Ladies and gentlemen, good day and welcome to Krsnaa Diagnostics Limited 2Q FY23 and 1H FY23 earnings conference call hosted by Equirus Securities. We have with us from the management Mr. Rajendra Mutha, Chairman and Whole-Time Director, Mr. Yash Mutha, Whole-Time Director, and Mr. Pawan Daga, Chief Financial Officer. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Yash Mutha. Thank you, and over to you, sir. Good afternoon, everyone, and welcome to Q2 FY 2023 results conference call of Krsnaa Diagnostics Limited. Thank you, everyone, for joining us today. We have already circulated our earnings presentations, which is available on our website as well as the stock exchange's website. I hope you all have had the opportunity to go through the presentation. From an industry perspective, the need for high-quality and affordable diagnostic services is clearly visible as it is an integral part of our healthcare industry, which plays an imperative role in diagnosis, assessing disease, and plays a major role in the treatment, management, and even prevention of diseases. Today, the Indian diagnostics market is valued at $10 billion and projected to a CAGR growth of 14% in the next five years. The key fundamental drivers of the diagnostic industry, such as a large population of 1.3 billion people, rising per capita income allowing increased affordability and need to access better healthcare services, the emergence of lifestyle diseases, and increased awareness of preventive health checkups. Overall, looking at India's demographics, there is a vast and underpenetrated market of diagnostic services, which offers an immense opportunity to both organized and the unorganized players. Furthermore, recognizing the importance of making diagnostic services affordable, the government and various states are continuously evaluating public-private partnerships as a viable and best alternative to provide high-quality diagnostic services at affordable rates to the masses. Today, Krsnaa Diagnostics is a leader in the public-private partnership diagnostics space, and we are proud to have expanded our presence in the last five years, making high-quality diagnostic services affordable and available to the remotest corners in the country. We are well positioned to serve our patients, and we see tremendous runway ahead to build upon our solid foundation. With this backdrop, I'm pleased to inform that in line with setting up new centers in the state of Himachal Pradesh, the company has operationalized 10 pathology labs out of the 24 and 126 collection centers out of the 190. In the state of Maharashtra, the company has fully operationalized its diagnostic centers at K. J. Somaiya Hospital and Research Centre, Sion, Mumbai, and at Pandit Madan Mohan Malaviya Shatabdi Hospital in Govandi, Mumbai. In the state of Punjab, as per the agreement with the government for procurement, operation, and maintenance of 25 CT scanners, six new MRI machines, 30 pathological labs, one referral laboratory, and 95 collection centers across the state, the company has operationalized diagnostic centers at two more locations, that is, Mansa and Sri Muktsar Sahib. With this, the company has now operationalized 20 CT scanners, 5 MRI machines, 18 pathology labs, including one referral lab, and 95 collection centers in the state of Punjab, which amounts to completion of almost 88% of the project as on date. We are progressively expanding our presence, and during the quarter, we've added 7 radiology, 50 telereporting, 20 pathology labs, and 116 collection centers. As of today, Krsnaa is a leading PPP diagnostic player with 120 radiology centers, 1,489 telereporting centers, 72 processing labs, and 677 pathology collection centers. The implementation of the remaining centers is on track. However, there have been some regulatory and procedural delays in operationalizing these centers. We expect all the centers mentioned in the RHP to be operationalized by the end of the third quarter of the current fiscal. Coming to the financial performance during the quarter, during the second quarter, Krsnaa registered core revenues of INR 123 crores, a growth of 19% year-on-year despite the high base in Q2 FY22 due to the second wave of COVID-19, and 9% on a sequential basis. The COVID-19 revenues declined from INR 5 crores in Q2 FY22 to INR 0.3 crores in Q2 FY23. Krsnaa continues to grow its core revenues with a focused approach. Our EBITDA stood at INR 31 crore with margins of 25.2% and net profit of INR 15 crores with margins of 12.5%. Compared to previous quarters, which saw an impact on margins, our margins for this quarter have stabilized with increased contribution from newly launched centers and therefore giving us confidence that our margins are expected to improve in the upcoming quarters with the maturity of newly launched centers. On the B2C side of the business, we are pleased to announce that we have decided to enter deep markets through a franchisee model and plan to launch 600 collection centers across India providing services at attractive rates. The company will strengthen its footprint across Maharashtra, Himachal Pradesh, Punjab, West Bengal, and Rajasthan in a phased manner with a spread across metros, tier two, and tier three cities. The centers will be equipped to offer specialized services in genetics, genomics, and molecular diagnostics along with routine investigations of biochemistry, serology, and histopathology. The centers will offer dedicated services to women's health, including hormones, PCOD, as well as diabetes monitoring, cardiac health, and cancer care. With this expansion, the company would be providing premium