Ladies and gentlemen, good day, and welcome to Krsnaa Diagnostics Limited Q1 FY24 earnings conference call, hosted by Equirus Securities Private Limited. 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 this conference call, please signal an operator by pressing star 0 on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Bharat Celly from Equirus Securities. Thank you. Over to you, sir. Thanks, Neil. Hello, good evening, everyone. Pleasure to have you all on the call. We have with us today Krsnaa Diagnostics management, represented by Sir Rajendra Mutha, Chairman and Managing Director, Ms. Pallavi Bhatevara, Managing Director, Mr. Yash Mutha, Whole Time Director, Mr. Pawan Daga, CFO. We will start this call with opening remarks from the management side, followed by a Q&A session. Thanks, over to the management. Thank you, Bharat. Good evening, everyone, welcome to Krsnaa Diagnostics Q1 FY24 earnings call. I thank each one of you for joining us today. We have already circulated our investor presentation, which is available on our website, as well as on all the stock exchanges website. I hope you all have had an opportunity to go through the presentation. I would like to address the current landscape of the diagnostic service industry and shed light on our company's position within this dynamic environment. As we all acknowledge, the provision of high quality and affordable diagnostic services stands as a fundamental pillar within the healthcare industry. It also plays a pivotal role in disease diagnosis, management, and prevention. In the Indian context, the diagnostic market is projected to reach approximately INR 1,360 billion by FY26, with a compelling compound growth of 14% anticipated in the years ahead. The diagnostic industry in India is being driven by various intrinsic factors, including a large population of around 1.4 billion, a growing elderly population, increased prevalence of chronic illnesses, higher individual income, improved insurance coverage, government initiatives, greater health awareness, and a focus on preventive care. The demand for accurate clinical solutions and better healthcare services is driving the adoption of point-of-care testing and home collection. India's demographic profile presents an untapped market for diagnostic services, offering opportunities for both organized and unorganized players. Governments at the central and state levels are exploring public-private partnerships to enhance healthcare and diagnostic services. Krsnaa Diagnostics, as a forefront of this in PPP Diagnostics, has established a strong presence across India. Our efforts ensure access to advanced and feasible diagnostic services even in the remotest regions of our country. Turning to recent developments, I am pleased to report a positive shift after encountering initial challenges in the new fiscal year. The Hon'ble High Court of Rajasthan has ruled in favor of Krsnaa Diagnostics and TCIL, mandating compliance with stipulated conditions related to additional performance security. Aligned with this judgment and as per the ruling, we have submitted additional performance guarantee required for the project. We are hopeful to execute the agreement by end of this month. For the past 3 months, we've secured a significant tender in the state of Assam. This project encompasses a network of 10 laboratories and an impressive 1,256 collection centers, significantly bolstering our growth prospects in the northeastern region of our country, where government healthcare holds 80% share. Presently, Krsnaa takes pride in its leadership role as a PPP Diagnostics integrated entity, boasting 134 radiology centers, 1,373 pathology centers, 105 pathology processing labs, and an extensive network of 1,336 pathology collection centers. Our unwavering commitment to serving the B2C segment remains at the heart of our efforts. We have thoughtfully introduced affordable wellness packages tailored to meet the diverse needs of our esteemed customers. I'm honored to share with you a momentous occasion marked by progress and commitment to accessible healthcare. Krsnaa Diagnostics, renowned for its innovative healthcare solution, proudly introduces its home sample collection services, inaugurated by the Hon'ble Health Minister, Dr. Balbir Singh. This forward-looking initiative enhances diagnostic service accessibility and promotes community health. The event, which was held on August 14, 2023, at Patiala, Punjab, marked a pivotal advancement in improving healthcare access across the region. This inauguration symbolizes not only convenience, but also unwavering dedication to quality, precision, and affordability. We have not only launched this service, but also established an efficient call center to streamline logistical, operational, and technical support to patients in 6 locations at Punjab, where in Amritsar, Bathinda, Mohali, Jalandhar, and Ludhiana. As a respected partner of the Punjab Health Systems Corporation, our commitment of providing state-of-the-art diagnostics and comprehensive healthcare solutions at discounted rates has significantly benefited Punjab's healthcare ecosystem. Furthermore, our dedication to embracing technology within our operations knows no bounds. In the first phase, we are actively implementing technology-driven initiatives, including digital pathology and integrated lab management. These endeavors are designed to augment our operational efficiency and elevate the quality of our services. Looking ahead, our confidence soars in our capacity to expand our geographical footprint and penetrate further into Tier 2 and Tier 3 cities. We are resolute in our commitment to provide high-quality diagnostic services at extremely affordable costs. Our recent center installations, triumphant tender wins, and our ongoing evaluation of pipeline projects all point to a future of promising growth. I will now hand over the call to Mr. Yash Mutha, our Whole Time Director, who will discuss Krsnaa's strategic plans and future growth prospects. Thank you. Have a great evening. Thank you, Ms. Pallavi. Good evening, ladies and gentlemen. I'm delighted to present the impressive performance of Krsnaa Diagnostics during the first quarter of FY24. It brings me great joy to announce that our total revenues have surged to INR 140 crore, demonstrating a remarkable 24% year-on-year growth. In terms of our normalized EBITDA, which has risen significantly to INR 35 crore, showcasing an outstanding 22% year-on-year growth with a substantial margin of 25%. Equally remarkable is our normalized net profit, which stands at INR 17 crore, representing a striking 19% year-on-year growth, accompanied by a corresponding margin of 12%. In addition, our regular EBITDA has reached INR 32 crore, reflecting an impressive 13% year-on-year growth, accompanied by a margin of 23%. Our regular net profit has also shown growth, reaching INR 15 crores, a 3% year-on-year increase with a margin of 11%. However, it is crucial to acknowledge that our profitability margins have faced some influence deviating from the previous quarter's performance. This shift can be attributed to our ongoing expansion endeavors. These encompass various projects that, despite incurring higher expenses, are yet to contribute proportionally to revenues. Nevertheless, we remain optimistic about a positive shift in the margins as these initiatives mature in the upcoming quarters. On an exciting note, I am thrilled to share updates on our growth trajectory. Over the last three months, we have successfully integrated six new pathology labs and established 252 pathology collection centers, all aligned meticulously with our expansion strategy. To propel our future growth and amplify our presence, we are deeply engaged in a comprehensive pipeline