Shalby Ltd
NSE:SHALBY
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Ladies and gentlemen, good day, and welcome to the Shalby Limited Q4 FY '22 Earnings Conference Call hosted by Elara Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Puranwala from Elara Securities Private Limited. Thank you, and over to you, sir.
Yes. Thank you. Good afternoon, everyone, and we welcome all the participants to the Shalby Limited Q4 FY '22 Earnings Call hosted by Elara Securities.
Joining us from the management side, we have Dr. Vikram Shah, Chairman and Managing Director of Shalby; Mr. Sushobhan Dasgupta, Vice Chairman and Global President; Mr. Shanay Shah, President; Mr. Venkat Parasuraman, CFO; and Mr. Puneet Maheshwari, [ Assistant ] General Manager Corporate Strategy and Investor Relations.
I will now hand over the call to Mr. Puneet Maheshwari for some important disclaimers regarding any forward-looking statements that may be made in the call today. Over to you, Puneet.
Thanks, Abdul. Good afternoon, everyone.
Our earnings presentation is uploaded on the Stock Exchange website and our company website, shalby.org. We do hope you have already had the opportunity to go through the presentation. Please note that some of the statements made in today's call may be forward-looking in nature and may involve risks and uncertainties. Kindly refer to Slide #34 of the Investor presentation for a detailed disclaimer.
Now I would like to hand over the call to Mr. Sushobhan Dasgupta, Vice Chairman and Global President, for his opening remarks. Thank you, and over to you, sir.
Thank you, Puneet, and good evening, everyone, and welcome to Shalby's Fourth Quarter and Full Year 2022 Earnings Call. I hope all of you had a good year despite the many challenges we all face together from the COVID situation.
During quarter 4 full year 2022, Shalby witnessed a strong count in surgical procedures at 5,500-plus, and in-patient count came over 9,000 as well, which, in turn, culminated in a decent growth on a year-on-year basis. On a progressive quarterly basis, we saw some moderation in elective surgeries due to the threat arising from Omicron in the first 2 months, starting the year 2022. There were not many severe COVID cases, though, and the infection rate was also low, due to which, we saw only few cases of COVID admitted to the hospitals. Hence, we can state that this quarter performance is driven by growth from -- mainly from our core businesses.
Now if you look at the full fiscal year '21/'22, the year started with the second wave of the COVID-19, which impacted the lives of many. Throughout the difficult circumstances, all Shalby units, our paramedics and our doctors were totally devoted in saving lives, and I would like to -- sincerely like to thank each one of them for rendering this call of duty.
In addition, we expanded Shalby Homecare services, which saw great acceptance among patients, and we completed a total visit of around 61,000 and cases of over 20,000 in full year 2022. This service of Homecare has also allowed Shalby to reach a large patient base and raised brand recognition, which is expected to drive our occupancy in the longer run.
In the second half of the year, we saw a strong rebound in elective surgeries. The recovery was clearly visible across all core specialties such as Arthroplasty, Cardiac, Oncology, Nephrology and others. We crossed a proud mark of 20,000 surgeries in the year and closed the year on a strong note, with the highest-ever consolidated revenue of INR 711 crores and adjusted net profits of INR 72 crores.
From a strategic perspective, we undertook various initiatives to improve occupancy levels and brand recognition by leveraging the several of the digital media and our marketing campaigns. We conducted more than 550 health care camps and 360 health care talks across all units. And Shalby Indore had also launched a free consultation camp through Matritva Care Centre on International Women's Day as well, a very proud moment for us.
I'm also proud to inform all of you that Shalby Indore unit has organized the first high-definition 3D mapping arrhythmia workshop of the state. 3D mapping is a highly specialized form of treatment for arrhythmia or disorders of heartbeat. A team of cardiologists performed these procedures on 6 such patients. This is the first occasion when such latest and most advanced technology has been used in the state of Madhya Pradesh to treat such heart diseases. And coupled with all the kidney and liver transplant that we performed at Shalby Ahmedabad as well as in Indore and as well as in other hospitals, plus some of the complex hip-and-knee replacement surgery that we do, Shalby, too, is a great destination for all types of surgeries that we can offer to patients in India and overseas.
Similarly, Shalby Hospital, in association with Jabalpur Orthopaedic Association, has conducted demonstration of a first-ever live advanced knee replacement surgery, subsequently arranged a conference with the orthopedic surgeons to exchange ideas on the best methods of job replacement surgeries through surgical and non-surgical methods and various joint diseases. The conference was chaired by our Chairman, Dr. Vikram Shah, and was attended by more than 125 orthopedic surgeons from Nagpur, Delhi, Indore and Madhya Pradesh.
