Good evening, everyone. I welcome you to Aster DM Healthcare's earnings conference call for the first quarter of financial year 2024. The company declared the Q1 FY 2024 results today. To discuss the quarterly business performance and future business outlook, we have the senior management team at Aster DM Healthcare available with us, namely Dr. Azad Moopen, Chairman and Managing Director at Aster DM Healthcare, Ms. Alisha Moopen, Deputy Managing Director, Mr. T.J. Wilson, Non-Executive Director, Dr. Nitish Shetty, CEO of India, Aster India Business, Mr. Amitabh Johri, Joint CFO, Mr. Sunil Kumar, Joint CFO, and Mr. Hitesh Daddha , Chief of Investor Relations and Admin. I would like to inform everyone about how we will conduct this call. All external attendees will be in the listen-only mode for the duration of the entire call.
We'll start the call with opening remarks by management, followed by an interactive Q&A session. During the Q&A session, you will get a chance to ask a question by raising your hand by clicking on the Raise Hand icon in the Zoom application at the bottom of the window. We will call out your name, after which your line will be unmuted, and you will be able to ask your question. We request you to please limit your question to two, but not more than three per participant at a time. Certain forward-looking statements may be discussed in this meeting, such statements are subject to certain risks and uncertainties, like government action, local political or economic developments, technological risks, and many other factors that could cause the actual results to differ materially.
Aster DM Healthcare Limited will not be in any way responsible for any action taken based on such statements and undertakes no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances. With this, I will ask Dr. Moopen to start with the opening remarks. Over to you, sir.
Thank you very much, Bala. Good evening, everyone. Thank you all for joining us for our earnings call for the first quarter of financial year 2024. Before I talk about our performance, let me touch upon the healthcare space in the region briefly. The Indian healthcare market is expected to touch $638 billion in 2025, with a compound annual growth rate, CAGR, of 22%, and the GCC healthcare market is expected to reach $135.5 billion in 2027, growing at a CAGR of 5.4% from 2022. Healthcare, being an essential service, has also become one of the largest sectors in terms of both revenue and employment opportunities.
Several factors are driving the growth of the healthcare sector, including an aging population and a growing middle class population with a rising proportion of lifestyle diseases. The requirement for healthcare services of an individual is directly proportional to the age, with increasing spend on medical care as we age. It is estimated that nearly 80% of the total healthcare spending of an individual occurs in the last 20% of their lifetime. This highlights the increasing healthcare budgets of individuals, families, and nations with an aging population. There is requirement for increasing allocation in the budgets to increase the proportion of the GDP, which is very low in India, now at around 3%. In addition to these demographic trends, COVID-19 has catalyzed long-term changes in the attitudes towards personal health, hygiene, health insurance, fitness and nutrition, as well as health monitoring and medical checkups.
The pandemic has also accelerated the adoption of digital technologies, including telemedicine. The advent of artificial intelligence is transforming healthcare. It is very important that all healthcare providers brace for its influence in the coming years and be ahead of the curve. On the policy front, the government is undertaking deep structural and sustained reforms for strengthen the healthcare sector. It has also announced conducive policies for encouraging foreign direct investment. India has emerged as one of the fastest growing emerging economies for the last two decades, receiving largest FDI inflows. The healthcare sector has received heightened interest from investors over the last few years, few years. All these factors together create several opportunities for investment in Indian healthcare industry, making it a significant focus area as we approach 2030.
I would now like to share a few highlights of our financial and operating performance. On the financial performance of Aster for Q1 FY 2024, at a consolidated level, our revenues delivered a strong growth rate of 21% year-on-year, amounting to INR 3,215 crore, primarily driven by an increase in the number of beds through commissioning of new hospitals, as well as an increase in the ARPOB. The strong growth across both India and GCC and the various cost improvements initiatives enabled even higher improvement in our EBITDA performance, which recorded a robust growth of 33% to INR 388 crore from INR 292 crore in Q1 FY 2023. Although the headline PAT performance appears weak.
If we exclude the impact of new hospitals and non-recurring exceptional items, the profit after tax grew 87% to INR 84 crore in quarter one, financial year 2024, as against INR 45 crore in financial year 2023. Q uarter one, financial year 2023. Moving to the operational updates for the quarter, the Aster India business is growing even faster, with revenues growing 29% to INR 838 crore, and EBITDA increasing by 47% to INR 123 crore. Profit after tax for Aster India grew 115% to INR 41 crore, as compared to INR 19 crore in quarter one, financial year 2023. While the Aster India growth momentum remains robust, we are looking at expansion across two of our existing hospitals, which are running out at near full capacity.
