Ladies and gentlemen, good day and welcome to Krsnaa Diagnostics Limited 3Q FY 2023 earnings conference call hosted by Equirus Securities Private Limited. We have with us on the call Mr. Rajendra Mutha, Chairman and Whole-Time Director. Ms. Pallavi Bhatevara, Managing Director. Mr. Yash Mutha, Whole-Time Director. Mr. Pawan Daga, Chief Financial Officer, and Mr. Nikhil Deshpande, Company Secretary. As a reminder, all participants' lines will be in a 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Pallavi Bhatevara, Managing Director. Thank you and over to you, ma'am. Thank you, Bharat. Good evening, everyone, welcome to Krsna Diagnostics Q3 FY 2023 earnings call. I thank each one of you for joining us today. We've already circulated our earnings presentation which is available on our website as well and all the stock exchanges with 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 are clearly visible as it is an integral part of healthcare industry which plays an imperative role in diagnosis. Assessing diseases plays a major role in the treatment, management, and even prevention of diseases. Today, the Indian diagnostic market is valued close to $15 billion and projected to CAGR of 11.5% in upcoming years. The key fundamental drivers of diagnostic industry, such as large population of almost 1.4 billion people, rising per capita income allowing increased affordability and need to access better healthcare services. Emergence of lifestyle diseases increase awareness of preventive health checkups and government initiatives. Looking at the diagnostic Indian demographics, there is a vast and under-penetrated market of diagnostic services which offers an immense opportunity to both organized and unorganized players. Recognizing the importance, the Government of India has allocated INR 88,956 crore to healthcare expenditure. INR 2,350 crore which amounts to a hike of 2.71% from INR 86,606 crore in FY 2023-2024, making high quality healthcare and diagnostic services affordable for the masses. The government and various states are continuously evaluating PPP as a viable and best alternative for their goal of providing high quality healthcare and diagnostic services at affordable prices. Today, Krsnaa is a leader in PPP diagnostic space, and we are proud to have expanded our presence all over India, making high quality diagnostic services affordable and available to 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. I am pleased to inform that recently Krsnaa has been awarded with two major pathology tenders, one in the state of Maharashtra for setting up one lab and 600 collection centers, and another one in the state of Odisha for setting up 5 labs and 386 collection centers. With these wins, we continue our journey of expanding our footprint across the country and especially in newer territories and geographies, thereby increasing our customer base. The recent wins are also aligned to our focus of increasing our business shares in pathology and therefore create a healthy balance between radiology and pathology. We are happy to announce the launch of its new Genexus System, the first fully integrated Ion Torrent NGS platform in PPP model, and offers a fully automated specimen-to-report workflow with unparalleled turnaround times. The Genexus System sets a new standard in NGS technology, and we are confident that it will have a significant impact on the molecular pathology community. I would also like to update you all on the status of radiology and pathology project in the state of Punjab. We have operationalized 24 out of 25 radiology centers, and the remaining 1 radiology center will be operationalized by Q4 FY 2023. All the 30 laboratories and 95 collection centers in Punjab are now fully operational. I would also like to add that we have operationalized entire pathology project in the state of Himachal Pradesh. Additionally, we have also successfully implemented the tele-reporting project in the state of Tripura, thus extending our reach to the Far East corners of India. We are progressively expanding our presence, and during the quarter we have added seven radiology, 33 tele-reporting, 25 pathology labs, and 64 collection centers. As of today, Krsnaa is a leading PPP diagnostic player with 127 radiology centers, 1,522 tele-reporting centers, 97 processing labs, and 741 pathology collection centers. Looking ahead, considering the ramp-up of our recently installed centers and the new tender wins and considering few projects in pipeline which are under evaluation phase, Krsnaa Diagnostics remains confident to further expand its geographical footprint and penetrate deeper into the Tier two and Tier three cities by offering high quality diagnostic services at affordable prices. Now coming to the financial performance during the quarter. During the third quarter, Krsnaa registered core revenues of INR 118 crore, growth of 12% year-on-year. The COVID-19 revenues declined from INR 1 crore in Q3 FY 20 2022 to INR 0.1 crore in Q3 FY 2023. Our EBITDA stood at INR 30 crore with margins of 25% and net profit of INR 14 crore with margins of 12%. The increase in new centers being launched, the profitability margins remained stable quarter-on-quarter as revenue contributions from new centers continue to grow. The margins are expected to improve in the upcoming quarters with the maturity of these newly launched centers. On the B2C side of business, we have launched wellness packages at affordable rates, which help us to expand in the B2C side. The wellness package is Ayaksham, which covers basic tests as well as special tests. Further, in terms of technology adoption, we have also continued our focus, and as part of the phase one, we shall be launching the website for the B2C segment in the next month with more technology-led initiatives being implemented in the following months, including digital technology, integrated lab management, et cetera. With all these initiatives underway and considering the implementation of the existing projects as well as considering the recent wins, we are confident and believe that we have a strong outlook in the future. I will hand over the call to Mr. Pawan Daga, our Chief Financial Officer, to discuss the financial performance. Thank you. Thank you, Ms. Pallavi. Very good evening to all that are joining. I will present financial highlights for the third quarter and nine months ended December 20, 2022. In the third quarter, the company registered total revenue from operation of INR 118 crore, an increase of 11% on a year-on-year basis from INR 106 crore. The growth is made by the core business comprising of radiology and pathology, which registered revenue growth of 12% year-on-year. Operating EBITDA for the quarter at INR 30 crore. EBITDA margin were 25% in Q3 FY 2023. EBITDA margins were partially impacted due to additional costs incurred on onboarding team to operate and run the newly launched centers. The margins are expected to improve in upcoming quarter with the maturity of the centers. Profit after tax for Q3 FY 2023 was INR 14 crore. For the quarter, PAT margins were 12%. In the nine months FY 2023, the company registered total revenue from operation of INR 354 crore. Our core business comprising of radiology and pathology, which registered revenue of INR 353 crore, a growth of 14% year-on-year. The COVID revenue declined by 92% from INR 1 crore in Q3 FY 2022 to INR 0.10 crore in Q3 FY 2023. Operating EBITDA for nine months FY 2023 stood at INR 89 crore with a margin of 25% for the quarter, and profit after tax for nine months FY 2023 at INR 43 crore with a margin of 12%. We can now open the floor for question and answers. 