of projects. These ventures encompass pathology labs, collection centers, and even CT and MRI facilities across diverse states. This strategic approach empowers us to explore new frontiers and fortify our operations within existing states. We'd like to inform all our investors and stakeholders that based on the upcoming projects, including Maharashtra, BMC, Assam, and Odisha, along with the retail expansion, we expect to maintain our CAGR growth rate for the next two years. With Rajasthan projects being finalized, we expect that this growth rate for Krishna will be much higher than the CAGR growth rate. As we persevere with our ongoing initiatives and execute existing projects combined with recent accomplishments, our outlook for the future strand stands strong and resilient. We possess unwavering confidence in our ability to harness the substantial opportunities that lie ahead. Through these endeavors, we are poised to drive sustained growth and create value that resonates deeply with all our stakeholders. Now, I would like to hand over the call to Mr. Pawan Daga, our Chief Financial Officer, who will provide further insights into our financial performance. Thank you. Thank you. Thank you, Mr. Yash. Good evening, ladies and gentlemen. I will be presenting the financial highlight for the quarter that concluded in June 2023. In the first quarter of FY24, our total revenue from operations surged to INR 140 crore, showcasing an impressive 24% year-on-year growth. Turning our attention to the operational aspect, our EBITDA reaches to INR 32 crore, signifying a commendable 13% year-on-year growth, and we maintain a margin of 23%. Furthermore, our net profit also demonstrated positive growth, touching INR 15 crore, indicating a 3% year-on-year increase, along with a margin of 11%. During Q1 FY24, we have added more than 500 employees, by the year end, we will be adding more than 3,000+ employees pan India, creating employment opportunity with our Let's Do Good mission. On the efficiency front, we have seen a reduction in receivable days, going from 86 days in Q1 FY23 to 79 days in Q1 FY24, indicating improved management of our receivable. Taking a closer look at our balance sheet, we have a gross debt of INR 50 crores while holding a cash and cash equivalent worth INR 225 crores as on 30 June 2023. It's important to note that our company continues to maintain a net debt-free status, a noteworthy achievement. We can now open the floor for question and answer session. Thank you. Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their 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. Participants, you may press star and one to ask a question. The first question is from the line of Jainil Shah from JM Financial. Please go ahead. Yeah. Hi. Thank you for the opportunity, and congratulations on this great set of numbers. My first question is on Rajasthan tender. We were earlier expecting Rajasthan to start contributing 3Q. Any update on the timelines now? Also, if you can call out what was the contribution of the earlier Rajasthan tenders in our 1Q base? Hi, Daniel. In regards to the timeline of Rajasthan, the new tender contribution, we had anticipated that to just move on to Q4, whilst we are trying our best to keep it, get this pushed by end of Q3, or earliest Q4. In terms of the contribution for Q1 of Rajasthan, was it this year you're asking or for the previous year? Previous year, the earlier tender that acquired. INR 20 crore. Yeah, it was about INR 20 crores. INR 20 crore in Q1 FY23. INR 21 crore? INR 20 crores. 20, INR 20 crores. Okay. The new centers that we've opened this quarter, just a clarification, how many have we opened, and, what is the, cost, and the impact on EBITDA? If you see, we have added, six pathology lab, one radiology centers, and 300+ collection centers has already started functioning in Q1. Further 200 will be added in the July month. Approximately INR 2.6 crore is estimated cost, which we incurred, but at the proportionate revenue has not contributed in the Q1. Okay. What was that? CapEx, how late this quarter? INR 31 crore is the CAPEX for the Q1. Okay. Okay, that's very helpful. I'll get back in touch if I have more questions. Thank you so much. Thank you. Participants, you may press star and 1 to ask a question. Next question is from the line of Darshan Jhaveri from Crown Capital. Please go ahead. Hello, good evening, sir, and thank you for the opportunity. I hope I'm audible. Yes, Darshan, you're audible. Yeah, yeah. So I just wanted to know, so now with Rajasthan, I think finally, I think all problems have been solved. What kind of additional revenue would it keep in maybe Q4 or next year? What could be our growth for FY 2024 and 2025 we would be expecting, and what particular margin range, you know, we can expect in FY 2024? Darshan, questions that you've asked, first is, what is the expected contribution in Q4 of Rajasthan? That we expect about INR 25 crore, which we expect in Q4 if the centers go live. If you could just repeat the next part of the question, please. The next part is, how would our FY24 as a whole look for us in terms of residential margin? What kind of growth will we have towards new Rajasthan coming up? How would FY25 look? Will we be able to do our INR 600 crore-INR 700 crore revenue, or... What kind of margin can we expect during that? Hello? Yeah. That's in terms of the FY24 numbers. Like you mentioned in our call today, we are confident to achieve the growth of almost around 30%-35% in this FY24, that is excluding Rajasthan. This is currently considering the three projects that are on life, three to four projects that are live. For FY24, with Rajasthan coming up, of course, you know, the growth rate will be much higher compared to what we'll be demonstrating in this year. The margin profile for this year will be a bit impacted because there are implementations going on. Like we've been mentioning, we will continue to focus on, you know, maintaining the existing levels of EBITDA margins and not have them, you know, impacted severely. Ensuring that revenue is in more in line with, you know, expenses that are being incurred. The reason for, again, as we mentioned, the margins will be impacted is because by the end of the year, we'll be adding almost 3,000+ workforce, and which will also. You know, once we add them, but the revenues not come in. We expect slight impact on EBITDA margins on a quarter-on-quarter basis as we keep on adding the employees. We're equally trying to also ensure that the revenue ramp-up is, you know, pushed further to ensure that the length or the impact on EBITDA will be lower. On an annualized basis, obviously, we expect EBITDA margins to be about the same, 25%, or, you know, try to improve from here on. I hope that answers your question. Yeah, yeah. Sorry for j ust sorry, so just for clarification, 30-35% growth, right, sir? Yes. Yeah. Okay, thank you so much for all the all the best. Thank you. Thank you. Participants, you may press star and one to ask a question. Next question is from the line of Kaustubh from Das Investment Group. Please go ahead. Hey, hi. I just wanted to understand, for the previous participant, you responded that you expect the 30% this year, and probably a bit of higher growth, maybe 30%-40% for the next year. Am I correct? I can go on to the second question. Sorry, we lost you midway. Can you just repeat the question? For the previous participant, you responded that this year the growth would be 30%-35% over the last year, FY25 will be another 30% or 35% over FY24. Is my understanding correct? The revenue growth. Down for Rajasthan? For this year. Hello. If you are expecting 30%-35% growth year-on-year, and next year, of course, you know, with Rajasthan being added, then