We are progressing well on our expansion of 100 beds, each at Aster MIMS Hospital in Kannur and Aster Medcity, Kochi. Our strategic approach includes the development of new facilities in regions where Aster brand has strong presence. Our project pipeline is advancing significantly, which include Aster Hospital Kasaragod, where 200 beds are being built, Aster Capital Hospital, Trivandrum, phase I with 350 beds. The phase II development of Aster Whitefield Hospital in Bangalore, comprising of 275 beds, which is nearing completion and is expected to be operational in the month of September 2023. Building on our O&M asset light strategy that has potential to generate higher ROC over a period, we are excited to announce our collaboration with PMF Hospital in Kollam, Kerala.
Aster PMF Hospital commences its operations in the month of August 2023. This step aligns with our commitment to extending quality healthcare services to new horizons. With this, we have added 530 beds under OIM asset light model in less than two years. As we forge ahead, Aster PMF Hospital stands as the next milestone, embodying our unwavering dedication to health excellence, taking it to the peripheral areas. Coming to our other businesses, as on June 30, 2023, we have a total of 255 Aster Pharmacy branded retail stores, 103 in Karnataka, 86 in Kerala, 61 in Telangana, and five in Andhra Pradesh. Aster Labs has established its presence in Karnataka, Kerala, Maharashtra, Tamil Nadu, and Andhra Pradesh, and Telangana.
As of 30th of June, 2023, there is one reference lab, 14 satellite labs, 214 patient experience centers. This dynamic business not only delivers strong growth at 51% over the last year to INR 61.64 crore, but also contributed significantly to reaching masses, brand recognition and awareness. Additionally, we are pleased to announce that we have increased our stake in the profitable subsidiary, Malabar Institute of Medical Sciences, MIMS, Calicut, from 77.93% to 78.82%. MIMS manages four hospitals in North Kerala with a capacity of 1,480 beds. Our GCC revenues grew 18% year-over-year to INR 2,377 crore. EBITDA grew 27% to INR 265 crore.
In line with our capital allocation strategy for sustainable growth, last year we had invested significantly in new assets. The focus for current financial year will improve utilization of those assets. We are also working towards commissioning a state-of-the-art, 126-bed Medcare Royal Speciality Hospital in Al Qusais, with oncology services, which is needed, badly needed in the region. We are also planning to add many of the tertiary and quaternary care treatment facilities in Dubai, including robotic surgery and transplants. We are proud to announce that we have managed to get permission to import the versatile Indian-manufactured SSi Mantra robot to UAE. This is the first export of this robot to a foreign country. We see Saudi as a major growth market in GCC.
Our Saudi hospital, Sanad, has shown sustained margins where we completed the civil and interior work for annex building, which is expected to go operational in Q2 FY 2023. The launch of Saudi pharmacies launch shall happen soon. Alicia shall speak more on Saudi plans as well as the focused Zest Pharmacy brand . Status of restructuring. The company has been periodically updating the stakeholders on ongoing restructuring process of its GCC business to help unlock value for the shareholders. We are happy to report that significant process progress on the restructuring of GCC business has been made, and the company continues to be engaged in discussion with shortlisted bidder focused on the GCC region.
On the basis of requests received during the bid process from the bidders for continued promoter participation in the GCC business, the company's promoters have expressed their interest in continuing to participate in the GCC business, and their intention is to hold a stake in the buyer entity along with the shortlisted bidder. Given that the promoters have decades of experience and goodwill in the GCC region, their involvement is core to the intrinsic value of the GCC business. Being a complex transaction with sale and separation of a material overseas subsidiary, the process is taking longer than expected. The transaction remains subject to finalization and execution of definitive documents and appropriate corporate approvals, including approval from the board and shareholders of the company. We continue to believe that separating the two businesses will maximize value for shareholders.
Requisite disclosures shall be made to the compliance, in compliance with the SEBI regulations at the appropriate stage. I now request Deputy Managing Director, Alisha Moopen, to elaborate more on the GCC business, business, digital transformation, and other strategic initiatives undertaken by Aster. Thank you very much.
Thank you, Chairman. Good evening, everyone. The healthcare market is set to expand, with the GCC's population expected to grow to 66 million in 2027 due to gradual increase in expat base, conducive government policies supporting immigration, and expansion of Golden Visa coverage. Also, the elderly population is projected to rise to nearly 21% by 2027. In anticipation of this population growth, the GCC region is projected to require an additional over 12,000 hospital beds by 2027, with Saudi Arabia anticipated to have the highest demand, necessitating over 8,000 new beds to manage these patient needs. With the rise in non-communicable disease, a focus on preventative healthcare is emerging, leading to emergence of new opportunities in the sector. Advanced technology is introducing cutting-edge tools, improving preventative care, and thereby reshaping healthcare. Now, going into the Q1 FY 2024 performance highlights.