quality diagnostic services to patients, which will be accessible to them at highly attractive rates. On the technology front, we're also implementing the latest CRM from one of the leading vendors. This will help us create efficient automated business processes to increase productivity, provide the team with relevant data points to enhance customer engagement with an overall aim to improve customer experience and satisfaction. Looking ahead, we are focused on timely implementation of our projects, which will augment step-up growth coupled with maturing of our recently launched centers. Further expansion of the B2C businesses. With all these initiatives underway, we are confident that Krsnaa is well positioned to meet its annual targets and remain one of the fastest-growing diagnostic chains in India. I will now hand over the call to Mr. Pawan Daga, our Chief Financial Officer, to discuss the financial performance. Yeah. Thank you, Yash. Very good afternoon to all the attendees. I will present a financial highlight for the second quarter and half-year ended September 2022. In the second quarter, the company registered total revenue from operations of INR 123 crores, an increase of 13.6% on a year-on-year basis from INR 108 crores and 8.9% on a sequential basis from INR 113 crores in Q1 FY23. The growth is led by our core business comprising radiology and pathology, which registered revenue growth of 18.7% year-on-year and 8.9% on a sequential basis. The COVID revenue declined by 94% from INR 5 crores in Q2 FY22 to INR 0.3 crores in Q2 FY23. Operating EBITDA for the quarter stood at INR 31 crores, an increase of 9.5% compared to the previous quarter. EBITDA margin was 25.2% in Q2 FY23. In spite of a new center being launched, the profitability margin remains stable quarter-on-quarter. Th e margins are expected to improve in the upcoming quarters with the maturity of these newly launched centers. Profit after tax for Q2 FY23 was INR 15 crores, an increase of 22.4% on a year-on-year basis from INR 13 crores and 7.7% on a sequential basis from INR 14 crores in Q1 FY23. For the quarter, PAT margin was 12.5%. In the half-year, the company registered total revenue from operation of INR 236 crores. Our core business comprising radiology and pathology, which registered revenue of INR 235 crores, a growth of 14.7% year-on-year basis. The COVID revenue declined by 98% from INR 35 crores in H1 FY22 to INR 0.6 crores in H1 FY23. Operating EBITDA for H1 FY23 stood at INR 59 crores, with a margin of 25.1% from the quarter. Profit after tax for H1 FY23 stood at INR 30 crores, with a margin of 12.5% for the quarter. We can now open the floor for question and answer session. Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchscreen 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 Avnish Khara from VT Capital. Please go ahead. Hello. Am I audible? Yes, you are. My first question is on the Rajasthan tender. There was a very large tender over there, right? What exactly happened over there? Can you just shed some light on that? वो टेंडर क्या हुआ? चार पार्टिसिपेंट थे, जिसमें एक पार्टिसिपेंट ब्लैकलिस्टेड था। एक पार्टिसिपेंट COVID के टाइम पर कुछ सप्लाई कर रहा था रायसन गवर्नमेंट में। तो उसने जिसको कंसेशन दिया था, वो ब्लैकलिस्टेड था। इसके लिए वो उड़ गया। उसके बाद जो थर्ड पार्टी थी, उन्होंने उनको बाद में मालूम पड़ा कि टेंडर इतना बड़ा है, तो उन्होंने उसको विड्रॉ कर लिया। तो तीन पार्टियां उड़ने के बाद एक सिंगल पार्टी था। तो सिंगल पार्टी टेंडर ओपन नहीं होता है। तो गवर्नमेंट क्या करती है? उस सिचुएशन में टेंडर को वापस रिटेंडर करती है। अगर रिटेंडर में वापस सिंगल पार्टी आई, तो फिर टेंडर ओपन करते हैं। कल या परसों नया टेंडर अपलोड होगा। फिर उस टेंडर में कितने बिडर आते हैं, देखेंगे। और टेंडर ओपन होगा। मेरे हिसाब से 15 दिसंबर तक ये नया टेंडर होकर ओपन हो जाएगा। तो 15 दिसंबर को द टेंडर विल बी ओपन। एंड देन आर वी एक्सपेक्टिंग अ लॉट ऑफ कंपटीशन हियर अकॉर्डिंग टू यू? अभी के टेंडर में क्या हुआ था कि हम लोग अकेले ही उसमें पाए हुए थे, पास हो गए थे। सारे डॉक्यूमेंटेशन और कमर्शियल जो भी कुछ था हमारा, उसमें हम लोग एलिजिबल हो रहे थे। सिंगल पार्टी टेंडर हो नहीं सकता। तो इसके लिए गवर्नमेंट ने टेंडर कैंसिल किया। और नया टेंडर अभी, यानी कि वापस फिर से टेंडर आज या कल वो अपलोड करेंगे। मैक्सिमम 12 तारीख तक अपलोड करेंगे। और 12 तारीख को हो गया, तो वापस 15 डेज फॉर प्री-बिड मीटिंग और उसके बाद टेंडर। तो एक महीना चलता है। तो 12-15 दिसंबर तक टेंडर कंप्लीट हो जाएगा। ओके। सो वी विल हैव विजिबिलिटी ऑन दिस बाय केस, सर। करेक्ट। आल्सो, इफ आई लुक एट योर रेवेन्यू लाइन आइटम इन द P&L, सॉरी, नॉट द रेवेन्यू, द फीस टू हॉस्पिटल, इट्स एन एब्सलूट अमाउंट। इट इज डाउन क्वार्टर ऑन क्वार्टर। सो व्हाट इज द रीजन फॉर दैट? The reason why the fees to the hospital is down, because that is linked to the Rajasthan earlier project that we were working on. Since the project has now, you know, been stopped from August onward, that is why you see a decline in the revenue and the fees to the hospital paid as well. ओके, गॉट इट। एंड योर रिसीवेबल डेज, दे वर एट 47 इन FY22। एंड यू नो, फॉर द फर्स्ट हाफ, दे हैव गॉन अप सिग्निफिकेंटली। सो इज दैट समथिंग दैट वी सी? वी सीन ओवर द इयर्स दैट द सेकंड हाफ इज रिलेटिवली बेटर? यस। बेसिकली, इफ यू सी फ्रॉम अ गवर्नमेंट रिसीवेबल्स, देयर इज अ सर्टेन लेवल ऑफ सीजनलिटी, वेयर इन Q2, Q3 इज वेयर द रिसीवेबल्स गेट स्ट्रेच्ड। बट वी ऑलवेज, लाइक, वी हैव बीन कम्युनिकेटिंग, वी ट्राई टू कीप इट विदिन 90 डेज। एंड इवन फॉर दिस हाफ ईयर, यू विल सी दैट वी हैव केप्ट इट अबाउट अराउंड 87-86 हॉर्स डे। एंड एज इट कम्स टू द ईयर एंड, द गवर्नमेंट इज आल्सो, द अथॉरिटीज आर आल्सो, बेसिकली, दे हैव टू पे द ड्यूस बिकॉज देयर नेक्स्ट ईयर बजेट्स गेट इंपैक्टेड। सो वी आर कॉन्फिडेंट एंड होपफुल टू सी इट्स कमिंग डाउन टू द सिमिलर नंबर रिसीवेबल डेज दैट वी सॉ ड्यूरिंग द मार्च ईयर एंड। सो दीज आर