Ladies and gentlemen, good day, and welcome to the Q2 FY24 earnings conference call of Metropolis Healthcare Limited, hosted by Nuvama Institutional Equities. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements do not guarantee the future performance of the company, and it may involve risks and uncertainties that are difficult to predict. As a reminder, all parties on the line will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Aashita Jain from Nuvama Institutional Equities. Thank you, and over to you, Ms. Jain. Thank you, Michelle, and good morning, everyone. On behalf of Nuvama Institutional Equities, I, Aashita Jain, welcome you all for Metropolis Q2 and H1 FY 2024 earnings call. With us, we have Metropolis senior management team, represented by Ms. Ameera Shah, Managing Director, Mr. Surendran Chemmenkotil, CEO, and Mr. Rakesh Agarwal, Chief Financial Officer. Thank you, and over to you, Ameera, for the opening remarks. Good morning to everyone, and thank you for joining us on the Q2 FY 2024 earnings call. Today, I'm joined by our CEO, Surendran, and Rakesh Agarwal, the CFO, and our IR advisor. We've uploaded our updated result documents on the exchanges and the company's website, and I hope everyone's had an opportunity to go through the same. We are happy to report a 13.4% year-on-year revenue growth in our core revenues for Q2 FY 2024, mainly contributed by 10.4% patient growth and around 3% by product mix, and very marginally from price increase. However, the performance in Q2 was slightly affected due to the low rainfall in Maharashtra in August, leading to a decrease in dengue and other infectious diseases in the month of September. We observed an increase in infectious diseases just during the end of September and October, which has resulted in some of the September revenues carrying over from Q2 to Q3. We have seen a steady increase in our volume over the last six quarters and are optimistic about volume growth going forward. Happy to share that our volume growth currently is trending higher than the pre-COVID level of 9%. Timing of price increases in our industry are company-specific, and Metropolis would consider one early next year. Also, we deliberately chose not to increase prices currently, as we want to concentrate more on volume growth, while the price level can be leveraged at the appropriate time. Let me begin with some industry insights. In the past two years, we've seen the emergence of new players in the e-pharmacy and hospital sector venturing into diagnostic services. Based on their aggressive pricing strategies and digital service, they have impacted companies who had built their business, the incumbents I'm talking about, on competitive pricing, more than players focused on quality service. We have observed a consistent decline in competitive intensity over the past two quarters. The new competitors are under margin pressure, forcing them to reduce discounts, reduce marketing budgets, and increase prices. Moreover, they are also not finding much traction outside the metro towns, and metro towns are not showing much growth opportunities, especially since the wellness segment post-COVID has settled down, since these companies base their entire business model on wellness. On the contrary, our ecosystem at Metropolis has demonstrated remarkable stability, with significant reduction in attrition rates for both franchise partners and employee talent pool in the current fiscal. The competition that we are primarily experiencing is on the B2B semi-specialized care coming through the B2B channel, accounting for less than 10% of our total revenue. Within this segment, there is the head and the tail of the business. Considering the 80/20 principle, Metropolis concentrates about more on the head, which is 80% of the business, which are sticky customers who rely on our quality of testing and services, rather than pricing and discounts. We're also happy to report that we have been able to increase our B2B revenues by 12% on a YoY basis, without much variation in price, regardless of this competitive intensity. Speaking of our strategy going forward, as communicated previously, we remain committed to our key pillars of growth under the Metropolis 3.0 strategy. As we discussed, one of the prime strategies is strengthening our core, which is about fortifying our core business and expanding into new markets. To achieve this, we've been working on a large network expansion plan, which allows us to increase penetration in our core markets and setting up infrastructure in new cities and towns with high growth potential. We're also focused on driving premium wellness products by offering curated, customized packages for accurate diagnosis to our customers. We have also added more than 75 new specialty tests in the first half of this year. Our second pillar is to expand into adjacencies. As we have mentioned, we are expanding into asset-light, basic radiology, like ECG, X-ray, and sonography and allied services. We have allocated resources for providing these basic radiology services within our existing infrastructure, and therefore, by leveraging our loyal end customers, our extensive customer base, we aim to provide these complementary ancillary services so that it can increase our revenues per patient. The third pillar has been digital transformation, and we're happy to share that we have launched our new registration platform, along with our sales and service CRM, which has now been rolled out across the country. This move will give us an edge in improving customer relationships, enhancing customer services, data centralization, and better utilization of data pool benefiting the end user. While we've come a long way in our website, we are still working on some of the other digital tools, like the app, to improve the experience and enhance it to the next level. However, our WhatsApp messaging messenger service has been very successful, allowing us to enhance our customer service and operational efficiency, providing a seamless experience to our customers. Lastly, the fourth pillar would be the bolt-on acquisitions to strengthen and complement our existing capabilities, either in new geographies or in existing geographies, but with new skill sets. Despite the limited talent pool available in the industry, we have made substantial additions and retention in our talent base across all levels. As a result, we have assembled a formidable team of senior executives. And recently, we have also added Mr. Mohan Menon, our Chief Marketing Officer. He carries a rich experience over 20 years, which his last stint at Max Hospitals. This collective expertise and leadership are pivotal in guiding the company forward, creating efficient systems and processes, and ensuring that we can continue to deliver high-quality services and our commitment to excellence. We're building an institution which is not so much dependent on individuals, but more processes and systems. We have also earmarked a clear understanding of roles and responsibilities across the organization, including between myself and Surendran. While I focus more on long-term strategy, governance, acquisitions, alliances, and