As Chairman mentioned, benefiting from these favorable circumstances, our GCC business has experienced a strong revenue growth of 18% in Q1 FY 2024 to INR 2,377 crore. Excluding the COVID testing and the vaccination income, the revenue growth surged even higher at 22%, which highlights the strength of our business model and our growing potential in this geography. Our last year was really a year of investments, during which we saw addition of two new hospitals, the 24 pharmacies, and the 6 clinics, a feat unprecedented for us in a single year. We have diligently continued and enhanced these projects throughout the year by getting the due empanelment from the insurance companies and providing for the specialized doctors. These investments are witnessing growing utilization and will help us maximize the returns over time.
The hospital revenue vertical, it witnessed increase in operational bed count, driving the revenue growth of 19% year-on-year growth in Q1 FY 2024. The retail business of the pharmacies demonstrated strong performance with healthy growth across product lines, including the expansion in the e-pharmacy and retail in-store formats. The pharmacy segment experienced a growth of 24% year-on-year growth in revenues for Q1 FY 2024. Coming to the clinics business, the revenue grew by 16% year-on-year growth in Q1 FY 2024. Excluding the COVID testing revenue, we experienced an even stronger growth of 27% in the clinic business. Coming to the EBITDA and the margins, the GCC business EBITDA, EBITDA for Q1 FY 2024 grew by 27%. The GCC business EBITDA, excluding the operational losses from all the new hospitals and the non-recurring expenses, delivered a higher growth of 34%.
At the tax level, we have unfortunately witnessed a certain one-time adjustment owing to the upcoming corporate tax changes in the UAE. I will request our GCC CFO, Amitabh Johri, to share more details on the same. It is really worth re-emphasizing that despite a significant expansion in our capacity, our occupancy rate has remained consistent at 51%. This accomplishment only highlights that our operational efficiency, not only our operational efficiency, but also reaffirms our capability to effectively meet the rising demand for our services. The financial progress this quarter can be largely attributed to extensive outreach through digital initiatives. Now, to share some of the other important business updates. As Chairman mentioned, we have partnered with Dubai Developments to build a state-of-the-art Medcare Royal Hospital in Al Qusais .
The hospital will offer specialized care, and it's set to commence operations by the end of this year, 2023. Aster Pharmacy, in partnership with Spinneys, which is one of the leading grocery stores in UAE, has launched Zest Pharmacy, which is a premium wellness concept in the UAE. Leveraging on cutting-edge diagnostic technology, Zest Pharmacy offers personalized health insights and plan through its innovative stations. The expansion plan includes operating and opening 25 Zest Pharmacy stores within the next two years. I'm also delighted to share with you that our Saudi pharmacies are on track for commissioning with an anticipated start later in October this year. This strategic endeavor aligns seamlessly with our expansion plans and reinforcements our commitment to delivering quality healthcare services. Our digital initiatives have also yielded impressive results with unique users.
It's reaching 270,000 in Q1 FY 2024. We've also added some key features over the last quarter, one of them being the Instant GP, where instant consultation and appointment bookings has been well received, and we've had more than 110,000 net installs in the UAE in Q1 FY 2024. Non-prescription orders have surged by over 35% in Q1 FY 2024, which is contributing to a 30% increase in average monthly revenue from non-Rx orders. We are also harnessing hyper-personalized omni-channel communication to engage with the 2.1 million unique customers across all our network. We've also started telecalling for maternity and high-value pharmacy patients, which has been proven effective, and our holistic digital engagement strategy resulted in some of the incremental revenues that we have witnessed in Q1 FY 2024.
In conclusion, FY 2023's strategic investments have set the stage for a profitable growth in FY 2024. We are set to maximize our assets, meet the growing demands, and continue delivering exceptional healthcare experiences through digital innovations. I would request now our GCC CFO, Amitabh Johri, to share more details on the financial performance. Thank you.
Thank you, Alisha. Good evening, everyone. On a consolidated basis, our revenue from operations for quarter one FY 2024 was INR 3,215 crore, an increase of 21% year-on-year. Consolidated EBITDA for the quarter was at INR 388 crore, as against INR 292 crore, which is a growth of 33%. EBITDA losses from new loss hospitals amounted to INR 10 crore, and non-recurring restructuring costs amounted to INR 6 crore in Q1 FY 2024. Excluding these losses, EBITDA stands at INR 404 crore, as against INR 292 crore during the same period last financial year, which is a robust growth of 38%. Consolidated PAT, post NCI, is at INR 5 crore as compared to INR 69 crore in Q1 FY 2023.
PAT losses from the new hospitals amounted to INR 29 crore, deferred tax liability of INR 44 crore in Q1 FY 2024 in GCC on account of one-time non-cash tax adjustment, as new tax regime gets implemented in GCC. There are one-time other income of INR 23 crore in Q1 FY 2023. Excluding these items and the restructuring costs mentioned before, adjusted PAT post NCI stands at INR 84 crore in Q1 FY 2024, as against INR 45 crore in Q1 FY 2023, a growth of 87%. Talking specifically on GCC performance, revenue from our GCC operations in quarter one FY 2024 was INR 2,377 crore, an increase of 18% year-on-year. COVID revenue in Q1 FY 2023 was INR 63 crore. Adjusted for this, the growth of core business was 22% on year-on-year basis.