सीजनल, एंड दिस हैज बीन अ रेगुलर पैटर्न। इफ यू सी द ईयर ऑन ईयर सिमिलर ट्रेंड्स, इनफैक्ट, दिस क्वार्टर हैज बीन बेटर देन कंपेयर टू ऑल द प्रीवियस ट्रेंड्स दैट वी हैव सीन एंड विटनेस्ड। [Foreign Language] ऑलराइट। आई विल गेट बैक इन द क्यू। थैंक यू। Sure. Thank you. Thank you. Our next question is from the line of Aditya Khemka from InCred PMS. Please go ahead. Yeah. Hi. Thanks for the opportunity. Sir, in the balance sheet, I'm just noticing there is this line item called Other Financial Assets, INR 118 crore in H1 FY23, which was a negligible number last year. Could you throw some light as to what this Other Financial Asset is? So basically, the Other Financial Assets includes the fixed deposits of a long-term tenure more than one year. Okay. So you are yet to execute the tender, so you have to put a fixed deposit with the government. Is that what it is? So some fixed deposits are of our internal accruals, and partially some fixed deposits of IPO also, which we are utilizing the funds for our projects, upcoming projects, and the projects earmarked with an IPO. Okay. But I'm slightly confused as to why that would be classified as Other Financial Assets. Generally, wouldn't fixed deposit affect our command of bank balance or cash and cash equivalent? Normally, we don't do it that way, do we? Yeah. Tenure of a fixed deposit is more than one year. Will be classified as an other financial asset. Got it. Nearly. Now I understand. Thank you so much for that. Sir, secondly, on the Rajasthan tender, so as you said, there was only one proper bidder, and therefore the government will need to reopen the tender to see if there are other parties that express interest. Just try and walk us through what is the total size of the tender. Even if the government is willing to give you the entire tender, does your balance sheet and funding allow you to execute a tender as big as Rajasthan's tender? Yeah. Basically, the Rajasthan tender, if you see, it's one of the tenders which has almost a large network of hub-and-spoke model, almost 3,000 collection centers and a bigger share of labs. The government is also keen to have serious players, and that is the reason why when they invited bidders to quote, they saw certain bidders with certain terms which are not qualified, and hence they canceled the tender, which they will come up again. Of course, this is a good opportunity. I think in terms of just top line, it could be revenue-wise contribution. It could be in the range of about INR 150 crore-INR 200 crore, which for a mature level of this project can be expected. Right. As a company, let's say if we win the majority of the tender, let's say we get the L1 in the tender, what is the capital outlay that we'll have to put? The capital outlay, again, will be subjected to what is the requirement that the government is putting up, how many labs they want to establish. Unlike our radiology tenders, since pathology requires it's likely an asset-like model, so I don't think so there'll be significant investment required for this kind of a tender. The actual outlay will only be we can comment once we see what are the tender requirements, and accordingly, we'll then update. Understood. Basically, if I understand this correctly, a majority of your Rajasthan tender is for pathology, it's not for radiology? Yes. It is for pathology. Correct. Okay. Sir, lastly, just one request. I was looking at the presentation that you guys uploaded. It's very, very informative. There are certain operating metrics like average revenue per patient and then total number of patients, which you gave in slides 37, 38 on your deck. These numbers are given only up to FY22 and not for first half of FY23. Just from a good practice standpoint, it would be very appreciated if the company would add first half and quarterly numbers to these operating metrics like number of patients, average revenue per patient, etc., etc., all these operating metrics. Yeah. We take your suggestions. I think we'll try to implement on that and accordingly ensure that the presentation has all these elements covered. Right. sir, just for now, because I don't have that data with me, can you have the number ready with you as to what is the average revenue per patient in first half FY23, and also what is the revenue from telereporting patients in first half of FY23? While I don't have the numbers on the top of my head, but the numbers in terms of the realization have been in line. In fact, both the telereporting revenue per patient have also improved as well as the average revenue per patient. I know we can provide the data to you separately after this call. Pawan, you can just take a note of this, please. Sure. Yeah. As I said, it would be great if you guys just add the quarterly data along with the annual data. That would be fantastic. Thank you so much for taking my question, sir, and I wish you all the best. Thank you so much. Thank you. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead. Thanks for taking my question. Hello? Nitin, you're not audible. Hello? Is it better now? Yeah. Sorry. My question is on if you look at the quarter-over-quarter revenue growth, we're looking at about a INR 10 crore delta. Now looking at quarter-over-quarter revenue growth where COVID was a small component of business. In the presentation, we've talked about that a lot of our Punjab contract has got operationalized over the last six-odd months. Why is the impact, I mean, is there an impact of the Punjab revenues, sort of Punjab project optimization already reflected in the numbers? If it is not, by when will it start to reflect through? Punjab has already started contributing revenues to the overall business. In this quarter, we've seen about INR 10 crore of revenue coming from the Punjab project, which has been increasing steadily. I think now with these centers getting live, more and more contribution will be seen from the Punjab project as well. What is, for example, the INR 10 crore that we've done in this quarter, what percentage of the peak potential of the Punjab contract will it represent? As of now, I think it will just be about close to 15-odd%. There's a significant opportunity as the centers get live, and the true potential of Punjab, like we've been maintaining earlier as well, I think it is yet to be tapped into. There's a significant opportunity to grow Punjab, and it has been ramping up month-on-month, quarter-on-quarter as we're seeing the trends now. From your past experience, typically, it'll take another couple of quarters before it starts to meaningfully scale up. This project gets meaningfully. Yes. From Q4 onwards, we will see Punjab improving the contribution. As you said, Punjab, compared to all our past experience in terms of deploying these centers and the projects, Punjab had its own share of challenges in terms of regulatory approvals along with the change of government, which is what resulted into a bit slow ramp-up compared to all our past experience. Having said that, now with the centers getting operationalized, we are also eagerly pushing the pedal and all our energy and resources to ensure that the ramp-up happens, and we are able to start getting contribution from the Punjab project. Yash, when we sort of think about our business from here on so obviously, Punjab project is going to scale up. What are the other projects, which we've already won, that will meaningfully contribute from here over the next few quarters? Along with Punjab, we have Himachal, the pathology project, which we have again, which has been implemented. 10 labs have been implemented. Along with that, we had Mumbai region, wherein we had some centers in the Mumbai region which are coming up. These are all the centers which we believe as they start measuring, they will start contributing to these existing revenue base that we have. Along with then, there are some new projects which are currently in the pipeline, including Delhi. We have won a project, then Tripura, the telereporting. These are additional projects that we won, which will also continue to add to the existing revenue base. If I were to put the last one, so of the contracts that we already won, right, if you were to assess the peak quarterly revenue potential of these contracts, what kind of a number can you on a ballpark basis be looking at? You say maybe in a year and a half, by when all of these contracts that you've won begin to get close to start to get at optimal levels? All these contracts put together with Punjab, Himachal, I think on a mature annualized basis, like we said, it should be close to INR 100 crores annualized revenue. Each of these? No, no. All put together. Punjab, Himachal, and Maharashtra, if you take all of these, they would be in the range of about INR 100-odd crores. Annualized? Yes. Annualized. INR 25 crore a quarter? Yes. Okay. That seems a little low, but that's fine. Thank you. Yeah. Thank you. The next question is from the line of Shashwat Desai from Sameeksha Capital. Please go ahead. Sorry, Shashwat. Your audio is breaking. Not able to hear you clearly. Am I audible now? Yes. Better now. As I see, margins are affected by two things. One is employee expense, which is rising from last year quarter to. It has been steadily rising as a percentage of revenue. Secondly, a major part of other expenses is reporting charges. These two expenses have risen a lot. What's the reason for that? Yes. I think that's a good observation. Basically, the reason for rising manpower cost is linked to the projects of Punjab and Himachal Pradesh where significant resources have been deployed. Just to give you perspective, there are 25 CT scans, 6 MRIs, a number of labs coming up equally in Himachal Pradesh. We have deployed manpower. While the manpower has been added, however, the revenue has not been commensurate to the extent of the manpower because it's a ramp-up which is currently going on. I think beyond this, there won't be a significant addition to the manpower once the projects are now operationalized. As the revenue starts increasing, you will see these costs getting stabilized. Probably, they will come back to the standard levels that we expect as a percentage of manpower to the revenues. With regards to the reporting charges, again, here in Punjab, we have to appoint a radiologist at each of these centers. That is the reason why because the volumes are low and we are not totally able to leverage the telereporting. That is why the doctors' cost or reporting costs are high. We are working where the other volumes could also be done for these doctors. As a result of which, you'll see the doctors' or the reporting charges also coming down as the volumes go up in the subsequent quarters. Okay. Secondly, as per my understanding, earlier, Punjab was an INR 100-crore project, and rest of all are INR 100-crore projects. Why now Punjab, Himachal, and Maharashtra, these three contributing only INR 100 crores? Punjab was contributing INR 100 crores earlier. Correct. The reason is, as we are seeing today, there have been these deployment challenges that we see. While on an annualized revenue basis, we would certainly have higher aspirations. Given that we are seeing, we just want to calibrate and see how we take it aspiration-wise or from a positioning-wise, of course, they will be providing