culture, Surendran and team will overlook operational excellence, productivity, process systems, digital agendas, and control. We would now like to update you a little bit on Hitech, which we acquired in 2021. At the time, we had done this acquisition for three core primary reasons. Number one, Hitech was the number two brand in the Chennai market, with a sticky B2C customer base. They had almost 70-75% B2C contribution, but had no overlapping customer base with our brand, Lister Metropolis. Both companies targeted different segments with different pricing. Second of all, the promoter had been looking for an exit, and if any irrational player would have purchased the company of Hitech, it could have spoiled the market through irrational pricing, which would have then also impacted all the other players, including us in the industry, including our pricing and our margins. Number three, the company we acquired was on the basis of pre-COVID EBITDA numbers and revenue, and not on inflated, unsustainable COVID revenue and margins. We believed that therefore, we were buying a sustainable business. Fourth, in the past, Hitech had not done meaningful expansion for multiple years or price increases, and they did not have management expertise in, in besides, the promoter were not investing much into the business either. Because they had not been investing much, the pre-COVID growth for Hitech was muted at 8% per year, with stable margins. We knew the potential of Hitech had a much larger runway for growth. So in the last two years now, I would like to talk about our performance in Hitech. We are happy to state that we believe this has been a successful acquisition for us, despite the multiple unexpected challenges faced by the first year post-acquisition from an unethical competitor who tried to infringe on our brand and poach our teams. Since then, we have added more than 35 centers, increasing the total count of centers now to 80 centers across Chennai. We have introduced new models of growth, such as B2B testing, community wellness, and home testing, all of which was very, very small parts of Hitech before. We have integrated Hitech into the parent Metropolis and capitalized on synergies such as procurement efficiency, logistics, manpower management, and marketing. And fourth, following the last year's resolution of brand infringement issues, we harnessed Hitech's regional brand strength and have grown to a revenue growth of 17% in each one of this year on a YoY basis, and a volume growth of 13% with expanded EBITDA margins. The way forward for Hitech will be to continue to have clear substantial opportunities by expanding our specialty business, as currently most of the business is routine and semi-specialized through our B2C. Second, expanding our network by adding additional 50 centers by the next year end. Thirdly, strengthening our corporate and B2B business to maximize the capacities available at our labs. Fourth, expanding the network and brand presence not only in Chennai, but across Tamil Nadu, through a large franchise network. Fifth, leveraging local synergies between Lister Metropolis and Hitech to expand margins. And lastly, Hitech will continue to be growing positively from a revenue and a margin growth perspective going forward. On a separate note, we received a whistleblower complaint from an employee in Metropolis regarding some accounting adjustments in the debtors account for FY 2023, 2023, and the current financial year. Upon receipt of the complaint, the matter was referred to an expert third-party auditor as per the whistleblower policy. The auditor submitted a report to the audit committee on sixth November 2023. As per the report, the audit committee noted that three employees were found to have indulged in passing accounting entries, which involved an amount of INR 9.28 crore, wherein INR 7.18 crore had been adjusted between debit and credit entries in the debtor accounts, and entries of INR 2.1 crore were passed in the TDS recoverable account. The entries of INR 7.18 crore passed in the debtor and creditor accounts largely nullified each other, and therefore the entries do not have any material impact on the accounts of the company. Having said that, to be conservative and careful, a one-time provision for doubtful entries of INR 3.34 crore has been provided in Q2 FY 2024 to ensure any full estimated impact for the report is taken. Audits have been done across the group level post this complaint to find if there is any such issue in any other location, and we can confirm the issue has been found in only one region of India, done by the selected three employees. This incident was clearly a deviation from the standard accounting policies and controls and processes defined by the company and our culture of no shortcuts. The company has worked very hard to build strong processes and systems, and we were disappointed with the employees' actions to breach these policies. The irregularities that they did, did not involve any misappropriation of funds, and therefore does not require any amounts to be recovered from the employees. The motivation for these employees to go against the processes of the company was to show better individual performance and meet their performance targets. The company has taken appropriate action against the errant employees, including separation with immediate effect where necessary. We would like to emphasize that while we did encounter this irregularity, our robust whistleblowing culture within the organization ensured that this issue came to light from the beginning. Subsequently, we swiftly implemented all the required corrective measures to ensure the right practices. We will continue to further strengthen controls and audit and uphold our culture of integrity and good governance. With this, I would like to hand over to Surendran for our update on the quarter gone by, along with the execution plan going forward. Surendran, over to you. Thank you, Aashita, and good morning, everyone. The last few interactions, we have guided our near-term objectives. Quarter 2, 2024, has largely focused on those objectives. Let me give you an overview. We achieved 13.4% YoY increase in core business revenue through a combination of increased patient volume growth, which is 10.4%, and the revenue per patient of 3% growth. Our test volume growth stood at 8.4% in quarter two. Over the last five quarters, our core business revenue has consistently experienced double-digit growth, and we are optimistic of the same to continue. Higher volume growth across the territory is a key indicator of increasing market share of Metropolis. We would like to highlight that historically, the second half of the year has been better than the first half for Metropolis. This year also, we anticipate a similar trend continuing and are confident of even better performance in H2 in terms of both revenue and growth, revenue growth and the margin. Based on our internal estimates, we believe we can achieve a growth pattern in H2, similar to that of the previous year, with a revenue growth in mid-teens and enhanced margins on account of better operating