Aster DM Healthcare Ltd
NSE:ASTERDM
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Aster DM Healthcare Ltd
Earnings Call Analysis
Q3-2024 Analysis
Aster DM Healthcare Ltd
Aster DM Healthcare's third-quarter report for the financial year '24 reveals a striking 16% year-on-year revenue growth, with a significant contribution from the newly added 780 beds within two financial years. Amidst the strategic manoeuvre to separate the GCC operations, the company showcased a solid quarterly consolidated performance, registering INR 3,711 crores in revenue. Impressive revenue increases were observed both in India, at 23%, and the GCC region, at 14%. Increased hospital bed occupancy and cost-saving measures led to an operating EBITDA jump of 28% to INR 583 crores year-on-year. Adjusting for nonrecurring costs and new hospitals, the Profit After Tax (PAT) soared by 53%, emphasizing the company's profitable trajectory.
In the Gulf Cooperation Council (GCC) region, the company enjoyed its operations booming with a 14% revenue surge to INR 2,761 crores, attributing to better hospital occupancy rates which have risen to 58%. This efficient asset utilization, along with 24% growth in operating EBITDA to INR 415 crores, signposts an increasing operational leverage and successful cost optimization. Notably, the Pharmacies and Clinics segments reported year-on-year growths of 12% and 20%, with respective EBITDA margins improvement, indicating a well-rounded advancement across the company's GCC portfolio.
In India, Aster DM's upward trajectory was remarkable, with a revenue hike of 23% to INR 949 crores. This growth was undergirded by an addition of over 750 beds in the fiscal year and substantiated by a 36% spike in revenue during the nine months of FY '24. An astute focus on capitalizing the nation's high population and low hospital bed density is evident, as the company targets a bed capacity of over 6,600 by FY '27. Their flagship hospital, Aster Medcity, earned the top position in the Best Multi-specialty Hospital Emerging category, reflecting a commitment to healthcare excellence. This robust expansion and awards recognition align with a 105% growth in post-NCI PAT, promising that the company's focused strategy in India is set on a path of positive outcomes.
Looking ahead, Aster DM Healthcare's pursuit of growth is steadfast. With the strategic segregation of the GCC and India operations nearing completion, the company plans to reward shareholders generously via dividends post transaction closing. By leveraging their strengthened healthcare ecosystem—encompassing 224 labs, patient experience centers, and 223 pharmacies—the company is making substantive inroads into healthcare service delivery. This integrated approach, efficient management, and commendable financial performance hint at a bright future for the organization, resonating with the healthcare industry's expected CAGR of 22% up to 2025.
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Good morning, everyone. I welcome you to Aster DM Healthcare's Earnings Conference Call for the Third Quarter of Financial Year '24. The company declared the Q3 and 9 months results for the financial year 2023, 2024.With us we have the senior management of Aster DM Healthcare, namely Ms. Alisha Moopen, Deputy Managing Director; Mr. T.J. Wilson, Non-Executive Director; Dr. Nitish Shetty, CEO of Aster India; Mr. Amitabh Johri, Joint CFO; Mr. Sunil Kumar, Joint CFO; and Mr. Hitesh Dhaddha, Chief of Investor Relations and M&A.Dr. Azad Moopen, our Chairman and Managing Director, is unable to join today's earnings call due to some personal commitments. I would like to inform everyone about how we will conduct this call. All external attendees will be in listen-only mode for the duration of the entire call. We will 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 the question by raising your hand by clicking on the raise hand icon in Zoom application at the bottom of your window. We'll 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 questions to 2 but not more than 3 per participant at a time.Certain forward-looking statements may be discussed in this meeting and such statements are subject to certain risks and uncertainties like government actions, local political or economic developments, technological risks and many other factors that could cause 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 Ms. Alisha Moopen to start with the opening remarks. Over to you, Ms. Alisha.
Thank you, Bala. Good morning, everyone, and thank you for joining our third quarter and 9 months FY '24 earnings call. Ladies and gentlemen, I will provide an update, of course, about the most important development, which was the voting on the restructuring and the sale of the GCC business. And of course, we'll be giving an update on the consolidated quarterly performance and also touching on the performance of our GCC operations before Dr. Nitish talks about India business for the quarter.On the segregation of the GCC and the India business, I really want to express my profound gratitude to our esteemed shareholders for their resounding approval of our initiative to segregate our GCC operations. This endorsement not only grants us the necessary mandate, but also instills the enthusiasm to nurture and strengthen our operations in India, underscoring our commitment to align with your trust in our strategic direction. The voting of the resolutions regarding the segregation of GCC got concluded on the 22nd of January 2024 with a significant voting in favor of separating the GCC business from our Indian operations.In the resolution which involves approving the sale of a material subsidiary, shareholders showed strong support with an impressive 99.96% of votes in favor. In the resolution which involves approving the sale of the GCC business as a related party transaction, we are very pleased to report an overwhelming support with an impressive 99.86% of eligible votes in favor. It is very crucial to highlight that given the nature of this resolution as a related party transaction, the related parties were excluded from voting in favor of the transaction. Excluded those considered as related parties under the law, holders representing 26% of votes were entitled to vote on the majority of minority resolution, which encompasses 16% of institutional investors and 10% retail holders.Of the same holders representing 22% shares voted towards the transaction, comprising 15% institutional investors and 7% retail holders. Remarkably, all the 20 institutional investors cast their vote in favor of the transaction, again, showing unanimous support -- unanimous support amongst the major domestic and foreign and institutional investors. Among the top 100 investors, nearly one investor voted against the transaction, again, underscoring a widespread approval. Voting among the retail holders also yielded excellent results with an impressive 99.97% of retail holders voting in favor of the transaction.Really, in summary, an overwhelming 99.86% of votes supported the majority of minority resolution, reflecting a strong confidence in an approval of the proposed transaction. Moving forward, post the successful closing of the proposed transaction, our intention, as published earlier, is to distribute between 70% to 80% of the upfront consideration of the $903 million as a dividend to our shareholders. This dividend is expected to be within the range of INR 110 per share to INR 120 per share, subject, of course, to the necessary corporate approvals mandated by the law.The closing of the transaction is pending the fulfillment of certain conditions precedent, including approval from competent merger control authorities in the Kingdom of Saudi Arabia. I'm pleased to share that we are currently in advanced stage of completion of all these conditions. We are diligently working towards meeting all these requirements to ensure a very smooth and timely closure of the transaction by the end of this financial year FY '24. The overwhelming support from our shareholders is really shows us a very strong affirmation of our strategic direction to segregate the India and the GCC businesses. This strategic move is aimed at unlocking value, demonstrating our commitment to creating sustainable growth and delivering enhanced returns for our shareholders.Now moving