the growth will also be much higher. Got it. Now, leave this year aside, because I understand that you'd be adding new employees. What would be the margin for the next year? Like FY25, when everything has stabilized, what would be the margin levels? Like, from our current margin level, what would be your margin level in FY25? Annualized, I mean. Yeah. On, on an annualized basis, we expect to, you know, hover it around the range of around 25-30. I would expect to, you know, settle down to about 28% is what we expect it to achieve. Of course, you know, our, our efforts will be to maximize the contribution from an EBITDA perspective with this project stabilizing. Like we maintained, we would try to aspire to 20-30%. Okay. What is the current margin right now? just for booking a 2 number. Current is 28%. Okay, you expect slight improvement, if possible, or maybe, maintain these sort of levels, for FY25? Yes. Got it. Thank you. I will return back to you. Thank you. The next question is from the line of Avanneesh Chandra from Sunidhi Securities and Finance. Please go ahead. Yeah, thanks for the opportunity. Just one question. When you say that, Rajasthan, it comes into play, so technically, what are the hurdles is still remaining there, to bring this project on, on life? Yes. See, Rajasthan, what is pending is only executing the agreement. That is basically both the parties will sign. Since there has been a high court order, the government has to follow their due internal processes, to issue the agreement and get that executed. Like we said, we are looking to get this executed by end of this month. After that, then we just basically go into the implementation phase. I hope that answers your question. Yeah, yeah, yeah. Just want to extend it into the saying that do you think that will there be any impact on the both parties agreement and in the operations going forward based on this this? No, no, absolutely not. It is, in particularly, you know, in tender, as we've seen, these are basically, contractual commitments. Both the sides try to negotiate and, you know, also ensure that it is compliant. Likewise, both we, along with our consulting partners itself, have kind of indicated that, you know, we are in compliant. At the same time, there were some technicalities in terms of, you know, interpretation of various, sections and provisions, which led to this kind of, situation. I don't think it impacts anyways our relationship, with the authorities or the government, and neither does it impact, because at the end of the day, this is in the public interest. Considering our past experience, in successfully delivering PPP across the country, this is also a testament that Krsnaa does deliver, and I don't see that should anyway impact our, our relationship. One more thing, the initial work you were doing, all that is on the standstill, or we doing some work, or some revenue contribution is there from the Rajasthan ongoing in the current? As of now, from Rajasthan, there is no revenue contribution. What we continue to do is in terms of, you know, let's say, evaluating the various sites that have to be, deployed, hiring, the initial, you know, let's say, managers. Those types of activities are ongoing. We know these are part and parcel of the tendering process, so we don't just, put a full stop to it. you know, until, as I said, we were confident and hopeful of the order coming in our favor, which has happened recently. We are continuing our activities and, looking forward to get this, contract live as soon as possible. Lastly, when you say that, INR 25 crore kind of contribution can be in Q4, what kind of revenue contribution can be in FY25 from Rajasthan? FY25, we expect Rajasthan to contribute about close to INR 300 crore, you know, based on the Q4 numbers and our sizing of the project. That is the number we expect. Okay. Thank you. Thank you. Next question is from the line of Amrita from Wealth Managers. Please go ahead. Hello? Hello. Yes, we can hear you. Go ahead, Amrita. Yeah. Thank you for this opportunity. I have two questions. First one regarding the page 15 of the presentation. You have mentioned the monthly capacity and the annual volumes. If you could just clarify how the headroom calculated there? I believe you are referring to the slide, right? Teleradiology slide on page 15 of the presentation. Basically, our installed CT scan and MRI, based on the last financial year, FY23, based on that headroom is calculated. We have an internal benchmark where every machine, based on their size or Tesla, we have calculated our internal capacity. Based on that, we have derived this headroom. Okay. Just to add, basically, it's a question of, you know, the installed equipment that we have, and then we have capacities in terms of putting up, including the number of radiologists as well as the teleradiologists. Combination of all of this allows us to ensure, you know, how much capacity or headroom we have for further growth in terms of getting these scans reported through our telereporting hub. More so now, the telereporting hub, as we mentioned in the previous calls, is India's first and foremost NABL accredited Teleradiology hub. We look into all these facts and, you know, aspects in determining the current scale of operations and the headroom for growth that will come based on, you know, these either new project wins or new tender wins that will be coming in the near future. For example, you've mentioned 2 lakh monthly capacity, so the annual capacity will be around 24 lakh. Whereas at FY23, the volumes are 9,17,666. That means some percentage utilization. Am I right? Yes, yes. Okay. Then my second question is regarding, like, what is the kind of CapEx that is incurred for each of these, like the collection center or a pathology processing lab or the CT or MRI centers. In the PPP model, how does it work? As in, the center is set up by the company, and then do we get a grant for it, or it is completely financed by the company, that is, the revenue system, there is a revenue-sharing model with the institution? Yeah. Basically, in any public-private partnership tender, the government publishes a tender laying out the specifications of the equipment to deploy, the number of collection centers. Once we participate and win the tender, the government will give us space, which is basically like a patient space, where then Krsnaa goes and does the investment in terms of the, you know, the interior, the ambiance, as well as the collection centers, setting up, you know, a collection center, including deploying the resources, printers, and the necessary furnitures. Each of these, you know, the investments or the CapEx involved varies from project to project and, you know, location to location. It's not, you know, one answer that would... It, of course, you know, we look at all these various metrics when we decide to participate in any tender. Then, then they be set up by the company? I think, if does the company receive a grant for this, or it is totally financed by the company itself? No, no. Everything, the entire investment is done by the company. We don't receive any grants from the government. The government only gives us space, basically where we can deploy or establish these, collection centers. At times, you know, there are electricity that is provided by the government to the site, from the site, and we, there are sub-meters and we. Per se, there are no grants or subsidies that we receive from any government. Okay. What is the kind of the patient profile that you have, the number of walk-ins versus captive patients? Could you repeat the question, please? What is the kind of patient profile? As in, as in I believe we have walk, normal walk-ins also in the, like, the government hospitals, centers