leverage. Talking about B2C performance, our B2C revenues saw a 16% year-on-year increase, with patient volume growing at 14% and 2% on account of product mix change and the RPP. Our overall contributions on B2C segment has improved from 47% one year before to 52% when we ended quarter two. Mumbai market witnessed even higher growth of 23% in B2C revenue. Despite new competition in the market, our operational performance in Mumbai market has been exceptional, which has helped us to grow our market share. We continue to add more touch points in Mumbai and bring out more efficiencies from existing centers. We believe there is enough potential to grow touch points in Mumbai, going deeper and closer to the patient. In spite of competitive intensity in certain pockets of the B2B segment, our B2B revenues increased by 12% year-on-year, with patient volume growing at 8% and RPP growth of 4%. We have seen the competition intensity coming down over the last few quarters and are optimistic of higher growth going forward. We have implemented multiple strategies to increase our share of B2B business, including B2B engagement via digital channels, centralized helpdesk to build a strong support system for B2B clients, and appointing key relationship managers for our key B2B accounts. This clear balancing of portfolios between B2C and B2B is helping us to achieve the desired growth level. Talking about the specialized test segment, our revenues from specialized testing grew by 12% year-on-year basis, with a volume growth of more than 9%. Our B2C specialized testing revenues grew by 18%, and our B2B specialized revenues grew by 10% on a year-on-year basis. For our specialty business, we have established a dedicated sales team, which we talked about in the past calls as well, trained them exclusively to focus specialty portfolios across India. We are continuously seeing volume uptick from our wellness segment and are hopeful of this trend continuing. Our premium wellness segment has been the fastest-growing segment for the company. We have witnessed a 27% year-on-year growth in the quarter two, with volumes growing by 21% over the same period last year. Contributions from premium wellness have increased from 13% when we ended last year to 14% in quarter two, 2024. On geographical split, our revenue from north have grown by 15% on a year-on-year basis in quarter two, outpacing the competition growth. I would like to give a glimpse of the network expansion. Under the Metropolis 3.0 project, we have successfully added 12 labs during the first half of the fiscal year 2024. We plan to incorporate 30 labs during the year and 30 labs during year 2025 as well. Our strategy focus in these new newly opened labs, mainly in newer geographies, is to drive our B2B business in the specialty segment and expanding the B2C market by aggressively establishing a network of centers around these newly opened labs to serve our patients. ... Since April 2022, we added 790 new centers, and we plan to incorporate 800 centers during this year, and 800 centers in the coming year as well. We are now present in 480 towns as compared to 307 towns at the end of last year, 2023. We plan to reach around 600 towns by the end of this year. Labs opened after April 2022 have contributed 4% of the revenue and 4% of volumes in quarter 2, 2024. As these labs are growing as much at a much faster pace, we expect them to contribute much more in the coming year. We are seeing continuous improvement in the margin for these labs and over the period, and we believe these labs can achieve a company-level margin in about 24 months. We are equally focused on increasing the productivity of our existing labs and center networks, which have shown an impressive growth during this year, during this quarter. In summary, I would like to highlight that maintaining a healthy equilibrium between our B2C and B2B strategies, along with activating our key growth drivers, such as expanding our network, emphasizing on the specialty and wellness segment, and implementing technology transformations, is propelling us swiftly towards our growth objective. Now I hand over to Rakesh to take you through the financial highlights. Over to you, Rakesh. Yeah. Thank you, Surendran. Good morning, everybody. Let me share some of the key financial performance for the quarter. Our reported revenue for quarter two, financial year 2024, has grown by 3% on a year-on-year basis. Reported growth for Q2 was largely impacted on account of the sourcing of large B2B contracts in quarter four, financial year last year. Reported EBITDA margin stood at 24.3% as compared to 27% in Q2 last year. Compared to last year, the margin impacted due to more intensity in lab expansion, negative operating leases because of the loss of PPP contract, and a one-time impact on account of provision for doubtful debt taken. These three elements impact the margin by around 2.5%. One-time impact in provision for doubtful debt on account of retail D2C complaint, which has been spoken by Ameera earlier, has been taken, which impacted EBITDA by 1.1%. This is a one-time impact, and we have taken the full estimated impact, and there is no further impact expected out of it. Excluding this one-time exception, our reported margin stood at 25.4%. Reported PAT margin stood at 11.6% as compared to 13.5% in Q2 last year. Compared to last year, the PAT margin is mainly impacted because of the lower EBITDA margin. Moving on to the balance sheet. Gross debt stood at INR 44 crore, and cash and cash equivalents stood at INR 108 crore as on 13th September 13th, 2023. As earlier confirmed, we plan to repay the balance debt by the end of this financial year. OCF EBITDA for September 2023 stood at 93%. Working capital stood at 18 days, marginally higher than the last year of 14 days. The board of directors have announced interim dividend. It is INR 0.04 per share. That's all from my side. With this, I open the floor for question and answers. Thank you very much. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask questions may please press star and one on the touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use only 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 Rahul Aggarwal from InCred Capital. Please go ahead. Hi, good morning, and thanks for the opportunity. Ameera, just one question, firstly, bit longer, pardon me for that, but, you know, whenever we are doing channel checks across India, we obviously don't see, you know, further entry of new digital labs or online labs. You know, this is a trend last 15 months, which is good news. But we see regional, local labs, which started during COVID, still trying to be competitive on pricing and taking away bits of market share. Also, I realize patients at large, you know, the affordable category, mass market, there is limited customer understanding of quality and service standards, and customers and patients, you know, live in ignorance and happy with low pricing and just the name of the lab on the report, you know, NABL, et cetera, doesn't really matter to them. A national lab like yours, trying to grow into Tier 1, Tier 2 markets, I think patient education