Narayana Hrudayalaya Ltd
NSE:NH
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Narayana Hrudayalaya Ltd
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Good afternoon, ladies and gentlemen. On behalf of Narayana Hrudayalaya, I welcome you all to our Q4 FY '21 Earnings Call. Myself, Debangshu, and as most of you would be aware, I run the Investor Relations and Mergers and Acquisition Practices at NH.At this moment, all participants are in the listen-only mode. We will conduct a Q&A session post our opening remarks and we'll open the floor for the same. And we'll ask -- let you raise your hand and or else share your questions in the private chat to us as well.To discuss our performance and address all your queries today, we have with us Dr. Rupert, our CEO; Mr. Viren Shetty, our COO; Mr. Kesavan Venugopalan, our CFO; alongside Ashish Sukhija from the team. I'm sure you have gone through the investor collaterals, which have been uploaded on the stock exchanges as well as on our website.Before we proceed with this call, I would like to remind everyone that the call is being recorded, and the transcript of the same shall be made available on our website at a subsequent date.I would also like to remind you that everything that has been 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.These uncertainties and risks are not included, but -- are included, but not limited to what we have already mentioned in our prospectus filed with SEBI before our initial public offer in late 2015 and subsequent annual reports on our website. Post the call, in case you have any further queries, do feel free to get in touch with us.With that, I would now like to hand over the call to Dr. Rupert.
Good evening to all. Building upon the gradual recovery over the last several months after an almost washout in quarter 1 of last fiscal, we are pleased to have returned to profitability in quarter 4 with our consolidated EBITDA at a margin of 17.9%, growing by 45.9% on year-on-year basis and 36.9% on quarter-on-quarter basis.Our consolidated PAT at a margin of 8.1% stood at INR 681 million for the quarter, registering an overall 450% growth on year-on-year basis and over 66% on quarter-on-quarter basis. This could be achieved on the back of our consolidated opening revenues finally turning around by clocking year-on-year growth of 12.8% for the last quarter.As new COVID cases declined across India for most of the last quarter, the operating revenues grew sequentially by 15% on quarter-on-quarter basis and 9.5% on year-on-year basis as our hospitals started performing higher volumes of elective procedures. COVID patients contributed to only 3% of revenues in quarter 4 as against 14.2% in the previous quarter. The operating revenues after having almost fully recovered in the month of December last year reported a growth of over 12% in the month of March as compared to the pre-COVID revenue in February 2020.Our flagships facilities grew 10% in the month of March as compared to pre-COVID revenues despite a muted recovery in the international patient volumes. As elective surgeries picked up, cardiac sciences contributed -- contribution returned to the normal 35.6% of total operating revenues in quarter 4 from 30% in quarter 3. This was also supported by increasing oncology work across the network hospitals.Our other hospitals, excluding the 3 new hospitals in Jammu, continued the healthy growth trajectory and registered a 14.5% year-on-year growth in operating revenues and over 43% year-on-year EBITDA growth in the quarter for a healthy EBITDA margin of over 16%.On the back of strong growth in non-COVID revenue registered by hospitals across our network, the India business reported a strong quarter with an EBITDA of INR 971 million at 13.9% margin, registering a growth of over 30% year-on-year basis and over 90% quarter-on-quarter basis, thus ending the year on a strong footing.Our hospital in Cayman continued to deliver strong and consistent performance over the last few quarters and closed the year at USD 68.6 million in operating revenues with USD 26.2 million EBITDA for the fiscal 2021.As you are aware, we had announced an expansion of our Cayman operations with a new hospital in the City Center, which would get commissioned over the next 24 months. We believe that our leadership position in the region, along with niche offerings, such as fully fledged oncology services, will be a strong lever for future growth.I'm also pleased to let you know that despite the several -- severe challenges in the year gone by, we have been able to further fortify our balance sheet by maintaining a strong liquidity profile with consolidated bank balance and liquid investments of INR 2.42 billion against a consolidated gross borrowings of INR 6.17 billion, which is down by INR 1 billion in the year gone by as on March 31, 2021.On the clinical front, our focus to continue providing highest degree of quaternary care is -- and this is reflected in some of the highlights of the quarter as captured -- highlights of this quarter. These are -- RN Tagore Hospital performed a rare type of aortic surgery where they replaced the almost the entire aorta, which is called as the frozen elephant trunk procedure.The Narayana Superspecialty Hospital in Howrah successfully performed the novel surgery of a rare tumor involving the roof of the nasal cavity and the base of the brain. And the Narayana Multispeciality Hospital, Mysore, performed a rare oncology procedure called a cytoreductive surgery and hypothermic intraperitoneal chemotherapy to treat advanced ovarian cancers.The Howrah unit, the Narayana Superspecialty Hospital performed rare operations on -- called the arterial switch on a 3-year old boy, and the Barasat unit also performed a very rare aortic procedure called the Bentall procedure, which is done for aortic surgery -- aortic dissection and aneurysm, causing very distended ascending aorta.In the backdrop of the current unprecedented surge in COVID-19 cases across the country leading to localized lockdowns coupled with restrictions on international travel, we remain cautious about the near-term recovery in the business. Our overall business, especially in the flagship cardiac hospital, has been quite impacted in April. Although cases appear to have peaked in May, we've seen -- we remain hopeful on a recovery post June with reduction in COVID infections and increase in elective procedures.We are extremely proud of the agility and resilience demonstrated by our team in the year gone by, and we are confident in our ability to weather similar pandemics in the future.We have invested in tremendous amount of manpower resources, medical infrastructure and critical supplies to ensure uninterrupted service for our patients in the chaotic times. However, we have limited infrastructure in NCR region and regret not being able to take care of the huge number of patients that needed an ICU bed.We have learned from our mistakes and are scaling up our infrastructure in preparation for a possible third wave and extending our support to the national vaccination program. We are grateful to many Indian and multinational corporates, who have generously supported us in increasing our critical care bed count across the major cities.COVID-19 is not the only crisis our country is facing, the second order effects of multiple lockdowns and economic slowdown has severely impacted the likelihood of urban and rural poor. We stand in solidarity with all the affected and pledge to support our communities in the face of this unfolding tragedy.Lastly, I would like to recognize and appreciate the hard work and sacrifices of all my colleagues during this challenging period. I'm thankful for their unflinching commitment and support to the organization, which is the cornerstone of our proud legacy as a health care institution that serves everyone. Thank you.
