Narayana Hrudayalaya Ltd
NSE:NH
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Narayana Hrudayalaya Ltd
Earnings Call Analysis
Q1-2025 Analysis
Narayana Hrudayalaya Ltd
In the first quarter of fiscal year 2025, Narayana Hrudayalaya demonstrated strong financial performance, achieving the highest ever consolidated revenue for a quarter at INR 13,410 million. This reflects a year-on-year growth of 8.7% and a quarter-on-quarter increase of 4.8%. Even amidst seasonal challenges, the company saw an uptick in patient footfall and revenue realizations.
The company's EBITDA for the quarter reached INR 3,274 million, with a margin of 24.4%, an improvement from 23.2% in the same period last year. This increase in profitability is attributed to the focus on quality revenue, improved payer mix, and operational efficiencies within its hospitals.
Narayana Hrudayalaya is set to enhance its Caribbean operations through the newly inaugurated Health City in Camana Bay, expected to attract patient inflow by the end of the second quarter. Additionally, the company is investing INR 2.8 billion towards greenfield expansions, including land purchases in Bangalore, which signals a commitment to long-term growth.
The group's financial health remains strong, boasting cash and liquid investments totaling over INR 13.2 billion against gross borrowings of INR 14.75 billion, resulting in a low net debt-to-equity ratio of 0.05. This provides ample room for further expansion funded through a mix of borrowings and internal accruals.
The total number of patients increased from 26 million in FY '23 to 28 million in FY '24, with projections to exceed 30 million based on current trends. However, inpatient volumes have shown stagnation due to a strategic shift towards quality over quantity, with management citing that these fluctuations are typical and will stabilize as new facilities come online.
Narayana Hrudayalaya continues to innovate with enhanced digital solutions and advanced medical procedures. Recent highlights include the successful performance of complex surgeries, such as robotic kidney transplants and 3D-printed implants. Additionally, the launch of AI-based systems aims to streamline operations and enhance patient care quality.
Despite not providing explicit forward-looking revenue growth guidance, the management indicated that organic growth would continue with expectations for the next inflection point in growth as new capacities begin operations over the next two to three years. Revenue growth is anticipated to be modest in the range of 9% to 10% as new facilities in Kolkata and Bangalore come online, aligning with the company’s strategy for quality revenue.
The first quarter typically experiences a slowdown due to seasonal trends and recent elections impacting patient flows. Furthermore, while operational improvements have stabilized margins, the management acknowledges external market dynamics which may temper volume growth in the short term.
Overall, Narayana Hrudayalaya's strategic moves toward quality revenue and operating efficiencies, coupled with a robust balance sheet, position it well for sustainable growth. Investors should pay attention to upcoming expansions and the overall trend in patient volumes as the company adapts to changing market conditions.
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Hello, everyone. My name is Nishant Singh. I head the Investor Relations function at Narayana Hrudayalaya. I welcome you all to the quarter 1 FY '25 earnings call of the company.
To discuss our performance, as usual, we have Mr. Viren Shetty, our Vice Chairman; Dr. Emmanuel Rupert, our CEO and MD; Mr. Sandhya Jayaraman, our Group CFO; Mr. Venkatesh, our Group COO; Dr. Anesh Shetty, MD of our Overseas Subsidiary, HCCI; Mr. Ravi Vishwanath, CEO of NHIC; and Vivek Agarwal, member -- senior member of the IR function.
As usual, before we proceed with this call, we would like to remind everyone that the call is being recorded and the transcript of the same shall be made available on our website as well as on the stock exchange at a later date.
I would also like to remind you that everything that is being 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 and the risks that they face. Post the call, should you have any further queries, please get in touch with us, we would like to address them to the best of our ability.
With that now, I would like to hand over the call to Dr. Rupert.
Good evening, everyone. I warmly welcome you to the Quarter 1 FY '25 Earnings Call Conference of Narayana Hrudayalaya Limited. We are pleased to report the highest ever revenue at a quarterly basis at a group level with a sustainable profitability margins.
Despite being a seasonally weak quarter due to the summer holidays, Eid and the impact of general elections, we are able to drive improvements in realizations and increased patient footfalls.
Consolidated revenue for the quarter stood at INR 13,410 million, reflecting a growth of 8.7% year-on-year and 4.8% quarter-on-quarter. Narayana Hrudayalaya generated a consolidated EBITDA of INR 3,274 million at a margin of 24.4% against 23.2% in quarter 1 FY '24.
HCCI continues to deliver strong business performance with quarterly revenues of USD 32 million, a year-on-year growth of 4.8% and a quarter-on-quarter growth of 5.8%. We're delighted to share that our new hospital Health City in Camana Bay was inaugurated in July with patient inflow expected to start before the end of the second quarter.
We are confident that our Caribbean business will continue to grow through synergies between the 2 hospitals, further strategic initiatives and investments in this fiscal year. The balance sheet and liquidity profile at the group level remains strong with group cash and liquid investments of over INR 13.2 billion against a gross borrowing of INR 14.75 billion, resulting in a net debt position of INR 1.55 billion as of 30th June 2024.
Our net debt-to-equity ratio at 0.05 gives us sufficient room to fund expansion through a mix of borrowings and internal accruals. We have incurred a capital outlay of INR 2.8 billion directed towards purchase of land in Bangalore for greenfield expansion, regular maintenance, biomedical upgrades and interior transformation work within existing hospitals.
We are confident of realizing the projected CapEx for the fiscal year as we take on more greenfield projects during the rest of the year.
On the clinical front, we have had many success stories and increase in the complexities of the work. The Health City Bangalore successfully performed 3D-printed patient-specific implant for a total knee replacement in a dwarf patient was -- and a navigation-guided pelvic bone tumor resection, which is a state-of-the-art technique for bone cancer surgeries, which very -- only very few hospitals are capable of performing it globally.
The RN Tagore Hospital Kolkata successfully performed what is called as the paint brush technique for coiling of a patient who had an aneurysm of the -- in the brain, which is the left middle cerebral artery, bifurcation aneurysm. And they also did a robot-assisted kidney transplantation as well.
During this quarter, across the group hospitals, we performed 40 TAVIs and 389 robotic surgeries across the entire group. Our focus on digitization and business transformation continues to lead to significant benefits throughout the system.
We launched an AI system, which auto creates discharge summaries of patients stay in the -- as an initial step so that the doctors can screen them before giving the final report.
The AI alert feature within the Namah app, which is the nursing app, triggers early warning signals to the nurses who can then reach out to the doctors for the timely attention. We also recently launched Virtual Tumor Board for oncology where the various specialist doctors can come across -- from across the -- all the centers on the same virtual platform and discuss the diagnostics and treatment on a real-time basis with all the history of the patient in one place.
Our digital appointment management system has been revamped and now includes the NH app, the website, queue management and kiosks for OPD consultations.
In the units where all these are deployed, we are witnessing more than 60% of the consultations being booked digitally, leading to reduced waiting time for patients and freeing up manpower and valuable space.