much higher value than we believe. Currently, the way these state-level different dynamics are working out, we just want to be cautious in terms of the approach and, of course, come back with much more updated probably by Q3 once all these centers get operationalized. Some of the centers, we are seeing there are some operational challenges in the border areas. Electricity is not getting supplied. We just want to get the centers operationalized, and then we'll come with probably more guidance in terms of how these projects will contribute to the revenues. Okay. Sure. With these figures, are we in line to match the target of 25% growth this year, which is INR 300 crore in the next half of the year? Sorry. Could you repeat that question? We have the operational challenges, right? Are we in line to make a 25% growth this year, which is around INR 300 crore in the next half of the year? Yeah, I think if you see from guidance-wise, we are working towards it where we will be able to achieve the target of having 20%-25% growth. As these projects get ramped up, we are confident we should be able to achieve it. Okay. Thank you. Just one request. As earlier participant mentioned, volume data is easing. If you can provide volume and operational data, it would be helpful. Thank you. Certainly. Yeah. Fine. Thank you. The next question is from the line of Jainil Shah from JM Financial. Please go ahead. Yeah. Thank you for the opportunity. My question is on the gross margin. There has been some impact on the gross margin this quarter. If you can throw some color on, is it the mix or what is it? Is it temporary, and how should we look at it going forward? Yeah. Pawan, would you want to take that question? Yeah. Sure. The gross margin, yeah, slightly impacted because of the low volume in the new and operationalized center where we see a consumption cost on the higher side. This is the reason only where we see an impact on the gross margin. Going forward, we will see the improvement in the gross margin as well as the stability in the gross margin. Okay. Yash, if you look at the growth ex of our Punjab contracts, it's just around 3%-4%. What is impacting this growth in the base business? How should we even look at lumpiness quarter-over-quarter? QQ is supposed to be a very good quarter, and we still have muted growth. How should we look at it? I think from an overall business perspective, as we said, today, the entire energy and focus is on ramping up the projects of Punjab. These are large projects which we want to go live so that they get stabilized. Hence, there has been a slight delay. The entire team is working on it. I think as Punjab and Himachal get operationalized, we will be focusing back on our existing centers, which are running on its own steam. They should also start contributing more and more to the business. I think quarter-wise, Q3, Q4 onwards, we'll have some more perspective to share in terms of how the quarterly numbers will look like once all these projects get operationalized. Are we still firm on our FY24 guidance? If you can just refresh, so our RHP tenders, as you mentioned, will contribute around INR 100-odd crore. Maharashtra, if I'm not wrong, last quarter, you mentioned INR 65-INR 70 crore. Other tenders would contribute INR 100 crore. Is that understanding correct? Yes. Base business, we are not seeing much traction. Would that mean that we would be lowering our guidance a bit, or maybe this could get delayed by six months or so? Correct. I think from a guidance perspective, we are equally and very aggressively working on achieving the targets that we have set out for ourselves. The only challenge that we are seeing is in terms of certain delays. I think that is why I would want to calibrate and come back. I think from our perspective, given that various of these even projects that are currently under implementation, we believe that hopefully, by end of next quarter, we will have some more realistic guidance to provide, which basically, though we are committed to achieving those targets of doubling profit as well as in terms of the revenue that we had mentioned in the previous quarter, so we are working aggressively towards it. If you see the projects that we have on hand, some of these projects, large projects, which include Maharashtra, then Himachal Pradesh, the entire state. I think that gives us confidence that we will be able to achieve those targets. Sure. That's helpful. One last question, if I may please squeeze in. What's your exact plan on the B2C front? We are going to operationalize around 600 roll out 600 centers. What is the timeline for that, and how much contribution are we really expecting? Yeah. For our B2C segment, though we are late in the sense from a market perspective, what we've done is we studied what are the current trends and come up with a unique model which benefits the so-called business associate. Having tasted initial successes, as of date, we have almost close to 100 such touchpoints, including Maharashtra, where we have these what we call as Krsnaa Business Associates and the B2B touchpoints. We are planning to do it in a phased manner. We are launching this in Punjab very soon. I think the team is working on where they will be signing such agreements very soon. Having said that, initially, it will be a bit slow ramp-up because we really want to ensure that the model that we are coming into the market is strong enough, stable enough. Then there will be a steep hike in terms of just basically replicating and scaling the model. We are expecting by end of Q4, there will be a gradual growth in terms of the numbers. From the next fiscal year, once