We are also highly focused on expanding our footprint through the asset-light franchise model plan. And during the quarter, we have signed 3 more MOUs in the cities of Gwalior, Kanpur and Lucknow, which is expected to operationalize in the coming years. We have plans to open over 50 Shalby franchise hospitals across India within the next 2, 3 to 4 years and capitalize on Shalby expertise and excellence in orthopedics.
Now a quick update on our U.S. implant business. During the quarter, we have made significant progress on all the critical drivers of our implant business. We have built a team of experienced professionals to lead the key departments and improve the operational capability by [ 50% ] in the U.S. Production has been ramped up from 300 components per month to 2,500-plus components per month at the end of full year 2022 and is expected to near 4,500 to 5,000 components per month as we approach the end of this year. Our sales in the U.S. have been improving every passing month, though we suffered a very little setback due to the stoppage of elective surgeries in the U.S. and the supply chain delays both due to the Omicron threat that loomed large, especially in January of 2022, which we have overcome now.
We are strategically shifting our sales ratio more towards retail from wholesale that helps to serve our customers better and results in better realization of our profits. In quarter 4, we had recorded total revenue of INR 10 crores, and we entered the year, as of March 22, starting from 16 May 2021, at a total revenue of INR 31 crores at our U.S. implant business.
Recently, we have also received approval to import Consensus implants into the Indian market, which is expected to drive further sales in the coming year. We have launched also a very innovative new knee implant product called TUKS, T-U-K-S stands for Tahoe Unicondylar Knee System. Tahoe is named after the Lake Tahoe, which is very close to our factory in El Dorado Hills in California. And the initial response had been very encouraging. We expect TUKS, or T-U-K-S, to drive significant sales in the coming year.
We are in advanced discussion phase with distributors in Indonesia to launch our implants in that country and are in active search for distributor partners in Malaysia, Vietnam and Philippines. The implant manufacturing business is fully in line with our core specialty of Arthroplasty, and we remain on track on our annual sales target of INR 100 crores and be EBITDA positive by end of the full year 2023. These are exciting times for us. We have a very fully synergistic model that will drive sustainable [indiscernible] top-line and bottom-line growth in the coming years.
Now I'll hand over the call to our President, Shanay Shah, to discuss our company's hospital performance. Over to you, Shanay.
Thank you. Good evening, everyone, and thank you for joining in.
It will be unfair if I don't go back 12 months and reiterate the relentless efforts put in by each and every health care worker associated with the group as well as the management during the peak of the second COVID wave in the months of April and May 2021. Today, we can proudly say that Shalby converted a section of each and every unit into a COVID center when the nation's infrastructure was totally stretched.
During the year, we undertook various initiatives to improve occupancy levels and brand recognition by leveraging digital media and marketing campaigns from a strategy perspective. We have also conducted more than 900 health care camps and health care talks across all the units. We continue to showcase our strength, having 350-plus full-time doctors; a large number of visiting consultants; and more than 3,800 employees while maintaining one of the lowest attrition in the industry.
We have successfully concluded our Project Samanvay with SAP S4/HANA implementation across all Shalby units. The strategic implementation is quite in line with global practices and also strengthens our financial and operational process by improvising database management, administration, security, real-time access and advanced analytics to support the business decisions. Furthermore, we have also launched a centralized cloud-based Lab Information System to produce standardized pathology patient reports and sharing it on a real-time basis across all units.
Shalby also takes pride in nurturing the young talent and imparts training in health care through Shalby Academy. During the year, we have trained more than 1,200 students on various disciplines of physiotherapy, nursing, lab technician, nutrition, preclinical, paramedics, hospital management and pharmacy as part of the academic outreach. Over 200 students have undergone a certification program on various paramedical courses in affiliation with the National Council of Paramedical department, and many students completed the postgraduate course in hospital management in partnership with various universities.
We have been awarded with The Most Preferred Hospital in Madhya Pradesh, the Best Medical Tourism in Gujarat and also the Six Sigma Excellence Award. We are very happy to receive top industry recognitions, and we'll continue to keep expanding our services, strengthening our brand to serve more patients while maintaining the highest quality of health care offerings.
Now coming back to the performance numbers. I'm happy to report that Shalby delivered strong operational and financial performance during the year. We recorded the highest-ever hospital revenue of INR 647 crores, a growth of 55% year-on-year; and an EBITDA of INR 142.6 crores, up by 49% with a strong margin of 22%; and our adjusted net profit of INR 87.2 crores, up by 77% on a year-on-year basis.