Deployment of Athma in the emergency department has reduced the ALOS by 50% in the emergency room by digitizing all the time-consuming documentation process.
Narayana Health Integrated Care continues to perform as per our growth plan. Revenue for the quarter has crossed INR 80 million, which is the highest so far with more than 51,000 patient transaction across the 8 clinics.
With the confident start in its first year, we will grow -- continue to grow this business and serve our customers with a clear focus on improving the health outcomes. We continue to upgrade our clinical and nonclinical operations across the group, transform the patient service levels, increase our thoroughput, build more capacity, invest in more digital patient outreach channels and improve our operational efficiency.
We are reasonably on track on our ESG commitments and continue to focus on creating meaningful social impact in addition to pursuing our environmental goals and upholding the highest standards of governance.
We are simultaneously pursuing organic and inorganic growth opportunities, growth both in India and overseas that will derive synergies from our existing operations, maximize value for all our stakeholders while keeping a close watch on return on capital. Thank you.
[Operator Instructions] Yes, please. Can we have a question, please?
So my first question would be regarding the new hospital in Camana Bay. So as Cayman being suitable geography for NH, what would be the [ assumed ] occupancy for the new hospital?
Yes. [ Prince ], thank you for your question. So the hospital will start in a couple of months. We've already inaugurated it. We have about 50-odd beds, that's our official bed count. We hope to be occupied from the early quarters. But at the end of the day, this is something we'll have to wait for a few months to see. We won't be able to project what the occupancy levels could be.
But this is in a good location. We have all the inputs to suggest that the hospital will be occupied as per our expectations.
Can I get a range?
It's hard to say. It's hard to say. Yes. Having said that, it's also important to consider that the occupancy as a metric for revenue growth is less and less important these days, especially because it's a daycare-focused hospital. But let's see, let's see in a few months.
Sure. My second question would...
Sorry, Prince, you're disconnected. Could you repeat the question?
Yes, sir. Am I audible now?
Yes, go ahead.
Can I get the CapEx breakup for the Bangalore expansion and Kolkata expansion?
Is this CapEx breakup of Q1?
No. Going forward. We are planning to put a brownfield expansion in Bangalore and greenfield in Kolkata, so can I get what the CapEx we will be keeping for both the hospitals?
Yes. For the Calcutta greenfield one, the first phase project estimate is almost about INR 1,000 crores, which includes the building of around 350 beds in the first phase. And there's been a lot of infrastructure development for the entire -- for the 1,000 beds as well. But the first phase will cost around INR 950 crores. For the Bangalore land, cost will be around INR 500 crores.
And what would be the expected capacity of beds in [ Bangalore ].
That is yet to be finalized.
Okay. Is there any expansion in the future you could be doing with the leased land?
Yes, we would explore different options and models. Right now, these are the projects that are in hand, the one in Bangalore and Calcutta, but we are talking with various projects and developers to look at leasing options as well.
[ Ritika ], can we have your question, please?
So my first question is again on the new facility in Cayman. So I just want to understand it better. You mentioned it's mostly outpatient setup, where you're focusing on preventive care, et cetera.
So my question is, how do you plan to ramp up your operations there, focusing on which key segments. And what kind of initial losses you expect to incur from this facility until it scaled up to a reasonable level? So that's my first question.
Sure. So it's not -- just a slight correction. Yes, it is predominantly focused on daycare procedures, but these are not necessarily preventive. They could be diagnostic preventive, but these are mainly short-stay surgeries, quicker surgeries, robotic surgeries, these kinds of things.
The primary goal of that facility is to offer the services we currently do not offer. The major gaps in emergency and trauma care, obstetrics and women's health, neonatal intensive care, et cetera. So when we start there, these would be the services we will look to lead with the services we do not offer.
To your question on the second part of your question around operational losses. As we've said before, it's a new building, Cayman -- any hospital we have in Cayman, including the existing one, has very high fixed cost.
So initially, there will be, obviously, certainly margin dilution and operational losses. We're not in a position to give out a particular number or a hard value to quantify that. But directionally, you can obviously expect operational losses and margin dilution for some time.
Sure. And if you can also update us on the existing facility about any improvement in say, IP or any volume pickup, et cetera. What are you seeing on the existing Cayman unit?
Sure. So in the existing Cayman unit, we continue to see growth in -- on a revenue basis and some growth in good quarters on volumes. But as you can imagine, we are reaching a sort of saturation point in the existing facility. And that's why the timing for the new facility is good and very much needed.
We have undergone some operational improvements in the existing facility. That's why you can see the good improvement in margin, but you will see a slowdown in volume and revenue growth until we commission a new facility.
Sure. That's helpful. My second question is on India operations. So on the IP volume part, we are seeing a bit of gradual pickup, which you earlier attributed to some reconfiguration of beds or facility upgrade, et cetera. So my question is are you broadly done with your initiative? And how should we see IP volumes moving up from here on?
I'll ask Venkatesh to take this one.
Yes. When it comes to the reconfiguration basically in terms of infrastructural upgrade, transformation, these are something which is an ongoing exercise and we still have a little bit more to go before we come to a conclusion on that.
Of course, when it comes to the IP numbers, we all know that we are in an expansion phase and these capacity expansions, obviously, will kick in, say, in the next 3 years' time.
Till such time, it is important for us to make sure that through these transformations, these efficiency improvements, we keep improving on the numbers. So we've got -- typically, we've got a long way to go before we run out of these benefits on efficiency improvement, and we've actually started reaping these benefits only now in terms of more OPD procedures, quicker discharges, lab reports and all. So what I would say is that while we look into the volumes, we are focused more on quality of revenue.
Our margins actually because of the quality of revenue, have shown a more positive trajectory in this Q1 of FY '25 as compared to Q1 of FY '24 by more than 1.1% and we are actually taking a balanced approach between cash flow profitability and growth.
So we've done a lot of work, as I said, of changing our bed mix, the digital journey, throughput. And we are also not very aggressive on the pricing, therefore our buildup has always been very slow -- has been slow but very steady.
So the current growth will be normal growth, and we will get the next point of inflection when our new capacities kick in few years from now.
And my third point is actually a request. So in your presentation, you have now started reporting ARPP per your clusters. So that's helpful, but request you to also share volume number because that, I guess, will help us to understand your business improvement in a better way. So earlier, like you used to give ARPOB, but now you have OP and IP, RRPP, but maybe volume numbers will be also helpful.
Sure.
Actually, there's one more question on the chat, and I'll take both of it together. We've been asked whether ARPOB is not being shared and can it be shared? So we will share the volume numbers, and we'd also work with you offline in terms of how to drive the ARPOB, this straightforward number, but we will share that volume and the ARPOB calculation.
Thanks. [ Nitant ], can we have your question, please?
Congratulations to the management on a good set of numbers. My first question was regarding the Insurance business, which was supposed to commence in Mysore. So what are the updates on the insurance business commencement?