EBITDA from GCC operations stands at INR 265 crore, as against INR 208 crore in Q1 FY 2023. Excluding losses of new hospitals, non-recurring restructuring costs in GCC, EBITDA stands at INR 280 crore in Q1 FY 2024, a growth of 34%. The growth in EBITDA did not translate into growth in PAT in GCC, mainly due to non-recurring items highlighted before. Post adjustment of these non-recurring items, like the deferred tax liability on goodwill, losses from new hospitals, PAT post NCI stands at INR 41 crore in Q1, as against INR 26 crore in Q1 FY 2023, which is again a growth of 57%.
Coming to the segmental performance for the quarter, GCC hospital revenue was at INR 1,090 crore, an increase of 19% year-on-year basis. The EBITDA stands at INR 170 crore compared to INR 133 crore in FY 2023, Q1, a growth of 28%. Excluding losses from new hospitals, the hospital segment had an EBITDA of INR 179 crore. The EBITDA margin adjusted for losses from new hospitals was 17.4%. GCC Clinics revenues stands at INR 626 crore, an increase of 16% year-on-year basis. EBITDA for GCC Clinic segment stands at INR 114 crore in Q1 FY 2024, a growth of 25% with an EBITDA margin of 18.2%.
Normalized for the COVID testing, which was there last year, the core business of the clinic segment grew at a rate of 27%. GCC Pharmacy's revenue increased 24% year-on-year basis from INR 660 crore to INR 817 crore. EBITDA increased from INR 58 crore to INR 76 crore, an increase of 32%. EBITDA margin for this segment in Q1 FY 2024 was 9.4%. GCC net debt stands at $175 million as at June 30, 2023, compared to $163 million as of March 31, 2023. The CapEx for FY 2024, Q1, were at INR 76 crore. Now I would request Joint CFO, Mr. Sunil Kumar, to take you through the India performance during the period.
Thank you, Amitabh. Good evening, everyone. For the quarter ended 30th June 2023, India revenues have increased to INR 838 crore, up by 29% from INR 651 crore in Q1 FY 2023. EBITDA from India operations have increased to INR 123 crore, with a margin of 14.7%, compared to INR 84 crore in Q1 FY 2023. With a growth of 47%. PAT, post NCI, for Q1 FY 2024 is at INR 41 crore, compared to INR 19 crore in Q1 FY 2023, with a growth of 115% year-on-year. With respect to segmental performance, revenue from India, hospitals and clinics, excluding O&M asset-light hospitals , stands at INR 777 crore in Q1 FY 2024, with a growth of 25% year-on-year.
EBITDA stands at INR 145 crore, with a margin of 18.6% in Q1 FY 2024, as compared to INR 103 crore in Q1 FY 2023, with a growth of 40% year-on-year. ROC for this segment stands at 21.9% in Q1 FY 2024, trailing 12 months, compared to 13.8% in the same period last year. In Q1 FY 2024, mature hospitals operating for over three years showed strong performance. Revenue for these hospitals stands at INR 749 crore in Q1 FY 2024, with a growth of 24% year-on-year. EBITDA for the same period stands at INR 152 crore, with a margin of 20.2%, as compared to INR 104 crore in Q1 FY 2023, with 46% growth year-on-year.
ROC for these mature hospitals improved to 24.3% in Q1 FY 2024 trailing 12 months, compared to 14.7% in the same period last year. Aster India net debt stands at INR 565 crore as on June 30, 2023. The capital expenses for the quarter is INR 119 crore. On that note, I conclude my remarks. We will be happy to answer any questions that you may have. I now request Mr. Balachander to open the question and answer session. Thank you.
Thank you, Sayo. I would request the participants to please raise your hands, and based on which you will be called on for your questions. Again, I'm repeating just in case if there's a technical issue. I'm requesting the attendees to please raise your hand so that we can unmute you to ask your questions. Okay. Jaina, please, please go ahead with your question.
Hi, everyone. Thank you so much for the presentation. Just three short questions from me. First, on Medcare Royal, that's gonna commence operations, is that at the end of FY 2023 or calendar year 2023? On the digital initiatives in the GCC region, is it that non-prescription orders are making up 30% of revenue? Did I get that right? Lastly, it was mentioned that there were some restructuring costs. Was that INR 6 crore, and then the other one-off was on the GCC taxes?
Yeah. Alisha, you would like to answer that?