all the systems, the integration, everything gets aligned, we should start seeing a spike in terms of getting that traction in terms of having more touchpoints and numbers getting added quarter on quarter. From a revenue-wise also, I think we are seeing some good contribution coming up with about these 20-odd centers contributing to almost INR 20 lakh from the initial month itself. We are seeing that as these centers start maturing, they'll also further add to the revenue base. Sure. That's helpful. If I have any other questions, I'll get back in the queue. Thank you. Sure. Thank you. The next question is from the line of Rishabh Devari from Allegro Capital Advisors. Please go ahead. Hi. Thanks for the opportunity. My question is regarding the material cost. The material cost has gone up from 10.5%-14% this quarter. May I know just wanted to know the reason of such a significant increase. A related question is it related to a change in the business mix as in the revenue mix of radiology, pathology, and telereporting? If you could please, if you have the numbers at the top of your mind. Yeah. I think one of the key reasons for increase in the consumable cost is, of course, because of the pathology business rising. There again, because as in a ramp-up, there are a lot of controls and calibrations to be done, which requires in the initial phase, these testing have to be carried out, which adds to the consumption cost. As the volumes increase, you'll see the consumption cost coming down and gradually stabilizing at the levels that we are used to. It's just a matter of the ramp-ups currently going on where machines have to be tested, calibrated periodically to process as the volumes start kicking in. Do you have the number round to the number at least ballpark? What is the pathology revenue mix contribution this quarter? Last quarter, it was 38%. Has there been a significant increase? I don't have the number with me. Pawan, maybe you will be able to answer this question? Yeah. Pathology contribution is 32% in this quarter. Okay. The telereporting or radiology? Tele-reporting in the range of 10% only because it was contributed by the radiology side. Okay. That helps. Thanks. Thank you. Next question is from the line of Bhavin Shah from Sameeksha Capital. Please go ahead. Yeah. My question is answered. Thanks. Thank you. Next question is from the line of Ranodeep Sen from MAS Capital. Please go ahead. Yeah. Thank you for the opportunity. Can you share some thoughts about the retail game plan, especially with respect to the franchising models, and what kind of EBITDA margins can we expect? Will it be marginally different from what we have been clocking in our PPP centers? The franchising model that we have conceptualized, as I said, both from a pricing perspective, it's an aggressive pricing compared to the market. Our rates are highly competitive. Yet at the same time, given that there's no significant investment to be made by Krsnaa, most of the investment will be done by the franchise, again, which is not a significant investment for them. The rest of the support comes from Krsnaa in terms of branding, collateral, and the system. With all these inputs, I think from a margin perspective, they will be having the same margin that we see from a center, which will be in the range of about 40% EBITDA margins is what we're expecting from these franchisee centers or the collection centers. Okay. Good to hear that. My second question, any specific reason in terms of choosing the B2C 4A, especially with the five states that you have mentioned in phase one and phase two? We would love to understand your thought process, especially why not we are opting for Tamil Nadu and Kerala, which has the highest share of elderly citizens as per the Elderly in India 2021 report. Any thoughts on that? Yeah. See, if you see, currently, Krsnaa has a larger footprint on the PPP side. What we try to do is we already have our network of CT scan, MRI, and pathology centers in the states like Maharashtra, Himachal Pradesh, as well as Punjab. The thought process was that since we have a network of these centers and by establishing these franchisee centers in these states, we will be able to leverage the network in a much more impactful manner wherein patients, those who are not within near the centers, but their samples could be collected and processed at the nearest lab that we already have and at the same time even get patients who are coming for pathology, maybe even also if they need radiology services, they can be directed to our centers. This is why we chose these existing states where we have a good footprint or network of centers and trying to leverage them. Of course, as the model starts expanding, then we could look into other states where there is a need. As of now, given that we want to have a very impactful and thoughtful process in terms of building this network, we thought of leveraging our existing footprints in these states and then launching the B2C network. All right. Fair enough. If I may just ask one question that I had, any update did we get on the tax issue that had come back a couple of months back? Yes. On the taxation, like we've communicated as well in the earnings report, we are currently cooperating with the authorities. I think a significant part of it in terms of the documentation or information that they requested has been provided. We are also equally waiting to see the outcome of their assessment. We still keep all the stakeholders informed about, as and when we get any such kind of information from the authorities. As of now, no demand or claim has been made on the company by the