into the consolidated financial performance for quarter 3 FY '24. On a consolidated basis, our revenue has experienced significant growth, reaching INR 3,711 crores, which represents a 16% year-on-year increase, supported by the ramp-up of the new hospitals, which were started in the last 2 financial years, which has allowed us to expand our capacity by more than 780 beds over the last year. The strong growth extended across both the Indian and the GCC regions and was further amplified by various cost-saving initiatives as well. As a result, our operating EBITDA has exhibited robust growth, increasing 28% year-on-year to reach INR 583 crores, up from INR 456 crores in Q3 FY '23, resulting in expansion of our overall operating EBITDA margins to 15.7% compared to 14.3% in Q3 FY '23.Our headline PAT performance has also demonstrated a strong growth with a 29% year-on-year, increasing to INR 179 crores in Q3 FY '24 as compared to INR 139 crores in Q3 FY '23. If you actually exclude the impact of the new hospital losses and the nonrecurring restructuring costs, which were incurred during the quarter, PAT has increased by 53% to INR 213 crores in Q3 FY '24 as opposed to INR 139 crores in Q3 FY '23.Coming to the GCC performance, our GCC business has achieved a 14% year-on-year revenue growth in Q3 FY '24, reaching INR 2,761 crores, primarily driven by improvement in our occupancy rate, which has reached 58% during the quarter compared to 50% in Q3 FY '23, indicating a very effective asset utilization following all our investments in the last year. Our operating EBITDA has surged by 24% to INR 415 crores with EBITDA margin standing at 15% this quarter versus 13.8% in Q3 FY '23 due to better performance from the hospital vertical, retail vertical, cost optimization initiatives as well as operational leverage. Excluding one-off exceptional items, the PAT saw a year-on-year increase of 20%, standing at INR 131 crores as compared to INR 109 crores in Q3 FY '23.Across the board, all our divisions have experienced notable growth. Hospitals have increased by 15% year-on-year, Pharmacy by 12%, and Clinics have seen a 20% improvement year-over-year. Amitabh will be elaborating more on the GCC financial later. I'm also very happy to inform to you that Aster Pharmacy were declared the winner in the Best Pharmacy Retailer of the Year and Best Omnichannel Loyalty Program of the Year at the Middle East Retail and E-Commerce Summit in 2023.I really want to express again my heartfelt gratitude once again to all of you for your trust that you've placed in us. We are generally excited about the journey ahead, and we are fully committed to delivering not only value but sustained growth in the years to come. Your confidence, it really fuels our determination, and we look forward to exceeding our expectations and creating shared success.I would now request our India CEO, Dr. Nitish Shetty, to share more details on the India business and its growth perspective. Over to you, [ Dr. Nitish ].
Thank you, Alisha. A very good morning to everyone. Thank you for joining us for this quarter 3 financial year 2024 earnings call. India's health care market is poised for remarkable growth. It's expected to reach USD 638 billion by 2025 with a CAGR of 22%. Recognizing this potential, we are committed to expanding our health care services in the region of our presence.Regarding our quarter 3 financial year 2024 performance in India, we are thrilled to report a 23% year-to-year revenue increase, reaching a INR 949 crores driven by our ongoing capacity expansion efforts of adding 750-plus beds this financial year. Our focus on cost optimization and operational leverage has boosted our operating EBITDA by 37% to INR 168 crores, resulting in operating EBITDA margin of 17.7%, up from 15.9% in the quarter 3 of financial year 2023. Notably, our major hospital achieved an operating EBITDA margin of 21.7%, contributing to overall hospital margin of nearly 20%. Our post-NCI PAT has more than doubled, showing an impressive 105% year-to-year growth to INR 62 crores in quarter 3 of financial year 2024.Looking ahead, we remain optimistic about our prospects in India. To capitalize on the vast population and low hospital bed densities, we are strategically investing in significant capital expenditure, aiming for total bed capacity of over 6,600 by the financial year 2027, which includes adding approximately 1,700 beds. Furthermore, we have strengthened our health care ecosystem by establishing 224 labs, patient experience centers and 223 pharmacies across Karnataka, Kerala and Telangana. These initiatives have contributed to 36% year-to-year revenue increase during the 9 months of financial year 2024.We are also proud to announce that Aster Medcity, our flagship hospital has been ranked #1 in the Best Multi-specialty Hospital Emerging category by Week-Hansa Research for the year 2023. This reflects our dedication to delivering quality health care services. As we move forward, we are confident that our focused approach in India will yield positive results. We look forward to sharing our progress with you in the upcoming quarters.Now I invite our joint CFOs, Amitabh and Sunil to provide more insight to our financial performance. Thank you.
Thank you, Dr. Nitish and Alisha. Thanks for -- good morning, everyone. First of all, I would like to thank you for joining the earnings call for quarter 3. I'll be covering the consolidated performance for the business, shall be also covering the GCC performance and then I would request Sunil to take over the India-related performance update.On a consolidated basis, our revenue for the operations for quarter 3 FY '24 was INR 3,711 crores, an increase of 16% year-on-year. Consolidated operating EBITDA for the quarter was at INR 583 crores as against INR 456 crores during the same period last financial year, which is a growth of 28%. Consolidated PAT post-NCI is at INR 179 crores as compared to INR 139 crores in quarter 3 of FY '23. PAT losses for new hospitals amounted to INR 20 crores. Operational losses from affiliates, largely Aster Arabia, our joint venture in Saudi Arabia has amounted to INR 8 crores and onetime restructuring costs towards the segregation amounted to INR 6 crores that were recorded in this quarter.Excluding these items, the adjusted PAT post-NCI stands at INR 213 crores in quarter 3 FY '24 as against INR 139 crores in quarter 3 FY '23, a strong growth of 53% on a year-on-year basis. Now screwing specific on our GCC performance. Revenue from our GCC operations in quarter 3 FY '24 was INR 2,761 crores, an increase of 14% on a year-on-year basis. EBITDA from GCC operations stands at INR 415 crores as against INR 334 crores in quarter 3 FY '23, a growth of 24% on a year-on-year basis. PAT post-NCI from GCC operations stands at INR 117 crores as against INR 109 crores in FY '23 quarter 3, which is a growth of 7%. Post the adjustments that we had called out earlier, the nonrecurring items and PAT post-NCI stands at INR 131 crores in quarter 3 FY '24, a growth of 20%.Coming to segmental performance for the quarter. GCC Hospital revenue was at INR 1,222 crores, a strong increase of 15% year-on-year basis, and the EBITDA stands at INR 210 crores compared to INR 171 crores in FY '23 quarter 3, a growth of 22% with an EBITDA margin of 17.1%. Our new hospitals that went operational late last year are seeing better performance while mature hospitals are seeing higher occupancy. Overall, GCC Hospital occupancy has increased from 50% in quarter 3 FY '23 to 58% in quarter 3 FY '24. GCC Clinics revenue stands at INR 792 crores, an increase of 20% year-on-year basis. EBITDA for GCC Clinics stand -- segment stands at INR 180 crores compared to INR 142 crores in FY '23 Q3, a growth of 27% and EBITDA margin of 22.7%.GCC Pharmacies revenue stands at INR 932 crores, an increase of 12% year-on-year basis. EBITDA increased from INR 98 crores to INR 118 crores, an increase of 19% on a year-on-year basis. EBITDA margin for this segment in quarter 3 FY '24 was at 12.6%. GCC net debt stands at USD 155 million as at 31st December '23 compared to USD 163 million as at 31st March '23. The capital expenses for FY '24 quarter 3 were at INR 78 crores.Now I would request joint CFO, Mr. Sunil Kumar, to take you through the India performance during the period. Thank you.