I guess we can now open up the Q&A floor. I would request the people to use the raise hand notification out here in Zoom. And then we will one by one get to you to ask your question on this. So would request everybody to use the feature of raise hand in Zoom out here to do that's rather than putting in any question on chat.Yes, Sachin, you can go ahead.
I just want to understand directionally, when it comes to our domestic operations, can you just give us some road map and how do we see growth coming in there? Like we haven't done any major capacity additions in terms of number of beds or anything of that sort. Then -- I mean, yes, I know in terms of the Cayman, we are planning a CapEx. But in terms of the -- because the consolidation also that we have been on the path for the last 2, 3 years, that seems to be also almost done, I guess. So can you give us some direction in terms of the growth for the domestic operations in the next 2, 3 years?
I can take this one. Yes. I think for the past couple of years, we have been on a consolidation mode for all the domestic operations. Capacity additions have happened, but not in the sense of adding new hospitals or doing any acquisitions. For us, capacity addition is adding new wings, new OTs, new ICUs, converting some general wards into semi-private, semi-private into private, private into deluxe. These are small things that just change the overall mix of the hospital and are aimed more at increasing the realizations on a per bed basis rather than chasing after greenfield or brownfield opportunities that we -- that other hospital would normally do and that we also used to do in the past.A lot of the capacity addition we were supposed to do during the pandemic actually got held up. We were supposed to add a lot of bed -- 2 floors in Calcutta to our Howrah unit, that could held up during the pandemic. We were supposed to upgrade a lot of hospitals with linear accelerators, again got held back during the pandemic. We were supposed to have lot of refurbishment in the Health City campus in Bangalore, again got held up.Now as things are easing up, we will continue. So it's almost been a kind of pause. We were on a plan to do a lot of these construction projects, but that got paused, and so we'll be taking it up now. I would say, if you're asking me for my 3-year outlook, what the domestic thing is for this next 1 year at least, it would be more of the same. We would continue the construction. We will -- we are borrowing a fair amount to fund a lot of the CapEx that we had planned, which is the CapEx that got deferred in 2020, the CapEx that is due in 2021, all aimed towards replacing aging infrastructure, the medical equipments. And doing up the interiors and engineering equipments to deal with a huge number of oxygen-dependent patients, who may come to us in any third, fourth, fifth wave and so on. The borrowing of cost is well within our limits, and we get very attractive rates. And right now, RBI has opened up a tap of borrowing for us for very concessional rates of lending as long as it's COVID-related expenditure, which all of this is.But yes, in terms of brownfield expansion, acquisitions, those are things that -- conversations we were having prior to the pandemic. Took again a bit of lull during the pandemic time. We may resume it, but I would say that as of right now, we really have nothing interesting to note.
Sure. Viren, that's helpful. So if I understand this, that the consolidation phase will include some bit of higher top line and maybe margins because that will lead to probably higher realization per patient or something of that sort. But that will have its own -- that will hit a ceiling at some point in time, right, in the next 1 or 2 years. Beyond that, we will have to increase the number of beds or the capacity, right? Is that a correct understanding?