At Shalby, we are proud -- extremely proud to announce that in FY '22, 2/3 of the hospital revenue and half of the hospital EBITDA has come from outside the 2 flagship units in Ahmedabad. This is despite the flagship unit growing and having further room to grow.
During the last year, a total of 20,240 elective surgeries were performed, an increase of 70% on a year-on-year basis. We saw a strong jump of 41% for in-patient count. And travel for international patients has also resumed full throttle. Occupied beds increased to 563, up by 31% in FY '22. The ARPOB and ALOS were recorded at INR 33,707 and 4.55 days in FY '22 compared to INR 27,400 and 5.42 days in FY '21. Our core specialties such as Arthroplasty, Critical Care & General Medicine, Oncology, Cardiology, Orthopaedics, Neurology and Nephrology contributed 29%, 22%, 9%, 8%, 8%, 5% and 3% to the revenues, respectively. We continue to generate strong cash flows from the hospital operations of INR 123 crores, driven by self-pay patients mix contributing more than 45%, which helped to strengthen our balance sheet further.
Our realized return on capital employed from the hospital business has increased from 8% in FY '21 to 14% in FY '22. We have also launched an Employees Stock Option Scheme for the employees to reward them for their loyalty and performance. This is in addition to the Shalby Medicos Trust, which was created for rewarding the doctors associated with the group. This is in line with the Chairman's objective of wealth creation for all involved in the growth of the company.
I now hand over the call to Mr. Venkat to present the company's detailed financial performance for the quarter and the year.
Thanks [indiscernible]. Good afternoon, everyone.
Now I'll be walking you through the financial performance of the company for the fourth quarter 2022. So first, I'd be running into the stand-alone performance of the hospital group and then might be running through the consolidated financial performance. In FY '22, we recorded a spectacular increase of 54% in our revenues to INR 659 crores on a year-on-year basis. While the first quarter was marked by some impact of COVID, we also saw a significant recovery in revenues from elective surgery in the subsequent quarters. We are also happy to inform that the company achieved all-time peak revenues this year as Shanay has already told.
The company EBITDA increased from INR 957 million in FY '21 to INR 1,426 million in FY '22, a 49% increase year-on-year. Our EBITDA margins continue to be very strong at 21.6%, again delivering a 20%-plus margins on a consistent basis. After making [ early ] adjustment for the math, we have delivered a net profit of INR 872 million for FY '22, a strong increase of 77.1% year-on-year.
Now coming to the quarterly performance. The company registered total revenue of INR 1,523 million for Q4 FY '22 compared to INR 1,440 million, a growth of 5.8% for the same quarter previous year. EBITDA for the quarter is INR 323 million, again a strong margin of 21.2%. The profit before tax is INR 226 million. The net profit for the quarter was INR 157 million compared to INR 110 million for the same quarter last year.
Coming to the consolidated financial results. In FY '22, we recorded revenues of INR 7,114 million, a significant increase of 62% year-on-year. EBITDA was at INR 1,324 million in FY '22, a 38.6% growth. The adjusted net profit was INR 716 million, a 32.9% growth year-on-year.
Now please note these consolidated numbers are not totally comparable because of the addition of the [indiscernible] business in the current year. So on the [indiscernible] performance, as Mr. Sushobhan also mentioned, there we have touched revenues of INR 310 million in the first year of operations. However, very understandably, it had negative EBITDA back in [ PAT ] in the first year of operations of INR 67 million, INR 117 million and INR 118 million. We are expecting significant increase in the operations in the current year, and we are expecting it to be EBITDA positive for FY '23. Coming to -- we have closed the year with cash balances of INR 1,551 million on a stand-alone basis and INR 475 million at the group level.
That's on the financial profile. I open the floor for any questions.
[Operator Instructions] We take the first question from the line of Sanket from Kedia Securities.
Hello. Am I audible?
Yes, Sanket.
Firstly, congratulations on good set of numbers. Just wanted a small clarification. Can you tell us about what is the total capacity of the company-owned and company-operated beds and similarly under the FOFO and the FOSO category? And what is the planned [indiscernible]?
Okay. So when we say, Sanket, the total bed capacity of 2,112 beds, these are all operated by the company, and this does not include the FOFO and the FOSO beds at all.
Understood. But when you -- when we look at the occupancy rate in this quarter, you had mentioned it was 40% on 500-odd beds. So that comes to around 1,200, 1,250 beds. So how does the total capacity be [ 2,130 ] beds?
Yes. So I think there's -- we always say that our operational beds are 1,235, if you look at the presentation. So 40% of that would be 500 beds. So this 1,235 beds are part of the 2,112 beds, which are all operated by the company and does not include the FOFO or the FOSO beds at all.