income tax authorities. All right. Thank you so much for answering all the questions. Wish you good luck for the next quarters. Thank you. Thank you. The next question is from the line of Yogan Jeswani from Mittal Analytics. Please go ahead. Hi, sir. Thanks for the opportunity. Just one question on your basic model in terms of I think in some states, we have a restriction on marketing and reaching out to customers. Given our model, how will we then grow if we are not able to market and reach out to customers? Sorry, sir. Go ahead. Just one more point that I would like to add to this. I think Punjab is one such state wherein we have a restriction on reaching out to customers. Today in the conversation, you mentioned that the B2C segment, we will start with states like Punjab, HP, and Maharashtra. With such conditions, how do we then leverage the B2C business without marketing? Basically, there is no such restriction in terms of marketing or efforts. I think what the government tenders normally stipulate is that if there's a government patient, you need to give them due service, what is stipulated in the tenders. Government doesn't discriminate between a private patient and a government patient. But because these are under the PPP, they expect that especially for those people who don't have access or the poor people and the people from low-income families, they get the due treatment and service. In fact, all the states where we are present, we have equal share of people coming from the government patients as well as private walk-ins. I don't think so there's any restriction for us to leverage. In fact, the government is more happy if more and more people avail these services because that is what they intend to create access to quality and affordable healthcare to the masses. Okay. Sir, I was under the impression or at least my understanding was that in a couple of states, we are not allowed to put out banners or holdings or such things about our Krsnaa Diagnostics for getting the outside patients outside the hospitals. Is that understanding wrong, sir? Yeah. We are allowed. Even if you see Punjab, like you mentioned, we have huge holdings that have been put out outside our centers. Otherwise, how would people know that government has launched such schemes and such initiatives? In fact, if I give you an example, like Himachal Pradesh, government is saying that they want to do a joint campaign with us to promote these services so that more and more people get to know that such services are being made available for the masses. Okay. Sir, currently, say, for example, if I have to talk about Himachal and Punjab, how much of your footfall is coming in from outside customers, and how much is it from within the government hospital? Currently, if you see. A rough breakdown would be helpful. Sorry? I'm saying if you don't have the exact number, even a rough ballpark figure would be helpful. Yeah. Currently, if you see today in Punjab and Himachal, we almost have to the extent of 50% of government patients and 50% of private walk-ins. Okay. All right. Got it, sir. I'll get back to you. The Punjab rates are highly disruptive. We have more and more patients coming. As they know that these are the services, they come and avail these services. Likewise, the same trend is being seen in Himachal Pradesh as well. I understand. Just one question I'm also asking. Sir, if we look at your slide in terms of average revenue per patient, so I think we are back to 975 as was seen in 2020. Going forward, do we expect some growth coming in from higher average revenue size, or will it just be more centers and volume growth given the kind of tenders that you have run? Do you see this number also increasing? If yes, by how much? The average revenue that you see currently, these are at the stable levels. I mean, if you see on a half-year comparison of the previous year, there was a combination of a lot of COVID tests, which are highly priced. These are the stable level of average revenue that we expect. There won't be a significant jump in these rates unless there's a new tender, which is won at differentiated prices. I think these are the stable revenues that we expect to continue going forward. However, as and when the mix of, let's say, patient or the test menu changes, there might be some impact. I'm sure it will not go down, but it will be stable or at least continue to grow. Also, coupled with the fact that there are certain price escalations embedded into our contracts, so they might also have an impact in the realization going upwards from the base that we have today. Understood, sir. That's it. Thank you. Thank you. The next question is from the line of Sanjay Ladiwala from JM Financial. Please go ahead. Thanks for the opportunity. Yash, we just wanted to understand from the base business perspective, as we see for this quarter, the sluggishness that we are seeing, is it volume-led or is it realization-led? You mentioned as we will come back to concentrate on the existing center, we should ramp up. I want to understand from the volume aspect or from the realization aspect? It's more from the volume side. As I said, with the centers getting deployed and delayed, so the kind of footfall that we expected in terms of ramp-up, that has not been achieved. Once they start achieving, you'll see the trend. I think if I give you the parallel analogy or example of Himachal Pradesh, we started somewhere in September, and we've already seen revenue run rate of almost INR 2 crore per month in the first two months itself. Unlike all the other states, Punjab has been a bit impacted because of delays. Now the center is