No, that is a very fair understanding in terms of, I know I have to do it. But the choice remains whether I choose to do it in India, where the return on capital is at a certain level or that, I choose to do it in Cayman and the Caribbean, where we have tremendous opportunities there. And those are the choices we make based on where the greatest return on our capital exists and those that have the greatest opportunities for us to increase our future potential and the ability to create this really dynamic organization.So yes, we continue to look out for opportunities in India, and these are things that we cannot overpay for. And asset price in India is, I think, everyone on the call knows, tends to be quite inflated. It just simply doesn't, at least with our model of providing reasonably priced low-cost care for the middle class. Our model is not sustainable on the kind of prices that have been quoted in the private market for a lot of the assets that are out there. If things could change, it could be that the pricing, we are able to increase our realization on our pricing mix sufficiently to the point where it then makes sense to pay for a lot of these assets.But until then, it will be gambling on a very hopeful future, that -- at least I would say, I have yet to see evidence of -- strong evidence of it happening. Obviously, the macro story is, right, on a 50-year horizon, yes, the health care scenario is going to be much more glorious than what it is now, and there will be huge demand for health care services. But in the near term, a lot of the, I would say, both from the public as well as from the government, a lot of the worst responses that came up on -- if there's a crisis rather than helping institution and helping hospitals, it became more about capping prices, capping charges and harassing a lot of medical personnel. And so these sorts of things make us little worried about the kind of investments one wants to make, when at any point, there is a threat that all the prices for all the procedures could be fixed by a central agency.
Right. Very, very happy to know that you continue to still remain very conscious on the allocation of capital. And just one follow-up to that. In terms of the Cayman Islands' new CapEx that we plan, and I'll just rewind a little bit back because when the Cayman Islands facility was there about 2, 3 years back, in my interaction with the -- with Debangshu or you, one of the sense that I got was that the model was based on expecting patients to come from U.S.A. to take care, so that it's a better -- in terms of costing, it would be better for them. But actually, it turned out to be the other way round, I guess, a lot of the natives have actually used that facility. But now expanding over there, are you trying to tap the local population? Or is it again trying to tap the population from the U.S. or the other offshore centers?
It continues to be both. The local population, yes, is between 60%, 70% -- 70%, 80% of the people that we take care of continuing to be the local population as it is in India as well. And the new hospital will also reflect that, but it has several more attractive features. That position us to be little more attractive to medical tourists. One, it's much closer to the airport. It's much better connected by the highways. It has oncology, which is a premier reason why people from the Caribbean Islands travel to the U.S. It's designed around a lot of services that are currently not available anywhere in the Caribbean, which is robotic surgery, onco surgery, chemotherapy, radiation therapy. So yes, it's designed with the idea that it would continue to attract patients from across the Caribbean from the U.S. and Canada in small numbers, and we're making those partnerships that will ensure it. But these things take a lot of time. India did not become a medical tourism leader overnight. It took many, many years of hospital like ours working at it, while continuously building businesses, serving the Indian patients.Whatever extra patients that came on top of that were great. I mean, even for our group right now, at its peak, medical tourist never crossed more than 11%, 12% of the overall revenue. So I think we sort of moderated our expectations on the kinds of patients that -- and where they would come from in Cayman, but it doesn't mean that the core business, which is building health care facilities for people in the Caribbean region is not a good one. It still continues to be a brilliant one, especially for a hospital group like ours, which have a lot of advantages and a huge network to draw on. I mean we want to capitalize on all those advantages that we have and strengthen our position there.
Understood. This is very helpful. Just one last thing as a follow-up to that itself. Any sense on the pay -- do you work on a payback period when you do this kind of CapEx since you're very conscious about capital allocation? So when it comes to Cayman, it's a fairly large CapEx. Any guidelines on that in terms of the payback period or whatever metrics that you are -- you work with?
Debangshu, do you want to take this?
Yes, yes, sure. Sachin, as probably we have elaborated in the past as well, we typically look at the internal rate of return, which is the IRR metric more than the payback metric. And suffice it to say that, as I have probably mentioned in our previous call on Cayman expansion as -- without disclosing the exact number, these are fairly attractive, particularly in the context of the Indian IRRs that we typically can foresee in the ground in terms of the available opportunity. And given the cost of capital being very, very low, even as compared to India over the IRRs we are talking about over there are fairly attractive.
Sure, Debangshu. I appreciate what you're saying. Just one thing on that. IRR considers a lot of numbers on a very long period of time. And as Viren mentioned, that this could be a fairly long gestation in terms of developing the market. So that's the reason why I ask payback because IRR can actually be very back-ended. So is that the case? Or it's not going to be so much back ended? That's my only basic understanding.
Okay. Okay. Got it. So let me help you out on that. So rather than a complete IRR as in a terminal growth IRR over a very long infinite period as your worry maybe, the IRRs out here for comparative like-to-like comparison, even for very, very shorter periods of time, whatever makes you comfortable are fairly attractive.I would request the participants to possibly limit questions initially to 2 per opportunity at the initial go and then you can always come back and ask us all the questions.With that, I would probably move on to Yash Gupta from Angel Broking for the next set of questions.
Sir, my first question is on the overall hospital as a sector. In last 2, 3 months, we have seen that a lot of new hospitals has come up with the COVID facility or with the non-COVID facility by the NGOs or by the private players. So if some of these hospitals continues for let's suppose 1 or 2 or 3 years, so how this will going to impact us in a short-term period of 1 to 2 years?