Thank you, Amitabh. Good morning, everyone. For the quarter ended 31st December '23, India revenues have increased to INR 949 crores, up by 23 percentage from INR 771 crores in Q3 FY '23. And operating EBITDA has increased to INR 168 crores with a margin of 17.7 percentage compared to INR 123 crores with a margin of [ 15.9% during ] Q3 FY '23 with a growth of 37 percentage. PAT post-NCI for the quarter 3 FY '24 is at INR 62 crores compared to INR 30 crores in Q3 FY '23 with a growth of 105% year-on-year.For the 9 months ended 31st December '23, India revenues have increased to INR 2,721 crores, up by 25 percentage as compared to 9 months FY '23. And operating EBITDA has increased to INR 453 crores with a margin of 16.6 percentage as compared to INR 342 crores in 9 months FY '23 with a growth of 32 percentage. PAT post-NCI for 9 months FY '24 is at INR 153 crores compared to INR 99 crores in 9 months FY '23 with a growth of 54% year-on-year. We have been actively pursuing margin expansion in our hospitals by implementing rigorous efficiency measures in the areas of revenue assurance, material costs and other overheads. This aims to enhance revenue, optimize operational costs, improve [ ROCE ] and ultimately strengthen the overall performance of our business in India. This is evidenced in the performance of our hospital and clinical segments.Specifically the revenue from India hospitals and clinical, excluding the O&M asset-light hospitals, stands at INR 869 crores in quarter 3 FY '24 with a growth of 19% year-on-year. And the operating EBITDA stands at INR 181 crores with a margin of 20.8 percentage as compared to INR 143 crores in Q3 FY '23 with a growth of 27% year-on-year. ROCE for this segment stands at 21.8 percentage in quarter 3 FY '24, trailing 12 months compared to [ 17.9% ] in the same period last year.Moving on to the performance of our mature hospitals operating for over 3 years. For the quarter ended December 31st, 2023, revenue rose to INR 816 crores, marking 16% increase from [ INR 705 crores ] in quarter 3 FY '23. Operating EBITDA climbed to INR 177 crores with a margin of 21.7 percentage compared to INR 141 crores with a margin of 20.1 percentage in quarter 3 FY '23, reflecting the growth of 26 percentage. Furthermore, ROCE of mature hospitals showed a significant improvement, reaching to 27.1 percentage compared to 19.2% in the corresponding period last year.For the first 9 months of FY '23, capital expenditure amounting to INR 287 crores has been incurred, with nearly 60% allocated to expanding our capacity. Aster net debt stands at INR 632 crores as on 31st December '23 compared to INR 510 crores as on 31st March '23.On that note, I conclude my remarks. We would be happy to answer any questions that you may have. Now I request Balachander to open the question-and-answer session. Thank you.
Thanks, Sunil. We can move on to the Q&A session. [Operator Instructions] Moving on to the Q&A session. The first question is from [ Sanjay Shah ].
Yes. Am I audible? Sir, I'm audible?
Yes, Sanjay. You're audible now.
Sir, I would like to understand the strategy for the Aster India. And as you highlighted, the growth path on the -- increasing the bed counts. And -- can you elaborate how we are planning for next 2 years, 3 years on hospital side, lab, and even our pharmacy? And -- that was my question. And more it was related to -- we came across the interview that you are planning to even invite some strategic partner or as a promoter to carry forward this growth story. So can you highlight upon that, please?
So thank you. Thank you, Sanjay. Maybe Dr. Nitish, I can ask you to answer the India strategy and talk about the path.
Yes. Thanks, Alisha. So, Sanjay, in our earlier presentation also, we are focused heavily on future plans. To put it in action, our future plans is to be among the top 3 in India. That's -- our vision is very clear in the next 5 years. We want to be top 3 in India. Having said that, the immediate plan is to ramp up the existing capacity beds. That is from 4,800 to close to 600 -- 6,600. We are planning to kind of roll out 1,700 beds in the next 3 years by year 2027. This is the combination of brownfield and greenfield projects.60% of the beds are going to be added as a brownfield. Our brownfield, when I say brownfield, it is the expansion of the existing capacity of the existing hospitals, like we are adding beds in our Kerala cluster, Medcity and a few of our hospitals there. And also we are expanding the capacity in the hospitals in Karnataka.And also we are planning a greenfield project, basically in Kerala, we are adding close to 600-bed hospital. To start off, it's 460-bed in Trivandrum, and then we are adding a 250-bed hospital, all part of Kerala in [indiscernible]. These are the greenfield projects. This is the plan we have, but we are also open for further inorganic expansion in our adjoining geography. We are dominantly present in 3 states now, Karnataka, Kerala and Andhra. We have some presence in Maharashtra also and Telangana, but we are also actively looking at expanding our footprints in the neighboring geography.But also, we are also looking at having presence in Northern India in a state like Uttar Pradesh, and also we are very actively looking at opportunity in Maharashtra through [indiscernible] which can help the M&A. And coming to the labs and the pharmacy vertical, this is something we have started to create an integrated health care ecosystem around the hospital. This is basically to enhance the patient experience and convenience.So for that reason, we have deployed close to 230 -- 223 lab and lab experience centers and then around close to 230 pharmacies. And these -- all these pharmacies and labs are located around the -- located in a geography where we already have a presence in terms of having the large hospitals. So this is the plan now. But right now, we are focusing on pharmacies and lab to kind of break even, bringing the financial viability and sustainability, which we are confident of doing it in the next quarter itself -- this quarter, quarter 4. And when it comes to pharmacy, we might take another years to -- year to break even. But at the same time, we are expanding our footprints in other geography through hospitals. We'll be also scaling up in terms of lab and pharmaceuticals in another geography.
Sir, when we talk about growing our bed counts, especially in Tier 2 and Tier 3 cities. So is the rising cost of the bed, is that proposition works well for us or we are going for some light asset model? And the other thing was about pharmacy. How do you see that change? Are we planning to go into B2C for general pharmacy or only to the customer or the patient who are in-house in our hospitals that only is our forte?