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 Aditya Khemka from InCred PMS. Please go ahead. Hi. Thanks for the opportunity. Hi, everyone. Few questions. Firstly, to begin with, if you can talk about the operating cash flow for this year. As you mentioned in the presentation, I think slide seven, the operating cash flow for this year seems nine months seems to be INR 239 crore, or rather, INR 24 crore versus last year INR 65 crore, INR 66 crore last year. And a large reason for that obviously seems to be the increase in receivables, which has gone up from 76 days nine months last year to 97 days this year. So, you know, what is causing the increase in receivables? That's question number one. Question number two, is there any other, you know, issue with the operating cash flow that, you know, we need to pay attention to? Sure. Aditya, in terms of the, you know, cash flows, you picked up right, that there has been an impact of the receivables. If you see the receivables, normally in this time of the year, which is around Q3, the receivable days go around 94-97 days, which is a typical trend we see in our line of business. If you see, you know, even comparatively in the previous periods, you'll see a similar trend that has occurred. That is the reason why the receivables are, you know, almost in the range of about 90 days plus. The reason why this happens is, you know, typically if you see from Q3 onwards to Q4, the authorities will start basically closing out their work day processes so that before March end they can complete the payment so that their next year budget doesn't get impacted. They have to basically pay out. Otherwise, if they don't pay us before March or before the year end, then their next year budget also gets impacted. This is a typical cycle we see in our line of business, and we don't see any, you know, concerns around it. The other reason in terms of the cash flow, I think, Pawan might want to add a few points. No. The main reason which is the increase in the receivable days, that's the concern here, where we see the cash flow from operating activities are low compared to. Yeah. last nine months. Basically just a part of our routine business. You know, like we've demonstrated in the past as well, come year end, the receivables will go down, and we should be able to collect on our outstanding dues. Right. Yash, what has been the CapEx that we have done this year? Obviously, for the newer projects there has been OpEx done, which has been, we can see in manpower and other expenses. What is the CapEx we have done this year in nine months? Yes. I think. In total, around INR 107 crore of the CapEx we have already incurred in 9 months. What is the budget for the fourth quarter? In the range of, in a similar way, INR 20 crore-INR 25 crore, which is as per the plan, which we have to get executed by this Q4. Understood. Understood. That helps. Second question is on the gross margin. If I just look at the past eight quarters, right, and I'm starting at eight to 10 quarters, I'm starting from Q1 FY 2021 to Q3 FY 2023, the trend that I can notice. You know, Q1 FY 2021, Q2 FY 2021, our gross margins used to be 70%-75%. Then starting Q3 FY 2021, the gross margins dramatically went up to 83%, then 87%, then 89% also. Now we have again started seeing for the last two quarters the gross margins declining from that 88%-89% to 86%, and this quarter 84%. Question part one, why did the gross margins from first half FY 2021 from 75% go up to 88%-89%? Part two of the question, why is that 88%-89% in this year now starting to come down to 84%-86%? Aditya, basically what you see here in the gross margins, one of the key components that were there earlier was the Rajasthan business. In the Rajasthan business, you know, because we had the arrangement with our business partners, in terms of cost, it was basically straightaway they were managing most of the cost, and we had very little component and which is why the gross margins were higher. After the Rajasthan project got over, and since that arrangement is no longer there, that is the reason why you are seeing a slightly softer, you know, gross margin where it has reduced. The another impact in the P&L side, which is the revenue sharing fees to hospital. Has reduced. has reduced. I think it was, about 25%. Now it has come down to about 21%. Yeah, exactly. That was my other part of the question. Just remind me this Rajasthan tender, which we stopped doing, I think sometime in August, you said last call. What was the size of this tender per annum? The Rajasthan tender, what we were doing was about INR 70 odd crore annually. INR 70 crore last year, I mean, the one that we were doing. Yeah. That's INR 70 crore last year. The reason why we stopped doing it because we wanted to bid for the larger tender, the one that is supposed to, you know, come up in February. Yes. They... Yeah, there were two parts. A, after the tender, we also got an extension, and we served the extension period. In the interim, the government had launched a smaller tender, which we did not want to participate, you know, because it didn't make sense from a business perspective. Now the government has come in with a much larger tender, which has more collection centers and more labs. I think, you know, that's much more bigger business than what we had done in the past, you know, in terms of opportunity that we see for Rajasthan, and which we have currently bid and we are awaiting the results. Yash, just, sorry, can you just talk this, about this a little more? The INR 70 crore per annum tender that we stopped doing. We stopped doing it because the contract period got over or we stopped doing it by choice because we had to wait for the new tender? Which of two is it? No. No. We stopped it because the contract period got over after the extension that was granted to us. Got it. The extension period also got over basically. The contract expired essentially. Yes. Right. That is why now the new tender is coming, which is larger, you are saying. The potential of this tender is how much, the newer tender? Well, I think if you see from the government, you know, the way they look at, it's roughly about around INR 250 crore,INR 500 crore. INR 250 crore-INR 500 crore. No, no. INR 450 crore-INR 500 crore. INR 450 crore-INR 500 crore per annum. No, no. This is spread over, I think, couple of years. Okay, spread over couple of