Those are not hospitals. Those are COVID care centers. They are open air tents, convention centers, hotels, owned by people who had capacity and no one was using it as a hotel. So they said, fine let me convert it as a COVID care center, buy some Chinese oxygenators and treat some patients and make some little money. These are not built to be hospitals. They weren't relevant during the pandemic. They will continue to not be relevant after that because there's only so much you can do with a bed and a low flow oxygen thing behind you.
Okay. Sir, second question, what's your view on the after COVID complications going on? And how you see this complications for 3 to 6 months going forward?
Dr. Rupert, this is about long [ COVID, ] what do you say?
Yes. We've been seeing some young people, who are having what is called as a prolonged COVID syndromes. And they present in varying degrees, like very prolonged necessity for them to be requiring oxygen at home. Some of them, you can even call them as COVID crippled, in the sense that they can hardly be off the oxygen.And not only that, they also have significant brain fog and cardiac problems and all kinds of things is there happening. This is a new thing, which is being unraveled every day, and we are seeing that. But this continues to be in a small portion of the people. But when it's happening, we've seen that a lot of young people, who have taken a lot of time to recover, especially close to a month or so are the ones who are experiencing something like this. So it continues to be a problem and a burden. And we will -- we are continuously learning from it. Hopefully, we'll have some answers in the month [Technical Difficulty]
Sir just a follow up on it. As we are saying that it's a very small rate, so it's around to be 1% or 2% of the COVID patients. And just a follow-up on the same is that whether -- we are seeing that any impact for our hospital as a change going on due to that?
Yes. The thing is they take a very long time to get discharged out of the hospital. So that is why even though the -- you've seen that the number of new cases in the NCR and all that has practically come down significantly. The new patients are less than 5,000 a day kind of a thing. But you'll see that most of the hospitals, the ICUs are completely full even now.That is only shows that a lot of these patients are not -- still requiring care and not in a position to go home. So if you look at that, that's a very small subset of patients, who are very sick and who have been there in the ICUs for a very long time are the ones who have -- even after they recover and go home, they have a very possibility of having a sequela and a prolonged kind of a support requirement for them is there. And this needs a lot of support and may or may not be just some kind of support at home.It might require equipments and it might require a lot of supportive structures at home like being taken care by home health care with nurses and physiotherapists and various others. So it's a very this one. But as of now, the number doesn't -- the crippling kind of a number, I mean, that helps the problems don't seem to be too high. But since the number of people infected with the disease is so high, when you look at it as a percentage, it might be small. But when you start looking at it as pure number of people in India, it will be a reasonably big number.
Thanks, Yash. Now moving on to Mitesh Shah.
I have a couple of questions. You have said that second wave has affected April and May. Can you quantify something how much that impacted our elective surgeries and how that increase in the COVID patient care?
Debangshu?
Yes. It is just to give you a guidance. April appears to be 7% down revenue-wise for the moment as compared to March. Plus, please -- but please bear in mind that historically, we have observed that April any which way is 3% to 4% down on the revenues from March. So incremental impact of COVID doesn't prima facie appear to be that high because if you notice for the actual dip in numbers or increase in the COVID numbers, the dip in elective surgeries, started -- kickstarted mainly post 15th of April. So that as regards April is concerned. March, we still haven't got the complete picture, but it appears that March is another 3% to 4% down -- sorry, I mean May is another 3% to 4% down on revenues for the India business as compared to April. And just to give you a sense on the -- in March, our total COVID contribution to revenues for the India business I'm talking about exclusively had come down to around 2-odd percentage, which went up to around 13-odd percentage in April. And while we do not have the figures as yet for May, but goes without saying that May will obviously be higher than April.
Got it. And the second question is about Cayman Islands. We have very strong margins in last 3 quarters, around 42%, 43% compared to the 25% in FY '20. It is a sustainable margin we can assume going forward?
We will try to, but there are couple of reasons why it will not happen. One is because a lot of this is driven right now by the fact that we're doing a lot more outpatient and diagnostic work, which always was a higher-margin business. This is driven by people, who cannot get treatment anywhere else. People that historically would go to the U.S. for treatment are being locked in the island, and they're coming to us.As the borders open, as I mentioned on several calls before, that the brand recall of Mayo Clinic, Cleveland, University of Miami, Baptist, these are all much stronger than ours. So it could be that we're not able to sustain people's interest for long. But this is a -- there will be this gap between when the borders open and our onco program is not yet ready, in which possibly we don't know for sure, but it could be under some sort of stress there.And once oncology is up. Oncology, again, is a very good sort of business for us, and it's something that has tremendous demand. But that again will get balanced between surgeries, which are relatively low margin and radiation therapy, which is high margin. So it's difficult for us to comment. I don't know if we can outperform. I mean that I'd be very skeptical of and in fact, something that definitely for the near term, I'm -- at least in our business plan, we're anticipating some kind of downtrend in that as the lockdown starts to reduce, but there are a lot of things that we're doing to increase the -- more than the margin number, it's a revenue number, we're a lot more interested in.So we're doing a lot more things in retail care around the island, which is opening up pharmacies, clinics and maybe we'll open up a diagnostic center at some point. And this is essentially around investing a lot more to get more patients hooked into the HCCI ecosystem.