I mean, it's a combination of both. We are -- it's both B2C and B2B, because we're deploying this pharmacy on a stand-alone basis in the geography where we are present. So it will cater immediately to the B2C in the geography where we are present, but also we are leveraging on our B2B advantage what we have in terms of brand presence and brand pull.
And about Tier 2, Tier 3 expansion?
Yes, Tier 2, Tier 3, see, the biggest strength of Aster, if you really look at us, 60% to 70% of our beds are in the Tier 2, Tier 1 cities already. And only 30% of our beds are in the metro. We have that expertise to make a working model, a viable model, a successful model in the Tier 2, Tier 1 cities. That gives us a tremendous confidence in kind of exploring the opportunities in Tier 1, Tier 2, Tier 3 cities, which we have already done through asset-light models. We have done -- deployed 4 hospitals through different, different geographies. We have done two of those in Kerala, one in Andhra and one in Karnataka.It is -- we had a mixed response to that, 50% of the models have done well and 50% are taking some time to kind of reach a state of giving us the confidence to pursue this model. Early days now, but we are -- now we are in the phase of just observing how this model will play out in the next 1 year. But we are confident post 1 year, this model will demonstrate the viability in terms of -- we have -- these models are asset-light because it might not generate enough margins in terms of EBITDA, but these models are good for ROCs, return on capital employed. So we are looking at this model closely, but probably in a year down the line, we [Technical Difficulty].
Yes, appreciate. So my last question was regarding, are we -- any landmark we have received or -- on getting any [ leads ] or any inquiries about our strategic partnership in Indian -- for Indian operation?
I would like to request Alisha to take that.
Sure. Sure, Nitish. So Sanjay, I think we've been very lucky as Aster. We've had a couple of PE, who've been partners with us over the last 10 years, 15 years. Of course, with all PEs, they do at some point exit. We've had some people who've been with us for a long time. So at that point, we would look at having someone else join us. We are trying to look for the right strategic partner for us who would be able to assist us in further value creation as we are now looking at the India-only strategy. So early days, but we hope that we'll have someone coming on board when the time is right.
Sanjay, just also wanted to add to what Alisha mentioned.
Sure. Sure. Sure.
We are seeing a lot of interest coming in from the PE investor side as well. So there are many PE investors who are showing keenness to come into this kind of opportunity, but we are also evaluating from various perspectives on what partner will make sense for our long-term growth journey.
Great. Great. Good luck to you, sir.
Thank you, Sanjay. The next participant who is asking the question is Amrish.
Thank you for the opportunity, and congratulations on a good set of numbers. My name is Amrish, and I'm an individual investor. Permit me to nitpick on the sequential numbers. If you could throw some more color on the Karnataka operations? So just on a sequential basis, the financial results are a little muted, partly I understand because of the Whitefield expansion. But also if I look at the operational metrics, if you could shed some light on the operational beds have gone down and our PECs have reduced quite significantly from, I think, 76 to 50. Is there something to look at over here or is it just a one-off?
Thank you, Amrish. Sunil, maybe you can go into the...
Yes. Yes. I'll start with that, maybe Dr. Nitish can add to this. So Amrish, thanks for the question. So with respect to Karnataka, Maharashtra, yes, right? See, Karnataka, Maharashtra, you know -- all know that quarter 3 is a quarter of festivals right from October to November to December, we always see that occupancy dip happening there, right? And when you look at the occupancy and also that is a dip which has happened, that is reflecting on the little bit of the numbers also. For example, CMI had a, I think 8 percentage to 10 percentage dip specifically due to the festival season.And also, yes, that Whitefield coming into picture, it's diluting at the cluster level margins also. But quarter 3 or the 9 months when you look at, we are at 19.4% margin, operating EBITDA margin for Karnataka and Maharashtra cluster. But if you exclude the Whitefield, we are at 22.2%. So that way, we are quite strong there. And also we're already seeing that Jan numbers coming in, we have a very good month across the India, not only Karnataka, Maharashtra. That is one bit of it.Now coming on the other FPEC numbers, yes, [ FPE ] numbers have come down. I think we are on the peak, we were at something like 250 plus, now it has come down to 223, 224. And that is basically because we have closed on certain franchisee collection centers. So you already know that out of the 220-odd numbers, we have 16 labs that is the processing labs and balance 208 is basically your collection centers, which we call as patient experience centers. And these things usually are done through a franchisee, company doesn't invest in it. And you always know when you do a ramp up, you always look at, the other franchisee partner also looks for a breakeven very quickly.For certain locations it may not really work well. Those cases, we are trying to either close down or shift from that location to another location. And that is the changes which is happening due to which only the numbers have come down.
And the operational beds in Karnataka, is there anything to read in that?
Operational beds, yes, no, no. It's -- basically, it has happened in Madegowda Hospital. Aster G Madegowda Hospital had a total bed capacity to 100 beds with operational beds of 89. Now currently, its occupancy is quite low, right? So when I say occupancy is low, it's between around 20-odd beds. So we can't keep all the 100 beds operation. So we ensure that to save the cost, we have [ caught down ] of certain beds basically and only kept around 40 beds as currently operational to drive that.
Okay.
Thank you.
Second question, just a broader question on the use of funds. So we're going to pay out 70% to 80% as a dividend. The balance 20% to 30%, is this as Dr. Nitish has already highlighted that perhaps we will use this for inorganic or will we use this to reduce debt or is there any other plan for this at the moment?
So I think Amrish, we're still working with the Board to look at what evaluate the opportunities, like what Dr. Nitish said, we'll have to be opportunistic in some of those decisions. So of course, there will be a small fund that is available post this. But though it's still kind of -- Board is still evaluating the various options.
I wish everyone the best.
Thank you, Amrish. The next question is from [ Bino ].
Yes. I hope I'm audible.
Yes, Bino, you are audible.
Okay. Great. So I just had a question around the broad strategy thought behind getting a PE partner in. So you already have a pretty good expansion plan in place, adding almost 40% more to the capacity over the next 3 years. You have identified the geographic areas where to grow, et cetera. How would this change? Suppose you actually get in a PE partnership, how will that investment change the strategic direction and how would it accelerate things?
So if I can take up this, Alisha? Yes. So Bino, thanks for the questions. As Dr. Nitish laid out, the organic plans are pretty much in place and the cash that business is generating, the India is generating, I think would be kind of self-sufficient to be able to help us deliver on the organic growth plan. So I think the PE partner will kind of help more on the inorganic front and some of the other new age initiatives that we may want to take up in future. So I think it's more going to be an add-on to what our existing strong growth plans are and how we can create more value for our shareholders in future for those initiatives.
Thank you, Bino. The next question is from Alankar.
