Ladies and gentlemen, good day, and welcome to the Max Healthcare Institute Limited's earnings conference call. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing Star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anoop Pujari from CDR India. Thank you, and over to you, sir. Thank you. Good morning, everyone, and thank you for joining us on Max Healthcare's Q1 FY 2024 earnings conference call. We have with us Mr. Abhay Soi, Chairman and Managing Director, Mr. Yogesh Sarin, Senior Director and Chief Financial Officer, and Mr. Keshav Gupta, Senior Director, Growth, M&A, and Business Planning of the company. We will begin the call with opening remarks from the management, following which we'll have the forum open for an interactive question and answer session. Before we start, I would like to point out that some statements made in today's call may be forward-looking in nature, and a disclaimer to this effect has been included in the earnings presentation shared with you earlier. I would now like to invite Abhay to make his opening remarks. A very good morning to everyone. I'm pleased to welcome you again to Max Healthcare's first quarter earnings call for fiscal 2024. Before we delve into the quarter one highlights, I'm happy to share that this is our 11th consecutive quarter of year-on-year growth in revenue and operating EBITDA. Second, we have added 44 beds to our capacity through internal reconfiguration during this quarter, which is in addition to the 92-bed oncology block we commissioned at Shalimar Bagh in March this year. Notably, Shalimar Bagh Hospital has reported an average occupancy of 77% in Q1, with a year-on-year growth in revenue and EBITDA of 37% and 43%, respectively. Third, we have released the inpatient module on our proprietary app, Max MyHealth, which allows IPD patients to track the entire process right from their admission to their discharge. It also provides them access to their reports and up-to-date billing data, with the ability to make payments online. This will not only enhance patient satisfaction on one hand, but also reduce administrative burden on the other. Coming to the highlights of our Q1 performance. Occupied bed days, OBDs, went up by 3% year-on-year, and the average occupancy for the quarter stood at 74%. Do keep in mind this is on a higher capacity, remaining flat compared to Q1 last year. This is on expected lines, coming off from seasonally the best quarter to the worst quarter. With increase in occupied bed days and marginal drop in ALOS, the admissions were up by 4%. Institutional bed share fell to 29.7%, compared to 30.3% in Q1 last year. It is pertinent to note that excluding Max Shalimar Bagh, where we strategically decided not to optimize payer mix at the cost of occupancy in light of the newly added 122 beds on a base of 280 beds, the share dropped by 270 basis points year-on-year to 27.4% institutional business on an overall basis. As you may be aware, CGHS has revised its tariff in April and June this year for certain segments after a gap of 9 years, and we expect further revisions for the balance segments in the coming quarters. We have not taken any aggressive call on this impairments. The average revenue per occupied bed for the quarter touched a new high of INR 74,800, reflecting a growth of 13% year-on-year and 6% quarter-on-quarter. This was mainly led by improvement in specialty mix, particularly oncology, orthopedics, cardiac sciences, and doubling of robotic procedure volumes. This was further aided by price revisions across almost all channels, which usually happen on the first of April. Network gross revenue was INR 1,719 crore, compared to INR 1,473 crore in Q1 last year, and INR 1,637 crore in previous quarter, which reflects a growth of 17% year-on-year and 5% quarter-on-quarter. Year-on-year increase was largely driven by growth in ARPOB and occupied bed days. Revenue from international patients grew by 31% year-on-year and 3% quarter-on-quarter, which now accounts for around 9% of the revenue from our hospitals. Digital revenue grew to INR 356 crore and accounted for 21% of our overall revenue. Direct costs were up year-on-year due to growth in surgical mix, medical oncology, and doubling of robotic procedure volumes. On the indirect cost side, while the overall percentage is lower, there is an increase in absolute costs due to commissioning of 4% additional capacity, creation of around 10 new operation theaters, and 50 ICU beds by cannibalization of existing ward beds over the last 12 months. In addition, we have strengthened our projects, digital, and home care teams, while also increasing efforts on ESG activities and marketing for the international channel. Network operating EBITDA stood at INR 436 crore, reflecting a growth of 18% year-on-year, while remaining relatively flat quarter-on-quarter, in spite of the fact that we are coming off perhaps the, you know, quarter four, which is the best quarter, onto quarter one, which is usually the worst quarter. The operating margin stood at 26.8%, versus 26.5% in Q1 last year, and 28.2% in the previous quarter. This is largely because we've been focusing on higher payer mix, which is international patients, higher clinical mix, which is oncology, cardiac sciences, and robotics, et cetera, which has grown, which in percentage terms may provide lower margins, but in absolute terms, provide higher value. Most importantly, annualized EBITDA per bed rose to INR 70.4 lakhs, yet again, our highest ever, clocking a growth of 14% year-on-year and nominal growth quarter-on-quarter. Profit after tax was INR 291 crores, versus INR 229 crores in Q1 last year, and INR 320 crores in the previous quarter. Year-on-year growth of 27% was primarily attributable to the flow-through of improved EBITDA. Free cash flow from operations stood at INR 261 crore, of which INR 38 crore was deployed towards the ongoing capacity expansion projects. Net cash position improved to INR 957 crore at the end of June 2023, compared to net debt of INR 217 crore same time last year. Expediting our routine CapEx, coupled with build-up of accounts receivable, led to higher working capital during the quarter. Continuing our efforts to give back to the community, we treated approximately 37,500 OPD and 1,260 in-patients from economically weaker section, free of charge. Both our strategic business units continued to report robust performance. Max@Home reported a top line of INR 40 crore, reflecting a growth of 24% year-on-year and 7% quarter-on-quarter, with critical care and medical room service lines being the major contributors to this growth. Max Lab expanded its geographic footprint to 36 cities and reported a gross revenue of INR 34 crore, which reflected like-to-like growth of 39% year-on-year and 10% quarter-on-quarter. During the months of June and July, there was a slowdown in the projects activity due to heavy rain in Mumbai, Punjab, and Delhi NCR. The current status of our projects, expansion projects, coming on stream over the next 3 years is as follows: For 300 beds at Dwarka, majority of the MEP and interior work are complete, while application for power, water, and sewage connections are in progress. The developer is expected to apply for occupancy certificate in the latter half of this quarter. We expect to commission the hospital in Q3, subject to the developer obtaining the OC. For 329 beds at Nanavati Hospital in Phase One, excavation and raft work are nearly complete. Sleeve fabrication and wall casting for DMAC and brachytherapy are in progress. The project is largely on time, and we expect to cast the ground floor slab by end of October. For 300 beds at Sector 56, Gurgaon, in Phase One, 50% of site excavation is complete, and the EPC contract is in the final stage of execution. All statutory approvals have been received. 