Got it. How is the situation in Cayman right now? Everything is normal?
Yes, I get so jealous when I get on the late night calls with the Cayman team. They're sitting on the call, not wearing masks. There is no mask over there, and they haven't ever used the PPE kit. Island is almost 70% vaccinated. But the big question for them is it's a small self-control -- self-contained island, highly dependent on tourism. So when they open it up, the cases will climb. And so we're doing a lot of things to prepare them for that. But as of right now, the economy, barring the tourism industry, is doing quite well.
And your 97% domestic patient in the Cayman because of this pandemic only, right? Otherwise, it would be lower?
Yes.
Thanks, Mitesh. We can proceed on to Nitin Agarwal.
Viren, just following up on Cayman, 2 things. One is, a, is there any further refinement that you have on your CapEx plan for oncology business in terms of time lines and the CapEx outlay for the business?
No, no, still very much on track. These things -- it's a very regulated market. So it takes a lot of time to get the planning and permission and so on. The costing was done keeping enough buffers in mind. So the final cost may come to be a bit less, but we've kept generous buffers because we're prioritizing speed over negotiating for the best possible price. So there we'd be actually paying our guys a little bit extra, if they can get the thing done sooner.Construction, again, it's a little bit hampered because of travel restrictions. And so as soon as the lockdowns are lifted, we'll be able to go up in a big way, but a lot of the pre-construction work has started, the surveying, the land filling, the clearing, the -- drawing finalization and all of that. So that, again, like we said, it's in a 2-phased thing. Your oncology thing will come within -- which is just a nuclear bunker comes in 10 to 12 months and 12 months after that will be the rest of the building.
Okay. And secondly, on -- you mentioned in terms of when you're seeking opportunities, in terms of investing outside of India, you mentioned Cayman and the Caribbean, so are there any more thoughts on -- or incremental thoughts on what kind of opportunities that the Caribbean brought beyond the Cayman Islands really present for us?
Yes. See, just to clarify maybe on my previous comment, it's not that there are no opportunities in India. There are a lot. And we're doing a lot of things on primary care, and we're looking at expanding the scope of primary care services we offer in a 10-kilometer radius around the hospital. So we're doing that. That's very incremental revenue. For the thing that you asked about Cayman, yes, in Cayman itself, we are opening up more clinics. These, again, are not very big expenses, maybe $1 million, $0.5 million that we can set up. These are really good clinics that can do chemotherapy, seeing patients dentistry, aesthetic surgery, just a basic day care sort of thing.In the other islands, we are in continuous engagement with various governments that have seen the health care systems get devastated by COVID. And they realize now that's the thing that we've been saying all along that these islands need to be self-sufficient and not completely reliant on the U.S. for their care. They're now realizing that they have to strengthen their own health systems and are now inviting us to come and just give them proposals for how we can work with them to invest in those countries. But nothing, again, great to note. It's something that we're doing in a more incremental basis. And as and when something concrete happens, obviously, we will announce that.
And secondly, on the India business, on -- with regards to vaccination opportunity for hospitals, one, just saw a check somewhere that is there -- just to clarify, are we adopting a policy that you're not going to be charging -- vaccine administration charges, and what if that is right, then what is the thought process? Because there seems to be a fairly lucrative opportunity that most of the private sector hospitals seem to be going after.
Yes. Okay. So this is where I -- Dr. Shetty and I have very strong opinions about this. There is no vaccine opportunity. There should not be a vaccine opportunity. It is frankly disgusting that we would charge money for doing the vaccine. So there should -- there is a reasonable cost that one can take, which is you have to at least earn enough to pay off the syringes and the nurse costs and so on.But by no means, we consider this as an opportunity for 2 reasons. One is because I got my vaccine for free, I work for health care system. And throughout the world, the richest countries in the world have made vaccines free for their citizens. But ours is a resource-constrained environment and the government decided that at least that the private sector be able to purchase some vaccines, so that it will be less of a fiscal burden. Fine, we're in that. But it should not be an obscene amount. And so we have decided collectively as a group across all our hospitals that our vaccines will only come at the cost of vaccine, what we bought. If I'm paying INR 600 plus GST, around INR 630, INR 650 to Serum, that's how much. If you come to any of our centers, that's how much you're paying for the COVISHIELD vaccine. Nothing more. We're not even charging the syringe costs if you get it done in one of our centers. If you want it done in your corporate setup, if you want us to come to your apartment, residential society, sure, we'll do that, we'll add another INR 100 in the cost it takes to get the ambulance and the ice box and a doctor to come and sit with you. That's absolutely no problem, but that comes with strings attached. And the string is, if you're getting a vaccine from us, please, we're requesting all the corporates to come and donate 1 additional vaccine.We've partnered with an NGO called GiveIndia, collecting money from the corporates and all the apartment societies, so they can sponsor free vaccine because we want half our stock. The amount that we have the privilege of buying from large manufacturers, we want half our stock to go to its people in the 18- to 45-year bracket, who otherwise are not in the priority from the free vaccination program.See for a person who is a daily wager and earning just what minimum wage, for them, INR 650, even INR 750, it's not a joke. INR 650 is not a joke, especially to pay for himself, his wife, his parents. It's a huge amount of money for them that they won't be able to spend. And so for us, we're taking a very different view on vaccines. We don't think this is something that will continue for years on end. I think this is -- the government will eventually take up vaccines as their initiative and do it free for the whole country. But for now, we just want to reach as many poor people as possible and vaccinate as many poor people with the money that the richer patients are willing to donate for us.