Yes. This is Alankar Garude from Kotak Institutional Equities. Sir, my first question is, now we have delivered a pretty strong 20% EBITDA margins in a seasonally weak quarter in the India business amidst the -- I mean, despite all that expansion which you have carried out in the last 12 months or so. Now going forward, there is, as you said, that further expansion planned, then on top of -- I mean, within that expansion, it's going to be a mix of 40% greenfield and some of the low-margin O&M asset-light hospitals as well. So just if you could help us understand how the EBITDA margin trajectory given all these moving parts in the India business is going to be over the next, say, 2 years to 3 years?
Yes, Sunil?
Yes. Thank you, Alankar, for the question. Yes, so what you said is very right. For the Hospital and Clinics segment, right, we've closed the quarter at 20.8 percentage and for 9-month period, we are at 20.2 percentage. And even at the consolidated level, we are at [ 16.6 percentage ]. And one of the things which we are able to expand margin, margin is basically because of the multiple measures which were taken internally, whether which I talked about in my speech also on certain optimization measures, whether it's revenue assurance or whether it's the man -- material cost savings. So material cost savings also, we have driven down from a highest of 25%, now it's, we are doing at almost like 21%, 21.5%. So we -- all those things are resulting in margin expansion. And we see that still a lot of scope is there in terms of manpower and other overheads, which we are trying to do that now.And keeping that in mind, when you look at the margin expansion, I can't give exact numbers, but broadly, what we see, see, we also have to understand that, as Dr. Nitish called out, our 70% of the beds are in the non-metros and only 30 beds are in the metros. But still, we have a very good ARPOB of almost INR 40,000. And also with the large brownfield expansion happening in coming years, next 2 years to 3 years, we see that there will be no much of EBITDA track or margin track. And including all the expansion of 1,700 beds, we are looking at in the next 2 years to 3 years, approximately only in the hospital and clinic segment, we are looking at at least 300 basis points to 400 basis points expansion, which is expected in the next 2 years to 3 years.And in terms of consolidated also, we can look at beyond that numbers because one of the things which is dragging the -- at a consol level is the new verticals, which we started like labs and pharmacy. So those are expected to stop the cash burn. With that added to advantage, we should grow beyond 20 percentage in next 2 to 3 years. I hope that answers the question, Alankar.
I think that very mindful, just to add to what Sunil said about making sure the margins continue to improve. So I think we've designed the expansion also very much to ensure that there is no drag. I think they've got sufficient capacity now, still got utilization to go as well as like what Sunil mentioned with all the cost-saving initiatives. We don't expect the -- any expansion that we plan to do over the next few years, which are penciled in to have a drag. So we would only see a margin expansion happening going forward.
Understood. That's helpful. Maybe just taking that point further, if you have to break down our margins across the 3 clusters in India, even the flagship cluster, we are at 21%. And I think in the previous call, we did allude to certain factors, which lead to the Kerala cluster margins being lower than what we would have ideally like. And then on top of that, we have Karnataka, Maharashtra and Andhra, Telangana, of course, is clearly suboptimal. So when you talk about this 300 basis points, 400 basis points, are there any low-hanging fruits across some of these clusters, which you would want to specifically highlight?
Sorry. Yes. Alankar, see, when you say low hanging, what we are seeing is that it's all about the occupancy, right? If you look at currently, we are at a very optimal capacity of 68 percentage, 69 percentage, or 70% in the current quarter. And every occupancy, which increased the volume will drive down or the revenue -- incremental revenue which comes in, we see majority of it coming down to the bottom line. And specifically, for example, when we talked about expansion, we have a 100 bed expansion happening in Kannur. See, Kannur is very near to in the higher teens is what the EBITDA margin is there. With adding 100 beds, what will happen is that there's no fixed cost increase because of which we can expand the margin faster there.Then also Aster Medcity, which is running at approximately 90% occupancy, there also we're running 100 beds there. And that is expected to get operational in the next 6 months or 7 months' time. With that coming also, we are looking at our margin expansion very quickly because you don't have to add too many manpower, except for the direct manpower like nurses and few junior doctors. Majority of your consultants, senior consultants already there. So again, we don't see that.Same thing, which is going to happen in our Whitefield also. Whitefield was a new unit started. The cash burn, what we expected compared to that, we are doing really well there. And even the ramp-up which is happening there in terms of occupancy volumes and the revenue is really good. It's going fine. It will hit the numbers faster than CMI, what it took almost 6 years. It can do it really early.So keeping that in mind, we see major expansion margins coming in Kerala because of the brownfield expansion and even in Karnataka and Maharashtra cluster also, because all are reached a very mature stage in the occupancy, where the increment revenue, the flow-down which will happen to the EBITDA is quite high.
What Sunil has made his observation, other low hanging fruit is in care. See, 70% of our patients are cash [indiscernible] because of our presence in Tier 2, Tier 3 cities. And then earlier challenges was also the minimum wages of the nurses, which has impacted our margin, but that has to be corrected. Market has to observe that. So there is a headroom to correct the pricing. If you really look at the ARPOB, how the ARPOB [indiscernible] year-to-year in Kerala, that will continue to grow. In fact, it will do better in the coming months. That's another easy part. But we need to be mindful of the main capacity of the geography. But going by what we have -- our previous experience, affordability is not a major challenge in a state like Kerala. That's another upside we have, which is going to unfold in the next months and years.
Understood, sir. One final question, if I may. If -- so given that, say, 30%, as you said, of our beds are in the metros, if you have to compare, say, Aster Hospital in a Tier 2, Tier 3 market versus, say, your hospital in Bangalore. In terms of the clinical mix, the surgical specialty mix, how would you broadly compare these 2, I mean, sets of hospitals?
Yes. Let's take an example of flagship hospital, Medcity, which is the Tier 1 city. It's not in the metro. But when it comes to clinical competence and specialty mix, it's at par with the metro hospital in terms of the competency level and also specialty mix. There's nothing that Medcity can't do where it has to be referred to the hospital in metro Bangalore. In fact, it's par in certain areas, it is better than any of the metro hospitals because of the clinical talent and infrastructure what we have there.Beyond Medcity, even in the Tier 2 cities like Kannur and Calicut, the work we are closing towards being a quaternary care hospitals there. When I say quaternary care, robotic surgeries, organ transplant, all this work are happening in the Tier 2, Tier 3 city of hospitals of us. So that's a conviction of what is going to happen in the future and how the things are going to evolve. I think Aster reflects what is going to play out in India in the coming years in the future. What happens in Aster is going to happen in the Indian healthcare landscape across all the states also. But I think we will be the flagbearer of this change. And we have that conviction that what model we have created is here to stay and is going to work going forward.
The next question is from Naman.
And just a follow-up on the previous participant's question. Sir, first is on the beds and expansion side. So we have almost 4,800 bed capacity in India, and we have operationalized around 3,500 beds. So how many and where are the major beds operationalization we are seeing from the existing bed capacity over the next 3 years?