where Krsnaa Diagnostics has set up the lab. As in, what are the kind of captive patients, as in the patients which are admitted in the hospital and they're coming in and getting the tests done, versus any normal walk-ins that they have? Yeah. Typically, initially, you'll always have captive patients which are coming to the government hospital. The reason why, government publishes these tenders is because, you know, there is absence of these diagnostic attributes or services. Once you're there, then you get a steady stream of these patients coming through. Over a period of time, because through our marketing efforts and when people get to know these are the kind of quality diagnostic services available at highly disruptive rates, you have even, normal people coming in, walking into the centers. In some of our centers, we have even educated patients coming in, and in some centers, the walk-in ratio could be as high as, you know, 50%-70%, compared to the government walk-ins. It varies to state, and as we've seen over the years, as the sector matures, you'll have a healthier contribution coming from the, you know, walking patients as well. Currently, what would be the rate? I mean, if you could company-wide average it. As a company-wide, it would be about, 30% would be private, and government would be about 60, 70%. Okay, thank you. Thank you. Next question is from line of Aditya Khemka, from InCred Asset Management. Yeah, hi, thanks for the opportunity. Yes, just clarification. I thought originally when we were discussing the Rajasthan tender of 37% was, it was an INR 460 crore contract over three years, equating to INR 150 crore revenue each year. You just said on the call that in FY25, we expect INR 300 crore from Rajasthan tender. Just wanted some clarification there. Aditya, see, what we scheduled earlier was based on the tender. Now, if you see, the overall tender size, the number of collection centers that have increased, based on that, we are assuming that this could be the potential size of the tender on annualized revenue basis. Of course, you know, as normally governments, when they quote the tender, quantum, they, they do it based on a conservative basis. Whereas when we've done now our initial surveys, as well as the number of collection centers, we believe this could be a good number to achieve, and, you know, a realistic number to achieve. Also, considering that it was number of districts that have been added, those have also been substantially added. 36 districts are being currently added. I hope that answers your question, where it's a combination of number of centers that have increased, as well as, you know, number of collection centers that have increased. It gives us, you know, the estimation of the value of the tender. Sorry, yes. What is the original number of districts to which specifically you are adding? If you see, Aditya, recently, government of Rajasthan, where the earlier districts are 36 only, so which has increased to further 50 districts now in total. Based on the districts, the government will increase their infrastructure or improve the labs or the big lab we propose over there. That is under discussion. Post our agreement, we will able to answer your detailed answer on this front. Understood. No, that's fair enough. Uh- Just on the, on the second part, your guidance is a little confusing, so I just want some clarification there also. In terms... This is just the top line. Margins, I know, you know, as we execute the tenders, the operating leverage is low. On the guidance standpoint, excluding Rajasthan FY24, you are indicating anywhere between 30%-35% top-line growth. Then on FY25, another 30%-35% growth, again, not including Rajasthan. Correct. Correct. If we add Rajasthan, the growth, CAGR growth or growth will be much higher. Without Rajasthan only, next two years, we can see a CAGR growth of 30%-35%. Understood. Already in hand of Assam, Odisha, BMC, Maharashtra, or if we add Rajasthan, the growth rate much higher. Understood. 30%-35% growth in the next two years is ex Rajasthan, and then, in FY25, we need to take Rajasthan over and above the 30%-35% growth in FY25 on the FY24 sales number, correct? Yes, correct. Okay, awesome. Just another question. You said you're adding a lot of people. Now, this is something which confuses me about your business model. These tenders that you said, these are 3-year, 5-year, 10-year tenders. If you hire employees on your own, you know, we know many other companies who do similar government businesses, and they try to cut corners by taking contract employees and, you know, keeping the more so-called bottom contract life. They don't have the obligation of, you know, the employee's future and his welfare, and then it went into solution contract. Just talk to us about how you manage this, sir. I mean, this is something which is really, really commendable because it's it, it does well for the economy, but I'm just confused as to how it goes to talk about- talk us through this. Aditya, basically, when we spoke about adding this manpower, these are basically a part of the tender requirements as well, where we are supposed to, you know, deploy these resources, whether it is a lab technician, a collection boy, whatever. Now, typically, when we participate in these tenders, we understand, you know, that the government is looking both from, not only from a service delivery perspective, but also to generate employment opportunities for the people, you know, of, of that geography. When we consider these tenders now, even if you consider clear horizon, the employees who are also onboarded know that this is from a tender perspective. Given that, you know, tenders get renewed or they have an extension, so I, I don't think so from an employee perspective, we keep this as a continuum. From a cost perspective, yes, we also try to see how do we optimize the resources. Now, just to give you a very ballpark number, if you see, we have about 1,500 collection centers to be deployed. Even if I could just put 1 person there, that it means about 1,500 people to be added, and which is required because for a collection center, you need resources, you know, to collect the specimens and do the rest of the processes. So it is part and parcel of the overall resource metrics or, you know, the financial that we look into. Of course, from a process perspective, we'll try to, like you suggested, whether it is, you know, contractual employees or not. That we decide based on the merits of the tender, requirements and as well as our optimization or, you know, these efficiency initiatives that we drive across the company. Got it. Just one last question from my side, and then I'll turn over to the other participants. For FY 2024 and 2025, what is your expectation in terms of CapEx? How much capital expenditure do you expect to incur in FY 2024 and 2025, given the current contracts? The capital requirement for 2024-2025 will be in the range of INR 120 crore-INR 130 crore. INR 120 crore-INR 130 crore. That I think more or less, you will be able to meet your operating profit given the growth that you are alluding to. The current INR 220 crore of cash on the balance sheet, what do we intend to do with that? How do we intend to utilize it? This will be for our working capital requirement, which likely we will be deploying. Last year, we deployed project, 2 major projects. This year, if you see, consider the full page or the state-level projects like Assam, Odisha, or total 5 big projects we are deploying this year. This year or maybe, continuing part in the next, first 2 quarters in the next fiscal. Mm-hmm. Mm-hmm. Okay. Okay, I'll get back then with you. Thanks, Paul. Thank you all. Yeah. Thank you. Thank you. Next question is from Shreyansh