years. Per annum would be about INR 225 crore-INR 250 crore. Yes. Okay. Understood. Yash, just help me understand this as well. If since we are incrementally winning more and more contracts in pathology, are the pathology gross margins, EBITDA margins going to be lower than our consolidated EBITDA and gross margins that we are doing historically? Because radiology to me seems to be a higher EBITDA margin but a lower ROC contract. Whereas pathology seems to be a lower margin and a higher ROC contract. Am I on the right track when it comes to analyzing these two businesses? Yes. From, you know, comparing between radiology and pathology, certainly pathology margins, EBITDA margins are a bit lower than the radiology. I think the difference will not be significantly high between radiology and pathology. It hovers around, you know, anywhere between 5%-7%. Also one of the reasons why, because there have been more pathology tenders. Also to, you know, like we've been saying, we want to have a healthy balance between radiology and pathology. That is the reason why we've also participated in these tenders and continue to win them. Of course, from a ROC perspective, pathology, you know, is better compared to radiology. Understood. This entire INR 11 crore decline in fees to hospitals from INR 27 crore to now INR 16 crore a quarter, this entire INR 11 crore per quarter decline in fees to hospitals is purely because of the Rajasthan tender? It implies that in a contract that you were making INR 70 crore, you were paying INR 44 crore, INR 11 crore into four quarters. You were paying INR 44 crore to hospitals as fees. Basically what we have done is like, you know, in this, in larger states, we normally go with business partners because these are far-flung places. We look at local partners with whom we have arrangements where they provide a certain services, and that is how the arrangement was, where we were paying fees to them. Like I mentioned in the previous calls as well, over a period of, you know, longer duration of the contract, then we even absorb some of these employees onto our rolls. You know, basically, the share of the revenue contribution keeps on reducing year-on-year. Understood. A couple of more questions from me. In the Punjab tender, so if I understand correctly, all our subsidiaries that we have are linked to the Punjab tender because of the way the tender has been drafted. Am I right? Sorry, if you can just repeat that question. Yeah, sure. All the subsidiaries that Krsnaa has as an entity, as a parent entity, the subsidiaries that Krsnaa Diagnostics has, these subsidiaries are all linked to the Punjab tender or there are other tenders also which require us to have subsidiaries for different tenders? It's linked only to Punjab tender. Only to Punjab tender? Yes. Basically, there was a very specific requirement in the tender for Punjab, where after winning they wanted us to create subsidiaries for each of these clusters. That is the only reason why Krsnaa had to create subsidiaries. Otherwise, in our history, we never had subsidiaries. Since this was a specific requirement, they had to be created, and accordingly, you know, they are 100% subsidiaries of Krsnaa Diagnostics Limited. Yeah. If I look at the difference between your consolidated profit and your standalone profit, the loss that I see in the subsidiary level, which is about INR 3 crore-INR 4 crore, and that loss is totally coming from the Punjab tender? Yes. This is INR 3 crore-INR 4 crore a quarter. That's the loss we are making in the Punjab tender as of now. No. See, Punjab tender, I think, As I said, the subsidiaries are only for, you know, from the regulatory perspective. Financially, you should look at consolidation because, for example, the fundraise or which happened for the IPO happened in the holding company from which the equipments were purchased. The subsidiaries are purely just from a, you know, the tender requirement perspective, because there are certain revenue upstream which happened from the subsidiary to the holdco. There are certain expenses which are there in the holdco, and some of them are in the subsidiary. I think, it is basically the consolidated way to look at our business and not from a subsidiary to a holdco perspective. Fair enough. Any update on the income tax investigation that was ongoing? Any conversations or dialogues you have had with the IT department? No, I think, as of now, whilst you know we have submitted all the requisite information, there is no update or no any information that we've received from the authority. We are also equally waiting to hear from them. Okay. All the best. I have no questions. I'll come back in the queue. Thank you. Thank you. The next question is from the line of Chintan Shah from JM Financial. Please go ahead. Yeah. Hi. Thank you for the opportunity. My first question is on the potential of the new tender wins, you know, the BMC collection centers and the Ole Odisha collection centers. What is the, you know, potential? I think Pawan will just answer that. BMC, where we are looking for, annualized revenue of INR 30 crore-INR 40 crore, considering the 600 collection center and one processing lab. Odisha? Odisha, INR 50 crore-INR 55 crore annualized revenue, which we are expecting from five labs and 360+ collection centers. Okay. Just a follow-up to the previous participant's question. We have lost this Rajasthan tender. From when, what has been the impact in this quarter? What was the contribution of that Rajasthan tender even 3Q last year? Rajasthan we have discontinued. Or the tenure has completed in August 2022, mid of August 2022. In this quarter, there is no contribution from Rajasthan pathology business. No. How much was the contribution in the last quarter? I mean, last year. Last quarter, somewhere, INR 11 crore, INR 11 crore-INR 12 crore. Okay. Hence your base business is showing lower growth. Is that the right understanding? Could you just repeat that question? We were talking about, you know, 15%-20% growth in our base business. I mean, we are just seeing 12% odd growth. The difference is the contract that we've lost. Basically the growth we've achieved is in spite of the loss of Rajasthan revenue. Right. Right. Any impact you're seeing on FY 2024 guidance because of that? Are we revising it? FY 2024, whatever, you know, we had basically considered, we knew that Rajasthan would not be there. FY 2024, I think, from a guidance perspective and considering, you know, the Punjab experience, we are looking at about INR 700 crore-INR 750 crore is what we are currently working. I think by end of this year, when, you know, we'll have more clarity in terms of, given these projects, Punjab completely getting deployed and other projects, I think maybe I'll be able to give a much more realistic guidance, you know, in the next quarter. Any more- Just generally, we've not lost the Rajasthan contract. The contract tenure got over, and it is for re-bidding. It is a stop for services for a particular period because we got extension