Narayana Hrudayalaya Ltd
NSE:NH
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Narayana Hrudayalaya Ltd
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Good day, ladies and gentlemen, and a very warm welcome to the Q1 FY '19 Earnings Conference Call of Narayana Hrudayalaya Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Debangshu Sarkar. Thank you, and over to you, sir.
Thank you, Ali. Good afternoon, ladies and gentlemen. Myself, Debangshu Sarkar, and I run the Investor Relations and Mergers and Acquisitions function at Narayana Hrudayalaya. On behalf of the company, I welcome you all to our Q1 FY '19 earnings call of the company. To discuss our financial and business performance outlook and to address your queries today, we have with us Dr. Ashutosh Raghuvanshi, our Group CEO; Mr. Kesavan Venugopalan, our group CFO; Mr. Viren Shetty, who spearheads the strategy and planning practices at NH alongside Ashish Sukhija from the team. I'm sure you have gone through the results release along with the investor presentation, which have been uploaded on our website as well as on the stock exchanges.Before we proceed with this call, I would like to remind everyone that this call is being recorded and the transcript of the same shall be made available on our website. I would also like to remind you that everything said on this call that reflects any outlook for the future or which can be construed as a forward-looking statement must be viewed in conjunction with the uncertainties that -- and the risks that they face. These uncertainties and risks are included, but not limited to, what we have already mentioned in our prospectus filed with SEBI and subsequent annual reports on our website. After the end of this call, in case you have any further question, please feel free to get in touch with us.Now I would like to hand over the call to Dr. Raghuvanshi.
Good afternoon to all of you. On behalf of NH, I welcome all of you to our Q1 financial year '19 earnings call. The result of the first quarter of fiscal year 2019 are broadly in line with what our expectations were. Our operating revenues grew at over 25% year-on-year with the overseas units revenue getting consolidated while the Indian business grew at 11%, in line with the industry. The Cayman Islands facility reported a growth of over 15%. Adjusted for the expenses at the new unit, where we have heavily invested in the clinical talent and there was a temporary blip in the performance of the Cayman Islands facility where we have invested again in human resources to augment the earning potential of the unit. The profitability appears to be on track.Our 3 new facilities across Mumbai and Delhi are witnessing decent traction in terms of patient footfall, with Mumbai reporting an average occupied beds of around 60 and Dharamshila reporting an average occupied beds of about 90 for the first quarter of this fiscal and showing an upwards trend. We do remain confident about the prospects of these units. With the strategic expansion exercise, which we undertook last year across the country, we are now focused on consolidation of our Indian operations to capitalize upon the strength of our network. Operationally speaking, with the recent commissioning of our Gurugram facility, our northern region is now closely knit with the 3 super specialty facilities across Jaipur and Delhi NCR region. We remain confident that in these times to come, this region shall contribute significantly to the group's revenues and profitability.On the clinical front, we remain committed to creating regional centers of excellence by focusing on advanced ordinary care, and thus continuing to invest in state-of-art medical technology across niche specialties, such as oncology and cardiac sciences through attractive financing solutions. With these being said, we believe that we have exciting times ahead of us as we embark on our transformational journey to realize the goal of pan-India affordable quality health care provider.Coming to the clinical highlights for the period. We are pleased to witness significant progress in the direction as we continue to prioritize health and well-being of our patients. Mazumdar Shaw Medical Center in Bengaluru operated the case of Naso Orbital Solitary Fibrous tumor using trans-nasal and endo-orbital approach. Only 30 such cases have been reported in the world. Narayan Institute of Cardiac Sciences, Bengaluru performed a double lung transplant, which was the first in Karnataka state. With novel techniques like these, the facility has emerged as a prime center for organ transplantation. A one of its kind knee replacement surgery in the city was performed at our Jaipur hospital in which a special type of implant was used as the patient was allergic to metal. Mazumdar Shaw Medical Center, Bengaluru performed postaural approach, Robotic Neck Dissection. This approach does not lead to any visible scar in the neck and the incision is hidden.I'm also pleased to announce that during the last quarter, our organization was recognized at various platforms. The few key ones being the health city at Cayman Islands won the silver award in the Direct Care Provider Category at Health Value Awards in Washington, D.C., U.S., in April of 2018. RTIICS, Kolkata was ranked second in the eastern region in the All India Multi Speciality Hospitals Ranking Survey by the Times of India in the month of June 2018. Narayana Health was also awarded under the CSR Excellence in Healthcare Category at the Federation of Karnataka Chamber of Commerce and Industry CSR awards in the month of June 2018.To conclude, I would say that while the core of our business operation is well poised to deliver quality affordable health care to all sections of the society, we continue to live in unpredictable times with uncertainties affecting the Indian health care landscape, particularly concerning the ambitious health care program like [indiscernible]. However, we continue to consider ourselves well poised to go to the next phase of consolidation. Thank you.