Sure. Thank you, Jaina. On the Medcare Royal Hospital, we're expecting to hopefully commission it by Q4 of FY 2023, so by between December and February of the upcoming year. I hope that-
24.
Yeah, January 24. On the non-prescription orders, we were just saying that there is... It's, it's increasing at 30% year-on-year, so it's not like it's contributing to 30% of the overall revenue for pharmacy. On the cost, the INR 6 crore, Amitabh, do you want to just explain?
Sure. Really, I'll do that. Jaina, you're right, the INR 6 crores that we have accounted for in this quarter pertains to adviser cost, diligence cost, or legal costs that we have incurred till now. As a principle, we are expensing them, since these are period costs. You had mentioned about GCC tax. Would you like to elaborate on your question, Jaina?
Just what is the loss that is coming from that? What is the one-off? I think in the statements it looked like about INR 50 crore or so.
Okay, I'll try and give you an answer to that, Jaina. It's INR 43 crore, to be more precise. This is not in the nature of a loss. It's in the nature of a deferred tax liability provision. It's a non-cash item put below the EBITDA line. The reason for that is because as the new tax regime is coming up in GCC, the difference between the book profit, which is coming from after the amortization of goodwill, and under the tax laws, where the goodwill amortization is not permitted, there is a timing difference. To accommodate that timing difference, there's a deferred tax liability that has been created of INR 43 crore. It's for all the acquisitions we tilted. This is a one-time cost and will not be repeated. In fact, the full cost is being accounted for in one quarter.
That is why you see such a significant amount sitting there.
Okay, I see. Thank you so much for taking my questions.
Thank you, Jaina. The next question is from Mehul. Mehul, please go ahead, and you can ask your question.
Yeah, yeah. Am I, am I audible?
Yes, Mehul, you are.
Yeah, yeah. First question on your restructuring part. Can you give some more detail, like, where the current process, like current status, any timeline for completion, and also on what kind of valuation that you are getting from the bidder side? Can you provide some more detail on that front?
Yeah, Mehul, as you know, it's not possible for us to disclose more than what... Whatever we have to say, we have actually told in the statement. I can repeat that. See, this going in the direction that we wanted, which is for a restructuring, that exact timeline and the price, it's not a time for us to disclose that, or it's not possible. We hope that, while it took some time, because of the complexity of this whole restructuring, we know that we had promised that this is going to, not promised, thought that this is going to happen earlier. We, it's slightly delayed, that's all.
Yeah. Thank you. One question on India hospital side. Sir, how do you see the progress, like Q1, possibly, there will be a seasonality impact, but now Q2 onwards, how that means the overall operations direction is going on in terms of occupancy, ARPM, how, how the things are moving up from here?
Sunil, you wanted to answer that? Sunil?
Yes, sure. Yes, Chairman. Thank you, Mehul. India quarter, and if you saw the numbers, right, year-on-year, we have done very well. In the occupancy also, we have closed the quarter with 64% occupancy, but again, that is blended with Odem satellite hospitals, which got operational also in Q1. If you remove that, Odem satellite hospitals, apple to apple comparison, we will be at 67%. That's almost a 3%-4% grow, you know, 400 basis points improvement year-on-year. In terms of ARPOB, we've also seen that we closed the quarter with almost INR 13,400 ARPOB for India. Compared to last year, same time, it's INR 36,000. Almost 8%-10% increase has happened.
Margin-wise, we have closed at 14.7%, and see, this is a quarter wherein you all know that there will be increments be happening. At the same time, there are certain pricing also we have taken. To ensure that the bottom line improves, quarter two, you'll see further growth happening in here. This is the quarter which will always be under pressure, because from first April, we'll have the cost increasing, but at the same time, price increase will trickle down only slowly, right? You can't do, take the complete price increase in one quarter. Keeping that in mind, I think we've, we have given good number, and July number occupancy is doing well. We see that, you know, quarter two is always very good in India, considering the season and the medical specialties usually do very well.
That way, I think, we'll have a very good number. Thank you.
Yes, sir. Yes, yes. The question I asked, because, Q2 of FY 2023, the occupancy level was almost 72%. Are you, are we on track to almost, like, achieving that kind of occupancy in, this quarter, Q2?
We can't, you know, predict, Mehul, but occupancy numbers are quite good. In the month of July, we are already at 68. Considering that, we expect this quarter to do very well.
Also, sir, like, just a last question on, like, ARPOB driver. What factors are basically driving your ARPOB, and what will be the, like, sustainable ARPOB growth that you are expecting from here on?
There are multiple factors in India, Mehul, which is driving the ARPOB growth. One is that we have a 50%-60% cash, you know, payer mix. Considering that, we can take the price increase, and we are doing that. Second would be the geography where the occupancy grows. Third would be the case mix, right? We do a lot of high-end cases like DBS, cochlear implants, TAVI, a lot of transplants, liver, renal, BMT transplants. All these really quaternary care specialties, which are the procedures which we do, really add to ARPOB growth. If you've seen our trend, year on year, we are adding almost 8%-10% ARPOB growth, which is happening, and I think that will continue to do, do so.