Understood. And where are the additional beds, the difference like in between 2,100 beds and 1,200 beds? What is the difference in regards to this?
Sorry, can you come again on that, please?
Why is there a difference in between the operational beds and the total capacity? Are the remaining 900-odd beds not operational? Or how should we interpret this thing?
Correct. So as we see the occupancy ramp up, we will see that these operational beds will increase. So at the moment, the 1,235 beds are beds which are kind of manned by nurse and paramedical staff. And there are about 500 people is -- the 500 to 550 is the nighttime occupancy. The daytime occupancy is always a 10% to 15% higher than that. And essentially, as you see the occupancy ramp up every year, gradually, we'll have to increase these number of beds. And we have mentioned in some of our earlier calls that from 1,235 beds to go to an operational beds of 2,000 plus, it will require a capital expenditure of only about INR 15-odd crores. So largely, most of the CapEx has already been done for these balance beds as well.
Understood. And apart from this, is there any planned capacity which you are looking in the company-owned and company-operated beds? There is 1 in Santacruz and 1 in Nashik. But are they included in this figure?
No, they are not included, Sanket. So these are the hospital beds that will be added in the years to come. So we have not included them as part of the capacity as yet.
So apart from these 2 projects, are there any other projects where you will be going in the company-owned or company-operated [indiscernible]?
So Sanket, we are continuously evaluating many projects on a weekly basis. We get a lot of opportunities because, as you know, a lot of consolidation is happening in the industry. So as and when there's something material that comes up, we will definitely disclose it in our calls.
And secondly, in regard to the Shalby Consensus, the total capacity is 60,000, right? Or can we increase it further?
Yes. So Mr. Dasgupta also is on the call. I think he will be able to take that.
Yes, Sanket, the 60,000, when I say 60,000, it's 60,000 components for the total year, which is around 5,000 per month. At this current moment, if we have all the machines running with these 2 shifts that we operate, we can do 60,000 components per month. Right now, what we have, we have around 28 machine people, which includes finishers and machinists and the machine operators. We have 3 categories in the workflow. So with that, we are currently operating between 2,500 to 3,000 components per month, which basically means around [ 30,000 to 36,000 ] components per year. We are now ramping it up to get it to the 60,000 per month level by adding more number of people on the shop floor, but not increasing the shifts.
What happens is in order to get into the 60,000, we will be adding more people. And by the end of this year, we expect to reach to that 60,000 level. Our total capacity, we could ramp it up to -- close to 100,000 to 120,000 components in the same infrastructure by adding a bit more number of machines and more manpower, which is the next phase we will talk in the later stages. But right now, we are aiming at a step by-state basis from a 2,500 to 3,000 components per month to a 5,000 per month by the end of this year. Does that answer your question?
Yes, it does. Thank you for answering that. And just a small clarification, out of the [ 100 cm ] projection, which we have given for FY '23 out of Shalby Consensus, how much would be the internal usage for these things?
It will be around 15% to 20%. So if it's around 100 crores, 15 crores to 20 crores is expected in Shalby internal, and the rest would be used in U.S. and Japan. Having said this, we are benchmarking ourselves at a target of 100 crores, but we will certainly plan to exceed that because we have plans to launch in Indonesia and in some of the other markets going forward, plus we have plans to distribute to other hospitals in India as well. Not only we will do it for internal consumption, we are receiving a lot of queries and demand from other hospitals and other surgeons across India to use our Consensus-branded implants, which we will slowly launch going forward in this year.
And on the TUKS project, can you tell us about -- more about the product potential and how big an opportunity can it be in the coming years?
Yes, I would love to answer this, but we have the world's largest joint-replacement surgeon in the room. So Dr. Vikram Shah can answer about TUKS. He is the right person to say. Dr. Shah, please?
No, sir, I think he has just gone to the OT. So I think [ he can ] come back [indiscernible]. Yes, yes.
Yes. Yes. He's the best person. But having said this, Sanket, TUKS is the unicondylar knee. So basically, when you look at the knee, it has 2 condyles, right? And sometimes what happens, it's called the partial knee where, at the early stage of osteoarthritis, your medial compartment gets worn out much faster than the lateral compartment. But then you don't need the full knee to be replaced. What happens, that's where the [indiscernible] or unicompartment or partial compartment knee has come up in place. And this is there for all companies.