Thanks, Nitin. We can proceed for the next question to Rajat. Hello?
Sir, just wanted to understand our CapEx plans for the domestic business overall, including the maintenance, what kind of CapEx amount are we looking to spend over the next couple of years?
Debangshu, have we disclosed what this year's CapEx would be?
We typically have given them in our guidance within any which way, so that the annual number is INR 125 crores to INR 150-odd crores. And you have -- in your last call also clearly specified that given that last year was a one-off year where we actually deferred most of the CapEx. So the bulk of it will get now accomplished in the next forthcoming.
So that will be over and above the INR 125 crores, INR 150 crores range or that will be...
Yes, you can probably look at a double kind of a number to that. Because essentially, it will be 2 years CapEx in one go along with certain brownfield expansion that was already earmarked for FY '21 as Viren outlined previously in the call and which are now probably getting deferred for FY '22.
Sure. So basically, INR 200 crores to INR 225 crores is the normalized CapEx for us for the domestic business, if we don't decide to go ahead with a greenfield expansion, correct?
Including the planned brownfield expansion, the numbers will probably be north of INR 250 crores that we currently have budgeted for FY '22.
Understood, sir. And also wanted to understand the revenue growth rates for the mature hospitals in India as well as for the Cayman unit that is already operational for the next 3 to 5 years. What kind of growth rates do we envisage there without doing any greenfield CapEx?
The mature hospitals, you have this temporary spike because you're coming off a very low base. I guess if you -- I think the question you're asking me if you normalize that, if you skip out the year in the middle, it was -- in the flagships, I would say barring some serious capacity addition that we were planning in Calcutta, for Bangalore it would be in the high single digits for the flagship.For the rest, the mid-tier hospitals, the smaller hospitals, they both have the ability to add capacity as well as there are new beds that we need to commission there. So that will be in the low double digits. Yes. So that is just the normal growth rates that we believe can still sustain for the next 2, 3 years, barring, of course, any more third wave, fourth wave, how many ever waves. So yes. If these were normal times, we returned to a normalized revenue growth rate.
And for the Cayman unit?
Cayman, again, it's very tough to say because we had one extraordinary year, and that's thrown all our calculations off the table. And the other thing is we're adding this huge oncology block and doubling our capacity there. So it's not -- it's going to be supra normal, obviously, because adding another 100 beds to the thing over there.So it's very hard for me to comment on what percentage that will reflect because I cannot, for sure, predict whether the occupancy levels will take 3 years to reach breakeven like it did for the first one or whether it will happen in 1 year, which we're more confident about because there's so much latent demand and people that have already registered for us for onco treatment. So that is still a bit of a question mark. I know that it will grow at decent rates, but I can't tell you the time frame in which that will happen.
So if that happens within 1 year, then probably double-digit kind of growth we are looking at?
Yes. Yes. But keep in mind, construction period itself is 18 to 24 months. So you're going to have -- next 2 years is not going to reflect much other than the normal growth, which will happen from regular additions and opening up the borders and from our other things that we're doing on the retail health.
Sure. This 18 to 24 months you are talking about the onco unit at the existing Cayman...
Yes.
Thanks, Rajat. We can proceed on to Charulata Gaidhani for the next question. Charu, you can go ahead.
You will have to unmute, I think.
Yes. Yes. Yes. My question pertains to, number one, is the oncology related work is only with Cayman or even India hospitals are have -- I mean, you have expanded the services?
Dr. Rupert, do you want to answer?
Yes. We practically have 11 of our units have been comprehensive cancer center. So -- and also we are looking at putting up the radiation facilities in Ahmedabad and Jaipur over a period of time. But all units do a sizable amount of medical oncology and surgical oncology work. And we've seen very good numbers in them and the clinical work with patients -- in chemo patients and the surgical patients going up constantly even in all -- across all our units.So we have this hub-and-spoke model with the people from the hub supporting them and taking them through. So we've seen some amazing work going on in these places in these sectors.
Okay. Just to add -- Charu, just to add on to what Dr. Rupert said in terms of certain numbers, we would be -- you would be happy to know that as we have repeatedly said that oncology is a key vertical for us even in the Indian context. So its contribution to our revenues, let's say, last fiscal, last quarter, Q4 FY '20 was around 10.7 percentage, and I'm talking about the India business only. It has gone up to 13.3% for the last quarter gone by. And it has become now the second largest contributing vertical for us after cardiac.