Yes, sir. Thank you. Just, before I leave, fall back into the queue. On, Aster Labs side, how, how do you see the business scaling up? Like, what will be our, more of like a EBITDA break-even time period from here?
You are talking about the Aster Labs?
Aster Labs India, yes.
Aster Labs India. The Aster Labs India, we hope that in the next quarter, by end of next quarter, on a month-wise, we should be going into a break-even. We are gone to that stage where we are seeing the profitability just starting. This year, we hope that we'll go into an EBITDA break-even, not as a whole the year, by end of the year, definitely we'll be going into a break-even.
Thank you. That's all from my side right now, so-
Thank you.
Thank you for it.
Thank you, Mehul.
Thank you, Mehul. The next question is from Ambrish.
Thank you. Thank you for the opportunity, and congratulations again on a very good result, especially in India. As, bear with me for nitpicking on what is otherwise a fantastic set of numbers. Again, the question is relating to the Labs and pharmacy business. Is there some color you can provide on whether we are still pushing forward? I understand, you know, that the pharmacies, and the role that they are playing is an ecosystem role. The numbers of pharmacies seem to have, are flattish, and I'm not sure whether is this deliberate, or is there something in the business model that we need to tweak? Is there something you can share on this, please?
Yeah. I'll start off, and then Dr. Nitish will join, the India CEO. Like what you said, exactly, we are not, we were not looking at the... Earlier, the, while we started off, we thought that it had to be a large rollout across many regions. Later, as we mentioned, and you also mentioned now, we thought that we have to create an ecosystem around our hospitals. That doesn't require a huge rollout of like what we mentioned earlier, of 500 pharmacies in three years and all. We think that we'll be able to do that with 300 pharmacies, is what we are now thinking. That's why that rollout has come down. We were also burning some cash.
Whereas in the lab, like what I mentioned, we hope that within the next three, four months, we will be going into a break-even. We have started this just two, 2.5 years back. Pharmacy, it may take a little more time. We are people who would like to be very conservative and conserve money rather than burn it for getting business, spread it out. Once we stabilize and we know that business model, we hope that by that time we'll have a lot of our own products, which will give us better margins. Then maybe the possible to have larger numbers, if we make sure that individual stores are becoming profitable. What you said is absolutely true. We are not going for a large rollout. We have, in fact, reduced the numbers.
This year we thought that we will stabilize the existing stores and go. Whereas pharmacies, it's slightly different. I mean, labs, it is slightly different. We are a bit more aggressive because we are finding, having more labs, it's possible to go more profitable. Now further to this, Dr. Nitish, if you would like to add on, no, from the from your perspective.
Yeah. Thank you, Chairman. Good evening, Ambrish. Coming to your question about the pharmacy, going forward plan. Like our Chairman mentioned, we are in a position, we are in a state of consolidation. We are looking at pharmacy completing the ecosystem for our patient experience. At the same time, we want to mitigate cash burn. We have been very prudent in our approach in stabilizing the back end and also taking a major step in increasing the top line. Like Chairman mentioned, we are hoping by another six to, by early H1 or H2 of the next year, we will be able to stop the losses and break even in the pharmacy. Further take stock of the situation in new geographies like Andhra and other area in Maharashtra.
Based on the, how exact, how early we break even, we would like to restrategize and look at further expansion. At this moment of time, our focus is in the consolidation and mitigating the cost, expenses, and improve the customer experience. That's our focus now for next six months.
Thank you. Very clear. The second question is a broader question, and I'm not sure how much you can share at this stage in a post-restructured scenario, whether we will lose some of these synergies. For example, we have done a lot of work in the GCC, with, in the pharmacies, with, our own health, wellness kind of products. Would we be able to bring these across to India? The, the Aster app, in any case, is, is, you know, all the technology that's been built there, will it be migrated? Is there anything we can share? What sort of synergies would we lose, or, or will we be able to retain most of it?
While after this process, this will be two separate companies. The India company remaining public and the GCC becoming private. It will be two companies, so whatever we do will have to be on the way, keeping that in mind. Answering your question, yes, there are certain things which we have developed here, like myAster, which is the app, which is becoming very popular here, like Alisha mentioned. We will definitely, we are looking at ways in which how we can utilize it by way of either a one-time purchase or like a licensing. It can be utilized in India. Like that, there will be also other areas, medical value travel, for example, patients travel from GCC to India.