350 beds at Max Smart in Phase One, as stated during the Q4 update in May this year, this project was facing delays due to forest approval for tree transplantation. Happy to report that the final forest approval has now been received, and we are initiating the process of transplanting the trees shortly after subsiding of rains. For 300 beds at Vikram Saket, environmental clearance has been approved and is under processing with the state level environmental approval authority. DDA has reconstituted our file, and we are planning to formally upload the drawings for approval in September, so this should be well on its way as well. For 190 beds at Mohali, demolition of existing building and shifting of services have been done. D-wall is completed, and excavation work is underway. EPC contract is in final stage of negotiation. The project is largely on time. Lastly, I'd just like to state that 3 months already into this fiscal, we continue to strive to improve operational metrics across all our current facilities and businesses, keenly monitor and execution of all our projects underway, while also prudently evaluating inorganic opportunities in our existing geographies as well as new promising geographies. With this, I'd like to open the floor for Q&A. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Yes. Tushar, the line is not muted. You may proceed with your question. Am I audible? Yes, you're audible. Please go ahead. Thanks for the opportunity. Just on the kind of growth which we have seen on ARPOB front, how sustainable that is, let's say, for next 12-24 months? Secondly, while the ARPOB growth is there, but the EBITDA per bed has been pretty stable, maybe on a quarter-on-quarter basis. If you could share your comments on that. I think, you know, we keep doing what we're doing, focusing on higher end specialty, focusing on a better payer mix, et cetera. Your ARPOB growth should continue. When it comes to EBITDA per bed being almost flat quarter-on-quarter, like I said, Q4 is the most solid quarter in the year. It's the strongest quarter, and Q1 is the weakest quarter. I'm very encouraged by the fact that in spite of that, you know, our Q1 results are flat with our Q4. Because if you look at it historically, and I'm taking away that 1 COVID year, Q1 is usually lower than Q4, because on April 1, you have increase in costs, particularly your salary costs, et cetera, for the whole year, increases on April 1. The quarter one, normally, seems to be the weakest quarter, as well as, you know, high indirect costs, usually has lower absolute EBITDA and margins which emanate from it, but that has not been the case this year. We have been flat compared to Q4. I see a very encouraging sign. Understood. So what kind of growth one can think of, on the sustainability basis, given the kind of bed additions, that are happening over the next 12 to 24 months on EBITDA per bed? Look, I can't-- I'm not going to give you a guidance on exact EBITDA per bed, but I think this is our 11th quarter of year-on-year growth, like I mentioned. The fact that the last time, I mean, recently, when we opened Max Shalimar Bagh, 122 beds on a base of 280 beds, you're seeing that, look, with 77% overall occupancy within the first month or two months itself, and it's giving us a revenue growth of 37 and 43%, respectively. I think, you know, that should sort of hopefully continue into the future as well. It should be positive from that standpoint, from all of these standpoints. Just, while you have already highlighted hospital-wise, the kind of, work underway in terms of bed expansion, but just from the CapEx number, if you could, also sum up for FY 2024 and, for the quarter? I think we're looking at INR 900 odd crores. In which are the, are the CapEx was expected in INR 9 odd crores. Obviously, it is subject to change. We're just trying to give you a block number, but you, you know that, you know, it can change from one month to another month, I think. Okay, sure. Thank you. Thank you. The next question is from the line of Damayanti Kerai from HSBC. Please go ahead. Hi, good morning. Thank you for the opportunity. My first question is on your Shalimar Bagh, clarity on your comment that you decided not to optimize payer mix. Does it mean, like, you have taken up more institutional patients there? Yes. Yes, yes. What you do is, I mean, you basically don't, do some panel over there, and you don't, filter with institutional business, because, the extra capacity, firstly, has a significantly lower cost, right? Because of, operating leverage. What it also does is, it gives you, even at, the institutional rates, you still generate EBITDA, which you've seen. The first sort of listing is that you bring in occupancy, and then you start filtering down at a later stage. Okay. Institutional bed share at around 29.7% for, first quarter. Earlier, you guided, like, by end of 2024 or so, you'll bring it down to 15%-16%. Does it still hold, or you have some different thoughts now? Well, ex Shalimar Bagh, it's down to around 27%. Sorry, end of the quarter. Ex Shalimar Bagh, it's come down to 27.4%. Clearly, you know, we've had some increases in pricing from institutional business recently, although it doesn't have a big impact on ARPOB, it's about a 0.6-0.7% so far. We're expecting in the next month or two, further revision of balance rates as far as institutions are concerned. That sort of makes us go slow on the formula. You know, again, the gap is still too much between institutional and cash. You know, it just pushes the can down by a quarter or two, not more than that. Still, you know, you're going to face capacity constraints, and you're going to have to be still, because your CTI business or preferred channels, still need those beds. Okay. As you said, like, gap between CGH, CGHS rate and CDL, CTAS patient, reduces, so, you might not be changing that 15%, 16% bed share, very strictly, right? It's not a question of we are not chasing a 15%-16% bed share. Let me put it in perspective. There is a certain rate at which my CTI business is growing, right? If the capacity doesn't come in, I have no place to accommodate that business. The best case for me is if I keep the institutional and I can accommodate my increased CTI business. As and when I can't, I distill that capacity and bring that down. Today, let's say, if I had a magic wand, and I could put up these extra beds to accommodate the increase in CTI, I would not let the institutional business go either. I'm having to do that, you know, the trajectory that we have set, it will come down to about 15%, you know, by that particular time. It may go up and down a couple of quarters because of these sort of