and, you know, repeat of this business is the biggest challenge. I just wanted to hear your thoughts on this. Thanks, Rahul. So a couple of things to address it. Look, there's always been competition in this industry, and I think while investors have noticed bigger players coming in the last six to eight years, but frankly, that has been the case for the last 15 years in our industry. Small players have always been there, and they have continued to try to take market share locally. But it has never stopped at least our growth in the last 15 years to be able to continue. So I don't believe that that is some significant change today that will in any way impede our growth going forward. To your point on consumers not recognizing quality mass consumers and only looking at price largely when it comes to wellness, when it comes to common tests, you're right. Many consumers are not educated on understanding the difference between a good quality lab and not so good quality, which is why 85% of the industry continues to remain in the unorganized sector, right? But what happens is that when they go to a doctor, especially for a critical illness, when they have a heart issue, they have a brain issue, they have a stroke, or they have a neurological problem. Then the decision about which lab to go to is not really in the hands of the consumer. It is in the hands of the doctor, because the doctor realizes the difference in the quality and requires the right quality report to make the right treatment decision. Because if a doctor gets a wrong report, they may end up removing an organ or doing something which is actually not required at all, and therefore, the doctor will insist on a good quality lab. Now, the kind of business that Metropolis is focusing on, as we've always maintained, has been largely in it and has been largely more specialist. So, we have always focused on going to the top quality doctors across the country in the specialized segment. And what happens over time is that as your brand builds through doctor's recommendation, for Metropolis, over time, that trust moves to consumers, and consumers start recognizing that actually this brand is really differentiated from others, and then they start coming to you directly. So the process, therefore, is a time-taking one, and one which is difficult for any new competitor to come in and suddenly build that kind of trust, either with doctors or with consumers. Which is why you see that pricing has been the main tool used by most of these guys to come in. While it may give them some short-term benefit in terms of price and some volume accumulation, the reality is the market in which you can only build through price is limited. If you want to get into a profitable business that is large, and get into scale, there is only one route, which is through building trust with doctors and consumers. I absolutely agree. But the point being that, you know, most of us are trying to figure out whether the growth for national labs is actually back to mid-teens, and hence my sense is, you know, the regional local labs are still playing dirty games with. Anyway, I get your point. I'll move forward. The second question on focus cities. Sorry, go ahead. Yeah, just as Anindya said, H1 for Metropolis is always, it's usually a smaller contribution to the overall year revenue, and H2 is always a larger contribution to the revenue, and we expect nothing different this year. We do expect H2 to contribute more significantly to the overall year's revenue, and therefore, our target of mid-teen growth, like it was pre-COVID, remains the same. Perfect. Get it. On focus cities, you know, there was some discussion happened on last quarter about redefining markets and some dynamic processes to be redefined in new cities. Any updates here, please? So, as you know, we are expanding a lot into some smaller markets. In fact, majority of the labs we are starting, are like, you know, 50 labs we are starting this year, with the majority of them are markets where we don't have a lab, today, right? In fact, probably closer from, you know, a very high number. So, we, what we are doing is really trying to, re-categorize, and we didn't want to do this in the middle of the year, which is why we'll probably announce it at the end of the year. But we will re-categorize the focus city and other cities list, at the end of this year, based on the changes and the trends that we are seeing and the kind of investments that we are making. We will come out with a new list by the end of the year, so that tracking is easy for us as well as for the investor. Well, and lastly, just squeezing in a smaller one on creditors. I see in the last two years, you know, every six months, the creditors as a percent of sales is declining. Is there some change here with how we're sourcing the stuff from vendors? Yeah. So I will take this. Basically, there are, you know, a bit of a credit decline because we have made some rearrangements with some of the vendors in terms of accounting and the payment terms. So, in particular, in the material piece, we have done some maneuvering where we are getting a bit higher discounts from the vendor in lieu of giving them an advance or a quicker payment. So I think that is the reason why you are seeing a bit of drop in the, in the, credit balances, but that is correspondingly helping us to increase the discount from distributors. So gross margin goes up, and, credit goes down and ROC goes up. That's how we should look at it? Yes, yes. So gross margin, we see largely in last, two years, we have seen the gross margin either remaining stable or increasing. So I think that's the reason why, in spite of everything happening around us, the dollar appreciating, we are still able to maintain, the kind of gross margin we are having. Perfect. Thank you so much, and have a good, festival season. Happy Diwali to all of you. Thank you. Thank you. Thank you. Participants, you may please press star and one to ask questions now. We'll take the next question from the line of Jainil Shah from JM Financial. Please go ahead. Hello. Yeah, thank you for the opportunity. My first question is on, you know, the EBITDA margins. Where do we see our sustainable EBITDA margins going forward? So, I mean, we had always indicated that our EBITDA margins this year will be similar to last year. We have to remember that we are having a dilution, as we mentioned, of about 1.2%, because of the expanded lab expansion that we did not have in pre-COVID period. So if that was kept aside, then we would be closer to 26.5%-27%. You know, we believe that sustainable margin going forward is going to be, you know, without this expanded lab expansion, will be between 26%-27%. And our growth of expansion, this lab expansion, will continue till FY 2025, post which, the lab expansion will then slow down, and our collection center expansion will expand. So, we are therefore quite hopeful that post FY 2025, we will see that expansion in margin happening very much. ... Sure. So is it fair to assume that over the next three years, we will see, you know, if we take a slightly longer term, maybe three to four years, we will