for the contract and even the extension period got over. Hence now the government is re-tendering it because of the process to be followed. We've not lost the contract. We have just stopped the services due to the tenure exhausting. Fair enough. Fair enough. Yeah. Yeah. That's all from my side for now. Thank you. Thank you. The next question is from the line of Chinmaya Bhargava from LSSP Family Offices. Please go ahead. Hi. Thanks for the opportunity. I have two questions. The first is on disclosure. A lot of the questions that, you know, participants have been asking you are, could be solved easily by sharing your test volumes that have happened over the few quarters. Can you please tell me why we've stopped disclosing this, or at least not disclosing data with a lag? This will help us understand better how the business has performed over time. Yeah. You know, we of course, started sharing this information, if you see in the earlier presentations. However, you know, considering the recent various tenders which we have participated, a lot of our information that we are publishing has been used and which unnecessarily creates, you know, in a way lot of competitive challenges for us. We of course, like we wanted to disclose this information. I think in the year-end we will be sharing the information. On a quarterly basis because, you know, there are a lot of these tenders discussions going on and some of these people they just use the numbers and, you know, basically come with some very weird tender quotes, which has kind of we've seen. That is one of the reasons we decided to hold. We've also seen a comparable with, you know, what information is being shared amongst the peers. I think to that extent, we are trying to share as much as information possible. Given that there are some large tenders also that we wanted to participate it, and hence the reason to, you know, not disclose. In terms of whatever information is relevant and required for the investor community, I think we are sharing all of that information. Okay. Two follow-ups on this. The first is in terms of prices that you've bid for any tenders, surely that is anyway public information, right? For tenders that you've won, that data is already out there. Would disclosing these figures change what's... Well, I think, you know, see some of these questions, which are more in terms to do with the number of patients, volume, and then the discounting. People can join the dots and, you know, there are, we've seen some very, you know, cases where some very high kind of unreasonable discounts are quoted, you know, seeing what our numbers and hence the question. I think, you know, we are conscious of the fact that there is an information, you know, that needs to be shared, and accordingly we are giving whatever information is required. Anything that is required, we can do on a personal, you know, whenever it's any, like for example, investors need information, we can happily share that, you know, on a one-on-one basis. Thank you. The next question is from the line of Darshil Zaveri from Crown Capital. Please go ahead. Hi. Good evening, thank you so much for taking my question. Sir I just wanted to ask questions. It's kind of a follow-up question. We were saying our potential for our BMC and Odisha is roughly combined, nearly INR 90 crore of potential. How would it kick in? Like, we were planning to have some 200 pathology centers in BMC. You know, could you just guide, you know, help me with the progression of revenue that we can expect? Maybe how much we are expecting in FY 2024, how will this, you know, operationalize? From a BMC perspective, of course, we'll try to operationalize the center in this next quarter in terms of establishing the center, setting up the lab. I think meaningful contribution of revenue should be seen only in the next year, you know, hopefully by Q2 or second quarter, because, you know, it takes time to ramp up. Given our experience and, you know, the logistics part of it, we expect it to roll up from Q2 onwards. Odisha will take a bit time as well, you know, because it's a very, if you see the location-wise, geography-wise, it's a wider area to be covered. The good part is Krsnaa will have its footprint across these locations in, including Mumbai as well as in Odisha. That also gives us additional way to look into, you know, increasing our, the B2C model as well. Okay, sir. From BMC, we can, you know, incremental we can expect around INR 20-odd crore of revenue maybe in the next year if we are planning to operationalize by Q2. Would that be a fair assumption, sir? Okay. Yeah. These centers would be collection centers would be activated as per whatever timelines we have to commit to the authorities. I think ramp-up wise, we would be a bit conservative in terms of how the ramp-up will happen. Eventually, from Q4 onwards, you'll start seeing the business gearing up. Okay, sir. Sir, our FY 2024 guidance that you were just talking about. Sir, we are planning to double our revenue. we just spoke about I think INR 700 crore, but I think this year only we will be crossing I think INR 450 crore easily. Doubling would be nearly INR 900, right, sir? Or do you know, am I? No, the doubling that we had quoted was from the FY 2022 base number. Aspirationally, basically, we would want to achieve that, and we are working towards it. The only challenge is, you know, with the Punjab experience that we've had, and at the same time, to ensure that the investor community also has a realistic expectations, we just want to come back with a more thoughtful approach to the expectation. As we said, hopefully by end of this quarter, the next quarter, I mean, we'll come back in terms of the real, you know, realistic guidance that we expect we can achieve. I think, if you see the way we are currently focusing in winning these tenders, at the same time, working. Even if you see the overall growth that we've achieved, including in this Q3, I think compared to whatever is, you know, happening in the industry, whether with our peers, Krsnaa still has demonstrated a, you know, in our opinion, a good performance, and we hope to continue the same in the subsequent quarters. Yeah. Yeah. Correct. If I may ask a few more questions, can I ask them, sir? Sure. I just, again, it's another clarification that, just so our Rajasthan business, we've shut down in mid-August. We would have, I think sir said INR 11 crore of revenue we booked in Q2. Correct, sir? Or. Yes. Basically, if we exclude that, we have actually grown by INR 6 crore of revenue in Q3. I would just want to know, are new all operationalized, we are, you know, we have yet to deploy some assets. How would we just see the ramp-up of these coming in? We have some 40 + CT scan machines and everything. Just could you help me in, you know, maybe Q2, Q1, when will we be able to see a, you know, significant jump? Because I think it would be a nonlinear jump. Correct, sir? Because, you know, a lot of them will come together. Could we have. I