changes, but that's about it. That's still a trajectory. If at some stage, let's say, you know, we can, I mean, like, you know, let's put it this way: If I can today acquire, big unoccupied, capacity, theoretically, adjacent to my hospital, then, you know, I will do the both the businesses. Okay. Okay, that's clear. My second question is on EBITDA. healthy ARPOB, but occupancy down sequentially, and then EBITDA down around 260 basis points, quarter-on-quarter. Does it mean, like, you did more of high-ticket surgeries, where ARPOB is high, but where you might be paying higher, like, higher payout to doctors, et cetera, like, higher cost, and that's why your margins declined sequentially? It should be read in that way? You need to complete the story. A higher-end surgery, okay, let's say you do a LVAD surgery, okay, cost you INR 85 lakhs. Equipment itself it costs you, the implant itself costs you about INR 56 lakhs, right? Patient stays in hospital for a few days, and you make, four, five days, and you make at the hospital about INR 15 lakhs. Your percentage is much lower. When you do robotics, when you do higher-end oncology, when you do oncology, cardiac sciences, orthopedics, any of the higher-end surgeries, your percentage margins are lower, but the absolute bill is higher, and in spite of the lower percentage margins, the absolute profitability is higher for patients and for beds. When you do international business, okay, the international people come for more severe diseases to India, so the billing is higher, the RPOF per patient is higher. Your percentage revenue is lower, but the absolute EBITDA per bed. I've always said that, look, I'd rather do a $10,000 surgery on a 20% margin than do a $2,000 surgery with a 50% margin, right? As you move up the payer mix and you move up, the clinical mix, you're going to see margins in percentage terms come down, but in absolute terms, EBITDA per bed, RPOF, as well as absolute EBITDA move up. That is what you've seen. My EBITDA, overall EBITDA, in spite of a lower occupancy, in spite of my cost increasing on 1st of April, okay, it's been flat over Q4, and in spite of Q4 being the strongest quarter and Q1 being the weakest quarter. I mean, that's a big, big positive, isn't it? Sure. My last question is on your utilized beds. As per your presentation, in last quarter, we have 2,523 utilized beds of the total operating bed, and this quarter it came down to 2,474. How should we read into it? As I already said, that generally quarter one is a weak quarter on occupancy. You will see the same trend even last year. Last year also, the occupancy was 74% in quarter one, 70-10% in last quarter. It always happens, right? This is the, this is the seasonality in the business, that in the, during the quarter one, when you have summer getting better, doctors do go on leave. Generally, you know, occupancy in the month of May and June tends to come down. Not, not just last year, I think if you look at any other history, seen a history of any hospital or hospital group, you'll always see the quarter one is lower. The occupancy, EBITDA, and everything else compared to quarter four. But at the same time, even if the occupancy is same, the OBs are gone up. The occupancy If we were not to add beds in Shalimar Bagh and other, other places, then the occupancy would have been 2% higher, right? You have to also consider that factor into bill down. Your Occupied bed days has moved up. Okay. Fine, thank you. I have more question. I'll get back into queue. Sure, sure. Thank you. The next question is from the line of Nikhil Mathur from HDFC Mutual Fund. Please go ahead. Yeah, hi. Good morning, everyone. Just one question I have. Now, you have reported pretty strong occupancy on the incremental beds in Shalimar Bagh. We are able to track numbers for one of your peer Fortis as well in Shalimar Bagh. They have reported decent numbers on a Q1Q basis, despite one Q being seasonally weak. It kind of seems that in that particular micro market, the demand is very strong. Would you say that this is reflective of many of your other markets as well, where, I mean, there's some bit of divided opinion whether the, whether the demand factors from next will be weak or not in, in, in this particular year? Would you say that a similar trend is kind of playing out in other micro markets as well, especially in which you are present? I don't see this play out anywhere, in fact, for any people. I've read other people's numbers, I've seen our own numbers. year-on-year, you have an increase in occupied bed days. If my total capacity goes up by, let's say, 5% or 4%, right, and my occupied bed days goes up by 3% or 4%, and my percentage occupancy remains the same, it's bound to happen, right? When you increase capacity, in percentage terms, your occupancy may be flat, but in actual terms, the occupancy is more. There are also other factors, we have not seen any building of demand in any of the hospitals, right? That's what you're looking at. There's no impact on demand, right? All hospitals are seeing variances. As we know that, you know, June, generally, occupancy is lower, but we've seen that occupancy come back in the previous quarter. Got it, sir. This was all the question I had. Yeah, I don't, I, I, I don't, cater to this point, at all. I mean, I think, demand-- You have to look at the business scene year-on-year, you know, quarters year-on-year rather than quarter-on-quarter. Unless you have a fourth quarter, which is a good quarter, which is running below the third quarter or something like that, then I'd worry. Right. No, I'm looking at it on a year-over-year basis only, but I mean, in this particular micro market, the numbers are looking strong on a quarter-over-quarter basis as well. That's why this question I had. But I mean, I completely understand what your thoughts are on the demand and how it's panning out. Got it. Thank you so much. Thank you. Thank you. We have the next question from the line of Lavanya Tottala from UBS. Please go ahead. Hi, thank you for the opportunity. I just have one question. I understood that there is an increase in employee cost, but if I look at Max control level, there's also increase in raw material as percentage of sales. Is there any increase in the pharma medicines that you are seeing, which is likely to sustain? ... I think, as far as the pharma cost is concerned, there is an increase because, like I mentioned, you're doing more higher-end work. Like I said, you've doubled your robotic procedures. When you do all of that, the consumables are more expensive, and that, and the percent is higher percent of the procedure. The overall EBITDA for procedure, overall, value that we get out of the billing is higher. In terms of percent, it's lower. You'll see ARPO is higher, your, cost of goods goes up, your absolute EBITDA per bed and EBITDA also moves up. That is what we've seen. One is that. As far as, your second question was with respect to the, to the employee cost. The employee cost moves up by usually about 6.5%-7% per year, happens on April 1. This year, you will see a larger year-on-year increase because you also have 142 new beds that we put up, 152, 44 plus 92 beds. We've created 80 more ICU beds. We've created 50 more, total 