing very fast. And with this approval of this [indiscernible], it is going to deliver the multifold growth in terms of the implant business into the next financial year.

Okay. So as of now, what is the debt level, sir? And any plan to reduce the debt?

So debt level is around 0.27% on the consolidated basis, which is well within the reasonable level. As I mentioned, the debt, we are not going to expand the debt except the 2 things. For the radiation, we have already taken the line of credit of close to around INR 40 crores, which will come into the -- at the end of the quarter 1. Apart from that, for this implant, we keep investing in terms of the working capital. So that will continue on the trend what you have seen into the earlier quarter, that will continue for the couple of 1 or 2 quarters more.

So can we expect now EBITDA level will improve in coming quarters?

So that is not impacting the EBITDA also. So EBITDA will definitely improve into the coming quarters. And we are going to see the growth in terms of the reduction of losses in terms of the PBT level for our implant business into the next financial year.

We have our next question from the line of Rohan Vora from Envision Capital.

So sir, I was just looking at the absolute occupied beds. We are at 646 beds for this quarter. We were at 690 in the second quarter. So how do we see this number? I mean, the volume basically of number of beds occupied, which has degrown sequentially.

So the way we would want you to look at it is what really has been the outpatient count growth, what has been the inpatient count growth. And essentially, if you look at that, we have delivered double-digit growth on both fronts. So depending on the specialty, what happens is that the average length of stay differs. So it could be from 1 day to 10 days, sometimes 20 days as well. So occupancy would be driven by all those factors. The way I would -- we would request you to look at it is what has been the inpatient growth, the outpatient growth, the number of surgeries growth. And in our case, it has been double digit, plus if you look at -- if you include Sanar acquisition, it is high double digit.

Got it, sir. And going forward, you said that we'll look to grow at double digit. So how much of it would come from ARPOB growth and how much would come from increase in occupancy? What would be the ballpark breakup there?

See, what happens is that ARPOB growth is usually on an annual basis, we are seeing that the ARPOB growth is between 3% to 6%. And then the volume growth is another 8% to 10%. So usually, this is what we see, but this could differ based on any particular year.

Right, sir. So on a longer term, we can expect this occupancy to grow at 8% to 10%. I understand it would differ on quarter-to-quarter, year-on-year basis. But on a longer term, this can grow by 8% -- 8% to 10%...

Yes. The inpatient count and the outpatient count, you can expect double-digit growth on those numbers, yes.

We have our next question from the line of [ Tanya Kothari from Home Capital ].

I appreciate the insights shared so far by the management and lovely to see the progress in key segments like oncology and joint replacement. I have just a couple of questions. With oncology surgeries at Shalby increasing by 32%, how do you see the exemption of basic custom duties on 36 life-saving drugs and government plans to establish around 200 cancer-based care centers impact the Shalby oncology segment? Will these initiatives create new growth opportunities for the company?

Look, oncology is a fast-growing segment and one of the important specialties for the group. And essentially, from a lower single-digit kind of revenue share in terms of our total revenues, it is now, I would say, the highest after the joint replacement. So -- and we are continuously investing in this segment across the medical, the surgical as well as the radiation oncology part. So we have one of the strongest team in Western, Central and Northwestern India across all these three segments. And as I mentioned earlier, we are investing further in two more linear accelerators and the third one as well after this, which will make us -- I mean, which will help us get to about [ 6 ] lakh machines across. So essentially, we are extremely bullish on the segment. And what happens is that the coverage of -- whether it is the government or whether it is the private insurance companies, the coverage is there for all the different kind of treatments across oncology. So again, that will be an additional benefit for us, and it will be a high-volume growth for us.

Okay. Sir, can you provide insights into the division of patients between domestic patients and international patients, which are being serviced in Shalby like number of patients -- on quarterly basis?

Sorry, I didn't get the question.

Sir, I was asking the division of patients between domestic and international, like how many domestic patients are getting the treatment in Shalby as well as in international segment, like in quarterly basis and yearly basis? Can we have the data?