[Operator Instructions] The first question is from the line of Charulata Gaidhani from Dalal & Broacha.
My question pertain to the lower occupancy level in the 3- to 5-year segment and the Karnataka cluster.
Yes. Charu, the 3- to 5-year segment, we have 3 hotspot facilities in this -- which where 2 of our facilities have faced particular challenges. One of them being our hospital in Whitefield where we had a little bit of degrowth, which was primarily a result of construction -- a civil infrastructure construction, which is going on in front of the unit related to the metro construction, which has partly obstructed the entry to the road which leads to the facility. And as a result of that, we have seen some shortfall in the emergencies which were coming to this facility. However, we expect this construction activity to be over within next 6 months or so. So after that, we may see a reversal of this. The other unit, which showed a negative growth, was the facility in Guwahati where the negative growth was almost to the tune of about 6 -- 7-odd-percent. And that was again a consequence of a lot of local factors and few challenges we faced on the clinical talent side. However, the facility -- the third facility within this group of HSR grew by about 15%. So we feel that we should be -- we have put several steps in place, which should overcome the problem of the growth in Guwahati. And while we might see a muted or stagnation for another period of 6 months, however, HSR shows good growth within these 3 segments -- within these 3 hospitals, which constitute this group.
Okay, okay. But Whitefield is an important component, right, for the company?
It is an important component. Every hospital is important. This is primarily in being in our key market and our key -- this one, the importance is even more. Whitefield, as you are aware, also has a good ARPOB compared to many of our other units because of the kind of clientele it serves, so that is why it is of great importance. But unfortunately, it is not much want can do because of the disruption, which has happened because of the city project happening on the road right in front of the hospital, which in the long run maybe a useful thing. But that for the next 3 to 6 months, it means we will see a suppression here.
Okay. My second question pertains to the lower ARPOB at Cayman.
Yes. The Cayman ARPOB had been slightly lower. Because of the case mix change and also because of, as I've said right in my opening, that there was a temporary blip, which was because of the little bit of issues with the island's ambulance system. And because of that, the acute emergencies, which typically have a high ARPOB, were not -- we were not able to receive them. Hence, in last about 3 weeks, that facility has been restored, and we do not expect that ARPOBs will remain low. But this was a just a case mix change because of -- primarily because of this.
Okay, okay. So you think the profitability should be restored in a quarter or two?
Yes, Charu.
The next question is from the line of Rohan Dalal from B&K Securities.
So my question was regarding, firstly, the lower other income in the quarter. I just want to understand why that was. And my second question was regarding the acquired facilities. Even though Dharamshila has reported a profit this quarter, operating profit that is, the bucket itself has seen a pretty sharp decline. So just wondering why that is.
Rohan, just to take your second question before the first one. Where did you see the Dharamshila has actually make profit this quarter?
Said that -- okay, I think it was just a typo in the presentation, sorry.
Yes, I'll just explain this to you. So when we look at our acquisition portfolio, which consist of the Meridian 2 facilities and the [indiscernible] facility and the Dharamshila facility. The 3 first facilities, which I mentioned, they have done remarkably all right and they have clustered about 12% in terms of EBITDA. However, the Dharamshila, which was positive in the previous quarter, has been negative in this quarter. And the reasons for that are that we have acquired a lot of clinical talent. We have -- we are starting the cardiac program as of this month. So we have installed a new cath lab. We have installed the new cardiac OT, et cetera. So there were lot of additions on the clinical manpower side in the last quarter. So temporarily, Dharamshila has been in negative in this quarter. Having said that, the occupancy levels have gone up. As I said that in the previous quarter, it was approximately 90, and for the previous month, it is approximately around -- turning around 100 beds. So that -- these are the reasons why this group looks the way you have described.