Yes.
which is happening now. There will be patients again traveling. We are, we are looking at ways in which how this can be beneficial on both sides, at an arm's length method, no pricing, how we can do that. Wherever there is a possibility. Now, there are people, doctors, nurses, coming to GCC from India, so we want to remain on both sides, as it will be Aster, and as the promoters, we are participating. We would like to get those benefits, at the same time, make sure that both the companies are getting separately, the benefit out of it.
That seems fair. Thank you very much. All the best to everyone. Thank you very much.
Thank you.
Thank you, Ambrish. The next question is from Mohit.
Thank you for this opportunity. Am I audible?
Yes, Mohit, you are.
Okay, I had this question about last year. There was this note that we had recognized income of INR 23 crore for reversal of this contingent consideration provision. When you are comparing one to this year versus one to last year, is this excluded from the normalized numbers?
I think that, yes, Mohit, we have excluded that. When we are looking at the growth and we are trying to do a normalization, this INR 23 crores have been backed out from the INR 63 crores of what was the Q1 FY 2023 numbers.
Okay. Okay, perfect. And one more thing. You said that the promoters will be participating in this GCC business after it's carved out. Is it going to be fine? I'm worried about a big increase in pledge shares. Is that going to happen? How will it be financed?
I didn't get the question clearly. Can you please repeat it, Mohit?
Is there going to be a big increase in the pledge shares, the Indian-listed business, to finance promoters participating in the GCC carve-out?
No, no, no, no, no. It's not going to happen, because, see, the structure that we are looking at is the. See, we have brought this money from outside India as foreign direct investment. This money can be repatriated. Whatever comes in India, when it is dividended out, we can bring that money back, and that can be deployed here. There won't be any requirement for promoter pledge and all happening in India.
Okay, got it. The bulk of the proceeds are going to be dividended out?
That is, the board has to decide. Our desire is that as promoters, but the board has to decide. We have seen that as one of the sources for getting the stake in GCC. If it's not possible, we have other methods in GCC to raise our own funding.
Okay. Okay, got it. This is, like, more of a minor concern, but for the last couple quarters, we've been saying that we would receive binding bids in, Q1 FY 2024, and we've always known that this is a complex transaction, right? What happened?
Yeah, yeah. The, as you mentioned, it's a very complex transaction because of many reasons. The board wants to be 100% sure before it accepts the bid and sends it to the shareholders. That whole process, now, the rigor which we have put into this because of many reasons, because it's a transaction between GCC India, outside of India, the promoters are involved, there has to be, again, no, hundreds of checkpoints where make sure that it is beyond any doubt, no, there is no conflict of interest. A lot of things, a lot of lawyers involved, a lot of, I mean, advisors involved, apart from our own, I mean, the resources we have.
The independent directors are helping us, giving us direction, as well as helping us, the board, to go, go in that right direction. As you mentioned, it's complex, but the good thing is that we all believe that this is going to significantly, I mean, sort of, unlock value for the shareholders, and that's why we are doing this. Otherwise, there is no point in doing this, no?
Perfect. We have received some sort of bid, yeah? Because you said you are evaluating them.
Yeah. That is. Beyond that, it will be difficult for me to now.
Okay.
I mean, commit. You know, there are certain restrictions, what I can tell you is that it is going in the right direction. Even though it's delayed, it's progressing well.
Mohit, in some of these larger transactions, and you must have been tracking for various other companies as well, you know, there could be a few months of, you know, delays in... If the transaction of this kind of magnitude and size is happening, those things can always happen. But I think as chairman mentioned, you know, so far, we are reasonably or pretty confident of moving forward on that transaction. That's the limited point I would like to make for. Thank you.
Okay, perfect. Thank you.
Thank you, Mohit. The next question is from Harit.
Hi, good evening. Thanks for the opportunity. There's a INR 7 crore loss from associates that I'm seeing in the P&L. It's not a big number, but just trying to understand which entity it's coming from.
Yeah.
All right, I will try to answer that question. It's a combination of entities across GCC in India. There are certain entities in India, especially in the IG side, where the business had invested, and there are accumulated losses that are coming from there. This is largely that amount. It's around $4 odd million that is sitting over there, which has resulted in this $4,000,080, which has resulted in this loss.
Okay. Okay, that helps. On the O&M asset-light strategy, we've added, I can see another hospital getting added under this model, which is in Kollam. Some color on this particular hospital, as well as, you know, what your experience has been operating hospitals under this model, because we've added some three, four over the last 12 months. Then, particularly when I look at this hospital, it's a slightly smaller hospital, very different from the other assets that we have in Kerala. In general, the O&M model, we are focused on Tier 3 and 4 locations. Again, a deviation from our Tier 1 focused, you know, high industry care, quaternary care focus model.
Thought process around this O&M asset-light strategy would be helpful.