Oh, very good. Yes. Right. And my second question pertains to Calcutta. What kind of a growth do you expect in Calcutta? Or do you expect it to be flattish or degrowing?
No, not flat or degrowing. If I take the whole city, so the Arthik Hospital, which is our flagship hospital, that's capacity constrained, yes. So there, we're still showing growth, but it's in the very low single digits because there's no additional space to grow.And we are looking at properties nearby. But if you take Calcutta as a region, we have other hospitals there as well. And those are demonstrating tremendous growth. And those are the ones we are adding the capacity to. So for the city, Calcutta will deliver growth, but that one hospital is constrained at the moment.
Okay. Okay. And last, if I may, whether the ARPOB of INR 11 million is sustainable?
Yes. That's a good question. You see this also -- what happened right now in COVID is that most of the work we're doing is COVID work, and we're not getting any patients coming -- not -- I mean, we're getting a lot, but not too many patients coming for surgeries from the government scheme. Most people are coming only for the very high-end work, very expensive procedures, complex procedures that they have been delaying for a long time.Now obviously, when the things go back to normal, people start coming in for the normal work, and those are relatively lower-priced options, which could have a drag effect on things. I don't know if anything structurally has changed with the business model that we'll be able to continue attracting higher paying. Obviously, there are a lot of things we're doing to maintain that.So I'd mentioned earlier in the call that we are using our CapEx plan to do a lot of sprucing up our infrastructure and create more capacity to deal with a higher class of paying patients as well as all the years we spent investing in medical equipment to treat very complex procedures. Those will continue to happen. Those will definitely drive up the ARPOB. But if things normalize, whether it stays or whether it goes down, I guess that remains to be seen on how much -- how many more government patients or low paying patients are there or rather whether we would prioritize a very quick revenue recovery over the quality of that revenue that comes.I would say that for right now, we will definitely rather fill up the beds with any kind of patients. Now that means accepting lower paying government patients. And later on, we can be more discerning about the quality of the revenue and start opting for higher payer mix.
Okay. Okay. And in terms of the EBITDA margin of 16.9%, you think -- I mean, how much of this increase has come from cost savings, and -- which can come back once the economy opens up?
So I asked our analytics team that. Even they were pretty stumped by the -- being able to extrapolate what percentage of that could be contributed by a cost saving measure because there are just so many variables that go to it. So see, the biggest cost saving measure, what we took is a nonrepeatable impact, which is just salary cut. So that is not there anymore and that was not right to do then. We just had to do it because we were in a desperate situation. And that's not something we'd ever want to revert to as long as things remain this kind of normal.Everything else in terms of efficiency improvement, in terms of things that we do on the qualitative side, those have a minor effect. But the truth is all other costs have gone up for us. Because of the China restrictions, a lot of the import cost of the medicines and a lot of things that we buy have gone up. We are running with a much bigger equipment base than we were before. So I would say that the only thing I can account for a higher margin would be just a huge number of beds being occupied by COVID patients, higher than normal occupancies and a huge amount of occupancy in the ICUs for patients getting very expensive treatments.As COVID goes away and the normal operations resume, I think it will start to normalize again. But obviously, we will work very hard to create sustainable margins to build a very decent business regardless of the COVID situation.
Thanks, Charu. I understand Sameer Baisiwala from Morgan Stanley wants to ask a question. I mean, it's not showing up out here, but he has sent a message to me. Sameer, you can go ahead.
First question, where is the -- how is the availability of medical talent in Cayman Islands, especially for expansion?
There is no talent in the Cayman Islands. They depend entirely on foreign doctors. They graduate maybe 1 or 2 doctors a year, and most of them end up going to the U.S. Most of the people we get are from India, and we're slowly opening up our empanelments to get doctors from -- empanelled doctors from the U.S., Philippines, Canada and so on. But predominantly, it's doctors from our network of people that we hire from India.
Okay. Got it. And second is, anything you can share on the paths to profitability for 2 new hospitals, which is Mumbai and Gurugram?
Nothing more than what we've already disclosed, just more of the same with the Children's Hospital, adding more capacity, getting into more high-end treatment, the gradual opening up of the borders allowing children from different states to come and get high-end treatment. One is the hospital got very well recognized during the COVID time because we were able to treat a huge number of children. We will be -- we have opened up the high-risk delivery and birthing program. And hopefully, we can expand on that to start offering a lot more women's care. With regards to Gurugram, this is -- yes, I mean the pandemic definitely put a spanner in the plans that we had for a normalized 3, 3.5-year breakeven then. So it sort of inserted a pause in the middle. But the Gurugram Hospital also has been able to distinguish itself in the neighborhood from the kind of services it's been providing. And they have done quite a few number of transplants for a hospital that small. They really punch above their weight in the quality of the work that they're doing.As time goes, as the reputation keeps developing and we get a stable cohort of customers, I think it would reach there. But yes, this is something where we thought 2021 would have been the breakeven year, but it looks like that will get pushed out another year again.