And Rohan, coming back to the first question, which is on the other income. I mean if you were referring to a drop of around INR 1-odd crore from the previous quarter of INR 4 crores to INR 3-odd crores, we believe this is in line with what typically we see. I mean INR 1 crore here and there are actual movement in this bucket happens on a periodic basis. This has got to do with the recast of the indirect treatment of the security deposits, and thereby, the amortization of the interest that we pay as -- along with the grant income -- or the grant commission treatment that we typically incur on account of the land that we have received from the government at Ahmedabad and Raipur -- sorry, not Raipur, Ahmedabad and Jaipur. And the fact that the interest income that we typically see on our deposits and everything. But we would tend to believe this INR 1 crore margin movement is a normal practice, and this is not a deviation from any normal occurrences that we have seen in the past.
The next question is from the line of Amish Kanani from JM Financial.
Sir, one question is, basically, our losses are led by the clusters where we are new -- relatively new, which is not on western market. And it seems to me we have a good brand equity of Narayana in the eastern and Bengaluru cluster. I think here, maybe we may have to do some more work in this cluster. So the question is, sir, the way the losses are ramping up, one, is it in line with the historical trend of any new large hospital that we are doing? Or is these 2 markets being more Tier 1 market versus the other markets and the losses are slightly higher because of the way Narayana brand is positioned? And two, what are we doing to kind of increase the visibility of brand Narayana in this cluster?
Yes. No, see, the operating situation or operating environment doesn't really change, whether it is for us as an operator and anybody else. So in terms of quantum, yes, these losses would be slightly higher than what one would make in, say, Mysore or the Shimoga. However, in terms of the trend and the pattern, it is in line with all other facilities we have established in the past. There is, however, an additional component, which has got added to the overall group's performance in this past year or so and which some residual effect has still remained, which is the various regulatory changes, which have been happening. However, we see a trend, which is pretty healthy in -- as far as the NCR clusters to hospitals are [ coming from ]. The losses within these centers are likely to be in line with what we see in the first quarter. However, the growth will be significant in terms of top line as well. But in the terms of quantum, we may possibly have similar losses. Now as these centers grow, and as I said in the previous question as well, is that like Dharamshila, for example, as well as Gurugram, we are acquiring lot of clinical talent, which is likely to result in better performances in, say, third and fourth quarter and not necessarily in the first and second quarter. So -- but that will gradually keep on going towards a more favorable ratio as we go further in the year.
Okay. And about brand [ willing ] exercise, any thoughts on that?
Yes. I think the early experience, what we have seen in Gurugram as well as in Dharamshila has been that we have sufficient brand recognition without following some of the very conventional in-your-face kind of direct advertising. But we are doing whole lot of other activity on clinical front as well as in terms of peer-to-peer word-of-mouth like medical conferences, et cetera, and also direct to the customer interface like outreach clinics, et cetera. So that is a very intensive activity, which is there. However, the challenges related to Mumbai are totally different because conceptually, this hospital is very differently placed. It's a quaternary care children's hospital. So majority of hospitals even in the space of children's hospital are focused on secondary care. So this one being focused more on bone marrow transplant, liver transplants and such other facilities, I think has to take its own cost in terms of brand building. We have made a certain kind of measures we have taken in terms of empowering some of the clinical manpower, et cetera, in order to create better brand visibility in that segment. Because in pediatric, the different pattern is a very different from a regular hospital. So this is the status of the brand.
Yes, okay. And so my second question pertains to [ Aishman ], the way it's progressing versus the opportunity. You mentioned uncertainties surrounding this. I understand that the rates offered by the government in the initial round was not so great and most of the private hospitals have rejected the kind of package, which has been announced. If you can give us some update on whether there's still is an opportunity? Or it seems it will take a lot of time before the pricing of the operations and what the government expects versus industry expects, there is time it will take to kind of marry each other.