think. Yeah. Sorry, sir. Yeah. No, no. I think that's a good question. If you see, we have the Maharashtra project also, which is a large project, almost of 39 CT scans to be deployed. Then we have the recent wins of Odisha and BMC. Maharashtra being a large project, it will take almost from an installation perspective and assuming, you know, we get all the centers handed from the government, we are still expecting it, the ramp-up in terms of implementation of the centers will take anywhere by end of Q2 or Q3 of the next year. Likewise, as I said, the BMC and Odisha will start kicking in from, you know, Q2. I think Q2 onwards we should see a ramp-up in terms of our overall business, you know, the new tender wins to contribute revenues to our existing base. Okay. Just to summarize, so that through the next Q1, Q4 and Q1, we might see our current range of revenue, and then from Q2, Q3 onwards, we'll see a bigger step up, sir? Would that be fair, sir? Sorry, can you just repeat that? I was just asking, sir, Q4 and Q1 would be our current range of revenue, from Q2, Q3, you would see a higher growth revenue, sir. Yes. We should see, you know, increase in the revenues. Okay. Okay, sir. Thank you so much, sir. That helps me a lot. All the best for the future. Thank you. Thank you. The next question is from the line of Punit Mittal from Global Core Capital HK Limited. Please go ahead. Hi. Thank you for the opportunity. Two questions. One is, the projects that you mentioned, on your slide 19, which are the new projects that you're undertaking, which has 50 radiology centers and 992 pathology centers. Can you tell me what is the total CapEx requirement for these projects? Maharashtra, I think there are about 49, 39 CT scans. That could be roughly about around close to INR 50 odd crore, between INR 50 crore. Which was the other one? I'm talking about all the projects, right? The total 50 centers, radiology centers, and total 992 pathology centers that you mentioned on slide 19. No, me too. Sorry. The Odisha and Maharashtra put together would be about close to 100 odd. Hello? Hello. Yeah. Hello. Yes. Odisha and Maharashtra, I think if you're referring to those, 386 + 1,600, that would be about INR 150 crore of total investment that we'll have to do for Maharashtra and Odisha. That's for the pathology centers, 386 and 600, right? Yes. You're referring to the investment, right? Correct. I'm referring to the investment for both the 50 radiology centers and 992 pathology centers that you have mentioned in slide 19. Correct. Okay. No mind. Apologies. I think we misunderstood. The CapEx that we plan for Maharashtra and the Odisha project that are mentioned on the slide, that would be in the range of about INR 50 odd crore put together. Okay. Okay. The next question, which you may have answered in your previous calls. Apologies for repeating that. When, for example, you said the Rajasthan project got expired and you have basically, you had set up the projects, when you got the contract. For example, when you get the new contract, you set up the projects and things like that. Once the contract expires, what do you do with the machines and all that that you have installed in these centers? Sure. I think there was some static. If I understood your question correctly, you're asking what happens with the equipments that in the case of Rajasthan, right? Correct. Was it your question? Yeah. Yeah. See, basically, typically these are, you know, like, in case of, pathology projects, these are very portable equipments which can be deployed at other projects because these are owned by us. They are in our books, our balance sheets. As and when, if we require to move them to other locations, we can do so. In the case of Rajasthan, it's just we knew that, you know, there's a tender, as of now, we have those equipment there. If, required some of the equipment, we can, relocate at other, private, collection centers as or, you know, private labs as well. These equipments can be deployed wherever we feel it appropriate to do so. Okay. My last question. When you do these CapEx for these centers, do you depreciate these assets over the life of the contract? Or how do you do the depreciation for these assets? For the equipment, we do, as per the life of the equipment. For the infrastructure and other things which we do for the life of the project. As I said, these equipments can be deployed, whether it is radiology or pathology, the equipments can be deployed. Considering the life of the equipment, the depreciation is done, which is also reviewed by the auditors. Accordingly, from the accounting standards perspective, the depreciation is carried in the books. Got it. Got it. Thank you so much and all the very best. Thank you. Thank you. Thank you. Thank you. Next question is from the line of Jamie Soo from HSBC Asset Management. Please go ahead. Hi. Hi. Good afternoon. Just a very quick question from me. I'd like to refer to the same slide in that the other gentleman referred to in terms of the project. Slide 19, projects other than mentioned in RHP. When I look at that slide on the third quarter and compare it to the slide on the second quarter, the radiology center declined. Total center declined from 60 - 50. On the other hand, the pathology centers grew from 200 to almost 900. Are these two slides referring to the same thing? How should we go about reconciling these numbers? Thanks. I think what you are referring to in terms of the number. Basically, these are the centers which are currently under implementation. The ones that you see refer to 982. Basically, these are the new projects or new centers that we won in this quarter. Basically, it's quarter-on-quarter movement between centers that are currently under implementation and those that we've added new centers into our pipeline or in which we now going to get implemented in the subsequent quarters. If you're referring to the last, Q2 implementation tracker, where Uttar Pradesh, where we mentioned four centers, four radiology center will be operationalized in Q4. Out of that two has already operational and two is. In the pipeline. ... in the pipeline, which will be operationalized in Q4 FY 2023. This is kind of status we are changing and adding the new projects which are coming up. No, I get the timing of it. There is a line or column on your, on the, on the table that basically sums up every single radiology center that is under, you know, either operational, to operational, construction work in progress, right. On the total number, on the third quarter slide, it's 10-50, but on the same slide in the second quarter it stood at 68. It's so quarter-on-quarter is down by 18. On the pathology center, the same number, excuse me, increased from 240 - 992. Jamie, if you see in the Q2, we would have shown about Tripura, where there were 18 centers which were under implementation. Now these 18 centers have already been operationalized. Basically, from that 68, if you remove 18, you'll have 50, which is what you're seeing in Q3. As the centers get