Jain from SJC Securities. Please go ahead. Hi, good evening. I just had one question. This is regarding, just I'm trying to understand the business model. Like, for example, we have a contract which is for a certain period of time, then it renews. What kind of operating leverage do we see? For example, if it does not renew, like, what are the business implications for, for those, and how do you model the equipment that you, you know, need to purchase or, you know, work with that? Also, like, for example, the Assam contract, we already had one in place. Like, I'm assuming that you would get quite a bit of operational efficiencies because right now you mentioned there's a lot of setup costs going in to the new centers. The ones, you know, where you're able to renew contracts, what kind of benefits do you see in terms of financials in your contracts? There are two parts of the question. The first one is, you know, how do these contracts, consider... I mean, if you're thinking from a renewal perspective, typically these contracts have clauses, you know, that the contract can be extended for a further period of two to three years or for similar terms. These clauses are there, which allows us to extend the tenure of the contract, without any additional investment that is required, which continue to operate. Now, in the case if the contract does come for, let's say, re-tendering after expiry of the period, like in the case of Rajasthan, given that we already, have an experience there, we've been there. That gives us a certain edge over our competitors in terms of understanding the landscape as well as, you know, knowing the nitty-gritties of, you know, getting these contracts operationalized. The Assam contract, there were two different tenders. Assam, we were doing tele reported tenders, whereas now we've got the pathology tender. The leverage that we have is, of course, you know, when we are there in a first tender sum, we have deep insights in terms of, you know, the operational metrics, the logistics that is involved. That helps us to, basically, when it comes to quoting the prices, we are able to bid ourselves for these tenders. That is the advantage that we normally consider. Otherwise, you know, per se, these are different contracts. Their, you know, specifications are different. It wouldn't, you know, be on an apples-to-apples comparison to say that we get these operating leverages. Okay, understood. Actually, I meant re-tendering, like, for example, when, like, there's a contract that ends, like re-tendering, there has to be certain continuity, right? If you win the contract, you don't have to go and set up the lab again or, you know, have something absolutely new. That is what I was trying to understand. It depends on project to project, because sometimes if there is a, as you mentioned, like, if there's a re-tendering and if we won, yes, it definitely adds a lot of value to our previous work, what we've already done. However, whenever there is a new tender, what we've seen in the history of Krsnaa, either the centers are added or the locations are added or number of tests are added. So a little bit of revamp is definitely needed, even if it's a re-tendering for the same similar kind of project. Understood. Lastly, for the machinery, how do you account for that, in terms of, like, depreciation? Is it fungible for different projects or, how, how, how's the MRI machines and, how do you look at that? Yeah. Typically for the pathology projects, these are long-term projects, you know, almost 10 years. The depreciation also follows the estimated useful life, which is prescribed by the accounting standards, and accordingly it is depreciated. For pathology projects, depending on, again, the project size and nature of equipment deployed, we also depreciate over a period. 13 years. 13 years. Because the equipment lives are, much higher than what we expect, the project, compared to project type. The same equipment can be deployed at the other location, so it can be used. The depreciation allows to carry up to 13 years. Thank you. Shreyansh, sorry to interrupt you. I will firstly join the queue again for a follow-up question. I request all the participants, please restrict to two questions per participant. If time permits, please come back in the question queue....This question is from the line of Manoj Dua from Geometric Capital. Please go ahead. Okay. sir, what would be the tenure of this Rajasthan tender? it's about five years, + 2 years. it's about five years. Okay. As you said, you would be doing CapEx of INR 120 crore-INR 150 crore in the next two years. What would be that for Rajasthan tender alone? Rajasthan, CapEx is envisaged to be about, close to INR 200 crore. INR 200 crore. Total CapEx you said was around INR 120 crore-INR 130 crore? For each year, it will be in the ranges of, Manoj, in the ranges from INR 120 crore-INR 130 crore each year. Each year. Okay. Okay. Normally, when you say that when the tender is over, go for renewal or renegotiation of the contract, is there any scientific, method given in the tender itself for renewal or re-tendering, or it, it, any initially mentioned it here, or we see at that period of time what happens? Basically, it is all depending on different, different contracts. For example, Rajasthan, it is clearly mentioned that it will be 3 plus 2 years. Some contracts say mutually extendable. Basically, they evaluate the project. If it is coming to a renewal, there is also according to the government's law, they cannot extend it for a more tenure than prescribed. Then, eventually they go for a re-tendering. Okay. For Rajasthan tender, is there any specific mention on the receivable days or something like that in the contract? It is a part of the normal process as it goes? There is no specific mention on the receivable days. There are conditions, you know, wherein the equipments, if let the government purchases, then we get it at the WDV value. Even the amount can be refunded back to us. Those are some of the conditions that are there in the Rajasthan contract. Okay. My last question is, can you tell me about your two initiative or, one main initiative of, B2C? How is it going, planning out, going on? Yeah. On the B2C initiatives, we have two streams of initiatives. One is, of course, the wellness practices, which we started. And, happy to say that, you know, we are seeing a lot of traction there. Krsnaa has always been focusing on the, you know, so-called B2G business or the B2B, but with this focus on packages and the kind of successes we have seen, month on month, the numbers are increasing. It gives us confidence, and that is the reason why we also launched our home collection services in Punjab, which is another initiative, which is also blessed and approved by the authorities of Punjab, you know, wherein the health minister had came and launched these services, which allows us to go through the doors of the citizens of Punjab and, you know, provide them health collection services, which is over and above the patients who come to the government center. I think with these initiatives, we believe, you know, these so-called B2C initiatives are taking good shape. With other success and, and the learnings, we'll be expanding this to other states, including Maharashtra, Odisha, and Assam, where we already have pathology labs. Like in the beginning, we want to leverage our existing network of labs and centers and, you know, spread them more through, through these various initiatives. Okay, thank you. I will join back with you. Thank you. Next question is from Rakesh Varik from Rockstud Capital. Please, go ahead. Yeah, thanks for the opportunity. I have a question. What is the status of Punjab project and- Sorry to interrupt you. May I request