Yes. I think it is very difficult to hazard a guess as to which direction this whole initiative is going to take and what kind of impact it may have. One point of view, which we share among ourselves internally is that this may be beneficial either way. What I mean by that is that one of the problems in the previous state-run schemes was that the controls were not very good. And as a result of that, lot of people who should probably not have been beneficiaries of those schemes were the ones who are getting the benefit. So in the current scheme of things, that part has been fixed to a large extent, at least that's what appears at the moment. So what is likely to happen is that those patients might converge to cash patients and then additional segment of patient may go towards this actual beneficiaries of scheme. And if it happens in that manner, I think it will be overall good, not only for us, but for the entire industry. However, if the controls in that process are not good and the hospitals tend to accept this kind of business, then it may be a business, which will be a very low margin, or in some cases, even a loss leader. So hospitals will have to take that call on individual unit where they are located and what kind of occupancy levels they are operating at. In some of the markets where we have very high occupancy, it may not make sense to add this low-value and low-margin business.
The next question is from the line of [ Amit Verma ], individual investor.
I have a question on Ahmedabad and then Jamshedpur. Last quarter, I believe that they were at EBITDA losses. So how have those hospitals progressed this quarter?
Yes. Both the centers have continued to underperform as the previous quarter, and we have been putting several steps in place for both the units. However, we have been successful in acquiring some really good clinical talent in Ahmedabad, and we want to see what is the result of that in the coming quarter. And as far as the Jamshedpur is concerned, we have been sort of recasting the way that -- or what services are being delivered in that hospital because this hospital has been having a very low ARPOB, whether the cost structures remain what they are. And with the inflationary pressures, the cost structure only keeps going higher. So I think this unit requires a little more analysis as to what kind of structure we will follow over here. It might mean scaling down in some ways, which we will take that decision as we continue to evaluate.
So my next question is on the strategy of expanding outside India. So I believe you were planning to do something in Africa. So the question is limited like [ with that ] -- since we are ramping up hospitals in India, which are kind of resulting in the cash flow coming down, so if you keep a time in India and then expand also in Africa and other places, so it would eventually result in those losses. So how -- what is your strategy so that you don't fall into expanding too fast and certain issues?
Yes, yes. Absolutely, absolutely. Your observation is right and our strategy is very clear. And as I said in my opening statement, that this is a phase of consolidation for us from our Indian operations. So as far as Africa is concerned, we have no immediate plans to get into any major or minor project except for the regular marketing related initiatives which we do, which is in order to have the international medical tourism patient, which travels to India. So that value travel is the focus for -- as far as Africa is concerned. So I think in any organization, and if you look historically as well, that whenever you have large ramp-up of facilities, you would have a phase of negative losses, which would sort of wipe off the hospitals which are making good profits. And that in turn -- that needs to be balanced. This company has always remained in a very conservative mode where whenever our expenses are higher, we try to calibrate and lower our rate of acquiring or getting into any new geographies or areas or units, whether it's greenfield or brownfield or [indiscernible]. So that is a persistent strategy and that will remain the strategy. Now the current 3 units which we started, out of that 2 units which are in the NCR region have shown that they have a good ARPOB. It has shown that there is a good demand for that. And it has shown that we do have acceptability also in that market. And as a result of all these things, we feel that, that -- the turnaround would happen over the next 18 months or so and that would take care of the overall cash flow situation, et cetera. So that has always been our strategy, that we go for a phase of growth and then we go for a phase of consolidation. So this is our phase of consolidation. And the established unit, the matured facilities are operating at -- all of them are operating at a margin of about 22% and more.
The next question is from the line of Sameer Baisiwala from Morgan Stanley.
I saw that the quarter-on-quarter ARPOB has gone up across maturity and across regions. Can you shed some light on this?
Yes. Sameer, there is no -- I mean, specific reason that we can attribute to that unless you highlight one [indiscernible].
Yes. So specifically, Debangshu, in Karnataka, for example, has gone up by 11% quarter-on-quarter ARPOB. So were there any meaningful price increase, or what really is driving this?