see mid-teens revenue growth along with, you know, healthy operating leverage play out? Because then our lab expansion would be done, and then that would also come into play. And how would the addition of, you know, basic radiology services, you know, add to this margin, or will it increase or dilute the margins? So I think you're right. That's exactly the direction we are targeting. And for the basic radiology services, the goal, as we mentioned, is it's going to be continued to be a small part of our revenue. It is not going to become a very large part of our revenue. It is more to complete the service for the consumer when they walk into our center. And therefore, the hope is that we can add on some of the ancillary radiology revenue to the existing patient who walks in, and therefore, that could expand the RTP, you know, for that particular patient. It's completely asset-light. It's not CapEx-heavy at all, and therefore, we believe it strategically makes sense in adding them in our existing infrastructure. You know, but considering it will be a small part of the business, I don't see it immediately impacting EBITDA or revenue in any significant way, but where it hopefully it will impact will be RTP. How much of this mid-teen growth would be from realization? So as we mentioned, about 10.4% is coming from volume, and about, currently, about 3% is coming from product mix, which is, realization. You know, hardly about, a very marginal amount is coming from price increase because we have not really done a proper price increase this year, which like we said, we are targeting maybe for, early next year. So out of the mid-teen growth, if you see through COVID, we were doing about 9% from volume and about 6% from RTP. Our goal is, you know, probably 3%-4% from RTP, and the balance through, volume. Sure. That's very helpful. Thank you so much. Thank you. The next question is from the line of Ranvir Singh from Nuvama. Please go ahead. Mr. Singh, I have unmuted your line. Kindly proceed. Yeah. Thank, thank you for taking my question. There are two, two things I want to clarify. One is that, it seems that quarterly number has been re-estimated. So just, just putting because, the earlier, the reported number in last previous corresponding quarter was INR 300 crore. Now this is, INR 77 crore. So is there has been a re-estimate or readjustment here on, on, revenue, item? We will, we will look into it, but I think what we are seeing is that there is one revenue, which we are talking about the core revenue, and one is the reported revenue. So I think when we are saying INR 300 crore, we are looking at a reported revenue, and there is INR 277 crore, which we are looking at core revenue. So these are the two elements. I think if you look at our, you know, investor presentation, slide number 7, I think you will particularly get the answer of that. No, no, I'm not referring to presentation. I'm referring to the reported, your audited reported number, which is INR 300 crore. Last year it was INR 277.0911 crore. I think last year in what in model I see that, last year this was INR 300.3493 crore. So there has been some, you know, roughly INR 23 crore difference. And even the, in Q1 also, reported number was INR 277 crore in last, time. Sorry, and this time it's a INR 300 crore year. So, it seems that there has been either number has been readjusted somewhere or... So I don't think this is the case, but with the paucity of time, we will, you know, note down this, and we will come back to you after this call in detail. Okay? Okay. Because otherwise, just assuming that PPP- I think maybe you are not including the NACO. Last year there was a NACO PPP contract of INR 21 crore. Maybe because of that, we are looking at a different number last year. Because last year we have given a core revenue, which was including the NACO revenue. And if you look at this year, when we are talking about it, without this PPP contract revenue, we are trying to do an apple-to-apple comparison. Just Mr. Singh will park this question a bit, but we'll clarify it for sure. There should not be any misunderstanding there. But Rahul, we have not done any readjustments or statements. No, no, nothing, nothing. I think, I think we have to clarify this, and I just want to, not to just, you know, spend time here, but we will clarify for sure after, just immediately after this call. Sure, sure. Sure, sure. Thank you. And, and secondly, on PPP side, is there any chances we are re-getting that PPP contract, or, do you see any such opportunity going forward, or this opportunity is gone? See, the government businesses never are interest, frankly. This particular contract we did for the last five years, more because it was specialized test, it was profitable, and you know, practices were in line with ours, and therefore, we went ahead and did the contract. But otherwise, government business, we are not frankly focusing on. And this particular contract has been enforced by the government. They are doing the testing themselves, so it has not gone to any other player. But the government has wanted to do it themselves and be a provider. So therefore, now the chances... They bought the machines, they have set up the staff and the facilities. The chances of this getting outsourced again are extremely low. ... Okay, fine. And how was the margin there in B2B contract? That was better than companies that have a normal margin, or was it lower there? Yeah, so the margin in the B2B contract was approximately 43% for us, and that business contributed to 7% for us. So therefore, once the business is not there, we have having a 1.1% contract in the margin that was the same. And you should see, I think you are referring to quarter two number, which was 377 in our financial statement, quarter one number. So let us, let us recompile it, but I think we are 377 reference to quarter one number, rather than the last year number. So anyway, we'll, we'll confirm with that. Sure, sure, sure. Thank you. Thank you. Thank you. That's all from my side. All the best. Thank you. A reminder to all the participants, anyone who wishes to ask questions, may please press star and one. We'll take the next question from the line of CRM. Sorry, I'm sorry. Shyam Srinivasan from Goldman Sachs, please go ahead. Hi, good morning, and thank you for taking my question. Just in light of the B2G contract going away, you know, just a request, maybe we can do this after your call as well, just to see what the overall volume was over, like, a three, four, five-year period. Either you want to remove B2G historically and/or keep it in there, and just for us to see how the volume growth is over a longer period. Ameera, I think you said 9% was what your historical volume growth was. So just want to see, you know, maybe we take out B2G out and see it historically or include it. So the idea is just to see what is the like for like, because when we report core volumes now, we are unable to see, you know, what is the B2G volume element. So that's just a request. But, the additional question I had is just on, you know, test growth has been on core volumes. Test growth has been slower