you to speak from the handset, please? Sir, can you just guide us through what is the status of the Punjab project, and is it scaling up in terms of margin and, the, scale as we envisaged? We see a good improvement in the Punjab, where, the month-on-month or the volume and the revenue, all the front we are getting in good pickup and, we see we can deliver what we have estimated for the Punjab project. Are we at the peak revenue with reaching that level, or it is still here or a bit away as of now? We, we still not achieved our peak revenue, but we see a good improvement in the numbers, volumes, and the response we are getting from all the fronts, as the government also initiating a B2C, where home collections and other factors are already taken care by the authority. They're appreciating our services, so we see, the peak revenue will be achieved very soon. In terms of BMC project, what we just recently won, so, and I think for the handover has been quick, pretty fast and determined happening. I understand there were some initial teething issue as such. How is it ramping up, and how do we see that contributing to the overall numbers as such? If you would just repeat the question, please. I just wanted to understand about the BMC contract, what we received, Janata Darbar, something like that, where, initially there were some teething issue in terms of the rolling out. I think immediately the revenue has, it seems to have started, since we have started operating a lot of centers. When it will scale up, and, how is it shaping up now? On the BMC front, like you mentioned, there were initial teething problems which happen in any PPP project. Those are behind the back and, you know, the revenue seems to also increasing. We are also in the process of stabilizing the operations, given that there are number of centers. We expect BMC to stabilize, you know, by in the next quarter or so, with even our labs will start, you know, supporting these extended number of collection centers which the government has added. I believe it's a matter of time. Once these collection centers that the government has added, over and above what was initially planned in the tender, and with the labs coming up, these will stabilize the operations, and we'll start seeing a mature level of revenues coming from the BMC tender. Okay. The last question on the B2C, how much it would have contributed in this, quarter as such, B2C? On the B2C, you're asking? Yeah. Right. Yeah. It's one or. B2C would not be a very significant contribution in this quarter. As I said, we've just started these initiatives. It won't be a very meaningful contribution, but we expect this to grow along, you know, with now the policies are coming up in Punjab, collection boys being deployed, and the government also blessed it. We'll see gradual uptick in this B2C model. As I said, you know, we are also testing various hypothesis when we are going into the B2C model. Whatever initial successes we had in this quarter, it seems very promising, and we look forward to, you know, more contribution coming from this segment going onward. Thank you. That is one more. Thank you. Next question is from the line of Amar Rao from Kitara Capital. Please go ahead. Yeah. Hi, Ash, Pawan. Couple of questions. One is, good quarter's performance. Rajasthan drop-off now is year-on-year, what contributed to this group? INR 140 crore would be- I'm sorry to interrupt you, but your audio is not clear. Can you please speak through the hands, yeah? Am I audible now? Yes, slightly clearer now. Yeah. Okay, Yash, Pawan, could you account for how this growth came about? Which orders are contributing to this growth in this quarter? Because Rajasthan is drop-off year-on-year to the extent of INR 20 crore. How have you got this growth? Which, which orders have ramped up for us really well? What has contributed in this quarter, in spite of the Rajasthan dropping off is our projects in Punjab, Himachal Pradesh, which are ramping up, and, you know, they have started contributing more to our mixture revenues, which has compensated for the loss to Rajasthan as well. All right. Going forward, if I got it correctly from you, you said, the ramp up will continue in Assam, Odisha, the BMC contract and the Maharashtra government contract, which should drive growth from here on with this base. Is my understanding correct? Correct, correct. Assam, Odisha, are yet to, you know, get operationalized in totality. As they start operationalizing, and the ramp up happens, contribute additionally to whatever they're doing as of today, and along with, you know, BMC and other centers as way. Got it. Just in a very quick question, this CapEx that you mentioned of INR 250 crore, this is all accounted for through our cash flow right now, right? We have no funding requirement, no debt requirement as of now, unless some new tender comes up, which we decide to participate, right? Yes. Whatever CapEx that we plan, typically we invest it through our internal accruals and, you know, some of it's coming through vendor financing, where they give us equipment on a part payment or leasing or lease. Those are the sources of financing. It is majorly predominantly only through the internal accruals. We don't expect to raise any debt or, you know, unless a new tender warrants it so. Got it. Thanks, Yash. Thank you, Pawan. Wish you all the best. Thank you. Thank you. Thank you. Next question is from the line of Punit Mittal from Global Core Capital. Please go ahead. Hi, thank you. Just two questions. One is, when you say our ROCE on mature centers is 22%, what? How do you define mature center? At what stage it is considered mature? Mature centers are, having their respective age life more than, three years, which we call as a mature centers. Yeah, as you mentioned before, that most of the contracts are 3 + 2. Is there a very short period of maturity of these centers? No, no, no. What we refer to 3 + 2 is largely for pathology projects, whereas, what you see in the existing ROC are predominantly our radiology businesses which have been going for the past many years. Okay. Majority of our business today still is, you know, radiology driven, which contributes to the overall almost 65%. 65%. -of our business come from radiology, where the contract period is about 10 years. 10 plus 2. Okay, got it. Got it. Makes sense. Second question is on the operating cash flows. Last year, your operating cash flows were a little subdued because of the higher working capital. For next two years, given the revenue and the EBITDA margin that you highlighted, what would do you expect to be operating cash flows for the next two years at our grade point? Operating cash flow for this year, we see precisely in a similar line what the last year, because the CapEx requirement in terms of from internal accruals, where we're going to deploy for new projects of Assam, Odisha, and later for Rajasthan pathology. We see is your at least similar kind of working capital requirement? You mean in the percentage terms, not in absolute, right? Sorry, I, I mean, when you say the operating cash flow should be similar as last year, naturally, your EBITDA would be much higher this year given the growth. Your operating cash flow conversion of operating cash flow to EBITDA would be similar as last year. Are you saying that? Yes. Yes. Okay, great. Just one last clarification from, the, what you spoke to previous participants. If you look at the revenue growth that you have and growth that you suggested of 30%-35%, and then you add up the Rajasthan, it goes almost up to INR 1,100 crore by FY25. Is that, the right understanding? Yes, we, we aspire to be there, and based on the project in hand, we believe those are some of the, you know, estimates or expectations, we