No, I don't think, Sameer, there was any specific price increase we have done, but as we had mentioned in the previous quarter, if you remember, that we are recalibrating our prices, which would, to some extent, take care of the impact of the earlier regulatory changes which we have seen. So some of that is a result of that. Some other contribution is because of little bit of change in the patient mix in the existing hospital, and some of the newer units typically have shown slightly higher ARPOB. And that is probably because of the early stages what happens you have more business happening in the outpatient and that also artificially sometimes shows a slightly higher ARPOB. But this is not a specific pricing intervention. This is more of the intervention on terms of how exactly the -- our pricing structure needed to be reworked upon, and that has resulted in some little bit of benefit on that side.
Okay, super. And this price recalibration was limited to cardiac or other therapy areas as well?
It was not limited to only cardiac. It is across the board because you see if you continuously have a situation where all kinds of things keep on getting controlled. So it is important to sort of deconstruct the whole building structure itself. So we took it up as a very systemic exercise. It was not limited only to cardiac procedures, but it was across the board. And when we have presented our concept to various insurance groups as well, they have all appreciated the idea and the concept very well. So -- and it takes care of any kind of fluctuations which may happen in future also.
Okay, great. And second question on Cayman Islands. What do you think will it take to take 30 occupied beds up, whatever, 50, 70, 80, 100 over -- in the midterm?
Yes. In the midterm, there are 2 focus areas which we are following on. There are certain Caribbean markets itself which we are focusing on. So one of them being Bahamas, and in the Central America, we are following the -- we are aggressively pursuing Honduras. And in the Eastern Caribbean markets, we are trying to focus on Trinidad. So these 3 markets are -- we have been able to get some tie-ups which we would see some immediate results. The fourth initiative which we are focusing on right now is trying to offer a capitative model for the local island population of -- which is called an indigent population which is completely supported by the government. And that population's health care spend for the government currently has been estimated to be approximately about $40 million per annum. So we believe that if we can offer them some very attractive solution, which we have tried to work out, and we get the kind of a capitative model with a fixed fee kind of thing that could give us both in terms of occupancy as well as in the cash flow and revenues a good flip. So we are trying to work towards that, and if that goes in the right direction, that would be a good thing. The second is -- activity which we are going to do over there is to try and offer a slightly wider service offering than what is currently available. In order to do that, we are going to provide a little more comprehensive cancer service over the next 12 to 18 months. So with these 2 things, we will -- with the first 4 things which I described, we would see the results in the coming, say, 1 year, and the cancer initiative would lead to results in the, say, post 18 months' period.
And just to follow up on this. I thought, also, if -- maybe I got it wrong, the big idea of having a hospital over here was to attract medical tourism from U.S., that's one. So is that wrong? And second is, for the incremental revenues that you get, I see your ARPOB is $1.5 million. So hypothetically, if you get, say, 20 beds more occupied, so, say, roughly $30 million, what's the EBITDA on the incremental revenue? EBITDA margin...
Yes. So the -- as far as the focus on U.S. market is there, it will remain. However, the U.S. market being complex and being extremely peer-driven, the traction over there has been slower than what was anticipated as a concept. However, we continue to focus on that. And we also keep on looking at certain other avenues like, for example, the Canadian market where the waiting lists are very long and sometimes as a result of that, some patients travel abroad. Now as far as your second question about the EBITDA margin on the incremental beds is concerned, that would be significantly higher, because unlike in India, the majority of costs over there are fixed in nature, including the high cost items such as the clinical talent remuneration as well. So because of that, the incremental EBITDAs could be much more than a linear growth.
Okay, super. One final one from my side, with your permission, which is for Dharamshila. I see that over 1 year your INR 18 crore quarterly revenue has moved to INR 22 crores. Just what percentage of this is in the legacy onco business? And how much of that is coming from the new multispecialty that you introduced?
Yes. In -- up till the last quarter, I would say that almost 75% revenue is coming from legacy cancer business and the new facilities we have introduced are only coming online now. Like, for example, the renal transplant program got started only in the last quarter. So we would start seeing the results of that now. Similarly, the cardiac program has started in the month of August, actually, the 1st of August. So these additional services, though are showing very good traction, like, I mean, just to give an anecdotal example, the dialysis unit is running 3 shifts already, which has been sort of been a very quick uptake because we started the enhanced dialysis unit only in the month of February of this year. So the -- but at the moment, what you see in the previous quarter, majority of revenue is coming from onco services.
The next question is from the line of [ Ashish Thakkar ] from Motilal Oswal Securities.