What makes our product unique, the unicompartment knee, first of all, it's a fixed-bearing knee. Secondly, it has taken inspiration from 1 of the most successful unicondylar knees in the world, which has been done in a long period. It has been designed by a doctor in Texas called [ Dr. Richard Brightman ], who is one of the largest unicondylar knee replacement surgeons in the U.S. He has already started using it. And he is now helping us get a lot more surgeons into the [indiscernible] unicondylar knee. So TUKS, as we call it, is a flagship brand of ours going forward. We will not only use it in the U.S. We will also use it in India going forward when we get to launch in India as well.
[Operator Instructions] We take the next question from the line of Mr. [ Avinash ]. He is an individual investor.
My question is, so far as Consensus is concerned, when you have given a target of [indiscernible] and we've also got these approvals to sell the product in India, so what could be the possible sales other than Shalby in India as well so far as the orthopedic business is concerned?
Yes. So it's a great question. So the way we are looking at it, we want to progressively go into India. We do not want to go right completely -- all out because it takes time. So you need to get the right people in place. [indiscernible] joint replacement selling in one of the multinational companies. We have recruited 2 more people, 1 in the eastern side as well as the international side of Bangladesh and Nepal, getting into opportunities there as well as we have recruited a person who will be covering western as well as parts of southern India. We are recruiting 1 more person in northern India.
So while we assimilate and get people in, we would be looking at, first, our internal consumption in Shalby to ensure that we are able to take care of internal consumption within the Shalby Hospitals. And then we will slowly venture into other areas.
So having said this, I would like to repeat again, we are receiving a lot of queries, a lot of excitement on the Consensus Shalby brand in India. And a lot of surgeons have personally reached out to us, asking us that they would like to use [indiscernible]. So there's a lot of excitement, a lot of potential, we will slowly realize this potential going forward.
I mean, I guess, based on the feedback, do you think that the Indian business can scale to, say, maybe in terms of a number, maybe 60,000 units over next 2 to 3 years? Is that a likely scenario?
Yes, there is. But having said this, we need to understand. So in a business, as you always know, it's not only about top line. We manage our top line and our bottom line pretty well. When you look at the profitability, our profits, when we sell it in the U.S., is far higher than what we sell in India. So what we are doing, do we want to deprive our patients in India? Certainly not. So we have a short-term, a medium-term and a long-term strategy.
When you look at our short-term strategy, our short-term strategy is to ensure that we serve our customers in the U.S. who have been waiting for so long. So we have to ensure that our production matches our customer demand in the U.S. first. And along with that, we would like to serve our internal consumption in Shalby. And then progressively, we'll go into several of these hospitals that you are talking about, not only in India, but in the other parts of Southeast Asia and Middle East as well going forward and Bangladesh and Nepal.
So to your question, yes, there's a lot of potential. But having said this, we need to balance the potential versus the supplies that we can make along with some of the resources. What we want to do is we want to do a quality job. We do not want to rush into things and get into a situation where we do not service quality, which our surgeons expect out of our brand called Shalby.
We have the next question from the line of Mr. Puranwala from Elara Securities.
My first question with regards to the margins that you're making in your new hospitals, which is 0 to 5 years is what you mentioned, sir, in your presentation as well, so I would like to understand that what are the kind of investments you will have to make for lifting the EBITDA margins in hospitals which are present for less than 10 years from the current 16%, 18% range to, say, almost a 37% EBITDA margin range [indiscernible] than the hospitals over 10-year plus?
Yes. So in terms of the capital expenditure, we are -- we have projected a capital expenditure this year of about INR 27 crores across the group level across all the hospitals. And out of that, about INR 17-odd crores will come in from the non-flagship units, which is basically the newer hospitals, which are between 0 to 5 years and 5 to 10 years, right?
And in terms of the EBITDA margins, we have done EBITDA margins of almost close to 20% across both the groups across 0 to 5 years and 5 to 10 years. And there is still room to kind of -- for the operational leverage to kick in. So we will stabilize at about 23%, 25% EBITDA margins going forward. So I think that would answer your question.
Yes, sir. So but 23% to 25% is what are we expecting in the next 2, 3 years or next year?
Absolutely. We would be expecting in the next 2 to 3 years.
Okay. Got it. Got it. And sir, a couple of questions on your Q4 numbers. So this quarter, I mean, the occupancy, let's say, from Q-on-Q basis has fallen to 40% as compared to 42%. So is there any impact of the third wave of COVID or the Omicron wave? And secondly, on in-patient count as well. So your in-patient count has also gone down a little bit, while that would have been compensated by the outpatient numbers, but some color on that part would be quite helpful to understand.