10 more OTs. When you're doing that, the manning of all of these is more. I would encourage-- It's almost like saying, theoretically, if you double capacity, then you will almost be doubling your employee strength, and therefore your employee cost. You know, then you have to have attendant increase in revenue. You see, look at it as a percentage of revenue. I don't think there's much of a change over there. Mm-hmm. In absolute terms, when you look at it, it's bound to increase because we're doing we're putting up more capacity. If I put more 4%, 5% more capacity, that itself should give my employee cost should increase by about at least a few percentage points because of that, right? Then I do a few percentage points of higher ICU beds. So a regular ward, for example, requires 5- 1 nursing. An ICU requires 1- 1 nursing. You know, it's almost 5 times the amount of people that you require for ICU versus that, but it generates you more as well in terms of revenue. You want to do all of those things. Got it. Oh, that's it. That's it from my side. Thank you. Thank you. Thank you. The next question is from the line of Kunal Dhamecha from Macquarie. Please go ahead. Yeah, thank you for the opportunity. So, sir, I think, you know, there is some confusion regarding the seasonality, at least on my end. So I think there is, you know, seasonality, the specialty mix that plays out, you know, in different quarters, and then there is what you cited as in terms of volume, also, kind of, there is some seasonality, right? That impacts our, you know, revenue on a quarter-on-quarter, year-on-year basis. Could you help us explain, you know, you know, how the seasonality... Because as far as I know, Q2 is more like internal medicine patient because of infectious season, you know, season in the country, right? How that impacts our revenue and EBITDA, you know, quarter, let's say, starting from Q1 to Q4, how you see specialty seasonality, and then how it impacts our revenue and EBITDA? Look, orthopedics happen less in winter, cardiac sciences happen more in winter, right? More insurance sort of people come more for insurance better because in Q4, the, the thing is, like, lapsing and so on. I'm not talking about last year, I'm saying any hospital chain over the last 10 years, okay? Any hospital, any hospital, okay, mature hospital, otherwise. You speak to a management or you look at the history, Q4 is the strongest, Q1 is the weakest, okay, as far as the occupancies are concerned. As far as Q2 is concerned, occupancy is highest, like you rightly said, because of dengue, other medical, this thing, et cetera. You have the highest occupancy in Q3, but you have lower ARPOBs in Q2. You have the highest occupancy in Q2, but you have lower ARPOBs in Q2. Mm-hmm. Okay? Because of dengue, because of, you know, medical admissions, et cetera. Mm. That's a very standard thing. I mean, Q1 is also down because doctors are on leave also, right? They go on summer holidays, they postpone their surgeries, et cetera, and the children's schools are on holidays. In fact, people postpone their own procedures because it's examination time for kids, et cetera, and so on and so forth. All of these things matter. Mm. These don't matter this year. They've been mattering every year for the... I mean, ever since I've been in healthcare or before. Mm-hmm. Mm. Let's say to that extent, the trends in July and August, how are those panning out? Because we are anyway 1.5 months into the next quarter, right, so. I'm not going to give you a forward-looking guidance, but, let me put it this way, it's secular. Okay. Sure. Secondly, on the 13% ARPOB growth, I, I, I'm not sure if I missed your initial comment because I joined little late. On the 13% year-on-year growth in ARPOB, if you can highlight the major moving pieces, because we have quite a few, right? CGHS, rate revision, international- No, no, no, no, sorry, sorry, sorry. Look, CGHS rates, okay, has not impacted ARPOB more than 0.6%. Okay. Okay. Okay? Mm-hmm. Mm-hmm. We have number return. Here, let's look at year-on-year to start with, okay? Mm-hmm. Your international patients grown by 31%. Your robotics has doubled. Oncology business, okay, is growing at a much faster clip than anything else. So is your cardiac sciences, so is your orthopedics. These are all the high alpha businesses. Mm. When you do that, okay, your ARPOB increases. Mm-hmm. Right? Okay. Right. When you do that, of course, the less medical admissions during this time, et cetera, a lot of that also kind of helps your overall ARPOB increasing. The best part is, okay, that I can't remember the last time your Q1 was almost equal to your Q4 as far as the overall EBITDA is concerned. Mm-hmm. Mm-hmm. Okay, I mean, I'm going, like, apart from the COVID year, for any particular, I mean, as a student of hospital, you will go through the history. Mm-hmm. Your, this is purely on increase over, it's not CGHS ratio, et cetera. Every year, we have an increase in pricing that impacts our revenue by 2% to 2.25%. In spite of increase in salary and other indirect costs on the 1st of April, you not only absorbed it, but your Q1 overall EBITDA is equal to your Q4 EBITDA. Mm, mm, mm. Sure, sure. Then, you know, if I may, just 2, very housekeeping kind of question. What was the international bed share? We have shared the payer mix, but bed share, if you can share? It's around 5%. 5%? Okay. Yeah, 5. I mean, it gives you 9% revenue. Yeah, yeah. Yeah, it's 9% of revenue. Correct, correct. Just a clarification. The way I understood is, any procedure which uses more devices, which is where, you know, our EBITDA per bed would be higher in absolute terms, but in terms of margin, it might not be accurate. Is the correct way to understand? Actually, any high-end procedure, okay, has lower% margin, higher value margin. Okay, okay. Okay? If Okay? If you look at oncology, look at orthopedic, look at cardiac stenting, all of these- Mm-hmm. Okay, have lower margins. Mm. percentage-wise, higher RPOF, higher billing, and higher EBITDA per patient, higher EBITDA per bed. Okay. Typically, you will pay a doctor also more for a surgical procedure, right? Compared to medical, you know, specialties. There obviously will be, you know, higher effect there also. Actually, yeah, on medical specialties, we are only basically getting the patient, we're giving a medicine, doctor visits, et cetera. Your margins will be more, but absolute billing is low. Got it. Got it. Okay. Perfect, I have more questions. I'll get back in queue. Thank you, and all the best. Thank you. We have the next question from the line of Bino Pathiparampil from Elara Capital. Please go ahead. Hi, good morning. Just wanted to know, you know, earlier you used to give a schedule of new capacity coming online all the way up to FY 2028. I haven't seen it for the last couple of quarters, so just wondering if all those timelines given earlier, two, three quarters back, still stay, or is there any change in that? No, I just give you updates, so there's no necessarily change in that. I think, other than the update that I've given you, we sort of, had put it out. Are you still out? Yeah, it's there in the investor presentation. It's there in the investor presentation. I think Abhay