than, patient growth. So anything we need to keep in mind here? So Shyam, we've always mentioned that, don't focus on our test growth, please focus on our volume growth. The reason is because each company has their own way of accounting there. So for example, in Metropolis, one wellness package is accounted as one, and not as, let's say, even if it has 50 tests in it. Mm-hmm. Right? So therefore, we, while other companies may account for it differently. So therefore, we have always mentioned, please focus on patient growth, because that is the more unique and fair to compare. So the test growth may not be appropriate to compare. Got it. And the request on volume growth, if you could acknowledge. We'll come back on that. Yeah, okay. Just the second question on Hitech, I think, very commendable job of turning around. You mentioned the difficulties in the first year. You know, I don't, I don't know whether you have put the subsidiary financials or now it's merged, so we may not get the subsidiary financial. But what are the fiscal 2023 numbers for where revenues was? And also maybe one net, since you have talked about a 17% growth and margins being better, if you could quantify some of these numbers. So I mean, I think the 17% growth, I think, is quite clear. The margins are, you know, better than what we acquired the Max. We've seen a few hundred basis points expansion. And the idea will be to obviously continue to grow this business well at a higher margin. And you know, too many more details will become a competitive problem for us. So I think we'll probably stick to these numbers as of now. But we can chat offline if there's any other specific information needed. Got it. Yeah. Thank you. And my, just, the last question on the overall guidance, you know, your ability to grow faster than national networks. I think also, I think one of your slides, you have shown you're growing faster in the north. So just, maybe talk about your regional strategy in terms of, you know, non-core markets, if I can use that term. Maybe your seeding markets and your other markets. What's the strategy out there? How can we outpace - continue to outpace competition there? Thank you. Sudhir, you want to take that? Yeah, let me take this. You know, so I think we have mentioned in the past also, the strategy of expansion is, you know, go deeper in the strong market and go wider in the, you know, non-core market. So what we're doing exactly the same thing, you know, but if they come to the north or the east, some part of the east, you know, we are picking up the strategic locations, and we are putting up the labs there, you know? And we continue to do that, and, you know, we start with, you know, B2B client acquisition first, and then we get into some level of volume, and then we put up the lab, and then we put up the centers, right? So that's what we are doing, and, you know, we are seeing success around that. So we'll continue to do that. You know, we go, we pick up the strategic locations, you know, in both these geographies, which is north and east, and then we will keep adding the centers there. And if you have seen that, you know, I just mentioned that, you know, the number of towns that we operate has gone up from 307 to 488. So this is most of these new towns have actually come up in the north and the east, right? And in the west and the south, you know, we keep going deeper. For example, Mumbai, you know, we believe that we can add more centers in Mumbai to geographically become stronger, and similarly, let's say, in a Chennai or a Kerala. So that's largely been the strategy that we're adopting. You're not the best. Thank you. Thank you. You may please press star and one to ask questions. We'll take the next question from the line of Rishi Modi from Marcellus Investment Managers. Please go ahead. Yeah. Hi, am I audible? Yes, sir. Please proceed. Yeah, so couple of quick bookkeeping ones. Firstly, your gross margins expanded. I think you all gave a comment on that. Just could you repeat, out of the 2.5% increase in gross margin? How much is it structural versus how much is a function of some seasonality element? So I will, I will let you know that this is basically because of the contract which we had on PPP, because the majority, you know, the cost coming in that contract was of material. And once that has gone away, majority, 80% of the benefit which we are seeing in the gross margin coming in with that, and 20% of the margin is basically on the price negotiation, which I discussed earlier also, and some part of the operational efficiency. So whatever gain we are seeing, 80% of the gain basically is only because of the PPP contract going on, which had a higher material cost in comparison to normal material cost. Okay, got it. Got it. Secondly, I wanted to understand from Surendran, so we've been seeing that our leading cities revenue growth has been lagging our focus cities, which is largely our mature markets, the focus cities. So just wanted to understand. Could you help me understand the disconnect here? Ideally, our leading cities should run ahead of our focus cities. So if you could just give me an understanding why we have been lagging for the last couple of years out there. Yeah. I think, you know, Ameera mentioned this, and we're just going to recalibrate the whole definitions on, you know, the focus cities, leading cities and the other cities. So we have actually kept our focus mainly on the other cities and new markets, right? So maybe, I mean, you know, we are not only focused on getting the new labs and centers and productivity from the leading cities. So at the end of the day, you have to prioritize what you want to do. So, we have just gone on expansion on the, you know, some of the other cities. If you see the other cities and the growth is substantial, right? So, we are going to recalibrate the definitions of the leading cities and the focus cities in the next, when we get into the next year. But otherwise, you know, this is the reason why in the leading cities we are not finding significant growth. If I can just add something to that. If you look at the leading cities, primarily in markets like Delhi, Calcutta, some, you know, other markets that are there in the leading cities, the kind of growth that had been very slow B2B and coming primarily from semi-specialized care. Now, as we mentioned, the competition, not only in the last few years, but last many years, has been primarily on the B2B semi-specialized space. So therefore, even though you may not see volumes often going down in these markets, but sometimes because of increased discounting, the revenue per patient in these markets may have slightly decreased. Versus if you look at the focus cities, the focus cities have been primarily B2C for us. That's how we categorize the focus cities, right? These markets are all brand-led, very B2C-focused, and we've actually gone much deeper and expanded our networks in B2C in these markets, which are Mumbai, Pune, Chennai, Bangalore, Surat. What we've done is we've gone more aggressive on the B2C side, which frankly has not been so impacted in the last few years, despite all the