No, it's a fair point. So what has happened is in the first month, which is January, the Omicron wave hit India. And during that quarter -- during that particular month, in fact, the elective surgeries were comparatively much lower. And at that time, we did not have a lot of influx of COVID patients, which has really been the case. Usually, what happens is when there is a COVID wave, as you know, we had an influx of COVID patients, which compensated for some of the loss of elective work. But in this particular month of January, that did not happen.
Having said that, February and March were very, very strong for the company. And in fact, in the month of April, we have already clocked the highest number of knee replacements done ever in the company. We crossed more than 1,100 in the month.
Got it. Got it. And sir, my final question is on -- are we guiding anything on the hospital growth for FY '23?
Yes. So internally, we have set a benchmark to grow at 20% from the FY '22 levels. So we would be aiming for about -- so we did about INR 650 crores in FY '22, we'll be expecting a 20% growth on that in FY '23 across the group -- across the hospital -- across all the hospitals.
Yes, just to add what Shanay is saying, it's important to know, if you look at our performance of the Shalby Hospital group. So if you take the last 15 years, which is 2008 to 2022, you'll see we have been consistently a CAGR growth -- revenue growth of 21% on revenue and an EBITDA CAGR growth of the last 15 years of 23%. And so basically, the idea is very clear. We would continue to ensure that the revenue growth remains at plus 20% and our EBITDA growth remains at plus 20%. So that would [ help ] improve our EBITDA margins as we -- Shanay was pointing out to 22%, 23%, 24% going forward. I hope that helps substantiate the answer -- question -- answer from Shanay as well. Thank you.
We take the next question from the line of Surya Narayan Patra from PhillipCapital India.
Just a couple of questions. First, on the hospital side. Obviously, this was one of the -- this year, we have reported one of the strongest performance in terms of revenues. And despite of impacted revenue mix, we have still managed to deliver around 22% kind of margin this year. So on a normalized business front, how should one really look at -- in terms of revenue growth, if I talk about, then obviously, FY '22 is not a normalized year. So hence, on a normalized basis, if things will not be COVID-contributed and all that, so what kind of a growth momentum that we should see for, let's say, '23 and '24? And how qualitatively the margin profile should improve? Because obviously, this year's margin is impacted a bit.
So I'll tell you, we consistently say that we have room to double the revenues and the existing capacity that we've built. So if we have done our revenue of INR 650 crores in this year, we will be able to double this revenue over the next 3 to 5 years in the existing capacity without the addition of the new beds. So -- and as Mr. Dasgupta mentioned, we are aiming for a 20% growth, which has been the historical trend for the group over the last 15 years.
Having said that, even if you look at the EBITDA margins of the group over the last 10, 15 years, we have always been in the range of between 20% and 25%. So we believe that even without the COVID going forward, we believe that we will be in that range, and it will only go upwards from here as the occupancy goes up and the operational leverage kicks in.
And just to add, again -- just to add on Shanay as well. If you look at our overall -- where are the sources of growth, when you look at the sources of growth, it's about some of the mix of surgery. So if you see our revenues on Arthroplasty today, it's at 29%, whereas our revenue -- or our surgical mix of our Arthroplasty is 45%. So today, we have done around -- so this year, we did around 20,000 surgeries. So we plan to add by another 20% to 25% growth in the surgery. So as we add our surgeries, so to your question, a normalized year will mean that more surgeons will be coming into, and that will increase our occupancy level. That will increase our revenue. And when we better our revenue mix of our surgery mix, that will help in better EBITDA. So that's the normalized year planned for us going forward.
Okay. Just slightly differently, if I ask this, if I consider this kind of a growth number, if it is organic growth and not contributed by, let's say, COVID for FY '22, so -- and keeping your revenue mix intact in terms of Arthroplasty and all that, so what margin it could have been in this revenue level, at this occupancy level?
So as I said, Surya, the margin would have remained in excess of 20% even without COVID for this year.
No, I'm asking whether it would be somewhere in the range of 23-plus or something like that?
No. So if you look at the quarter 1 margins, they have been on the higher side. So basically, if you look at the quarter 1 margins, they've been higher than quarter 2, quarter 3 and quarter 4. Because what has happened is that despite the ARPOB being lower for COVID, what happened is the average occupied bed for that quarter was 723 beds compared to the other 3 quarters where we have averaged about 500 beds. So that operating leverage did kick in at that time [ with saw ] margin expansion. So essentially, if you see the -- if you have to average it out, the quarter 2, quarter 3, quarter 4 would have margins in excess of 20%, but below 22%, if that makes sense.