has given you the update, firstly. I think everything else, everything else except for Max Smart, where we are delayed because of the first approval, and those approvals are also been received now. We have to transfer the pre-cut, and that's the only project where we're finding some delays. Right, and we said that last time that because of those delays that we've seen, we are fast-tracking the transformer foundation, the pre-addition, right? Usually, any data which is static, okay, which doesn't change, we don't give every quarter. I think, you know, we give changing quarter. You see it on the website, it's on the investor presentation. Okay, I will check that. Thank you. Okay, thanks. Thank you. The next question is from the line of Kunal Dhamecha from Macquarie. Please go ahead. Thank you for the opportunity again. To the time that we have added this to ride in Shalimar Bagh, and you also said that we have added, you know, some of the doctors, et cetera, right? Would it be fair to say that the addition of, let's say, manpower, would be largely in line with what our averages, you know, at network level would be? No, like I said, that we've added, manpower for these hospitals. No, you're talking about for the incremental beds with Shalimar Bagh and others? Yeah, yeah. It's lower. It's lower. Mm-hmm. You don't have to add the same amount of, or especially not the same cost of manpower. I've mentioned the operating leverage here. That's not all, right? I mean, you added 144 beds, you added 18 ICU beds, okay? You added 10 odd OPs, okay? All of this generates a lot more than what it was previously being used for, as both in terms of revenue and EBITDA, but has, you know, higher manpower requirement. Then, you know, we've, sort of... Over the last year, what we've done is we've strengthened our projects team, because all the projects we're doing, the digital team for the app that we've come out with, what we've done is a lot on, sort of the ESP, et cetera, as well. All of these things play out. I would encourage you to look at it in percentage of sales, rather than on an increase necessarily year-on-year. Our, our salary increase has been the same, 6.7% is- One on the strategy side, you know, if we, our, our earlier comment was, that we will be mainly focused on the metro cities, like, Delhi and Mumbai, et cetera, right? You know, some of the competitions have been now opening up into tier 2 cities, and we are seeing, you know, good, kind of ramp up, in terms of both top line and, you know, the profitability. Would we also look at these, markets, going forward and probably broaden our horizon as to where we are going to expand? I think you missed out on almost every call of mine prior to this one, okay? I will repeat myself. Whereas any city where at least one or two of our competitors have proven viability, we would enter into both cities. Presently, which expansions we are doing, I'm not saying it's because we only want to be in metros. We are doing because we have a business need. We've run out of capacity, okay? The demand, which is surging in, on my doorstep, I have waiting of a couple of days, if not more, sometimes, in ICUs. Okay, we're doing down field capacity in order to tap that demand, right? First and foremost, I need to elevate the business needs that I have. Thereafter, we're looking at other cities. We continue to look at. We have said in the past, there are 21 cities that we have identified, that we're looking at. These are cities where at least one or two of my peers have proven viability. We think we can go there and do it better. Mm-hmm. In terms of inorganic activity, you know, obviously, you know, probably my, my sense is valuation could be a factor, you know. Do you see that intensity, you know, in terms of the ask price, versus what we are willing to pay is reducing, increasing over the last, let's say, 6 months? For that, yeah, you have to know how much I'm willing to pay. We are usually guided by, you know, we are guided by ROCE. We seek a 20%-25% ROCE, right, in a business case. It's less important what we're paying today. Of course, nobody likes to pay more, but what is important to us is what is the business case we are willing to underwrite, you know, four or five years down the line. Do keep in mind that, our EBITDA per bed is at least 50%-55% better than the next best player in the industry. Our ability to write a stronger business case perhaps is more than others. You know, and that's what we are willing to back. Mm-hmm, mm. Right? That is why, because. Mm. That is why I asked about the spread and not what you are willing to pay, right? Spread, whether that has increased, decreased, you know, can be the... It's irrelevant, right? The point is this, that no matter what company, you know, there will always be people running full errands. Okay, they want to buy more expensive than what I'm willing to pay. The fact is... Look, if I am today shooting for a 20%-25% ROCE pre-tax, four or five years down the line, okay, with a particular ability to underwrite a business case- Mm-hmm, mm. That's the number I'm willing to, willing to pay. That's the maximum I'm willing to pay today. Yeah. No change there. Somebody else, okay, who won't run a full errand, will be willing to pay a higher number. The fact is, the other person then has to write a business case which is at least equivalent to mine. Mm-hmm, mm, mm. Which at present, at least, I don't think anybody seems to be doing. Okay. Okay. At least on their EBITDA per bed or performance, et cetera. The last, again, a housekeeping question. Let's say the consumption of drugs, if we can quantify as maybe% of revenue in our, in our hospital business, as a% of revenue or as a% of costs, you know, would be helpful. A broad range would also be fine, not exact. That's not a static number, right? I mean, if, let's say, if I was to do more surgeries, more higher-end surgeries, that number will increase. Mm-hmm, mm. You know, what we need to do, we have, we have beds, and we have days in a year. Yeah. Yeah. Right. EBITDA per bed- Quarterly, quarterly basis, maybe, you know, 2, 3 year, you know, average would also be fine, or a range would also be fine. No, we don't give forward-looking statements, in guidance. I'm asking about the historical, you know, what would be the drugs as a% of probably revenue of? No, it'll be in the range of 23%-25%, right, depending on which month, quarter you're talking. That's the range, I would say, in the, in the surgical number, right? Okay. Okay. Thank you, and all the best. And by the way, we don't call it material costs, but you know, that costs, and these include the F&B costs et al. also, right? That's the definition I use. Yeah. That is, that in, this includes what? Can I- F&B and so on and so forth. We don't give precise, as far as drugs are concerned or consumables are concerned, include F&B and some of the other costs as well. Okay. Okay. Sure. Sure. Thank you. Thank you. The next question is from the line of Dheeresh Pathak from WhiteOak Capital. Please go ahead. Yeah, thank you for the opportunity. You gave a commentary on the projects that are underway, but I'm just trying to get a better understanding of the commissioning timelines. Dwarka, which is 300 beds, Q3 