Ravi, if you can comment on the insurance?
Sure. Hi [ Nitant ], thanks for your question. This is Ravi Vishwanath. So on Insurance, pleased to let you know that we launched Narayana Health Insurance in Mysore as we had said, in late June with our first product, which is called Aditi, the headline feature of which is providing INR 1 crore coverage for surgeries for a price of about INR 10,000 for a family of 4 where the oldest member is 45.
You also asked about -- on regulations and things like this. So yes, I mean, our focus has been on making sure that our systems, processes, data flows, et cetera, are all in line with -- are compliant and in line with the regulations, including the most recent changes, which have been several by the IRDAI. And I'm happy to report that all those things are in place and working as expected, which now gives us a good base from which to focus on making sure more and more customers are able to take advantage of our products.
Another question was that -- you mentioned that you were venturing into new specialties such as [ auto spine ], neurosciences, [ BIA ] sciences. So has that impacted your revenues in this quarter or will this effect in the quarters to come?
Yes. These are not new departments per se, but we're just increasing the spectrum of work so that we can do a little more complex spectrum. We've just recently installed the robotic spine program and the equipment. And we've done around 5 cases with that, very complex cases. But over the next few quarters, it will start -- we will see some impact on the complexities of these patients as far as spine is concerned.
So all those things is a routine stuff which we are doing, and it will -- but it is not something that dramatically, it's not a new department. It just adds to a different spectrum within the same departments.
All right. Just one last question regarding the Kolkata facility, what is the updates regarding the commissioning of the facilities?
Yes. This is Rajarhat facility in Newtown Calcutta you're talking about. So we are currently seeking approvals for plans from the authorities. The work is going up in full flow. We expect the approvals to come by October, and we hope to start the construction towards the end of Q3 this year.
So we will try and speed it up, but mostly what it looks like by the end of Q3 this year, we'll be in a position to do the groundbreaking in for the Calcutta project.
Okay. Thanks, [ Nitant ]. [ Prakesh ], can we have your question, please?
I was trying to understand the volume number, the footfall number for -- and we can break it down between India and the U.S. Caymans. So to begin with in India, our inpatient numbers have not been growing for the last 3 quarters, is there any particular reason for that?
What I would say, first point is if you look at this quarter, in our Health City in the major facility there, there is a little bit of a dip. Q1 generally is known to be a low quarter because of the summer holidays, Ramzan period. But this year, due to the Indian elections, there was a phase-wise election throughout the months of April, May and some part of June.
And since our Health City sees a lot of these patient inflows happening not only from Bangalore, but from other parts of Karnataka and also from other states, these numbers got tempered a bit due to the election, which will obviously get corrected in the coming quarters.
But of course, what I would want to reiterate is along with volumes, more than that, we -- I've said I'm just repeating it again, that we're focusing more on quality of revenues.
So as a result of that, if you see, even if the volumes are not growing substantially, there are good quality of revenue, which is resulting in our margins showing a good growth from 18.3% last year Q1 to 19.4% this year.
Obviously, we have started working a lot in terms of changing our bed mix, upgrading it to single rooms, twin sharing rooms. So within the same volumes we are able to recover more quality revenue. And of course, it is also a constant endeavor for us to make sure we work on increasing volumes, and we are confident that eventually in the course of next few quarters, we'll be in a position to get more tractions from the volumes.
But the current growth what we are having will be very normal growth, of course, double-digit growth year-on-year, quarter-on-quarter, year-on-year mostly. But the major inflection point will happen when these capacities come in the next 2 to 3 years' time.
Till such time, we will see very normal growth, but we'll work more on efficiencies to ensure a much healthy margins and bottom line.
Sorry, just adding to the data point, actually, we were -- we saw about 26 million patients in FY '23. Now we've seen about 28 million in FY '24. And we -- based on the Q1 run rate, if you extrapolate, we'll see upwards of 30 million patients in terms of the number of people who are visiting us and so there is that footfall in volume that is coming through. But everything else, I think Venkatesh nicely explained.
So let me just follow up. So I appreciate that there is growth, and that's why I'm actually breaking down the numbers between outpatient and inpatient. And my question was particularly towards the inpatient because that's the one that hasn't been growing for the last 3 quarters. It was not just this quarter, which might be election dependent, right?
I appreciate the point you're making that you're trying to change your payer mix and hence, that is impacting the volumes to some degree. But that also would imply that your margins are improving.
So even though you're saying then that you will see a normal double-digit, but a normal revenue growth, you should see a slightly more faster EPS growth. Is that a fair statement?
See, just one maybe data point I want to clarify, though, the general trend, I think Venkatesh spoke about. Q3 and Q4, we saw about 56,000 patients in our inpatient and this quarter, we saw about 59,000 patients in our inpatient.
So even though Q1 is a weak quarter for us, in terms of inpatient volume, we were okay. So just -- that's a little bit of clarification on the data point. But in general, I think there is a little bit of investment that we're making in terms of balancing between quality of revenue between healthy cash flows and in terms of growth. And that balance is reflecting in the numbers that you are seeing.
And so while I appreciate that we are tempering our volumes with the payer mix in India, the Cayman number also in terms of footfall has not been a great quarter for us, right? So the inpatient year-on-year degrown by minus 7% and the outpatient has also just grown by 6.5% year-on-year as compared to some of the previous quarters, you were growing very strong double digits.
So what's the pattern and the trend you're seeing in the Caymans in terms of volume?
Yes, I think you're largely right. The fact remains that, as I said in the earlier question as well, we have sort of reached a point of where we will not see double-digit growth with just the existing facility. And that's why about 2.5, 3 years ago, we started planning the new facility, which will be commissioned any time now.
We have inaugurated it. It should be ready, we should be treating patients in a couple of months or hopefully sooner in a few weeks. And at that point in time, we will see the next wave of growth. But in the existing facility, the existing location with some other market dynamics at play, we will just see this small incremental mid-single-digit growth and some quarters up or down, like for example, this quarter. But the next leap forward will only come with a new facility.
Sorry, Anesh, and I appreciate you saying that, I obviously heard you've seen this. The reason I'm being so stubborn about pushing this point is that in the previous quarters, we have -- our same facility was capable of handling a much larger volume. So it's doesn't seem like an infrastructure bottleneck, right? Because we -- in the previous 3 quarters, we have done higher numbers.
Sure, sure. It's not an infrastructure. It's more of a market dynamics situation. So the first point is, as -- in Cayman, my request would be to always look at a trend over 2 or 3 quarters because the base is so low. There are silly reasons that could skew a quarter up or down if somebody -- a couple of people are on leave or if there was a bad weather like we had a hurricane that came pretty close, et cetera.
So don't read too much into 1 quarter. I would say, 2 or 3 quarters to get a general trend is [ true ]. And if you see 2 or 3 quarters, you will see a sort of stagnation in the IP volumes and a moderate growth in the outpatient volume. So that is the picture over a couple of quarters.