could achieve. We've been consistently saying that that is a target we have set out ourselves for. Now with the project in hand, we have a certain level of, certainty towards achieving those, numbers. Okay, great. Just one last one. Is there any new, bigger, centers in pipeline that you have or currently focused on, just these ones? There are a couple of projects or tenders that are in pipeline. You know, as and when, of course, we will participate or we come to other stages, we will keep all informed. We continue to seek opportunities, you know, over an existing projects that we have signed up with. Thank you so much, and all the very best. Thank you. Thank you. Next question. Next follow-up question is from Rinan from InCred Capital. Please go ahead. Yeah, hi. Thanks for the follow-up. Yes, so on Rajasthan, you said, total CapEx will be INR 200 crore. And in the next, in FY 2024, 2025, the CapEx guidance is INR 120 crore-INR 130 crore each year. So in FY 2025, you're saying Rajasthan will contribute INR 300 crore of revenue, which means that the entire INR 200 crore of CapEx for Rajasthan should be done before FY 2025. So I'm slightly confused as to how much CapEx have you already incurred to Rajasthan? I mean, could you just verify, at what time will you incur how much CapEx to Rajasthan? Is my understanding correct, that if you get INR 300 crore of revenue from Rajasthan in FY 2025, then all the CapEx for Rajasthan needs to be done before FY 2025? If you, if we, the project deployment will start once the agreement executed. In the Q3 or Q4, we see some amount of CapEx to be incurred for Rajasthan, and balance will be incurred in first quarter of next year, FY25. This is an expected timeline and projections of ours, which drives the project further. Follow up. That means that, within second half of FY24, and let's say first quarter of FY25, you will find total INR 200 crore of CapEx and all of it will be Rajasthan? Yes. Okay. Okay. Okay, so, in project excluding Rajasthan over FY 2024 and 2025, we are spending only INR 50 crore, INR 60 crore of CapEx? Yes. Yes. Okay. Okay. This, this number seems a little low. Is this low because we are taking more equipment financing, or is it because most of that CapEx is behind us of the other projects other than Rajasthan? Sorry, could you just repeat the? Yeah, yeah, I'll restate the question. So over two years, this is FY24 and FY25, we are spending total CapEx of INR 250-260 crore, right? That's INR 120-130 crore each year. So over two years, it comes to INR 240-260 crore, right? Now, of this, INR 200 crore will be Rajasthan. So the CapEx from the other projects, which is, let's say, your Odisha, Tamil, you know, what have you. So on those projects, we are spending literally only INR 40-60 crore, in addition to what we have already spent on those projects. So what I wanted to understand was that for the... Yeah, go ahead. No, sorry, sir, I think that's a, a good question. If you see, like, in this quarter, we've already invested about INR 30+ crore. Some of the investment has already been incurred. Considering that these are turnkey projects, some of the equipment we're also trying to keep it come on a deferred payment basis or as, as I said, you know. Those are the ways we are trying to look into it, where, you know, it, it shows how the project gets implemented and the CapEx. What, what we've spoken is these are the projects like Rajasthan, where we have deployed the equipment entirely, and hence that is the outflow in terms of CapEx that we'll have to do. I got it. Sorry, I got it. Thank you. Thanks for that clarification. Secondly, on the tenders that you, you know, keep getting renewed, I think one of the concerns investors have is that because tender lives are between 3, 5, and 10 years, depending on whether they are pathology, radiology, which stage. Could you talk to us about, you know, you have been doing this business now for more than a decade. For more than a decade now, how many tenders have you got successfully renewed, or, you know, you have won in the rebidding versus how many instances have been where you have actually lost the tender or the tender has not been renewed by the customer? If you were to give me a certain percentage, about a percentage, as to this percentage of our tenders, we keep getting renewed or we keep winning in the re-bidding. My percentage of tenders, we try to re-bid, but we couldn't win, or the government has been closed the tender again. Yeah. Aditya, out of the tenders that have come for renewal, you know, if I could just to give some reasons, we have probably won all of these tenders, whether it was, you know, the HP, or Assam, Teleradiology, even if you take Rajasthan. You know, while I don't have the exact number in terms of how many it is, but broadly, given our experience, and then like I mentioned, since we already have a lot of information and insights there, we are-- have the ability or an edge over the competitors to win these tenders and continue. As of now, most of the tenders being radiology, so they have not yet completed the tender. Wherever these tenders were there, whether it was pathology for Rajasthan or Teleradiology, we have won these tenders and we continue to have an extended period. Understood. Understood. Thanks, sir. Aditya, Aditya, clarifying your CapEx query. INR 31 crore we already spent in this Q1. Further, in next 3 quarters, we will be spending around INR 120-150 crore, and next year, the CapEx requirement is INR 120-130 crore. If we go precisely, INR 290 or INR 300 crore of the CapEx, out of that, 31 is already spent, and balance can be spent as I mentioned the breakup. Understood, Pawan. This is helpful. Thank you. Yeah. Thank you, Aditya. Thank you. Next follow-up question is from the line of Kaustubh from DAS Investments. Please go ahead. Hey, hi, just I had a couple of two questions. Basically, from B2C side of business, what is the pricing model like, how much do the customers need to pay? Like, is it, is it the same CGHS rates or like, is it higher than what, you know, is defined in the contract with the government? What is the pricing that customers pay in B2C? In B2C, I think there are differentiated models. Predominantly, what we are coming out is where our prices will be slightly higher than the government rates because of, of course, you know, there are marketing efforts, there are franchises in between. To the extent of 10%-20%, they'll be higher than the CGHS rate, but they are significantly lower than the existing market rates. That gives us, you know, what we've seen initial successes on the B2C model as well. Okay. Sometimes there is a private walk-in, like, someone comes to your center. Is the, is it same like, rates are, like, 10%, 20% higher, or in that case you follow the government rate? No. There are two schemes. If the patient comes to a government center, they have to, you know, stand in the queue, submit the necessary documents, and we charge the government rates. If we go to, let's say, a facilitation center or like a, a franchisee or a home, there they have to pay a slightly higher amount, which is because of the services that they're getting at the doorsteps. Okay, got it. Okay, and one last and one more thing on the similar line of question. Basically, if the customer is going and walking to your to your center, so he or she makes the payment, or is it like, you, you keep a margin and government finally does the payment? Like, who is doing the payment in this particular case? If, if a patient, or a customer comes to a government center and if he avails under any government scheme, and if, you know, for example, certain states, provided under the free diagnostic scheme, then entirely it's free for the patient, and the money