Okay. Sure. Yes, this is clear, sir. So my second question is on the -- let's say, a couple of new initiatives for better growth -- and qualitative growth rather that we have taken, whether this -- the franchise-owned model or the loyalty card initiatives, what we have taken in the recent past, possibly, it is already a year ago or something like that. So what is the progress on those 2 initiatives, whether it has really added to our progress? Or it is yet to be seen in a normalized year, let's say, FY '23 onwards, something on that front?
Hello? Am I audible?
Yes, yes, absolutely. So when we talk about franchise, which was the bigger initiative for us and essentially, we already have the Udaipur franchise, which is up and running, which is a franchise-owned franchise-operated. We have also converted an Ahmedabad base, it's a small unit where Dr. Shah started from into a franchise. So these 2 hospitals, we have already started doing a lot of marketing activities around it. We have started seeing a lot of patients coming in over there.
The further development to this particular model is that we have signed -- already signed 3 more franchises. So we have signed 1 in Gwalior in quarter 4 of last year. We have signed 1 in Kanpur in quarter 4 of last year, and we have also signed Lucknow very recently. So the way things are going, we have been seeing a lot of promising response coming in from the market for this particular model, and people are wanting to associate with us on this.
And absolutely, it is in the earlier stage right now. But we see that these numbers will contribute very meaningfully in the years to come, and we plan to have a lot more franchises. We have a target of 11 to 12 franchises in FY '23, which will be operational. It will be a combination of both franchise-owned franchise-operated, and franchise-owned Shalby-operated.
And this is a solid strategy. Just to add, again, this is a solid strategy. When you look at what are the tailwinds that are there in this? So basically, when you look at orthopedics. Orthopedics is the fastest-growing surgery in India. The reason being because of the demographics and the potential that arises today. Today, actually, if you look at the potential perspective, that could actually be 15 lakh orthopedic procedures or joint replacements that can be done in this country today for a year. But as we do not more than, say, 2 lakh to 2.5 lakh procedures. So there's a huge potential. And where is this potential come in? Through not only in the Tier 1 cities, but also in Tier 2 and Tier 3 cities.
So when you look at the strategy, Shalby is the largest orthopedic center in the world. So it has all the expertise and the competencies that are in place. So what we are doing is we are lending this expertise by partnering with the hospitals which are very interested in Tier 1, Tier 2 and Tier 3 cities to capture all the patients who would not travel so much going forward but would like to have a Shalby-type competence and capability closure at home.
So the strategy is solid. As Shanay rightly said, it takes a bit of time to get that momentum going. We've already signed many of the MOUs. We will be signing 3 or 4 more MOUs in this -- in the next 2 quarters going forward. And we aim to get into 50 partnerships over the next 3 to 4 years to this franchise model. So we believe it's a solid strategy and will give us rich dividends to our Shalby group going forward.
Okay. Just on a longer-term [indiscernible]. So the [ venue sales like ] 50 kind of arrangement franchise model. So in terms of the mix to the overall volume that we will be achieving, so how much it could be -- it would be of the total Shalby's activity?
It all depends in from a -- from which stage it is. For example, so today, we started with Udaipur, right? So Udaipur, we launched around in the start of the third quarter, I would say, or yes, third -- start of the third quarter. We have done 67 surgeries till date. So next year, definitely, we plan to do close to double of the surgery that we are doing in Udaipur [ SOCE ] which we got around the 48% growth in quarter 4 alone over quarter 3. So if you see the growth that is coming up. And if you look at the SOCEs, we are getting into a 30, 25, 30, 35 bed hospitals. So we expect this will be ramping up going forward.
To answer your question, do I have an answer in terms of what will be the exact number of surgeries? No. But when you look at the potential, we believe this is a solid strategy that will give us rich dividends going forward.
I would add to that. In fact, we are seeing a lot of ripple down effect of having these FOFO and FOSO centers because we see a lot of influx of patients from that particular city in our group hospitals also. So say, for example, when we started Udaipur, now what has also started happening is that because of that, we see a lot of patients coming in from Udaipur to our Ahmedabad hospitals who are Jaipur hospitals also. So it has a kind of [indiscernible]
[indiscernible]
Yes.
Sure, sir. Sir, just last question relating to this -- Consensus. So -- and see the objective here is to understand the inclusive growth of Shalby driven by Consensus. So let's say the theoretical understanding initially what it was like the input or captive requirement of the implants can be fed by Consensus? So sure, could you give some sense of what is the -- in terms of the volume that we will be consuming at this juncture from the other brands? And a percentage of that can be replaced with the internal Consensus requirement. And see -- and whether it is the discretion [indiscernible] or discretion of the patient that only can be done, or it is we can decide about which plan that can be used for which patient? Something on that [indiscernible] because what is -- what volume of our current capital requirement can be [ fed ] from Consensus and since what overall profitability improvement led by that can be achieved. Is it possible to get a sense currently?