Yeah. Harit, thank you. Thank you very much. This is something which is very close to our hearts because of many reasons. One, from the point of view of, I mean, providing, care in the areas where it is not there, where we are all mostly our assets are in the city, India, I mean, in Bangalore or in Kochi, Calicut, and places like that. We would like to go to the interior. That's why we have gone to these places. The four hospitals which we have started confirms to that. The size are smaller, like what you said, it's smaller than our other hospitals. This whole thing, apart from, making us, I mean, the healthcare providers who can provide advanced tertiary...
I mean, not advanced, tertiary care, like an angioplasty or angio, I mean neurosurgery, in a place where it's not possible because of our connect with that hospital, is something which is really life-saving and being appreciated by the medical professionals as well as the patients. That is from the point of view of taking this to the periphery. From the point of view of an investment, as you know, this is a very asset-light model where already there is existing infrastructure. What we do is we bring in some equipment, and sometimes we have to give some deposit and all. Sunil will tell further about this hospital in Kollam, which we are the latest one, which we have added. Before that, we started one in Tirupati also.
The advantage is that it is very asset light. While the EBITDA margins may be lower and it may even dilute our overall EBITDA margin, we find an opportunity to have significant increase in our ROC. That is the whole idea. One, bringing care to places where it is not available, and second, to get a very high ROC, while there may be some dilution on our EBITDA margins. Sunil, if you can just tell us the experience of a couple of these hospitals now, regarding the financials of that.
Sure, Chairman. Thanks, Harit, for the question. As you know, already we have three assets live. One is in Aster Mother Hospital, Areekode, with 140 beds. That was almost one year back, we started that. Aster Narayanadri Tirupati, we started two quarters back, with again, 150 odd beds. Recently, this quarter, we started with 100 beds, Aster G Madegowda Hospital in Mandya. Out of the three, we already broken even in Narayanadri, that is something which we communicated in the last quarter itself. It's doing very well. It does more than INR 3.5 crore revenue per month, with a more than 10% EBITDA margin.
Now, the Kollam one, which, tied up, we tied up in June 1, 2023, and already, we have gone live, in the sense the operations already started on August 1, 2023. Revenue is really picked up, so this will also be in the similar range of Aster Narayanadri revenues. In terms of the contract, as chairman told, we use a combination of the secure deposit and a little bit of CapEx. In this case, we have given around INR 6-7 crore as security deposit, and my CapEx is around INR 2- INR 3 crore. That's it, not more than that. Another good part of the Aster Padmavathy Medical Foundation, Kollam Hospital, is that there's no fixed revenue share or fixed revenue or share at all.
In other cases, we've done fixed or a variable, which is higher. In this case, there is no fixed and it's purely variable, which we tied up.
Okay. Then just one small clarification. I see in your presentation, I see in your presentation as per KLE
Yes, Harit. See, when you say, only that's where we qualify that, only O&M, means we usually go with interiors, plus medical equipments, or we only go with medical equipments. When we call O&M asset-light, not only just O&M, O&M asset-light, here we have existing hospital already. We've already also asked about equipments also. We go only with the small deposits and just refresh the medical equipments which is required, and to add wherever the specialties are lacking, try to get a new doctor, a new specialty we want to start. Only those CapEx we incur, nothing more than that.
Okay. These hospitals like this, Kollam asset, they're already operational hospitals?
Yes. Yes, it's an existing running hospital. We have taken it over.
Okay. Again, one last question. Looking at the ARPOB profile of mature hospitals in India, it's around INR 40,000 that we have for this quarter. How should we think of this number going forward in terms of further expansion from here? You know, we've seen a lot of peer reporting double-digit ARPOB growth in recent years, but for us, how should we think about ARPOB growth, particularly for this mature hospital cohort?
Harit, if you see the historical numbers, right, we are able to comfortably grow around 8%-10% ARPOB year-on-year. Considering that our cash business is still 58%-60% of our total revenue comes from cash patients, that is at least the place where we have the capacity to do the price increase, right? Keeping that, yes, we have that leverage available. At least I'm not giving a long term, but at least in the short term, yes, that percentage, you know, growth can really happen in the ARPOB. Also, in case of balance also, we have got 28%-30% of TPA. We don't do a lot of schemes. If you do a lot of schemes for state government patients, right?
Yeah.
You don't have the control over the increase in the pricing. At the same time, TPA also, you, you enter into multi-year agreement. You really don't have a year-on-year comparable, but every two years or three years, you can see a, a jump in the ARPOB. That's a broad, I think, guideline we can give you.
Thanks. Thanks, for taking my questions. I'll, I'll get back in the queue.
Thank you.
Thank you.
Thank you, Harit. If there's anybody else who has any questions, please raise your hand. Okay, since there are no more questions, we'll close the call with that. Thank you all for attending, and if there are any further questions, please do get in touch with us outside this call. Thank you. Thank you all.
Thank you all. Happy Independence Day in advance.
Thank you.
Thank you.