Yes. Thank you, Naman. See, when you looked at 4,800 beds only, if you say 3,500 beds, what you're looking at is operational census beds. There are also another 900 plus non-census beds, which is operational. So if you look at that way, almost 4,500 beds are operational, okay? So capacity, which is yet to operationalize, which already have the capacity equipments or the medical furniture already ready, we have to just operate, that is somewhere between 250 beds to 300 beds. That is basically in 3 places. One is in the Andhra, that is Guntur. Then you have our newly opened Aster Whitefield hospital because in the Phase 1, we opened almost 350 beds. Another Phase 2 is there, which is in work in progress, which is 150 beds. Out of 350 beds, we are only operationalized 140 beds to 150 beds. Still there is a scope to operationalize. Another 50 beds, which is pending is our Aster G Madegowda hospital, which is a O&M asset light. So Naman, I hope that answers the first part of your question. What was the second question?
Yes. Second part is out of the pipeline of 1,700 beds, how much is it brownfield and greenfield?
So as of now, we'll look at almost, I would say, see, when you say greenfield, really, which we are driving it is basically coming in the capital, our Aster Capital, Trivandrum, that is the 450 beds, which is greenfield. Then you have got in another in the north of Kerala, which is Kasargod, which is 264 beds or 254 beds, which is the greenfield. Otherwise, the majority of is the O&M projects or the brownfield expansions, which we are doing.
Got it. And one last question. So as per your PBT, we have seen there are quite a small -- few smaller format hospitals. And there are 4 to 5 hospitals which have a huge bed capacity of more than 300 beds or 400 beds. So we have seen hospitals talk about building larger format hospitals to have a larger operating leverage. So any thoughts around this strategy that we would look going forward, increasing our bed capacity to hospitals, which are just currently 100 or 200 bedded and moving them to 400 beds, 300 beds capacity to get a major leverage?
Yes, Naman, you're right. The larger format hospital makes more sense in terms of financial viability and return on investment. That's the way forward. But if you really look at our strategy, we believe in a cluster approach where we are focused on particular geography and maximize our footprint there. In that context, a combo of both large and mid-sized hospital always helps. It's pretty acts like a hub-and-spoke model. But if you're going getting into entirely a new geography, a large format hospital is a must. That's we have learned over a period of time. Now, we believe in that. That's a way of model going forward.The smaller hospitals, when you talk about smaller hospitals in Aster group, it's all, all about. Apart from the asset-light, it is a mid-sized hospitals, which are in the range of 200 beds to 300 beds. Right now that's an ideal capacity in a Tier 2, Tier 3 cities. But when it comes to metro, a hospital of 500 bed is a prerequisite and a must now. In that context, the mix what we have is right. But if you are going to new geography, we'll be pursuing a larger model, but in the area where we are already dominant, we are not averse to adding a hospital of size of 250 beds to 300 beds.
[Operator Instructions] The next question is from Harith.
So my first question is on the labs and pharmacies division. So can you give a sense of our plans in terms of network expansion both on the pharmacy side as well as the lab business? When I look at the pharmacy count as of December '23, it's declined a bit on a Y-o-Y basis. So is there any change in thought process there?
Doctor, he is asking about -- yes, see, I'll just add -- start with the Dr. Nitish, you can pitch in on the strategy bit of it. So Harith, with respect to the pharmacy bit of it, at the peak level we were at 257, now we are at 220-plus. When you open a retail stores, we have to see that the yield per day per store, right? It has to increase at an expected number. When the ramp up is slower, we try to do certain corrective measures to see that we can optimize on the revenue generation.If that is not working out then there is no point in staying that location and burn the money. So the idea is to relocate those locations.At the same time, we always told that we are not trying to be a standalone pharmacy chain. That is not the idea at all. The whole idea of bringing the labs and pharmacy was basically to ensure that we build an ecosystem around our hospitals, so that from the initial tele consultations to the OP and IP procedures and also the post discharge, the lab collections or the pharmacy delivery discharge medicines or even you have got the chronic patients regular medications, those deliveries can happen. So as we said that currently 220-plus pharmacies are spread only in the Karnataka, Kerala and Telangana region.So we will be only expanding the pharmacies wherever the states or the cities where the hospitals are present and build ecosystem. And according -- and as per that our strategy next, I think we have told that 6 months time we already more or less finalized the app also, our myAster app is coming to India. With that launching in, I think we'll be able to really augment the revenue beyond the services, which we are looking at in terms of the growth.
I would like to add to what Sunil mentioned. See, the health care now can't be constrained to the hospitals [Technical Difficulty] need to take the health care [Technical Difficulty]. For your convenience -- one is the convenience and then this is the benefit it brings in terms of service availability. Now, we have created these pharmacies and labs to address this requirement of the future, one. And also at the same time to increase the patient, the experience of the patient who come to a hospital.Now, having said that, we deployed this pharmacies and lab in a very short period of time. Just 2 years period, we scaled up to 250. We need to get it to the critical size so that the utility of that particular vertical is experienced by the patients. So we had, having said that, when we deployed 250 to 300 pharmacies and labs, some we got it perfectly right. Few we couldn't get perfectly right because of the locations. And also at the phase what we have grown, there are certain back end areas we need to tighten, which right now we have started doing it. And then also focusing -- parallelly focusing on revenue enhancement.So, as we speak now, that has been done in the lab with the pharmacy -- with the virtue of the way the business is and the competition, which prevails in the market, it might take some time for us to go there to break even. But we are committed to this model and we are going to keep continually focusing on this model to strengthen our integrated healthcare ecosystem. Now, of course, later we are going to use this model to leverage our digital app experience of a patient. This is basically considered to give the patient experience and then make our model future proof.
Okay. So the INR 75-odd crores of revenues that you have for the segment, how would that break up between the 2 businesses?
Yes. Harith, for example, we closed INR 74 crores for the labs and pharmacy and around INR 3 crores EBITDA loss. So out of INR 74 crores, broadly around INR 30 crores is what is coming from the labs and balance is the wholesale pharmacy.
Okay. And, Sunil, one more accounting related question. If you can share the Ind AS benefit, that's there in the India P&L, so that we can calculate the pre Ind AS EBITDA for maybe the third quarter or the 9 month FY '24 period?
Sure. See, broadly, when you talk about Ind AS benefit, there are 2 parts. I'll give a very broad number on the yearly number. You can break it up into the quarters. See, Ind AS rent reversal, what we get is approximately INR 65 crores to INR 70 crores. That's a fixed rent, which gets reversed because of the Ind AS benefit, which we're getting it. At the same time, there is a variable fees also, which is coming approximately on yearly basis, around INR 28 crores to INR 30 crores. That doesn't get reversed. That's where we show and call out that separately.
Yes, understood. And the transaction, the divestment of GCC business, when do we expect the transaction to close? Any rough time lines that you can share?
Amitabh, do you want to...
Sure. Thank you, Alisha. So Harith, we are in the process of completing the CPs. Presently, we've made substantial progress on that. A couple of them are near completion. So we expect this to sometime happen in the month of late February or early March.