competition. Therefore, you are generally seeing a much faster growth in focus and a slightly slower growth in the leading cities. You know, as we are now making some B2C headway in the leading cities, we are seeing our B2C contribution in the leading cities actually increasing. Earlier, where it was much, much lower, it has probably now come closer to 25%-30% of contribution of B2C in the leading cities or maybe a little bit higher, which is giving us, you know, good opportunities to actually expand this area more, and not have only focus on B2C. Okay. So just, then the structural question, right, are we changing our approach to new geographies? Because if you say, right, that B2B semi-specialized is, how we enter a new market, and that's always going to be a commoditized market, then how do we intend to geographically expand if we are always going to struggle on this front? See, like we said, the B2B semi-specialized again, has a head and a tail. It's not that the entire category is commoditized. We have a lot of B2B semi-specialized business today, which is very profitable for us. So the issue is about whether you get into a market, and like we said, 80% of our business traditionally comes from the head. So even if 80% of that business is stable and sticky, but if 20%, which is coming from your tail, from your tail, is churning, you are going to see a slower growth, right? So the strategy now going into most of the markets is focusing more and more on the head, focusing more and more on in the semi-specialized segment, and focusing more and more on specialized care. So this is naturally more sticky, because obviously not everybody can do it, and because you, the quality of the result is that much more important and critical for the doctor. So I think the strategy going into whether the existing leading markets or into new markets will be to focus on the head of semi-specialized, to reduce the tail, and second, to focus more on specialized. Okay, understood. All right. Yep, that's it from my end. Thank you. Thank you. We'll take the next question from the line of Aashita Jain from Nuvama Institutional Equities. Please go ahead. Hi, good morning. So just two questions from my side. First, in the Mumbai market and the focus cities market, you mentioned in your comment, that you are still going deeper in the Mumbai market and seeing more of the touchpoints. So how do you think that the Mumbai and other focus cities can grow for us in the next 2-4 years? Can you just repeat the question? I didn't get the question, Aashita. So, you mentioned in your comments that you are still going deeper in the Mumbai market, and there's a lot of headroom in your... even in the core regions of Mumbai and other focus cities.... My question is, how do you think this Mumbai and other focus cities will grow for us in the next 2-4 years? Yeah. So exactly what we have done in Mumbai is what we would like to replicate in other cities as well. So, we are going deeper in the other cities as well. You know, for example, Chennai, Bangalore, right? And some of these big cities also we are going deeper. So, and also this, with the focus on the specialty in all these all these markets. So what we've done in Mumbai is exactly the same, and we would like to do this in the other big four cities as well. Is it fair to assume that these markets will continue to grow at the same high teens, like, higher than your overall revenue growth? Yeah, that's a fair expectation, right? Okay. And my second question is on the acquisition front. So, just your thoughts on, you know, the kind of geographies, the size, the target company, and have the valuations come down compared to the COVID times? The valuations during COVID times were based on COVID revenue and EBITDA, which, frankly, if anybody did, would have been unsustainable, yeah, if you bought it on the back of that, right? So clearly, today, with no COVID and revenue and EBITDA, there's a far better chance of it being a sustainable business. And having said that, you know, a large part of the unorganized markets is still not completely compliant with best practices, et cetera. And therefore, it reduces the funnel of possible acquisitions we want to do. Otherwise, we land up inheriting something with big skeletons in the closet. And many of the larger deals that are available, again, I would say the quality of deals always available is not great. So we are very, we are very selective about what we buy. Even if that means, you know, paying a slight premium for a good quality business, we would rather do that than buying something cheap, which is a poor quality, and we know 30, 40, 50% of the revenue will have to go because either they don't follow good practices or, you know, things that we are not in line with. So, I think we will continue to be selective, but we definitely are building a funnel of potential acquisition targets. Like we said, we are looking at things which are strategically going to add to us, either in new geographies or in new skill sets. So I think once there is some more something to announce, we'll be happy to share more, but at this point, you know, it's not done yet. Sure. It's okay. Thank you. Thank you. Ladies and gentlemen, this will be the last question for today, which is from the line of Kaustav Bubna from BMSPL Capital. Please go ahead. Yeah. Hi, thank you for taking my question. So basically, I had two questions. One was on the possible government regulations that could face this industry. I basically wanted to understand what could be—I know it's a little bit of a futuristic question, but what could be the possible government regulations that could impact this industry? And more importantly, how could this benefit players like Metropolis, Dr. Lal, et cetera? I know that they're the organized players. How could it benefit us? Because if a majority of this industry is unorganized, I would assume that certain regulations could actually work an advantage for organized players. So if you talk about that a little bit, that's the first question. And the second question is basically, what is the company's philosophy on debt going ahead? Do we... I mean, because, you know, there will be acquisition opportunities, going in the future and growth opportunities going in the future, too. But also we have the potential to be a negative working capital business with more B2C contribution and, generate cash. So I want to understand, do we have some goal and aspiration to continue being net cash? I mean, to be net cash and continue being net cash over the years. So those are the two questions. Sure. So, regarding regulation, you're absolutely right. I mean, if regulation were to come in, I think it will be very advantageous to the larger players, because today we are operating on a completely uneven platform. You know, as an industry, where there are some of us who are following payable quality and some who may or may not do the test at all, right? So it's an uneven platform, and therefore, the conversation lands up going to things like price and other things, which frankly, in healthcare, tend to be less relevant. So if regulation were to come in, it