Just one question from my side. Sir, is there some kind of a binding on -- for the private hospitals to be part of the Ayushman Bharat Program? And second question is that, if this program goes through well, will it delay ramp-up at the new hospitals?
To answer the first question, there is no binding on any hospitals to accept this. And the second question is that it may not have a very huge impact because the patient selection for this particular program is going to be an extremely controlled event, which means that only a certain segment of patients which was currently not a cash-paying patient can get covered by this scheme, because the definitions are rigid and the enrollment process is rigid as well as there is a linkage to other card, et cetera, so the chances of people impersonating and creating false identities, et cetera, does not exist. So I believe that it may not have much effect on the ramp-up.
Okay. And by what timelines do you think a full-fledged implementation of this program could be seen?
That is difficult for us to say. Yes, that depends on when it is introduced and how well it goes. I mean, yes, so it's difficult to predict for us.
The next question is from the line of Jiten Agarwal (sic) [ Nitin Agarwal ] from IDFC.
Dr. Raghuvanshi, on the new hospitals, is it fair to say this INR 20 crore a quarter is pretty much should be a peak EBITDA loss for this 4 hospitals?
Yes. I think this trend would be almost similar. So the quantum may not increase. Of course, in terms of ratios, it will become better.
But in terms of absolute quantum, I think 20-odd, we should not be going much beyond this, I presume. Is that the right understanding, sir?
That is correct.
Okay. And sir, and how do you see this blocks are progressing? So if I take a 3-year view, I mean, should we assume this sort of gets utilized over a 2-year period or a 3-year period? I mean, how should we look at it going forward?
Yes. I would say that the trajectory is almost going to be similar except in case of Children's Hospital where it might be slightly slower than what we had originally thought of. But the other 2 hospitals will have similar trajectory. So -- but they being the -- kind of having a high ARPOB business, that would to a large extent compensate the shortfalls which may happen elsewhere. So I would say that 18 months is -- to 24 months is the period when you could expect this complete ramp-up here.
I mean -- and in the -- the losses on this block per se becoming 0 in about 24 months or thereabouts.
Yes.
Okay. And then sir, how should we look at now the existing hospital business? Because the large hospitals are running at pretty high occupancies now. And where do you see now opportunities for us to grow these 3 large -- 3 of our mature -- large mature hospitals, sir?
As far as our flagship Health City is concerned, I think we still have capacity available to us. And at the same time, we are also seeing a ramp-up on numbers. As we had mentioned 2 quarters back, that we are starting a big liver transplant program, which since we have started. So with these kind of high-yield businesses getting added as additional services which didn't exist and using the same capacities -- same built up capacity and increase the occupancies over there, these 2 hospitals will continue to grow because of that. However, in case of the Calcutta's flagship hospital, situation is slightly different because the margin of growth is getting limited because of the capacity constraint and the occupancy being extremely high. So the measures we are taking over there, one of them is that we are moving out some of the nonancillary activity which can be moved out. Some of the institutional activity, like nursing college which we were running in the campus, we are moving out. And by doing those things, we will be able to add additionally about 30 to 40 beds within the existing hospital and that would give us some respite. And the second thing which we could do there and which we are trying to do is to change the patient mix again and get some advantage in terms of revenue growth through ARPOB and other corrections rather than volumes.
Sir, sir, lastly, sir, question about what would be your occupancy in the Health City Hospitals, sir?
Health City, in the heart hospital, the occupancy currently is about 70% and in the multispecialty hospital is about 55%. So we are expecting more growth to happen in the multispecialty.
And sir, these are both 700-bed operational hospitals. So operational beds are 700 each in both of them, sir?
[ It's 600 ] in the heart -- it's a little more than that. One second, let me just give you the exact number.
Almost 700. Operational beds is 700.
700 operational beds in both, 700 each.
Okay, sir. And sir, lastly, sir, when you talk about expansion now, at what stage -- what would be the milestone for us to sort of -- for you to achieve that will probably give you the leeway to start looking at expansion -- of project expansion, sir, going forward?