All right. So am I reading it wrong as I think the outpatient growth has been fantastic over the last few quarters, no?
See, there are several factors to it. Yes, the outpatient growth has been there. I wouldn't say too fantastic, the reason being we have started changing a lot of the procedures that would traditionally be inpatient into outpatient. This is in line with our efficiency initiatives, et cetera. So some of it is a reclassification from IP to OP.
The other thing also is we have commissioned new service lines like we did in ENT acquisition, which is outpatient heavy about a year ago. So this is what we expect. Our patient growth is good. Yes, it can be better. Inpatient growth is what it is given the constraints we have until the new facility is up and running.
And if you don't mind me following up, you mentioned that besides the new facility opening up, you were also saying there was hinting on some market dynamic. Is there a new competitor there that has opened up? What market...
No, I'm saying whatever the existing market dynamic is with the location we are in and with the other players who are already there, there's no new change to it.
Thanks. [ Uday ], can we have your question, please?
Just wanted to get some color on the insurance product that you have launched. Can you highlight some differentiator in terms of underwriting that we are doing in this product? Because it's a very different product compared to the normal health insurance that we see in the market.
Sure, let me answer that. So I think our philosophy is that we want to make the claims process as simple as possible. And as -- I guess, based on your question, you understand that largely the way the market operates today is that underwriting effectively happens in the time of claim, which can lead to unhappy experiences for the customer.
We want to do it differently. We want to be sure that we underwrite at the time of acceptance and make sure that the customer has got absolutely no issues when time -- when it comes to claim.
So every customer for our product undergoes a full physical examination. It happens at our facility through our doctors. It's a very smooth process that we put in place. It is provided completely free of charge to the customer, whether we accept the customer or not.
So even if we are not able to accept the customer for some unusual reasons, our goal is to accept as many people as possible. It is still provided to the customer at no charge. And it's a pretty comprehensive physical checkup that is done.
The results of that are immediately available to him on the app. And in cases where they need further treatment or further attention, we work with them to make sure that they get that attention as well.
Sure, sir. And just another question is, are there any plans to expand coverage to other hospitals as well in the future or it will be restricted to Narayana Health only?
So at the moment, the focus is on Narayana across the country. There are situations where a customer can go to any other hospital. For example, if there's an emergency or something like that. I don't think that we will ever have a wide network like you see with a typical carrier.
So we will always have a narrow network. It's something that we are always listening to our customers and trying to understand what their needs are and we kind of respond accordingly. So at the moment, it is across the country. You can go to any Narayana facility. We may look to expand that over time, depending on what our customers tell us.
But I expect that it will always be a narrow network as opposed to a broad one. And it will actually let us provide a much superior experience to our customers which is the main goal of what we're trying to do is to make sure that we are their partners in helping them stay healthy and do well.
Okay. And lastly, if I can squeeze in one last. How is the traction that you are seeing? I know it is a very short period after launch, but any color on the traction that you are getting on...
Yes. As you said, it's very early days, right? So I think we're not prepared to give you any numbers in terms of traction. What I would say is that -- and what I would say is that we have -- we are happy to have put in place the processes and systems and all the other things that are required for an insurance company to be able to successfully service customers, which is a gargantuan exercise.
And all the testing that one does before you go live is fine, what really matters is whether that works in the real world. That's been really our focus. And happy to tell you that -- the team has done a great job and all those systems are working really well. And the customers that have purchased the product are really happy with it.
They're happy with the process, they're happy with the transparency with which we are explaining the benefits and the limitations in the product to our customers. And I think that overall, I would say that they feel comfortable that they are with a trusted brand and should they ever require complex surgery, they will be well taken care of, not just financially, but also surgically by a really high-quality team of doctors at a high-quality facility.
Thanks Uday. [ Adrit ], can we maybe have your question, please?
Am I audible.
Yes, you're audible. Go ahead.
Thank you for being so open about your volume issues. If I could just push the envelope a little bit here, so the overall IP volumes are flat, and Bangalore is the only cluster that has seen a drop in your Y-o-Y discharges. So I believe it's being driven there. And when I view that in the line of your specialty mix, the cardiac mix has actually come down over the last year -- so if I compare it to 1Q FY '24.
So what comes to my mind and please clarify if I'm incorrect, is that the Health City Hospital, which is essentially cardiac, have you seen any kind of drop, particularly regarding surgical demand there when it comes to heart surgeries?
Never a drop when you're selling heart surgery in India. The numbers that you're talking about, maybe on a quarter-to-quarter basis would not be growing the way it grew in a post-COVID catch-up growth scenario. But we are focused on growing our overall top line and rejiggering the interior bed allocation, and focused on certain payer classes.
But it may demonstrate that volume-wise, it's not growing the way it did, it's still delivering revenue and margin growth and that's been our focus.
Yes. So the share of cardiac, could you help me out why it's going down, like it's down 2% from 35% to 33% on the overall IP.
That is a conscious effort -- see, the cardiac, it's disproportionate component of our business compared to all the other listed hospital groups, predominantly because we have this very, very large -- the largest cardiac hospital in this part of the world, which does only one specialty. Most of the groups, it will be between 10%, 12%.
Now it's not that there's lack of demand for cardiac services, it's just that ortho, oncology, [ their ] businesses have been growing much stronger and more robustly across all the other hospitals. Cardiac still remains our flagship anchor business and will still contribute anywhere from 1/3 to maybe it can go down to 1/4 of our business 10 years from now. But it is nearly half the reasons why people end up in a hospital in India. So it will always remain a very large growth engine for us.
Got it. So you could confirm that you have seen an increase in discharges regarding cardiac in your Bangalore cluster?
Over a year-on-year basis, yes, but quarter...
Yes. Yes. Year-on-year because obviously, there's seasonality so I'm not looking sequentially. Secondly, on the payer mix. So the Scheme business is again flat, like at 21%. Is there any kind of guidance or direction as to you would -- it's decreasing proportion in the coming quarters or at least in these next few years?
Because as it was reiterated before multiple times that the quality of revenues are important and even though realizations are only up like 6%, I'm just wondering if a lot of the growth would have -- growth levers would have to come from the payer mix because specialty also is not margin-accretive at times.
So I guess the improvement in margins will have to come from a scaling down of the Scheme business share. So is there any kind of guidance on that?
Yes. So two things. We're not scaling down the Scheme business. We are taking the calls that makes sense for the hospital that's over there. And guidance on the revenue mix, I mean, I'm sure you know we don't give forward-looking guidance. but Sandhya can comment on the things we're working on.
So we are making a judicious choice between balancing cash flows because some of the schemes do not pay on time, margins, as well as capacity utilization because if you have spare capacity, you would want to utilize it judiciously.
Another aspect on schemes is that there are certain geographies where it requires a little bit of scheme support because there is a certain affordability and a demographic reality of those geographies where we will have to support the geography with certain scheme predominance.