Okay. Great. And one final question. Discharges quite naturally for India business still remains low 48,000 from versus 68,000, 70,000 that you were doing pre-COVID. So what's the outlook over here?
Dr. Rupert, this is about discharges that have come down. And do we believe that when things normalize that the discharges will -- as in the number of patients we treat and discharge can go up?
Yes. I mean the discharges have marginally come down, but we have been doing some quite high-end procedures as well. And we have the sufficient capacity for us to keep admitting patients and as they keep coming. And we know that every time the couple of months after lockdown, we do get more of the routine work back on. So I think we will -- we won't be too worried on that, but I think we'll catch up.
Okay. So maybe just to summarize. What may happen if the volumes go up, which is discharges will go up, but your ARPOBs may come down because of the lower end work. So would that be the correct understanding of how things can play out over the next few months?
The ARPOB may stay the same, depending on the quality of the revenue that comes in. It's also that people have been delaying their procedures for the past 3 months. It could be that the ones that we get in this next quarter will be the emergency cases. And in which case, I think ARPOB could sustain for another quarter. But post that, as things normalize, it may see downward pressure.I would say the other thing adding upward pressure is the fact that now a lot more as a percentage of the total beds that we have are in metro cities compared to before when we were just in Bangalore, Calcutta as metros and everywhere else was a Tier 2, Tier 3 towns, because we have the 2 in Delhi and the 1 in Mumbai, that also tends to push ARPOB up.
Just to add on to what Dr. Rupert and Viren said on this one, despite the fall in numbers in discharges that, Sameer, you mentioned, if you notice, overall, given that there has been substantial increase in ALOS because of the COVID patients and that stretched the period of stay in the hospitals, the occupancies are -- thereby the occupied bed numbers have actually not gone down at least for Q4. If the Q4 this year over last year is actually a slight increase. So to that extent it has been covered already in the ARPOB recovery working because occupied bed-wise, there hasn't been decrease. And another factor, just to add on to what Viren just said, which will probably ensure that ARPOB may not fall off the clip out here, is the increasing share of oncology work that is going on and oncology by its very modality offers you a higher ARPOB than most other modalities.
Great. But I'm a little surprised because your ALOS for fourth quarter was 4.8 even though your COVID related business was, I think you mentioned 3%. So very surprised that your ALOS has actually remained elevated despite COVID patients higher income.
That's because we never stop short of being very cautious with the pre-procedure protocol, clinical protocol because we continue to test them for COVID. And we had -- so the pre-procedure length of stay actually was -- compared to the normal times was slightly more because the -- if you -- if your patient is COVID and you go and do a procedure, the mortality is extremely high. So we were very cautious, and we continue to be cautious. Even while going forward, we will continue to be cautious. But we have fine-tuned our clinical protocols and procedures. So we know how to keep the ALOS also under control, at the same time increase the throughput in future as well.
Thanks, Sameer. I see a hand, Ayush. Ayush, you can go ahead.
So 2 questions. You said the Cayman EBITDA was $26.2 million for the year. Is this number Ind AS adjusted or after Ind AS?
This is a post Ind AS number, the way we report it.
What would be the pre-Ind AS number?
You just subtract $1.7 million from there.
Okay. Perfect. The second question is, would you be able to guide us on what the March revenue and EBITDA run rate was for the India business?
March revenue and India business. March, as we have mentioned in the opening remarks, revenues had gotten back to, I think, 112% of the February '20 levels with fairly attractive EBITDA as is easily observable in our overall numbers.Thanks, Ayush. I see hands from people who have asked questions previously. Nitin, you have a question, follow-up question? Nitin Agarwal?
No, no, no, probably, go ahead. I didn't have anything.
Okay. Okay. Mitesh, you have any follow-up question?
No, I don't have.
Debangshu, maybe the people who have already asked the question, they have not lowered their hands. So that's why it's showing.
Okay, okay, okay. I checked with every one of them. Charu, do you have any follow-up question?
No, no.
Okay. I guess that's about it. Unless Ayush, you have any follow-up question. I see your hands raised out here.
No, no, nothing.
And there is one question in the chat about what is the number of COVID doses you administer per month for the COVID vaccine?So this is -- I mean, we will -- we are buying as much of vaccine as we can get from the manufacturer. They are constrained in supplying to us because there is so much demand from other hospitals as well as their export commitments and the government.So I would guess as to say that anywhere from 3 lakh to 5 lakh doses of vaccine in some combination of maybe 75% coming from COVISHIELD and the other 25% split between COVAXIN and Sputnik. That's how much we will be buying and administering. But like I mentioned earlier, we're not making any margin of this. In fact, maybe even making a slight loss of this. This is just something that we want to do to just increase the overall vaccination rates in the country.
Any further question because we don't have any hands raised out here? We probably don't have any other question because I see people moving out. So that's it. In that case, folks thanks for your support and active participation.Like we mentioned before, should you guys have any further follow-up queries or anything to get in touch with us, do feel free to reach either to me or Ashish, we will be happy to address your queries to the best of our abilities. Thanks again for your active participation. Thanks.
Thank you.