See, in our Delhi hospital, the mix is very healthy. About 50% of the patients coming in are from outside India and the balance 50% are from within India from the -- I mean, along the rest of the hospitals that we run because of the lack of international flight connectivity, the numbers are not as significant as a proportion to the revenue. But I can tell you that in all these different places like Ahmedabad or say, Jaipur, we are being awarded every year on the medical tourism hospital facilitator for the year. So we are doing the highest volumes for international business in Ahmedabad as well beyond Delhi.

Okay. And the last question, that is like increasing adoption of robotic surgeries and specialized treatment. What percentage of revenue is now derived from high-end procedures? And how do you see this evolving?

Yes. So I think there are a lot of developments across robotics on the orthopedic front, I think Deepak will be able to throw some light on that.

On the robotics front, basically, there are multiple robotics that are coming in. But from our side, we are doing two things. We already have got the approval to sell a robot in India, which is in partnership with a company in South Korea. So we have our first installation that is happening this week in Shalby Hospital. In parallel to that, we are also on a -- we initiated a clinical study with American orthopedic robot company called Monogram Orthopedics. That clinical study should get kick started in this quarter. And post that, we would be looking at furthering our robotics. So what we're trying to look at is there have been robotics in the market for a long time. But as an organization, we are looking at new technologies in the robotics space to come in from there.

We have our next question from the line of [ Viresh Sangwan ] an individual investor.

I have a question on our -- the low-cost model, which is the Shalby managed or operated. So what's happening on that front? Like I have not -- the initial plan was like very -- I would say, to take it, the hospital count to around 40 plus. There's nothing much happening on that front, if you can just like what's happening there?

Yes. So we have 5 franchisees which are operational already. And what we have shown, I mean, in our presentation is that there has been a growth on that facility. I mean, in all these facilities. So there has been a significant growth, although at a much lower base. We are assessing certain things like, for example, we dealt with a couple of FOSM models earlier. And we've realized that for us to be able to keep a control on the quality, et cetera, it is very important to go more on the franchisee-owned Shelby operated models. So going forward, our focus will be a lot more on that. And as a group, as a kind of conservative group, we also want to kind of make sure that we consolidate what we have first before we venture out because we have a lot of underlying opportunities, but we will take them up as and when we are able to kind of get enough management bandwidth as well as kind of grow in the existing hospitals that we run.

Okay. So nothing in pipeline in near future? Is that correct understanding?

A couple of things in the pipeline, but no announcements to be made as of now.

Okay. Okay. And another question I had was on the devices business. I'm pretty new to Shelby, but just wanted to know like the -- what I understand the company is U.S.-based, and we are importing the devices from there. But is there any possibility to start developing offshore, at least for the South Asian regions? So is there a possibility? And if yes, are there any plans?

So do you want to take...

Yes. Yes. So just to answer that, there are two, three things behind this. The first thing is the kind of quality and the precision that we have in terms of the manufacturing in our plant there and the quality systems as well as U.S. FDA approvals and stuff like that is very extremely important to build up credibility to ensure that the quality of the product is high because at the end of the day, we are in the business of health care, ensuring that the products are top standard in terms of quality is our first fundamental belief, right? Having said the same thing, also the second part of it is the plant right now is now getting into its full capacity and there is still some way to go, right? So if you look at the manufacturing that is happening month-on-month, quarter-on-quarter, we are increasing our components, which I mentioned. And we still have scope to increase our capacity inside the plant by adding more shifts, adding more labor. And unless we don't get to that space where we have completely come out of that, we do not want to add another plant, which would just drive extra CapEx at this moment. So -- but there are plans, but I think once we are able to streamline the whole thing, when we are able to manufacture quality at scale, then we will have the same thing replicated in some part of maybe India or some other country. But as of now, the plan is to maximize what we have and bleed all our assets to the maximum.

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

Thank you, everybody, for joining the call. We will connect again into the next quarter. Apart from that, if you have any questions, you can reach out to our investor email ID. Thank you.

Thank you.

Elara Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.