So keeping all those balance in mind, we are taking our scheme choices. So I don't think we'll be able to guide a number, but I can definitely say that the choices we are making are reflecting in the expansion you've seen in the margins and in our cash flow positions also. So therefore, we will continue to keep playing this balance. But at the same time, we will also be socially focused and relevant.
So therefore, we are not aspiring to say that I want to bring it down by 5%, 10%, not like that because we want to be socially relevant also. So we will find the right balance as we have done in the past.
Thanks, Adrit. Yes, [ Mohit ], please ask your question.
So my question is more on the industry part. So my question was on the free medical services that government obliges us to provide to EWS section of the society. So firstly, do we come under this? And secondly, what is the total percentage of the beds that needs to be given to the EWS section?
Yes. So that requirement only applies in some variation or the other to 3 of our hospitals. One is our Dharamshila Hospital in East Delhi, where 10% of the beds need to be reserved for EWS category of patients. The other one is SRCC Children's Hospital in Mumbai where 10% is under the Charity Commission.
And Guwahati Hospital, where under an arrangement with the government, some proportion of the beds need to be treated under the Assam scheme. So these are very small by total number of beds and are not that much of -- they don't contribute that much to the overall proportion of the patient services that we offer.
Thanks, [ Mohit ]. [ Nancy ], can we have your question, please?
Could you please throw some light on the Ind AS 116 impact on our EBITDA and PAT numbers?
Give us a minute.
Yes. Our EBITDA will increase by -- because of Ind AS, our EBITDA has increased by INR 148.7 million and our PAT has decreased by INR 19 million for Q1 FY '25 on a like-to-like basis.
Thanks, [ Nancy ]. [ Prince ], can we have your question, please?
Sir, my first question would be regarding the debtor days, do we see any improvement in debtor days, as elections have gone and we have also -- planning to reduce the scheme patients?
So in Q1, normally, debtor days will be slightly adverse for a few reasons, one is that most of the government payers have their cash flows released in Q4. So most of the collection happens in Q4. And Q1, their budgets are not fully approved. And therefore, we don't get the payouts.
This year, we also had the added impact of the elections. So like every Q1, this Q1 also had a little bit of a slowness in terms of collection. Between Q1 of last year to Q1 of this year, we are holding the same levels. But between Q4 of last year to Q1 of this year, we have deteriorated by about 7 to 8 days, which we will catch up in the next quarter.
Okay. And regarding the payer days, you have been telling that you have negotiated with the payers and you have seen that the payer days have increased significantly. Can you give some guidance regarding the future that how it will be moving in future? Will it be maintained or even it -- increase?
You're referring to days payable, vendor payments, right?
Yes.
Okay. We -- I think we will have -- we will bring it down to levels of 90 days. Right now, it is slightly on the higher side. We've gone through a certain ERP migration and because of which there has been a little bit of a lag, which has got built up there. We will go back to between 60 to 90 days is what we have negotiated with the payers. So we will go back to those levels.
Yes, that will be helpful. And my next question would be regarding the India business. For the India business, revenue growth in the last year has been 10%. So -- as per your guidance, you are not focusing on aggressive revenue growth, but quality revenue growth. So should we consider in next few years, will the new facilities of Calcutta and Bangalore will be inaugurated, the revenue growth will be around 9% to 10% only?
Can't give a forward-looking guidance like that. I think Venkatesh already explained a couple of times the outlook on growth and how we are looking at it. The next inflection point for us, the growth will be organic in the short term. The next big inflection point will come when our capacities come online.
Until then, we will grow in line with the market and in line with our own efforts that we are putting in, in terms of throughput maximization as well as quality of revenue. So I think we've already answered that.
Yes, ma'am. And my last question would be regarding the lease. In last -- in FY '24, we have seen a slight increase in lease liability. Can you please guide is it regarding some clinic facility or something else?
Yes. see, to some extent, it is because of this clinic facility. But actually, if you see our overall lease costs have come down by almost 0.6%. Now that is because a lot of the lease contracts, which we had taken 5 to 8 years back, we've completed those lease obligations and we've unwound those leases.
So our overall lease cost has actually gone down and our overall lease liability is also gone down because of that. So I need to see where you are seeing this increase from, but there is definitely some amount of lease obligations coming on board because of the clinic, but they are not material in the way you're seeing.
Maybe our team can offline reconcile with you.
Thank you, [ Prince ]. [ Kunal ], may we have your question, please?
First one, on our International business, can you share what is our proportion of revenue coming from Bangladesh?
So our Q1 was about 7.6%, which was our international patient. A large part of it, a substantial part of it comes from Bangladesh, which will -- we'll have to see how the situation pans out.
But have you seen any reduction in flows in recent months or for you, the business is as usual, at least in July?
No, it's not. It has been disrupted during the election time, during the festival season Ramzan and so on. And see, but one thing is consciously as a company, we're moving away from a reliance on international medical tourism and more towards domestic patients.
So this is the number over 5 years, we expect to go down to 0. What will come will come, not going out of -- above and beyond to maintain these numbers.
And would it be fair to say that for you, the profitability of International business is not so much different because all other payers are saying that International business profitability is higher, right? So to that extent why [ would we elect to ]...
We don't distinguish between domestic patients and international patients. So a patient is a patient. The only distinction in pricing comes from the room category and the sort of procedures that they take. So we've never -- in the recent -- I mean, ever since few years before COVID, we had normalized the prices between domestic and international patients.
Okay. [ Now ] concerning the unwinding impact. So is it that now that you have paid the lease expense, you own the assets and hence, your lease expense is going down? Because a large part of your EBITDA improvement on a year-on-year basis, [ EBITDA ] improvement is driven by the rental expense going down?
Yes. Correct. We have paid those -- we have completed the lease tenor and completed the payout, we own these assets now. And that is why the unwinding of the lease charges have happened. But we've seen improvement across lines, not just on the lease charge line, but across lines, we've seen improvement in terms of cost. Lease is also one of the contributing factors.
Which asset this is where we have now completed the lease.
This is equipment finance. Maybe I could clarify, this is biomedical equipments which we purchased.
This is not asset or lease of buildings.
Okay. Okay. So currently, INR 195 crores of rental expense in this quarter, will we see a similar decline? I think last year same quarter would have been INR 235 crore, right? So will there be any meaningful declines in the coming quarters due to this thing?
Most of the unwinding is done, most of it is done, [ Kunal ]. I don't think -- there is a little bit left, but most of it is done. So maybe slight decrease you will see in the next couple of quarters and then this will normalize.
But we will be taking up new equipment on lease. So it will go back up again as and when the new capacity comes on there.
Are these related to the robotic surgery, if I may ask?
It's all the major equipment. The equipment companies give you the option to either buy it upfront or lease it from them. And based on the cash flows based on the volumes, we take a measured call on trying to match that. So we take lease cum sale options from a lot of these vendors.
[ Mohit ], can we have your question?
No, my question is answered, I'm sorry.
[ Kunal ], is your answer also -- because I think you only asked the last few questions, right?