getting operationalized and government also getting an understanding of how the PPP model works, especially the new government, we should see that these volumes coming back to the expected levels, and therefore, they should be contributing to the overall revenues. I understand that. I'm trying to understand the existing centers, not from the new centers or the upcoming centers which we are just commissioning. Yeah. For example, even in the existing centers of Punjab, the ramp-up that we expected, in Punjab, there is largely all cash-driven patients. Correct? Now as more and more awareness is being created that they are getting these prices, in fact, a lot of other people are doing marketing without us. There are certain NGOs they have got to know, so they are spreading the word about. As these centers, their visibility gets started across the various communities, we'll see traction coming on the existing centers. Even Punjab, which was like INR 4 crore of revenue in the Q1 has ramped up to almost INR 11 crore in Q2, which is almost doubling up the revenue. These are the trends that you are seeing. As I said, as the centers and they get stabilized, we'll see more jump coming up from these existing centers as well. How about Maharashtra? Maharashtra for the new project or for the existing centers? Both, if you could, in the ultimate light. Sorry? On both sides, existing as well as new in Maharashtra. Yeah E xisting centers, I think for the most mature centers, which are our old centers, they are in fact, some of the centers have also shown good growth, almost in double digits. The new centers like Mumbai and the municipal corporation centers, as I said, once the initial there is a bit of lag as the center gets operationalized, people start knowing about it. After a couple of months, the spike starts being seen because this awareness is being created about the centers, the prices, the quality of services, and then you start seeing an uptick in the businesses as well. On the new Maharashtra tender, I think the project that will get operationalized only in next year. It's a large project. There's a lot of, I mean, site possession to be taken over, and the learnings from Punjab, we are updating for Maharashtra as well. Maharashtra new tender will be operationalized only in the next year. Thank you so much. In terms of EBITDA margins, you highlighted that it is stabilizing right now. For this remaining second half also, we should expect EBITDA margins around 25%. As the ramp-up happens and newer centers mature from FY 2025 onwards, we should be expecting the earlier EBITDA margins of closer to 20%-29%. Is that the way to say? Yes. Like I mentioned, if you see in quarter one, the EBITDA margins were a bit impacted because of the cost of operations and revenue is not being compensated. As the revenue starts stabilizing and they'll further improve, we also expect a further improvement in the margins and hovering around the same 27%-28% is what we expect in the subsequent quarters. Thank you so much, Dr. Pranath. Thank you. Thank you. The next question is from the line of Aditya from Securities Investment Management. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. I just needed one clarification. I believe that our revenue from our Punjab contracts used to come from our subsidiaries. When I look at the difference between our standalone and consolidated revenue, so it comes to around INR 2 crore. We are seeing that we got around INR 10-11 crore from our Punjab contract. Where is that disconnect here? Could you just repeat the question? Yeah. Earlier, we used to say that the revenue from our Punjab contract used to come from our subsidiaries. When I look at the difference between our consolidated and standalone revenue, it is around INR 2 crore. We just said that we got around INR 10-INR 11 crore. Where was the disconnect over here? Pawan, maybe you can answer that question? Yeah. Yeah. Basically, at the consolidated level, the revenue between the subsidiaries and the holding company gets knocked off. The assets were deployed by the Krsnaa Diagnostics Limited, parent company. We have an internal arm's length transaction with the subsidiaries where we share revenue because the assets were deployed by the holding company. That's why this gap is arising. The sharing which holding company is getting, which is added in the top line of the standalone number, that's why this gap is arising. Just to add, these are 100% subsidiaries created only for the Punjab project, which was a requirement of the tender where the government wanted us to have the subsidiaries or special-purpose vehicles created 100% owned of the company. This is just an arrangement where basically, since the holding company has invested the assets, there's this revenue that comes back to the holding company. I think from all perspective, the consolidation level wherein these are all Krsnaa centers and owned and managed by Krsnaa, that is how we see it. Sure. Thank you. Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference back to the management for their closing comments. Thank you, and over to you. Sure. Thank you, everyone. Thank you for your time and for attending this conference call. Thank you very much. Thank you. Bye. We hope we've answered all your questions. If any questions remain unanswered, please feel free to connect with us or our investor relationship team at Certus Capital. Looking forward to interacting with you in the future. Thank you. Thank you very much. Ladies and gentlemen, on behalf of Equirus Securities, that concludes today's call. Thank you all for joining us, and you may now disconnect your lines.