Yes, sure. I can give you a good understanding of that. So when you look at, as I said, so basically, if you see, we said out of the INR 100 crores, around INR 15 crores to INR 20 crores will be coming from the Consensus for the current year -- current fiscal year, right? So INR 20 crores means if you divide it by an average selling price, it will be around 2,000 to 2,500 implants.
We said very clearly that we do close to 12,000 implants in a year, right? So if you could do the math, you can understand the 2,000 or 12,000 will be the first year going forward. That means it will be definite that there will be other implants that will be also used in our Shalby Hospitals going forward.
To your question, it all depends. So when you look at how a surgery is done, when a surgeon looks at the patient, he or she decides on what implant would be the most suitable going forward. Obviously, the patient we've spoken to about what brand is being used and we also take the advice of the patients of what is their preference. Having said this, we give them an option that these are the implants that are available. And when we choose, we do a very stringent quality check in terms of the product that we use, including Consensus, as I think I have mentioned it earlier, Consensus is a brand which has been implanted more than 60,000 knees and 40,000 hips in the world, especially in a stringent market like which is controlled by FDA in the U.S., and we have 0 product recalls.
So similarly, like every other brand that is used in Shalby, Consensus also has [ fared ] through that test. But going forward, we will try and use more Consensus with the consent of the surgeon and the patient in Shalby. But right now, to your question, next year or rather this year, full year '23, we expect around 2,000-plus implants of Consensus to be used in Shalby, which we'll be progressively increasing going forward.
Okay. Just for the expansion of the overall Consensus base. So do you think there is -- do you find the necessity of a larger CapEx for scaling up this operation further? Because now you are registering in new markets, as you mentioned, Vietnam, Indonesia, Malaysia, like that. And also want to enter in deeply into the Indian market, along with the kind of progress is what you are witnessing in U.S. and Japan. So there is -- is there a [indiscernible] or a definitive need for a larger CapEx for Consensus?
No. Right now, as I said earlier, when I look at the full year '23, when we get into 5,000 components per month capacity production, we would be -- that would be enough to take care of our aspirational growth for our full year '23. So we do not need any CapEx. The investment that we need is only on manpower on the shop floor people, where you need, first of all, recruitment of people and then training them to get into -- be able to produce efficiently.
So to your question, no, we have -- we require very minimal CapEx, which mainly is on maintenance for this full year '23, but full year '24, full year '24, we will see. If there be need for CapEx to expansion, we will definitely expand. We have room for expansion, and we will certainly expand.
To your question, again, our aim is to fully bleed the assets of the corporation. And all the fully bleed assets, we aim to do 120,000 components. That is around 30,000 joints internally manufactured within our plant as well as the need be we are looking even to partner with other companies to manufacture going forward. But those are long-term strategies, which we have it in our playbook, which we will discuss as we get into other investor calls going forward.
Just one extended one, sir. When do you think this breakeven to be [ in Q4 ] Consensus? Or at what scale that you expect breakeven [indiscernible]?
So we will be breaking even at the end of this full year '23. So when we talk in the -- hopefully, in the last quarter of -- or the early quarter of next year, we should be able to probably say that we have broken even, which could again be a record in an implant business because implant business [indiscernible] to break even. And we have been managing it so well efficiently as well as increasing our profit mix as well as increasing our revenue, that we can confidently say that we'll be breaking even by the end of this year.
[Operator Instructions] As we do not have any further questions, I would now like to hand over the conference to Mr. Dasgupta for closing comments. Thank you, and over to you, sir.
Yes. Thank you again for all for participating in this investor's call. As you know, this is the year-end call. So it's very important. And hopefully, we have been able to answer most of your queries and clarify some of the things that you wanted to ask. Having said this, we are always there to -- please reach out to us. If you have further questions, you have our numbers, you have our e-mail, but this has been a solid performance. And every company, including Shalby, is on the basis of some rock-solid foundation of strategy and execution. And we believe not only having a rock-solid strategy, we believe in execution. If you see the numbers, they speak for themselves. And we have some very solid and robust plans, as we've said. And we would like to share with you -- all of you going forward.
So thanks for being with us and thanks for all your best wishes. We have a very good year for Shalby in full year 2023. Thank you again.
Thank you all. Thanks, everyone.
Thank you. On behalf of Elara Securities Private Limited, that concludes the conference call. Thank you for joining us. And you may now disconnect your lines.