Yes, yes, yes. It is answered.
Yes, [ Prashant ], can we have your question, please?
Am I audible?
Yes.
Yes. So 2 questions. Firstly, can you give a steep profitability or EBITDA number that your Delhi, Gurugram and Mumbai hospitals? .
Yes. I'll take that.
Yes, go ahead. Venkatesh, go ahead.
So when you talk about the revenues from -- I'll take all the new hospitals together with Delhi and Bombay. Revenue of these new hospitals have been reported around INR 123 crore with year-on-year and a quarter-on-quarter growth of more than 7% and with an EBITDA margin of 7%.
Dharamshila will and continues to give reasonable returns, Gurugram is also mildly positive for this quarter. Mumbai is in a single-digit loss, which we expect to stabilize to EBITDA breakeven in Q3 because the opening in Q2 has been pretty good. So overall, this is the summary of our new hospitals.
Okay. And the second question is regarding your Integrated Care and Health Insurance businesses, what is the outlay in terms of cost that we can see on these 2 businesses put together, say, over the next couple of years? And at what point would they start -- would they breakeven in your assessment?
So for now, we've invested about INR 100 crore as a capital commitment into the Insurance business. And as and when the business grows, we will make further commitments and investments into the business, depending on the scale and growth trajectory.
As far as the Integrated Care business is concerned, there is a cash burn, which is given as part of the analyst deck already. And there will be a cash burn because the Integrated Care business is a long-term venture and we have to build out this business over a period of time. So there will be cash burn in this. However, we've kind of kept our cash burn as judicious as possible.
May we request everyone else to go on mute because there's a lot of background noise. Okay. Thank you.
So we are being very judicious about the cash burn, and we are also keeping ourselves very tightly accountable to breaking even at a singular clinic level at a reasonable time frame. So there, we are tracking okay.
But because we are opening new clinics, therefore, there is a little bit of a cash burn, which is happening. We will continue to build on that. We are not guiding a full number for Integrated Care and Insurance because we're responding to what our customers are asking and the way the demand patterns are coming through.
Therefore, we are not putting an outlay out there, but we will do whatever it takes to make these businesses successful.
Thanks, [ Prashant ]. [ Vinay ], can we have your question, please?
Just wanted to check out on page -- on your Slide 7, on -- for 2 years, given the ARPOB numbers, that is for -- is that the right ARPOB number for Q1?
Just a minute.
Yes, that's the number for India.
So that is an annualized number or a quarterly number?
That's the annualized number.
Okay. So Q1, here it is INR 15 million and then last year it was INR 13.6 million. The second part is when I look at your performance of the hospitals in Western region, they seem to have shown a jump in the overall revenues. Now you're saying still Mumbai is a loss-making proposition?
Yes.
Okay. So today, we have only 2 hospitals which are loss-making, is it, out of the total?
Actually, if you look at Q1, Gurugram also was not loss-making. So at the moment, only Mumbai is loss-making. Even Mumbai Q4 broke-even, Q1 because of the -- a little bit of the seasonality impact, we kind of slided it back into a little bit of loss. Other than that, all our other hospitals have been profitable in Q1.
Okay. And lastly, just 7.9% of patients you said who came from Bangladesh. These were in Calcutta region only, right, or the Calcutta and the East?
7.6% of our revenue comes from international patients, largely from Bangladesh. Most of them come into our Health City campus as well as our Calcutta campus.
Okay. So this is 7.6% of the overall.
Yes.
Thanks, [ Vinay ]. We've got a few questions from the chat. We'd just like to read out a few questions. Yes, sorry, [ Parikshit ], you can have your question, please, and then we can move to the chat questions.
Okay. Great. In my previous question when I was asking about the volumes, we discussed about how we are changing our payer profile, and that is also going to impact our volumes, but in return benefit our margins. And I'll just quickly went back to pull the data.
I think our EBITDA margins started moving towards 19%, and I'm talking about the India business, started moving to about 19% all the way from FY '23 itself, right? Q2 of FY '23, we hit 19%. And the payer profile also, I'm just looking at the number percentage of customers that are from the schemes in the scheme section of it, that has been hovering around 20% to 22% throughout this period.
So are we still changing it or has the transition happened and it's done already?
Not done. It's a very dynamic process, and it's not just who you're getting in. It is what we are doing for them. And so a lot of the work that gets moved towards daycare, a lot of the emergency services, a lot of things that don't count towards occupancy and the pay [ up ] and these are cash and insurance patients who will contribute towards our performance.
There are other efficiencies we're getting from throughput and being able to manage a lot more tasks with the same manpower, which do contribute towards performance. So the payer mix, sometimes the hospital we have are locked into a certain payer mix.
So in Ahmedabad, for example, we run a hospital that is in a poorer part of town and that is a state that has a very high contribution from the government for doing the surgery. So that will always have a disproportionately high proportion of patients coming from Scheme. Whereas our hospital in Gurugram, for example, it's in Cyber City Phase 2, it's built just as a private, semi-private sort of hospital, so it barely has any contribution coming from the government program.
So it's not something we are consciously looking at, what we're trying to do is improving the cash flows of each hospital looking at the patient base that makes sense for that place.
Thanks, [ Parikshit ]. Now we can take up the questions from the chat room. The first question is that is ROCE significantly different in case of capital-intensive areas like oncology and cardiac treatments compared to less capital-intensity areas like neurology? And how do you -- yes.
See, actually, ROCE is not just about the biomedical equipment. The cost of a bed when we say, is say between INR 1.5 crores to INR 2 crores, it is the cost of the infrastructure, cost of the bed, cost of the biomedical equipments, cost of the diagnostics that go into it. So it's a large investment that goes into getting a hospital or a bed up and commissioned. And ROCE is a factor of that.
So if you just look at the biomedical equipment of a particular specialty versus another, that is not a big player in the calculation of the ROCE.
Okay. There's another question. Are you looking for a finance partner in the Health Insurance business or do you plan to invest on your own money into this insurance venture? What are the reasons why you are choosing the option that you are -- that you've chosen?
So at this point, we're not looking for a partner for health insurance. We're still building this up. And since we're doing it in a very moderated way, phased out across our different hospitals. It's something we believe, at least for the near future until it proves itself that we're able to build an insurance plan that's sustainable that provides a lot of value for patients and improve their outcomes.
We wouldn't want to look at scaling it nationwide. Why we're choosing this option is because the market has enough providers who will just sell you a policy and not ask any questions. And that does lead to a lot of dissatisfaction with premium holders. So we want to provide something that is a policy that has no questions asked.
Once you're in, we shouldn't have to doubt the intentions of the patient coming in for any sort of procedure, and we take a more proactive role in managing it. That's why it's positioned very differently. And a lot of financial investors may not be fully aligned with that way of running the business.
Thanks, Viren. Just another question on insurance, which Ravi can take. How long would the Insurance business take to breakeven on this INR 100 crore initial investment as per your business model to get positive ROIC -- to get positive ROI?