could be very beneficial to organizations like us, who are already following all the compliances and practices. Actually, it would create a burden on smaller companies to now come up to a certain quality, which means that we would possibly see a reduction in the number of players or at least an increased cost in their operations, which would not then allow them to spoil the market with very, very poor prices. So, you know, we have been obviously talking to the government for long, trying to say, "Look, please put some minimum standards in our industry. Very much required." Government has shown a lot of intent and excitement to want to do it, but obviously we have no control on any of the timelines or when and how that will happen. I think on your second question around debt and cash flow. So, actually starting this year, we are moving to a biannual dividend policy. Unlike the last year, where we were doing once-a-year dividend, and therefore, we have declared something right now, as Jackie said, and we will probably declare a dividend at the end of the year, as well. So, you know, we are looking to see how, one, we can continue to have a very stable, predictable, dividend payout, which we've had for the last many years, at about 35%-40%. And we'll continue to do that. We would then like to use our cash to obviously do these bolt-on acquisitions, where we feel that they can strategically benefit Metropolis going forward. So generally, we would like to be a net cash organization where, you know, we are very efficient as far as our working capital, and that's the direction that we are wanting to head to. And we consider net cash. But having said that, if there are acquisitions that do come up that require us to take a conservative level of debt, you know, in a market that we know is stable, we are not completely closed to the idea of taking debt, as we have seen with Hitech as well. But we are, we are not the organization to use debt as an expansionist strategy, you know, on a regular basis, neither would we do it in any significant multiple of EBITDA. So it would be a conservative approach for us, but generally we would like to be in a net cash situation. Thank you so much for your answers. Appreciate it. Thank you. We'll take one more question from the line of Tanmay Gandhi from Investec. Please go ahead. Hello, am I audible? Yes, sir. Please proceed. Yeah. Yeah, hi. Sorry, I got disconnected for a while, so sorry if I repeated. So firstly, are we qualifying, you know, what is the impact of dengue in this quarter? Dengue for us has not been a very strong thing, because dengue was mostly seen in the north of India. You know, it tends to be a lot around Delhi NCR. We don't see as much dengue, at least we haven't this year or the last few years, in the rest of India. So it's a very... It's not a very significant impact. Understood. Just a bookkeeping question. So if you look at our network contributions, right? So if you look at what we have disclosed for the entire year in Q4 FY23, and if we you know come up, so and again, we have disclosed for each quarter as well. So based on that annual number, minus the three remaining quarters, so ideally the base would have been INR 17 crore, but this quarter we have been paying INR 21 crore. So can you help us reconciling that? And is INR 21 crore the correct number to look at? Yeah, INR 21 crore is the correct number to look at, because, you know, there were two contracts which we had. Majorly the PPP contract, which we are talking about, which has ended last year, February. And there was another one small contract which was there, which was NACO, in Bombay. So these are the two major contracts, or one was the major one, one was a very small contract. Two contracts taken together, the impact is INR 21 crore. Okay, so 17 plus 4 is the correct number to look at? Yes, please. That's all from my end. Thank you. Thank you. The next question is on the line of Harith Ahamed from Spark Capital. Please go ahead. Hi, good morning. Thanks for the opportunity. I'm looking at the segmental breakup that you provided, B2C, B2B, and there's the other segment. What exactly is this other segment? Is it B2G? 7% of revenue for the quarter. Yeah. So this will include your clinical trials, which we have around 2%-3%. There is a corporate business of 2-3%, and there is some government business. So these all including together is, you know, others. Okay. And I'm also looking at the revenue per patient growth for the core business for the quarter at 3%. So is it correct to assume that this 3% growth is almost entirely coming from the high share of premium wellness business? I'm just trying to understand if there is an element of price increase here. Your competitors had talked about taking price increases in the last few months, and that has reflected in their revenue per patient growth that we saw. Yeah. So basically, the increase in RPP has come through product mix. Rightly, as you said, from a higher volume of wellness revenue and to some extent, specialty growth. And the price increase is very, very marginal. As we mentioned earlier, also, we had a very small marginal increase in price, which is contributing to around 0.7%, very insignificant percentage to the RPP. Understood. Thank you. Thank you. As that was the last question, I would now like to hand the conference over to the management for closing comments. Over to you. Thank you, everybody, for joining us today and, you know, hearing all the experiences over the last quarter, answer all the questions, and just want to say a happy Diwali to all of you. We obviously feel very positive about the direction that Metropolis is heading in. Not only do we see a very robust, substantial volume growth and RPP growth, but we do believe that H2 will be, you know, a better half to the year for Metropolis, from a revenue and a margin perspective. Overall, we feel that the hump of COVID is done with, and while there will continue to be some competitive intensity. But, regardless of that, we believe that we are on our own track and our own journey, and can continue to meet our targets, regardless of the market. We have built a strong leadership team, you know, led by Surendran and Rakesh, CFO. We feel very confident around the robustness of the processes, systems, and the kind of momentum and rigor that we have seen happening in the market, and Metropolis being seen as an aggressive player. The expansion of network that we are doing across all the different towns and cities will obviously continue to give us a lot of rewards in the years to come, as we open a lot of markets with labs as well as with collection centers. As we mentioned, as FY 2025, while we continue to add all the collection centers now, that will become even more aggressive post FY 2025, as the lab expansion paths slow down. We look forward to continue to engage with all of you, outside of these reviews, meetings as well. Again, a happy Diwali to all of you, and best wishes to all your families. Thank you so much. Thank you, members of the management. On behalf of Nuvama Institutional Equities, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.