implemented, they move from this table because these are only tables which are currently under implementation. Oh, I see. Okay, okay. I get it. We have completed the center. They're still in our network. It is just showing which are completed and which are still in the pipeline. Oh, I see. Okay. Okay, got it. Thank you. Thank you. Next question is from the line of Manoj Kuwar as an institutional investor. Please go ahead. Good afternoon, sir. Manoj, all the assets, sir, you're not very clear. The audio is not clear. Am I audible now? Yes. If all Punjab centers has been now functional, how much sale we can expect in next financial year from the Punjab center? Punjab we expect about, close to INR 60 crore-INR 70 crore annualized revenue in the next fiscal. Okay. This whole subsidies might not give the actual profits to here, but same revenue can be take from the subsidy of the Punjab? Sorry, if you can just repeat that. Whatever revenue the subsidy is reporting, we can take that is a revenue from the Punjab centers? No, no. As I said, the subsidiaries, there is a certain, you know, arrangement that we've had where because the investment is made by the holdco. In that case, Krsnaa, you know, Diagnostics Limited, and there are the various subsidiaries. There is a certain revenue sharing that happens between the subsidiary and the parent company, because, you know, investments are in one company and the operations are the other company. As I said, the subsidiary was made purely from, you know, the regulatory requirement, and also the accounting is done in the way the arrangement was there between the holdco and the subsidiary. What was the revenue from Punjab in this quarter? INR 20 crore. INR 10 crore. like we were doing the Rajasthan center and, the tender got stopped after the extension. Normally what we see is that services don't stop. In this case of Rajasthan, those services were stopped. Won't that be difficult for the patients that suddenly bringing their problem? Any comment on that? I'll just comment on that. Basically, if you see that Rajasthan tender, you know, it cannot be said it was stopped. The contract tenure was completed. After that, the Government basically brought in a new tender. Again, when we participated, there were a lot of, as I said, you know, competition that had come in with lot of complications around the tender. It got canceled, and now it has come for rebidding. If you see our past experience, there was for the first tender when we had won for Rajasthan, when it came for extension, we bid for it and we continued for another period of three to four years. Basically there is a continuity that happens in these tenders. Only in this particular case, because there was a lot of interest and, you know, some complications that were there in the tender because of which it had to get canceled. That is where this gap has now come up. Otherwise, normally these tenders work in continuity. Okay. can you give me the CapEx requirement for the new BNP in Odisha pathology autosampler? What would be the CapEx requirement? Both projects put together INR 20 crore-INR 22 crore, approximately CapEx we are looking. Okay. Thank you. Best of luck. Thank you. The next question is from the line of Aditya Khandelwal from SiMPL. Please go ahead. Yeah. Hi, sir. Thanks for the opportunity. When we came to the IPO, one of the key advantages of our model was that we used to open centers in the hospitals and the in-house patients would help us with the revenue growth and the ramp-up would be faster. When we look at the Punjab order, there has been a delay in the ramp-up of revenue. Just wanted to know what are the issues you are facing in this Punjab order? Punjab, from our, all our collective experience of the past, more than a decade. Excuse me. Sorry. More than the, you know, I mean, the experience that we had in the past versus Punjab proved to be an exception for various reasons. You know, there was a change in the government, and when they came in, then in terms of, you know, getting the necessary approvals from the authorities took time. That led to delay in implementation of the project. Also one of the key things that is, you know, kind of putting an hindrance to the revenue ramp-up is the Punjab is purely cash business. Typically in government business, when it is under the free diagnostic scheme, then you'll see a very good ramp-up because, you know, patients come and they avail these tests. It is entirely cash driven, that is one of the reasons that we are seeing where, you know, the ramp-up has not happened the way we had anticipated. Now, of course, you know, that we'll have to do more of, I mean, in terms of community outreach and all those initiatives are being undertaken to educate the consumers and, you know, showcase that these are the kind of facilities that are available. Hopefully that should translate into additional or increased revenues in the subsequent quarters or the year itself. Sir, when we had bid for the contract, we would have made some assumptions regarding a particular revenue growth and particular total revenue across the contract period. Because of this delay, our revenue projection would have taken a hit. The return which we would have calculated would be lower now because of this delay in the ramp-up. Are you think the IRR which we had earlier estimated, we would be able to achieve that? I think you're right. From a timeline perspective, the IRR would have been delayed. As I said, potentially wise and, you know, like today, now, more and more people are becoming aware of the, you know, the kind of centers we've deployed in Punjab, the rates at which we are offering. Which is also being seen in translation in terms of more volumes coming to our centers. I am sure. I think it's a matter of time where, you know, once these projects achieve their true potential, whatever projections we made, we should be able to achieve that. We've seen that in the past as well. In some of these projects that there are delays happening. It is more of a timing difference, the way I look at it, you know. A couple of months here and there, the projects get streamlined, and that's one of the uniqueness of BPL foreign business model. Okay. If you could just give us a split between the margins which you are making for the old centers, the pre-IPO, the centers which you had opened pre-IPO, and the margins which you are making in the new centers. If you could just provide a split between them. I don't think so I would have had that split with me. We don't have a timely as of now. Yeah, we can share that information to you separately. Separately. Sure. Thank you. That was all from my side. Thank you. Next question is from the line of Aditya Khemka from InCred P MS. Please go ahead. Yeah, hi. Thanks for the follow-up. Yash, if I understand correctly, compared to FY 2022, when we did, let's say, revenues of INR 450 crore, this year, FY 2023 will be in the range of INR 470 crore-INR 480 crore. Last year we would have done almost INR 70 crore from the