I think it might be a bit premature to comment on that because, as Viren just said, we are kind of positioning ourselves very differently. And the important thing to keep in mind is that we are starting in a very modest way in Mysore and 4 districts around that, and we will expand gradually.
So -- and kind of see how the market reacts in response. And I'll just repeat what Sandhya said earlier, which is that we're doing this very prudently and looking to make sure that we extend our capital as much as we can.
So a little bit premature to say that, but hopefully, we'll have more -- we'll be able to share more information with you in the coming quarters.
A question from [ Ridee ] about how do you assess the performance of your health care administrators?
We give them targets and they operate on an operating budget every year. And there are multiple parameters for assessing them, not just on hitting the financial parameters, but also on keeping the cost within line, improving the digitization, reducing the length of stay, improving the throughput of the hospital.
So at the senior levels, they have an 80-20 fixed to variable pay structure, which helps incentivize them towards that.
There's a question of what type of business intelligence, AI tools we use for measuring performance?
Those are two different things. The business intelligence, we were on Microsoft Power BI, we moved to an ingrown application developed by our analytics team called Medha. The name of the -- at least what they've called their BI tool so far is called [ Arrow ] This is something that we use extensively for our internal performance benchmarking measurement, not just for business operations but also for clinical operations and supply chain and so on.
And it is a tool that is deployed across a few other hospitals as well. People pay to use these services. For the health care professionals, other than using the analytics, they also use our ingrown hospital information system that's called Athma. And Athma has multiple applications on it, which include an app for nurses called Namah, an app for doctors called AADI.
It has its own analytics program called [ Athmetrix ]. It also is deployed across all our hospitals and clinics as well as this is being sold to other hospitals and clinics outside of our network.
Other questions, the ARPOB for Gurgaon region?
Yes, so we aren't specifically sharing out a particular hospital, but North region, the ARPOB is about INR 16.6 million for Q1 '25. So that is actually not if -- when I take North, it's slightly higher for the Delhi and Gurgaon units and slightly lower for the Jaipur units, but in that range.
The last one is occupancy percentage for India and Cayman.
For India, it's not a number that we are sharing like as a separate number because we have always said that occupancy, the way it is measured, midnight occupancy is not a representative of our -- evolution of our business. Having said that, we always operate in the range of between 60% to 65% on midnight occupancy basis.
Daytime occupancy and daycare occupancy will be much better. So in Q1 and Q3 quarters, we kind of end up at the lower end of that range. And in Q2 and Q4 quarters, we normally hit the upper end of that range, and that's how we've come in this quarter also. In some of our mature hospitals, we will be at a much higher number than that. And in some of our smaller hospitals, that number will be lower.
There's a question earlier on from someone who's new to the conference calls. When you see inflection point, when you see better growth, what would that be?
This we had mentioned earlier, and we're mentioning it again. This is when all the new hospitals come online. So that will take about 3 years from now.
Debottlenecking, adding infrastructure. So debottlenecking, that refers to the fact that a lot of our patients wait, they spend a lot of time waiting in our hospitals, waiting for the doctor, waiting for tests, waiting to get a bed, waiting for certain services. And so a lot of that is addressed through our digitization and process improvement initiatives.
And what this does is, it increases the throughput. So we can see more patients per given day as well as reduce their length of stay. So we are trying to achieve best-in-class length of stay of 3.5. We have some way to go. And a lot of the work we're doing helps improve the flow.
What do you consider as quality revenues is the question?
So quality comes in various kinds. But essentially, you can simplify it as payers that pay on time and you're able to cover most of the cost incurred in providing the services. Now in a perfect world, everyone would -- you could run a hospital just with patients paying cash up front and paying it at a 30%, 40% margin to whatever services you're providing. But that doesn't happen in the real world. Running in a country like India means you have to cater to multiple payer classes.
And so within those payer classes, we try to rationalize certain payers who may have a very poor track record of paying us on time or have a huge track record of disallowing certain things. And we would try to mix and match the patient and the variability to the services that make more sense for that.
There's a question on that ARPOB number for North. We mentioned INR 15.6 million is the -- that is the INR 1.66 crore for the year, that's annualized ARPOB. So there's a question that it is much lesser than the North where it is 50,000.
So if you make it a daily ARPOB, that number comes out to be around 45,000 which we have. So it's not that much lower compared to what others are making in the North.
But having said that, we do peg our services to be at a slight discount to what is available everywhere else. We try not to be top of market in terms of our pricing for patients on a like-to-like basis.
Next question is how many total new hospitals have planned for the next 3 years?
It is still work in progress. As and when we keep identifying opportunities, I think we will keep sharing. We will -- we have indicated a certain CapEx for the current year, and we see -- we are expecting that we will spend a similar amount of CapEx over the next 2 to 3 years. And therefore, there will be significant investment that will happen. We will share more details as and when we make those choices.
But as and when they come up, we will announce, like we announced in Calcutta, we've announced in Bangalore and there are certain capacities being added in Jaipur. So those are what so far we're giving clarity on.
There is a suggestion on bonus share issue. So we thank you for that suggestion. We try to stay as consistent as possible in terms of our return to shareholders in dividends, et cetera. But we take your suggestion on board, and we will evaluate them on its own merit. Thank you for that.
There are a lot of questions on the chat, but most of them have got answered through questions which have been already asked. So if we have missed to answer any question, may we request you to please put your hands up, and we will be happy to answer.
Yes. I think [ Gagan ] has questions. [ Gagan ], can you please pose your questions?
Yes. So the first question is on the tax rate. I think the indication at the close of the last financial year was that the tax rate will go up. 1Q has still been around 13% year-on-year, it's slightly up, but still fairly low, so any explanations there?
We had some onetimers in the last year when we -- because there was a deferred tax credit we got because we switched from the old regime to the new regime, and that came in last year. So that benefit is not there. But otherwise, what tax rate you are seeing right now is the steady state tax rate that we are estimating.
Okay. So if I got it correctly, the first quarter tax rate was 13%, is that what you're saying can be extrapolated for the full year?
Yes, 13% is correct. If you see last year, in first quarter was 10.6%. Second and third quarter was like 8.7% and 9.8%. For the full year last year, we were at 11.13%. Now that was the effect of the deferred tax credit that came in, in last year. So that is not repeating.
Therefore, we've kind of come on to that 13% kind of range. One thing you'll have to keep in mind is it will also vary on the mix effect because the India revenue is at a higher tax rate and Cayman profit is at a lower -- at no tax rate. And therefore, this is the average. So if the mix changes between India's profitability and Cayman profitability, accordingly, the tax rate will also get moderated.
Yes. Okay. And then second one pertains to your existing facility in Cayman. If I understand it correctly, the occupancy there is still fairly low, right? It's a 100-bed facility, if I remember it correctly and I think last you indicated the occupancy tends to be 50% to 55%-odd or something there. And you indicated in your comments in the call that there's not much headroom for growth there.