of this fiscal year, FY 2023, based on the end of Q3, right? In FY 2025, as per the earlier investor presentation, right, there were 4 assets, smart and delayed, now there are 3. Nanavati, 329, Mohali, 190, and Gurgaon, Sector 56, 300. Of these 3, if you can individually call out their commissioning timing. As per your current understanding, based on the current project progress. Yeah, this should be. Basically, what we-- given the timeline is for the completion of the construction, right? You can assume that in the next quarter of that will be. For example, if it's in Q4, FY 2025, that means Q1 of FY 2026 will be the commissioning, right? There'll be obviously, once we register the 30-year, there's a time lag of one and a half, two months. As Abhay had mentioned already- Yeah, sometimes it comes sooner also, so yeah, more or less, it's the timeline you mentioned. Yeah, we have, we are, we are all projects on time, except for the Smart one, which is the, which is the, you know, Smart, Smart. There we are delayed by 6-7 months because of the forest approval, right? That's the only project where we think there'll be a probably slip in timeline, right? But, but in truth, you know, we have stopped it in the Iran one, which was also in the same complex, complex to France, right? That we keep on. I'm sorry. Individually, if you go, Nanavati, 329, we expect in Q4 of 2025? Yes, as scheduled. This will be finished in quarter four of FY 2025. Right, that is March 2025 is going to be finished. We'll be starting this in the first quarter of FY 2026 year. Okay, that. February to April. Mohali, Mohali. Mohali? Similar. Similar. Similar. Okay, most of the assets, Q4 of FY 25 commissioning, and Q1 FY 26 is where the. Yeah, we are commissioning end of, 2025, right? Yeah, end of 2025. End of 25. Okay, understood. Just to understand, of, for these assets, whatever is the estimated CapEx outlay, I don't know if that number is handy or not, how much have you already spent? I think as given the given the project updates, for example, in Nanavati, we would have spent probably around 20-26% of the total spend. Other than Nanavati, Mohali, we just finished the excavation. We done the D-wall, currently most of the progress is being given to the to the EPC, EPCG, EPC vendors now. I would say large amount of, you know, CapEx is yet to be spent. On an overall basis, if you ask me, it will be probably a 12-13% spent. Nanavati is the only one where we have, you know, more than 20% spent in them. Thank you. Just keep in mind that 1 million sq ft, right, it's a building. Hello? The current participant has dropped from the queue. Okay, okay. Yeah, other than one idea is that generally the CapEx spend is because it's also having to plan, right? Typically, 30% is back, all is, you know, back in it. The infrastructure doesn't cost too much, INR 2,000 sq ft. If you're building 1 million sq ft, you spend INR 200 crore in the structure. That's not the expensive part of the project, which you do upfront. Thank you. We have the next question from the line of Harith Ahamed from Avendus Spark. Please go ahead. Hi, good morning. Thanks for the opportunity. A couple of questions on the CapEx numbers that you talked about. Actually, the operating cash flows, you mentioned is lower because there's higher routine CapEx spend this quarter. Will you be able to quantify the same, the routine CapEx that you spent this quarter and the budgeted spend for the year? Just trying to understand what is your ongoing regular maintenance CapEx. Yeah. Typically, we spend around INR 170-180 crore in a year. This quarter, we spent INR 70 crore, right? That means we obviously advanced and fast-tracked the spend so that we can get the benefit of the spend during the course of the quarter, course of the year. That's the number. Okay. On the project CapEx, the INR 38 crore spent, I'm assuming it was lower because of the weather situation that we had in, in the Delhi region, and then we should expect it to pick up. For the year, is there a number that you can share? Yeah, we said that already. Okay. INR 900 crore spent at the beginning of the year. How much? Sorry, I missed that. INR 900, INR 900 crores. Nine, okay, okay, got it. There'll be a significant pickup as we go into the next- Yeah, yeah. Quarter. Okay. On, on the M&A front, are there any opportunities that, that you're exploring currently or main, keeps coming up in, in as per various media articles in various M&A situations? On, on the litigation that we had initiated, against Care, is there, any update on what are the next steps on, on that particular situation? Care, I mean, the matter is sub judice, I can't really speak about it, but we've filed an appeal in Bombay High Court. As far as inorganic expansions are concerned, yes, our name everywhere, whether that is true or not is besides the point. Lots of places where we are looking at things, our name doesn't come up also, or those matters are not in the public space. I think to your point, we are looking at quite actively. We fortified our teams as well. Keshav has been a new addition to head M&A from our standpoint. We are quite sort of focused on this. Thank you. The next question is from the line of Pallavi Deshpande from Sameeksha Capital. Please go ahead. Hi, yes, sir. Thank you for my question. I just wanted to understand how was the operating cash flow. If you could also highlight on the bed days. Secondly, what would be the bed days separately for the government link? Sorry, Yes, the DSOs are at the end of the quarter was 66 days. They have gone up compared to 55 days at the end of March. There's a buildup of AR in the, in the ESIC segment and also the PPA segment, insurance segment. What we see is that in July, it's getting unwinding a bit, right? That's the DSO. You had a question on, on cash flow also, right? Yes, just continuing on this, I didn't follow the first part. You said there were 2 parts to the increase. The first part, what's due to? Yes, as I said, the DSO overall went up by 11 days, from 55 days to 66 days, right? Mm-hmm. Behind the end of March, 66 days at the end of June. Right. This is basically because of buildup of AR, right? There's a AR buildup for the ESIC segment, the DGCS and EGCS and, you know, these, these PSUs, and also some buildup in the insurance, right? Sure. The insurance, you know, we had a 24 days DSO at the end of March. This has gone up to 34 days at the end of June. There's some buildup there. As I, as we, as we, you know, speak today, I'm saying there is some unwinding which has happened in July. Okay. We brought some of those over to you in July. Right. Things are getting normalized. Yeah. Sir, overall, on the strength of the PSUs and the EGCS, is this, are we going to see better years than last year in terms of government re, making the payments faster? Yeah, I mean, so far the story looks, looks bright, but we don't know what will happen. When the budget finishes, then, you know, how much time they take to get allocation, et cetera. That's what determines how fast will they pay. Thank you. The next question is from the line of Mayur Patel from 360 ONE Asset Management. Please go ahead. Yeah, hi. Thanks for the opportunity. Most of the questions got answered, but just