Rajasthan tender, which in FY 2023 would be how much? About INR 30 crore or more? Rajasthan in FY 2023 would be close to about INR 40 croreor, INR 36 odd crore, yeah. INR 36 crore. Last year there was a INR 32 crore COVID revenue, which obviously this year is like INR 2 crore. Am I right? Yeah. I think last year it was close to INR 40 crore. If you see put together, INR 70 crore of revenue has not been there, which is because of COVID and Rajasthan not being there, yet we've been still maintaining that kind of revenue growth. Exactly. Basically, if I knock off INR 70 crore from the base year, we are looking at an INR 385 crore revenue of FY 2022, comparing that to whatever 470 something we'll do this year. Right. Yeah. That is the kind of growth we have still maintained and continue to grow. Correct. Correct. No, that makes sense. The other question is, you know, we have a couple of, you know, data points we got from the government website, where it seems that there are maybe three CT scans which are coming up for expiry, I think, which we run. I think one of them is the Nashik district in Ghoti. Then there is a Jammu, I think, J&K, then there is Madhya Pradesh, one hospital. These are CT scan machines, which I think we had contracts for seven, eight years. Now, I think these contracts are expiring sometime in 2023. Could you talk about what size of contracts are expiring in 2023? I understand that we may get extension, but as an investor would be good to know what could be the potential revenue loss we could face in 2023. This is the calendar year 2023 I'm talking of. FY 2024, basically. Aditya, I think again, thanks for bringing that. If you see, for MP, we've already got an extension for one year, and that continues. Typically, we've seen given that, you know, like the investment and radiology projects, normally the extension happens. Jammu also there's already an extension in place, we don't see any of these tenders coming up for expiring in at least the next fiscal. I think the other one is Nashik. Nashik is continuing. I don't see that coming to expiry any this soon. Okay. In your assessment for the next one to two years, there is nothing significant coming up for expiry? Yes. Okay. Okay, that is understood. Last question. You know, you said that when these contracts are not renewed, especially your pathology machines, you are able to transport to other locations where you may be setting up pathology labs. What do you do with the radiology scanners, the MRIs, the CT scanners? Do you also transport that? Yeah, yeah. For example, see now, over a 10-year period, we would have already recovered the investment that we made in our radiology equipments, whether it is a CT scan or an MRI, given our, you know, kind of payback that we expect. Hence, these machines can be deployed. We can deploy it to either private centers, we can deploy it to Tier two, Tier three locations. There is absolutely flexibility in terms of how we can use these equipments, and there is no kind of any hindrance or bottleneck in using these equipments. Right. Am I correct in assessing that ending FY 2023, radiology would be about 55% of total revenue and pathology will be 45%? Would that be the split, broadly speaking? I would have loved to answer that, but I don't think so I have an immediate answer to this. Maybe, you know, towards the close of the year, we'll have more clarity on that. Sure. I'll get back on that with you. Okay. Thanks, Yash. All the best. Thanks, Aditya. Thanks. Thank you. The next question is from the line of Vineet Jain from as an Individual Investor. Please go ahead. Hi. Thank you for the opportunity. I wanted to ask some details about the retail strategy. I think you all have highlighted it in part in the investor presentation on slide 23. I wanted to understand what our broad projections are for this space and what are the plans to eventually get into home connection of essential services which have been highlighted on FY 2023. Sure. Yeah. See from our overall the B2C market as we call it, you know, we had announced that we are entering that space. We've already started the franchising model, so to speak. Having said that, today, you know, after the successful trial that we've had in Maharashtra and Punjab, we are getting a lot of inquiries from people. We are very selective in the way the entire process is, where we want to really identify some good partners with a long-term vision. Because the way we are seeing in the market, there's so much of, you know, the kind of pricing pressure or deep discounting that's happening. We also want to ensure that there's a strong partnership with the, these kind of, players that whom we want to be associated. We are not very interested. As I mentioned in my previous calls as well, there will be, you know, where it will be a slow ramp-up, and then all of a sudden we should expect a good spike once our model gets baked well, and we also see strong, you know, these kind of partnerships. Home connection, we've also started there, and like we mentioned, once the franchising model also gets in full swing, we'll also expand home connection in all these locations as well. Currently home connection does work in areas like Pune and Bombay or where we have our network and we've been launching it across other locations. The reason why we currently don't really focus, because we already have a kind of customer base or captive customer base which comes to our centers. Home connection is again a very differentiated service and, you know, also it means adding more manpower. As and when the overall network gets established, then we should be able to leverage all these other verticals of business as well. Sure. Is it fair to assume that home connection and other non walk-in patients is not going to be an immediate focus? That's honestly good to hear, because I was worried about exactly what you said, the entire cost structure involved with it. I wasn't sure if this will work in semi-urban or rural settings, where the density of population will be significantly lower as compared to urban as well as transportation etc., would be challenges. Is that a correct assessment? Yes. You know, we've been mentioning that as well. We are very cautious because, you know, in a highly concentrated kind of a market where there are such players, we are also trying to see that we should have a good differentiator. Price is, of course, you know, that's a disruptive model that we have, but at the same time in terms of quality, the logistics. We are also studying this and, you know, as I said, hopefully in the next fiscal when we have these franchisees and, you know, accordingly we will start working on it. Having said that, today also in our government centers, we are seeing an increased participation from private walk-ins. That is the result because people have now started appreciating that in government centers you are getting such kind of facility. We are seeing a very good, healthy increasing trend, you know, in these centers as well. Sure. Thank