We'd like to highlight that we'll be giving preference to attendees who have not asked a question before. So in that line, the next question is from [ Rishabh Tiwari ].
Just a follow-up on the Ind AS discussion. I see that in the quarter 3 in India part, I think the Ind AS impact is around INR 12 crore. In one of the calls earlier it was mentioned that the quarterly impact is around INR 6 crore in India. If you could just throw some light on the current Ind AS impact that we have in GCC as well as India?
Well, I'll give the India numbers, Rishabh. As I told for the previous caller also, it is somewhere fixed rent which gets the impact of the post Ind AS 116 impact. That is approximately coming to INR 65 crores to INR 70 crores. Because, see, Whitefield, we added very recently, right? Those are numbers kept changing. That's why I'm giving a yearly figure to you. Approximately INR 65 crore to INR 70 crore is the rent reversal which we have. That is a fixed rent. All above that we also have certain variable rent specifically in certain O&M assets and specifically bigger number which is coming from the our CMI & RV Hospital. So that is on a yearly basis is amounting to around INR 28 crores to INR 30 crores.
So that means around INR 100 crores of impact yearly in Ind AS?
Yes.
And what would the similar number be for GCC?
So in GCC for the YTD December, there's a rent reversal of almost [ $142 million ], that sits over there on AED terms. So close to INR 300 crores.
Okay. INR 300 crores for 9 months?
Yeah.
If you could also just give some color on the corporate cost that we incur in India, and how would that be impacted post the demerger of GCC business?
Rishabh, currently the corporate cost what we incur is approximately 1.4 percentage to 1.5 percentage on our top line. That is a number. And we already have a very full fledged team currently as Chairman has been always calling out. We have 2 different leadership teams for handling the GCC in India. So it's not that the cost is going to -- yes, there are certain roles will come into the picture. Certain cost also will increase. But that will not be having a too much impact. When I say, currently 1.4%, 1.5% is with the complete leadership team, including the salaries and the other corporate related costs, it's coming to 1.4 percentage to 1.5 percentage. We see approximately another 20 basis points, 30 basis points impact. That's it. So there is no major increase, which is expected to happen with GCC segregation.
This is for India business or was this for consol?
This is for the India business, which I'm calling out specifically.
The next question is from Jainil Shah. Jainil, if you can unmute yourself.
Hello?
Yes, Jainil, please.
My first question is on the payer mix. Can you give out the payer mix cluster wise?
I hope you're asking for the India thing?
Yes.
See, across India, we have a payer mix wherein cash is -- cash or walk-in patients, what we call is coming to approximately 48 percentage. And TPA insurance is approximately 27% to 28%. And we have an MVT of 5.4 percentage. And schemes, various state government schemes, then ESI, ECHS, CGHS, all put together, ranges between 5 percentage to 6 percentage. So that's a broad payer mix across India.But when you look at Kerala itself, the cash percentage is quite high. Approximately, we can take somewhere between 65%, approximately will be cash because North Kerala has got almost 80% plus cash. In the Central Kerala, we have got only 60% cash. So that's where we still have majority cash there. And on balance will be the TPAs. And specifically, in terms of MVT, the Central Kerala does approximately 10% of the business as the MVT business, in Bangalore it's approximately 4 percentage to 5 percentage. And in case of Bangalore or the cluster, the payer mix will be something like 40% cash and balance is credit.
Sure. That's helpful. And what is the pricing position and strategy going ahead in each of these clusters?
See, as I called out, still we have almost 50% to 60% cash. So we have that room to take the price increase. And what we also seen that is that post-COVID, the insurance ramp up is quite high. At the same time, we don't have the burden of handling the large government schemes. As I said, it's only between 5 percentage to 6 percentage. So keeping that in mind, even in the terms of insurance, yes, you don't get every year increment. It's maybe 2 years to 3 years based on the contracts what we have with different insurance providers. And every year -- every two years to three years, we get a good increment of anywhere between 8 percentage to 10 percentage there.At the same time, in the cash, we take the usual inflation, which is expected to be somewhere on between 8 percentage to 10 percentage increase, which you take on the cash patients. So that's where you can see that ARPOB growth has been very consistent for last 5 years. We're able to go at a consistent 9% ARPOB growth. Even in the current 9 months when you compare to the previous FY '23 9 months period December, it's a 9% ARPOB growth which we had.
So this 9% would be sustainable?
It's sustainable, 8% to 9% is very much sustainable. And if you ask in the current 9 months period, actually the ARPOB growth is more than 12 percentage considering the optimization initiatives, which were taken on the revenue assurance. But that's not reflecting because of the lower ARPOB from the O&M asset lights, because O&M asset light where we have in the Areekode or a Kollam, or Mandya and Narayanadri hospital which is in Tirupati, there the ARPOBs are just around 20,000. So that has got almost INR 2,000 ARPOB impact at the India level. So if we exclude that we are at all more than 10 percentage. So we see that in the future, somewhere around 8% to 9% is very much achieved.
Jainil, I would like to add here, see, there's a general perception that the insurance penetration increases if the patient comes down, challenges the ARPOB. But for us, what we have seen is because we are basically a quaternary care center, we focus on high end cases like transplants or robotic surgery. Insurance penetration helps us in getting this category of patient affordability and accessibility of this patient who improves with insurance, especially big ticket procedures. So that is another reason which also contributes to the expansion of the ARPOB or the growth of the ARPOB.
Makes sense, makes sense. And just one more, 2 years down the line or 3 years down the line, what according to you would be the difference in the ROCEs between your O&M asset light model and O&M hospitals?
So currently our O&M matured hospitals have a ROCE of more than 30 percentage, Jainil. But in case of the O&M asset light projects, you see, to read 30%, it takes around 5 years to 6 years from the start. But in case of O&M asset lights, even in the first year, the 2 out of the 4 hospitals, which we have in the O&M asset light, 2 are already positive and broken even almost doing near 10% EBITDA margin. There the ROCEs are already being double digits. I'm talking about somewhere between 10 percentage to 15 percentage is the ROCE already which we have.Going forward, we see already at the hospital level we have a 21 percentage ROCE and mature hospitals are already at 27 percentage. And we see that across India we have about 15% is the ROCE and that's going to expand into about 20 percentage going forward.
Okay. And just one last, if I may. What would be the difference your in house business versus non-Aster business in your labs and pharmacies?
See, pharmacies are specifically, we see -- currently the standalone pharmacy within the hospitals are already captured under the hospital revenue itself. So it's not outsourced to the pharmacy. So whatever the pharmacy revenue, which we do, it's all non-Aster. But in case of the labs bit of it, 75% is the Aster and 25% is the non-Aster.
The next question is from [ Puspendu ]. Puspendu, can you please unmute yourself?