in your business planning about the new assets, which you mentioned, would be commissioned by end of FY 25, you know, what would be the peak occupancy, which you're targeting in the new assets? Is it possible to share some thoughts around that? Sorry? Can you repeat the question again? What is the peak occupancy you expect? With the new, with the new- With the new capacity? Yeah. The peak capacity will be similar, at, could go up to about 80%. Okay. In line with, whatever are your mature assets currently, 77%-80% is the fair way to assume? That's right. Okay. Okay, fine. Thanks. That's it from my side. Thank you very much. Thank you. Thank you. The next question is from the line of Amit Kadam from Canara Robeco Mutual Fund. Please go ahead. Yeah, hi, sir. Hi, Amit. Yeah, hi. I'd just like, because you gave some of the timelines of commission- Sorry to interrupt, Amit, but the line for you is not very audible. If you could please speak closer to the mic. I'll try once again. Yeah, is it better now? Yes. Yes. Yeah. Hi, just like on this new, the timelines that you provided for commissioning of this various bed, so from that, what I can understand is that, we from here on, 300 beds of Dwarka is expected to get commissioned in quarter four, start of the quarter four, this year. Then we have something coming in the quarter one of FY26. Yeah, last quarter, 2025, first quarter, 2026. Yeah. Then I'm just focusing on the commissioning or revenue generation potential. I mean, little, little, little early to kind of project that, you know, because exactly which month it happens in the year. When we said end of 25, we meant February, March. Now, whether it's February, March, or it's, continuously February, March, or it's March, April, it's a little difficult to sort of this thing, right? I mean, yeah, but assume it comes on stream next year for calculation purposes. Right. The broad thing which I'd want to understand, during this particular period, I understand we have a 300 bed to ramp it up. What are other levers in that particular year, which could still make sure that our growth momentum continues? We fall back on payer mix. Okay. Right? That's one. We have another 20, 30 beds on the margins will come on stream, through the year, but, that's about it. I think this, this is in terms of, occupancy and the quality of occupancy and occupied bed mix. Yes. Of course, we have a case mix which has increased, as you've seen. That continues to hold. Okay. Because Dwarka is a- If you take Q4 or Q1 versus Q1 this year- Yeah I think other than occupancy, you've seen a big, and you take out the 2-2.5% increase in revenue, you see the increase in RPOC because of increase in clinical mix, largely. Payer mix, of course, more international and some. Just I was going to come to the international, but before that, the, we just wanted to understand, that when the Dwarka comes on stream, what are the changes this thing will have on our overall number? I think this will be a kind of a new, complete, standalone assets, in- even though in the same region, but, it would have its own, individual standalone case, where you have to do- Yeah all the recruitment start from top to bottom. Right. Typically, you have a break-even receive, which will be, you know, more than INR 20-30 crore. Break-even, start to break even. There may be some loss in the initial phase. This is, this is a story with anything to write. That should not be, say, INR 30-40 crore in there. It's not a big sum of money that won't go there, as I see, it will be 10 months that we are targeting a break-even. Only with the... Yeah? to... Hello? Yeah. I mean, Dwarka is a kind of greenfield, we are targeting a break-even in 10 months of operation. We tend to do better, but yeah, our direction is about a 10th month or the break-even. We should not consume more than INR 30-40 crore. Okay. No, that 30, 40, that's what I wanted to understand from you, and that answers my question. The third thing and final thing is on the international thing. We have been doing it quite well in that particular segment. How do I look at this particular thing, at least, like, on an annualized basis? How this thing piece should further do for us? Like, moving towards double-digit is like a percentage away, how do I look at this particular piece beyond that particular percentage point increase? Look, it's going well. I think, I've always maintained that this is a big area of growth for us. You know, again, I will stay away from making forward-looking statements, Afghanistan, which is 12% of our business, is still down to 0. Very, very recently, they started flights from Afghanistan, so that's a very positive, big positive. Hopefully, in the next few quarters, that should kick in, that should give us something as well. This business is growing. You know, you know, I'm gonna avoid giving any forward-looking statements. Do keep in mind, I, we had a 13% year-on-year growth, of which 3% has been through OBGs occupied by day occupancy, as you may call it. Out of the 10%, if you take out 2 percentage points for, for price increase, I think the balance is really being through clinical mix. Little bit has been through, you know, international and so on. All right. because I-- why I was asking, so one thing is that the, the volume or the inflow or the patient count may go up because there would be certain, like, some geographies, would open up, which were restricted, or, or maybe there were some embargoes. Second is that some efforts what you guys have taken by going into various geographies, setting up a front-end offices there, that also will lead to your inflow. Second is that the, this inflow could also, have a, like, some kind of a delayed, surgeries, because they were not able to have that particular, Well, not so far. I don't think we've come, what you say, anything which are the embargoes. Hopefully in the future, some of it may see through that. We don't see any sporadic demand right now. I think it's being very kind of secular and should continue. That's the plan. We have not seen any one-time businesses, what you're saying, you know, like bottled up demand, which will suddenly come in and the rest is going to come later. We've seen this secular growth through the year. Thank you. The next question is from the line of Alankar Garude from Kotak. Please go ahead. Hi, thank you for the opportunity. Firstly, Abhay, when are we planning to commission the 100 brownfield beds at Vaishali? Vaishali? Vaishali was commissioned two years ago. Brownfield. We had signed an agreement, right, for 100 beds. We have signed an agreement to sell, right? There, there's a CP for that, right? There, there are some litigation going on. Looking to buy. We, if APS were be achieving them and he's selling it. Now, basically, you know, there, there are some ongoing litigations that High Court and, and, you know, District Court, et cetera. They have to settle those litigations before we can hand over that piece of land first, right? You know, Vaishali is early. Yeah. Early phase. I mean, Vaishali first, we have to procure the land. That's why I would wonder which Vaishali you're talking about. Okay. I think. We need to purchase the land. The land has to be sorted, and then we will purchase