you, Yash. Just a couple of quick questions on exactly that point. Will it be possible for you to share details of what proportion of your revenues by center or maybe by geography come from private walk-ins as opposed to the traditional government contract? That's one. Second, the BMC contract that you have won. If we do a quick, the numbers suggest that the revenue potential there from the government contract is about INR 27 crore, INR 28 odd crore per annum. You know, you correct me if I'm wrong. Wanted to understand your sense of whether that contract in particular can be high in terms of potential from private walk-ins. The fact that it will be in Mumbai, and, you know, will be in the backyard, so to say, of the traditional large pathology players. Could this be, in your view, a step towards disrupting the pathology diagnostic ecosystem in urban India as well? Yeah. Again, if you see from a data point perspective, you know, while it's even we wish for, it's a bit difficult to capture because, you know, the differentiating whether it's a private walk-in and a government patient, before there are certain measures. We are also working equally to have our systems, you know, to capture that kind of element from a more meaningful analysis and data analysis. Again, you know, thank you for raising this. We are equally working on it. It will be difficult for me to give that data point upfront now because the systems are not, again, you know, given that we work in the government centers, it's equally challenging to differentiate very easily. The second part of the question which you asked about from the Mumbai, of course, Mumbai density of population, very high metro like Mumbai. Potential wise, we also, you know, believe that it could probably have a better potential or, you know, much better potential. At the same time, we could leverage our presence in Mumbai to also reach out to the much more wider urban markets, you know, with our disruptive prices and the kind of quality that we are offering. I believe, yes, Mumbai could be, you know, a good base for us to look into and tap into these kind of urban markets. Thank you. The next question is from the line of Nirvana Laha, as an individual investor. Please go ahead. Yeah, thanks for the opportunity. Yash, you've mentioned that- Can you use your handset please? please? You're not clear the audio, Nirvana. Yeah. I'm actually using my handset. Am I audible now? Yeah, the audio is low. Yeah. Now it is fine. Yeah. Yeah. Yash you mentioned that Punjab is already at INR 12 crore run rate. If I heard you right, you said that next year is going to be about INR 15 crore-INR 16 crore run rate for Punjab. You know, we were thinking that due to the Punjab not ramping up, you know, profitability might be depressed, but that doesn't seem to be the case. Why do you think the margins YoY are down and continue to be down for the last two, three quarters? Like I said, the margins have been impacted primarily because, you know, for example, we have onboarded employees. Now, for example, Punjab might have about 700, 800 employees, but the revenue is not commensurate to the kind of number of employees we have because the project has not ramped up. Similarly is the case of Himachal Pradesh, where, you know, we've added more employees. As the revenue ramp-up happens, that is where we, you know, the contribution will start increasing, and you should see an improvement in the margins going forward. The question is: do you expect similar numbers in terms of margins to also continue next year? Because what you're projecting is a very small growth on the number that you already have for this quarter, for next year. Yeah. I think, see now most of the fixed overheads have been incurred. We don't expect a further, you know, dent on the margins. You know, that trend should continue where the margins will be stable or improve going forward. Okay. Around growth for next year for Punjab. Sorry, could you repeat that question? Sorry. Your guidance for Punjab for next year remains at around INR 60 crore-INR 70 crore, is it? That's about INR 70 crore. Yes. Yeah. Yes. Okay. Okay. Can you help us understand what exactly is this line item called fees to hospitals and others? Is this only to do with private hospital tie-ups or even for government hospitals? What is the trend in this expense item going forward? I can see it's reducing. Can you please explain this? Basically what gets captured under the fees to hospital is there are two components. One is, we are also, you know, currently tied up with various medical colleges and private hospitals where we have a center. There's a certain revenue share that we do to these hospitals. There is a element that we have in some of our bigger projects, like Punjab or far-flung locations where we have business associates, as we call them, between the work in serving the state. These are very remote locations, into the tribal areas or, you know, the remotest corner. For example, if I give you Himachal Pradesh, we have a center which is, you know, near the Tibet border. It's absolutely impossible for, you know, people to go there. We leverage these local partners to help us in terms of the logistics, in terms of sample collection. These are the partners. It's a straightaway arrangement of a revenue share. Basically it doesn't become a fixed cost. It is linked to the revenue. At the same time, they are also incentivized, you know, in terms of helping us, not only increase the revenue but also ensure that quality service is being delivered. This is how the business partners and the revenue, or the fee to the hospital arrangement works. I hope I've answered your question. That part is completely clear. How does the fee to the hospital, like what does the hospital or medical college deliver to Krsnaa in return for the fees? We need the space, right? When we are operating inside their premises, the medical colleges or the hospitals give us the space, and that is one of the reasons why they expect a revenue share, because it's a kind of a partnership, right? Okay. This is for your private tie-ups, this, the fees to hospital. Yes. Yes. Okay. Okay. Thanks. Thank you. Ladies and gentlemen, that would be our last question for today. I would now like to hand the conference over to Ms. Pallavi for closing remarks. Thank you. Over to you, ma'am. Pallavi, ma'am, your line is muted, I believe. Yeah. You're on mute. Thank you. Thank you everyone for joining our Q2 FY 2023 earnings call. I hope we have answered all your questions. In case you have any further questions which have remained unanswered, feel free to connect us with our investor relations team at Beachhead Capital Partners. I'm looking forward to interacting with you in the future quarters. Thank you. Have a great evening ahead. Thank you very much. Thank you. Thank you, everyone. Ladies and gentlemen, on behalf of Equirus Securities Private Limited, that concludes today's call. Thank you all for joining us and you may now disconnect your lines. Thank you.