Yes. I think one of the major things would be that our EBITDA to debt ratio should become better, so that would be the major criteria. And I think that would happen as a result of obviously increasing profitability, EBITDA and cash flow. One of the challenge, of course, which we continuously face is the outstanding amounts on receivables through various credit businesses. So that also we are working on. And -- but this would be the main trigger point for considering a major expansion.
[Operator Instructions] The next question is from the line of Kumar Gaurav from Kotak Securities.
My question is on the Jammu facility. So can you share the cumulative losses in this facility which we have incurred since commissioning? I'm asking this because I remember there was a viability gap funding of close to INR 50 crore over which the losses would come to our P&L.
The cumulative losses, Kumar, till date is around INR 28-odd crores. You are right, the original agreement have envisaged up to a INR 45 crore cumulative BGF, beyond which, it was to be borne out by the company. But we are in discussions, and should we be anywhere close to that number, we -- at this stage, we possibly don't foresee a situation whereby we will be crossing that number. But in future, should we be nearing that number, there could be opportunities of discussions with the counterparty to explore, I mean, if we can settle at a separate kind of a number or something around that.
Okay. And my second question is on the Cayman facility. Can you share the few one-off expenses which you have mentioned? So can you quantify this?
Yes. That -- there was a autoclave which was not working this particular -- in the month of May, which was like USD 50,000-odd, and there was one particular assignment in terms of consulting that we took around $400,000.
The next question is from the line of [ Amit Verma ], individual investor.
So my question is for the hospitals which are in the mature stage, 5 years and above, and this is at a very generic level. So I wanted to get a view of operational. So basically, we get around 20% EBITDA of our hospitals. What I wanted to understand is like what shall be our high level maintenance expenses? Which are basically if you have to keep the revenues same, we would still have to spend on hospital's upkeep or building repair, et cetera, or buying new surgical equipment. So how should we take like percentage of revenue or something of that sort will help?
I think we'll -- can we discuss it off-line? We'll be able to give those details.
Yes, sure, I can approach you off-line.
Just to clarify one thing out here. I mean, in my previous answer, I possibly missed out another element of one-off expenses in the Cayman unit that was regarding particular invoice, which came in towards from a lab vendor in this month, which actually was pertaining to some previous period that was for a total of around $140,000-odd.
The next question is from the line of Sameer Baisiwala from Morgan Stanley.
A quick question. That as you get new and high-quality medical talent in some of these newer facilities, is it not possible that your upfront cost is going to go up and the losses can actually widen before they narrow down?
I mean, that is the normal pattern. And the reason why we are at that kind of a peak right now in terms of expense is because we have already built up lot of those costs. So there will be like peaks and troughs depending on where you are falling in the cycle of acquisition of this talent. So the chances of that happening, Sameer, is very minimal because majority of acquisition of clinical talent has already happened. So I don't see that happening.
Okay, super. And second, on a regulatory side, in terms of price control in-house pharmacies, et cetera, is there anything else which is upcoming or any update on that?
I mean, there are like lot of the murmurs which keep happening, but we aren't too sure whether there is something specific which is coming our way except for the larger health care scheme. So there are no such clear indications of anything coming within next few months.
Okay. And across the network and maybe over 5-year-old, I mean -- or the mature hospitals -- matured successful established hospitals, I mean, what's the sort of peak sustainable occupancy that you can achieve?
A good number is about 80%. Anything above -- even 80% is like a chockablock hospital. So 75% to 80% is an ideal number.
The next question is from the line of Charulata Gaidhani from Dalal & Broacha.
Sir, do you think the profits -- you will be able to maintain profitability at FY '18 levels in FY '19?
I don't think so, Charu. I think it -- this year would be definitely slightly suppressed because of the several reasons we have discussed as an answer to earlier questions and the cumulative impact of the new units, et cetera. So I think it would be slightly suppressed than that.
[Operator Instructions] As there are no further questions, I now hand the conference over to Mr. Debangshu Sarkar for closing comments.
Thank you all for participating and asking your queries out here over this call. Should you have any further queries, just feel free to reach out to all of us. Thanks all again -- all over again for all of you to -- for your active participation over the call. Thanks.
Thank you very much. Ladies and gentlemen, on behalf of Narayana Hrudayalaya Limited, that concludes this conference call for today. Thank you for joining us, and you may now disconnect your lines.