Yes. Can you hear me?
Yes, Puspendu.
Yes, I have a 2 part question, mainly on the Indian business. See, currently the Whitefield, Bangalore and the new age hospitals are not making profit and they are not contributing towards bottom line. So how soon can these new hospitals will start generating profit at the net level?
Yes, Puspendu. Puspendu, Whitefield ramp up has been quite good, as I already called out. We expected a higher cash burn, but from our budgets we are looking at only less than 40 percentage is what we are spending with the good clinical set of doctors, what we've have from the oncology to the neuro to plastic surgery. The ramp-up has been very fast and we expect that the break even or we will not start losing money within I would say 12 months period should be good enough here in Whitefield.
Sure. And what would be the revenue guidance for the next year for the entire operation of India business? So for FY '25, how should I look at the Indian business on a revenue front?
So, Puspendu, I think we generally try to not give any specific guidance, but I think we are on a pretty good trajectory of growth as well as EBITDA margin improvement. You can see the last few years how the business has ramped up. So I think we generally believe that we'll continue to be on the similar growth path and the margin improvement is kind of likely to happen along with the growth happening. So that's how we would like to comment on this.Probably, Sunil, if you want to add anything, but I think we would stay away from giving any specific guidance.
No, Nitish, I think you're right in that aspect. Historically, we've grown at a 20% CAGR in revenue and almost 30%-plus EBITDA. We expected to have very strong performance in a couple of years.
Why we're asking this question is that because Bangalore and new age hospitals will keep on making losses? And then how are you planning to improve the profitability after incurring losses from this metro hospital likes of Bangalore?
See, Puspendu, if you look at the current losses, what we're incurring, except for the Whitefield, there are no other major losses apart from the 2 O&M asset light and their losses in few lakhs of rupees, not even in crores. So first of all, O&M asset light will not be a drag. Already we have gone into positive margin in the quarter 3 with the publishing almost 4 percentage EBITDA margin already we'd achieved. So we don't expect a major drag because you're not adding many more beds in that particular category.So coming to back to other than O&M, the drag is only from the Whitefield, which I said it's not a major point. So that's where I was very confident in the previous comment which I made, that we are looking at a very good expansion. Already we are at a 20.8 percentage in this quarter and a 20.2 percentage for a 9 months period in hospital and clinical segment. And we expect at least another 300 points, 400 points increase in the next 2 to 3 years period.
I was just trying to add on to Sunil's point. This Whitefield, I think is probably one of the fastest ramp up that we're seeing across our major hospitals. I think it is ramped up really well even in the first year of its operations. And I think the margin should be kind of coming to the Bangalore cluster margin very soon, in next couple of months or probably a year or so. And if you look at the other places, especially in Kerala, the way we are adding the beds, it's mostly a large part of it is actually brownfield there in Kerala. So the kind of expansion, like in Medcity and some other units, which is going to happen, will help us amortize a lot of fixed cost and help us improve the margins because we don't have to take that many more doctors or staff to kind of ramp up the new beds that we're going to add in those existing hospitals.So these are some of the initiatives. Plus I think there are a lot of initiatives that are being taken up from the manpower cost optimization or the material cost is already kind of optimized dramatically. And Sunil and kind of team has been working a lot on the revenue assurance as well. So there are a couple of those initiatives that we are working on which is going to help us margin improvement from here on.
So if I look our peers which are available in Bangalore, like so -- like so Manipal or Apollo. So what are the revenue potential from these 2 A and B wing that we are operating now? What would be the revenue potential? Suppose if an utilization level reaches too close to 60-odd percent to 70-odd percent, just to get an idea that how impactful the contribution would be from this hospital.
So -- go ahead, doctor. Go ahead, doctor.
The Whitefield Hospital is a 500 bed hospital. If you really look at the CMI numbers, we have an aspiration to achieve CMI numbers in next 3 years what CMI has done in 7 years, we are looking at this hospital because of the clinical team. We have the location where we are and the patient mix what is there. Because Whitefield is a very affluent area. If you really look at the competition, they are also done well in that particular geography. Considering all these factors, clinical talent, structure, the size of the hospital and the location, we are expecting it to do it in 3 to 4 years time what CMI has done in 7 years.
Any revenue guidance that you want to give Mr. Shetty?
I've given you the indirect numbers
We have Alankar back in the queue for the question.
Just one bookkeeping question. If I look at the segmental results, the hospital PBT has increased significantly, I mean, both on a Y-o-Y as well as sequential basis. That doesn't seem to be in sync with the EBITDA growth in the overall hospital's business. So can you please help us understand what exactly has happened below the hospital EBITDA for the consol entity?
You are referring to the India segment, Alankar?
No, no, I'm referring to the segmental highlights in your results uploaded on the exchanges. So there you classify the EBITDA across hospitals, clinics, retail pharmacies and others. So if you look at the hospitals EBITDA in this quarter, including India as well as GCC, that's about INR 355 crores. Now that INR 355 crores compares to INR 193 crores in the same quarter last year and about INR 116 crores in 2Q FY '24. So just trying to reconcile that number because the EBITDA growth year-on-year and Q-o-Q doesn't seem to be so high.
Can we look at it and come back to you, Alankar? I think it must have to do with some of the larger losses in the GCC hospitals that recently opened up, shall we do the reconciliation and we share it with.
Sure, we can do that, Alisha. As you know, I'm just looking at the numbers, Alankar. So effectively, what you're saying is as of 31st December '22, the EBITDA was INR 193 crores, which is what has gone to INR 355 crores in 31st December '23. Is that what you're referring to, Alankar?
Yes, yes.
Okay. Allow us to come back, it's a combination of India and GCC numbers. I'll come with a clarification on this.
Okay. All right.
We again have Sanjay Shah again on the question queue.
Alisha, my question is to you regarding the -- have management decided on any tax saving method to distribute the fund which we receive from GCC other than dividend option?
So, Sanjay, I think we had explored various options. We found that dividends was probably the most effective one. But I would also let Amitabh maybe comment a little bit more on this.
Sure. Thank you, Alisha. So, Sanjay, as Alisha called out, we have gone through this extensive study to say what could be the most effective way to provide the upstreaming of funds to the shareholders. And the dividend came as the most tax effective from both resident as well as non-resident, because the individual tax positions come into the picture over there. While this is there, we also evaluated capital reduction, we evaluated shareholders buyback, but the dividend came out as the most tax effective from that perspective.
We have Puspendu's hand still raised. Puspendu, do you have another?
No, no, I think the hand was raised earlier, Ram ji. Thank you.
[Operator Instructions] Okay. So I think there's no more questions to the management. Thank you all. This concludes the earnings call for this quarter for Aster DM Healthcare. I thank the management and all the attendees for joining us today. If you have any further queries or questions, please do get in touch with us. Thank you.
Thank you.
Thank you.
Thank you.
Thank you.