gets reimbursed to us by the government. In states like Punjab or other states where, it is purely cash, the patient comes and pays us the cash, and there is a cash, and account fee accordingly. It varies project to project and state to state. Even, even after IP, if the person who's not patient who's not availing any free diagnostic scheme, or he don't want to wait in the queue, patient has to upfront pay at the center and avail the services. It's the same pricing. For B2C, it is purely cash, collection model as of now. Got it. Got it. This helps. I understand this side of the business. You know, I just have a bit more on the B2C side of the business. Do you operate in a franchise model or, like, how do you do it? Like, do you just franchise to someone, or is it, like, your own stores? No, no. We started the franchisee model. Like we said, you know, there are already established franchisee players in the market. We studied them, we came with our own unique model as Krsnaa Business Associate, which is essentially a franchisee with certain differentiations. These franchisees basically help us collect samples in the periphery of our labs or, you know, help them get patients to our centers. That is something which is already in, in process or it been implemented. Along with this, we started home collection services in certain of the geographies where we have a different lab footprint. Punjab being the recent case, where now we have a dedicated team as well, including a call center. That allow us to further spread the appeal and get more samples, processed at our labs and contribute to the revenue. We have started our home collection services in Maharashtra, where Pune, Mumbai, Nashik, Ahmednagar, Kolhapur locations. Okay. All of the... Basically, franchises helps you to, you know, collect the samples, right? All of the labs are owned by Krsnaa itself. Is my understanding correct? Correct. Correct. Okay. Okay, got it. Lastly, you could introduce some apps or something so that, you know, people can start ordering, like, take for example, Thyrocare or Dr. Lal PathLabs, try to do it through a mobile-based kind of in, infrastructure. But I didn't find anything like that. ... those kinds of solutions are not available for Krsnaa. Do you think you might be thinking on those lines, like developing an app so that you can get the booking? At least the app should be like those locations where you already offer, you know, connections, like GPC connections. If you see, first of all, we have an app both on the Android and iOS. Bulk of our target audience is, you know, segment is where they, they don't use the app. Now, considering the B2C, we already have started the app. In fact, we have many features which are, you know, are not there in the peers, including, you know, having reports available for six months and for the entire family. We have an app, and people are using it, and as and when, you know, as we said, we start having more of these B2C models, you'll have more visibility of the app as well. Okay, got it. Just the last thing, so once a tender is, is, you know, like between renewal and, and between stopping a tender, for example, the target market, you need to dismantle all of your stores and then, create a new fresh lab when you re-win the tender? See, when there's a transition period, normally the government allows us to continue providing services until the tender process is completed. If the tender process is completed, these equipments are owned by us, and we can transfer the equipments to wherever we believe, you know, they can be put to use. The rest of the, you know, whatever investment would have been anyway, which was recovered over the duration of this contract period, you know, with the Krsnaa Radiology pathology. If we, let's say, rebid and win the contract, then we can leverage the existing infrastructure that has already been put in place. Thanks a lot. Thanks a lot. That's amazing. Thank you. Next question is from the line of Manoj Kumar from Geometric Securities. Please go ahead. Okay, I have two questions which are connected together. Like you, what are your selection criteria for the tendering process? Which kind of tender you process or which you bid? Because one of the biggest problem in pathology, what I am saying is, we, we have a great model that we have acquired customer, like, locking customer, but the mature period is three years, and we see that tender tenure is 3 + 2 or something like that. When we tender, when we see for a tender, what are our criterias, and what are our learnings from last two, three years? Yeah. In terms of criterias, I would just probably speak that for radiology, if you see, we normally participate in tenders which are through NHM, National Health Mission in the state. We do not participate in any tender which is just driven by the state. Of course, you know, then the financial metrics, you know, in terms of EBITDA, the profitability, the tenure, the investments, all of this you can see. Pathology, because the investment is low and, you know, you, you have the revenues are multiple of investment. Therefore, even if we are for a lesser duration, but we are able to recover the investments and hence we are seeing differently. Manoj, of course, the maturity for the pathology center is started lesser compared to the radiology, which if you're correlating with the presentation, where we talk about the mature centers in the range of 3 years, they're majorly fall under the radiology centers. If we consider our semi-matured or matured. We now see a significant change over a period of time because of the pathology contribution has slightly increased compared to earlier. In terms of the second part of the question, you know, in terms of learnings, you know, we've seen this overall PPP space evolving over the years and, you know, differentiated models coming up as well as, you know, as I mentioned, we only focus on NHM-driven tenders. At the same time, Krsnaa was earlier, you know, strong on radiology. They are also now equally, and which we'll be maintaining, we want to be strong on good pathology as well, which is a well-diversified business if you see from a split perspective. Those are learnings have been deployed across these various projects, and of course, you know, we would want to continue this momentum going forward as well. I hope that answers the question. Yeah, perfectly. My last question is regarding vendor financing. I think it was mainly for path, radiology. Any vendor financing you are using for pathology or something like that, can you more color for that? Like we have done for radiology, equally for pathology, and especially for these large projects, we are currently in discussions with the vendors as well, where, you know, we could procure the equipments on a deferred credit basis, on a different payment basis, as well as some of, like, on a leasing. We have already established, like, a lease rental models, but we are trying to come up with some more better models to suit our line of business. Thank you. This is a lot for exciting next two years. Thank you so much. Thank you. Ladies and gentlemen, we'll take that as the last question. I will now hand the conference over to Ms. Pallavi Bhatevara for closing comments. Thank you. Thank you everyone for joining our Q1 FY24 earnings call. I hope we've been able to answer all your questions. If there's any questions remain unanswered, please feel free to connect with our Investor Relations head, Mr. Vivek Jain, and team at Churchgate Partners. We look forward to interacting with you in the future quarters. Thank you, and have a great evening ahead. Thank you very much. On behalf of Equirus Securities Private Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you. Thank you.