the land, and then they will be building on that. That's still our, yeah, orientation, yeah. Got it. The same question on Gurgaon, the second piece of land. I think there as well, there is a litigation ongoing, right? Yeah, yeah, yeah. That's it. It is the order from Punjab and High Court. There is a litigation, right? They tend to be leased it after one year of giving up situation. Taking full money. Taking the full money. I think we have a good case here. The next date is somewhere in December. That was in any case, post 2028 plan. That was never part of the plan until 2028. Even if you see the investor presentation, the CapEx plan, et cetera, et cetera, that was something which was never even kind of account. Neither the finals, nor commissioning, nor start date for it was ever accounted for. Thank you. The next question is from the line of Senthil Kumar from Joindre Capital Services. Please go ahead. Hi, thanks for the opportunity. Can you share the revenue and the EBITDA growth, excluding Max Chandigarh in Q1 FY 2024, on year and EBITDA? I can't hear you. I've already said that the revenue has grown by 37% Y over Y in Chandigarh, and 43%, you know, EBITDA growth. What is the contribution in top line from Max Chandigarh, then? No, I don't have the ready numbers of this brand. Oh, okay. My second question is, what is the gross debt as on June 2022? There's no debt, there's net cash. On a gross, this will be an INR 642,000 number, which includes the TT limits. Thank you. We got cash with it, right? Of INR 1,600 odd crores. Yeah, yeah. Next, there's a tax surplus of INR 97 crores. Thank you. The next question is from the line of Amit Bhawani, an individual investor. Please go ahead. Hi, Abhay, thank you for taking my call. I saw the presentation, I saw the performance in the oncology segment, even some of the peer hospitals have reported some really good numbers in the oncology segment. I was just wondering what's happening. Is there some kind of change in, in the, you know, health insurance, you know, policies that are allowing more coverage of oncology? Can you elaborate a little on what's happening there? I mean, nothing in particular. I think, you know, incidents of cancer is increasing, awareness is increasing. More and more people are sort of acquiring health insurance and are able to afford to come to private sector hospitals, which obviously for more high-end diseases, you know, are preferred compared to perhaps smaller nursing homes. We see a drive towards that. Also, we've seen that in oncology, there are more usage of ORC drugs, right? Which improve, improve the revenue, because these ORCs are generally expensive, right? Got it. Got it. Got it. And how does oncology growth impact our inpatient, our outpatient, revenue? Because how does, how is really radiation and chemotherapy really accounted in, you know, beds in terms of bed occupancy? It's not, it's not. It's daycare. Any daycare procedure is not part of occupancy or IPD sort of. I mean, it comes through, through the RPOB, because you take all the revenue and you divide it by inpatient beds. Any daycare procedure, daycare, et cetera, is not part of occupancy. Okay, the, the ARPOB will, will go up. It's not a part of the 3,400 beds. These are not census beds. These are not census beds. When you do occupancy, you take a denominator of total number of beds. If you, we have 3,400, let's say, beds, for now, 3,500 beds or whatever, okay? Which does not include the non-census beds, which is the chemo beds, dialysis beds, daycare beds, ER beds, VR beds. If we add all of that, we'll be able to find the number. Thank you. The next question is from the line of Damayanti Kerai from HSBC. Please go ahead. Hi, I just have one question. Abhay, you mentioned you added 44 beds through internal restructuring, et cetera, during first quarter. How many more such beds can come, say, in 2024? Expect another 20, 30 beds. For this fiscal, right? 20, 30 beds. The plan is to add another 40 beds. Some of them are getting added in July, and some will happen sometime in August. Okay, 25, 30 beds. Okay. 40. Okay, 40, yeah, 40 beds. It will be an ongoing exercise, right? In coming years also, you can, like, choose to add such beds. No, we can't say. I mean, things are happening, right? We are now pressing and at the final stage of capacity, et cetera. We require that capacity is somehow defined. There's always some elasticity in there. Moving the laboratories out, we're moving the offices out, we're moving the kitchen out. I think that's what we're doing to add in beds. It's not an annual, you can't do it every year. Let me just put it this way. Thank you. At least that's what the team tell me now. I mean, like I said, it's probably quite simple. Thank you. The next question is from the line of Lavanya Tottala from UBS. Please go ahead. Hi, thanks for the opportunity again. I just wanted a small confirmation. So, the CGHS increase in rates related to the radiology test, that has not come in in the Q1 any impact, right? What kind of impact that can have on our health? No, all of that, all of the CGHS rates, some of it came in June, some of it came in May, I think all of the impact is about, has been about 0.6% on RPOC. Overall, yeah, so far, if you want to talk on the price increase of CGHS, CGHS business has 60% of that, that we build in material costs, which is basically drugs and consumables, et cetera. 40% is what is the, is the item which are actually carry items, right, in a way. Of the 46%... 40%, 26% of the 40% have been touched by the price revision so far, on that 26%, we have around 50% price increase. In a, in a nutshell, overall price increase is 5% increase in the total bill for the ICU patient, right? That's the story today, and the absolute amount for us could be around, if I take the number for whatever has been the Q4 volume and take the price increase, which has happened in June, that will be a, you know, INR 49-54 crore. Okay, all of that is still not, still not there in, Q1 number, right, then? Yeah, it won't be fully, yeah. That Q1 would be, you know, would be probably INR 10-11 crore out of a INR 50 crore, you know, full year annualized number that we see in terms of price revision. Thank you. The next question is from the line of Alankar Garude from Kotak. Please go ahead. Yeah, sorry, I got dropped off earlier. Just 1 follow-up. Historically, in the run-up to the general elections, has Max seen any increase on the receivables front, given the higher institutional mix? Not really, I think. No, there was an increase in the AR by the, in by end of June, but in July, we've seen, you know, some of it unwinding, right? There's not a, there's nothing, nothing, we don't see any impact of that. Yeah, even in the prior years, may, be it 2014, 2019, no impact per se? No, no, no, no, no, no. Fair enough. Thank you. Thank you. Ladies and gentlemen, that was our last question. I would now like to hand the conference over to the management for closing comments. Over to you, sir. We would like to thank each one of you for taking the time out and being on the call. Appreciate your time. Thank you. See you next quarter. Thank you. On behalf of Max Healthcare Institute Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.