So is the constraint more a demand-related constraint, allocation-related constraints or am I understanding the capacity itself incorrectly.
No, [ Gagan ], you're about right on the capacity. The constraint is that the number of specialties or service lines we can offer in that facility, we reached the limit. For example, the new service lines, we are going to start in the new hospital, which cannot be offered in the existing hospital.
The second constraint obviously is location. As we've discussed before, the existing hospital is located very far away from the center of the city where most patients live and work -- most people live and work. So by moving to a very, very prime location, we'll become a lot more accessible to patients who otherwise would not consider driving so far for smaller services or for entry services.
But the primary constraint is just the services we can offer, the new specialties we are going to offer cannot be offered in the existing...
[ It sound a little bit ] how should I put it, a very layman like, but my question is if the best case utilization at this facility cannot exceed what it is, does it then make sense to -- or is it even a possibility to reduce [Technical Difficulty].
[ Gagan ], sorry, could you repeat that, please? I'm not able to hear you.
No. My question is that if you don't see occupancies in your existing hospital at Cayman improving, is it then a possibility to maybe reduce the bed count and perhaps utilize the additional space that you get in some other way in that hospital or is it simply...
Okay. Understood. No, no, that doesn't -- it won't work like that because when the new hospital comes, the existing facility will also see an increase in occupancy. So they're not 2 distinct hospitals. They are just 2 campuses. Think of them as 2 locations for the same unit.
It's the -- many of the doctors or -- there are some new specialists also. But when we have the new hospital, we absolutely expect the occupancy of the existing hospital to increase meaningfully. So it just wouldn't make sense to reduce the number of beds in the existing hospital.
Having said that, even that -- it's more an issue of the opportunity cost. There isn't -- unless we start the new services, there's nothing that's going to happen just by removing beds.
We'll have to add either equipment or reoutfit the facility, et cetera. But none of that is needed because once the new hospital is there, once we start the new services, we will see an increase in occupancy of the existing hospital as well. The new hospital will be primarily for patients who are short stay. The existing hospital will be for patients who have longer, more complicated stays.
So you're saying that the new hospital will act like a catchment for you and you could...
Yes, absolutely. It will also render services in -- or services of a particular nature in that facility, but it will also significantly feed into the existing hospital.
Right. And final one again on this facility -- while one understands that your first venture in Cayman took a reasonable amount of time to mature, [ there ], you have good credentials, you're not an upstart there. And therefore, is it reasonable to then assume that breaking even in the new facility will be a relatively shorter time frame sort of affair compared to the first one?
Yes, you are absolutely right. That is the expectation we have.
So I mean, is it possible for you to perhaps give us some understanding of at least from an intent standpoint or an anticipation standpoint, how much lower the breakeven duration of the payback period potentially be on the new one?
Yes. No, it's not something that we've disclosed or would like to. But having said that, I think you just have to wait for the next quarter, and then we'll have a much better idea of where things stand. We're not far away from knowing the actual answer.
All right. And finally, on your comments that you intend to keep the CapEx at INR 1,500 crore, INR 1,600 crore run rate for the next 3 years. One, what -- the debt hasn't really moved too much in the first quarter. How should we think of the leverage towards the end of -- or the closure of this year? And does it continuously keep increasing from here on over the next 3 years and to what levels?
Yes. That is the right assumption to make [ Gagan ]. The reason the debt hasn't moved is because the CapEx hasn't moved. A lot of our CapEx ambition is in greenfield, which means that we have to identify the land and then go through the plan approval process, which is a long process and then start the build and therefore, the consumption of that CapEx is a little slow.
And that also is reflecting in the debt that we are taking on board. We will -- for whatever CapEx we've indicated, a significant part of that will be through debt only. So you can assume that at least 80% of the CapEx we are indicating will come through debt. And to that extent, the leverage will be -- it will increase.
Have you considered equity raise as an option or that's completely off the books and you intend to completely use debt and internal accruals?
At the moment -- sorry.
It's not something that we need to look at right now, given how underlevered we are and how much cash we still have on the books. The nature of this sort of CapEx is that it operates at a low intensity at our choosing. And it goes in a very staggered manner over many years. So we're able to match our internal cash flows plus the [ bought with ] from banks and from NCD to match the CapEx and the greenfield and the land construction, all of that as and when it comes.
Should we get to a point where we -- our ability to service the -- our ambition is no longer matched through our cash flow and borrowings, then we would look at an equity route. But at this point, it's not really required.
And of the total cash flows that you accrue annually, I mean, is the ratio of cash flow accrual from India and Cayman very much in line with the EBITDA that you generated in India and Cayman or is that also sort of different from that?
Cayman has just gone through an intensive CapEx cycle, and therefore, there is some amount of that cash flow that's got deployed in that CapEx. And obviously, there is a lot of borrowing that has been taken on board. So the repayment of that will kick in, in Cayman. So that's from a Cayman point of view.
As far as India is concerned, the cash flow generation is in line with the EBITDA, but like how we choose to invest in terms of CapEx, et cetera, accordingly, the cash flows will be moderated.
And what will be the repayment schedule at your Cayman? I mean, over what time frame do you pay off the loans?
See, in Cayman, we have got a mix of the new loan and the old loans. The new loans are almost at the expiry stage than the old loans. The new loans would expire in the next 3 to 5 years. The average maturity is around 3.5 years, the large maturity is around 5.5 years.
Okay. [ Ridee ], there's a question from your side?
Can you repeat on the CapEx expansion plan for Bengaluru and Kolkata?
In Bangalore, we are adding an annex to our cardiac building. It's a piece of land we bought next door. This will focus mostly on aneurysm surgery and very advanced [ valve ] repair surgery to expand the capabilities of our flagship cardiac hospital.
We also bought a 1.5-acre piece of land in HSR layout. This is a suburb of Bangalore, where we have an existing hospital, whose capacity is quite filled up. So this will operate as an extension of that hospital as well. This will be a greenfield hospital that will accommodate about 200 beds-or-so. This is for Bangalore. Any other things you wanted to know about?
Yes. Kolkata as well.
For Calcutta, we have bought land in Rajarhat. This is a new suburb of the city. And there, we bought a fairly large patch of land. We'll be building a very large hospital over there in phases. This indicatively, it could go up to about 600 beds, but we will do it in 2 phases and plan the expansion accordingly.
Okay. And the CapEx amount is INR 1,000 crores, right, for Kolkata?
Yes. That is on the amount that we expect this should cost us, yes.
The total cost of the project for the next 10 years is going to be more, but the first phase will cost around INR 900 crores to INR 1,000 crores.
There is this last question from the chat, the Bangalore and Calcutta hospitals will get fully operational in the next 3 years? That's the question.
So we'll start the construction by the end of this year for Calcutta and Bangalore maybe another couple of months after that. So from that start to end, we'll be around, say, 3.5, 4 years.
So as there are no more questions, we would like to end our session. We thank you all for the active participation as usual. Thank you.