Your company continued to be invested in the consolidating and growing healthcareservices business. Your company during the fiscal has diversified from the core dentaldiagnostics sector into integrated hospital management services.
Review of FY 2017-18 Performance
Total revenue of your company on rose by 188% in the current year from Rs 179.80 lakhsto Rs 518.84 lakhs.
This growth has largely been a result of your company venturing into the hospitalmanagement business. For strategic focus and management purposes your company initiallyintends to work in the Western Indian region with a narrower focus on the MumbaiMetropolitan Region in the initial few years of growth. We believe that the Mumbai regionitself offers a vast market potential for our services. These are early days of experiencefor your company and we are in the process of building up the required management andbusiness expertise to deliver sustainable growth in this segment.
Your company's primary business of running the chain of CBCT imaging centres continuedto do well.
The number of such centres expanded from 9 centres at the beginning of this fiscal to10 centres by end of March 2018. Your company continues to be a leader in the independentthird party CBCT imaging centre networks across India. Your company also for the firsttime is experimenting the concept of installing OPG imaging machines through our 'OPGConvenience Program' at established Dental clinics belonging to corporate Dental chainsHospital based Dental clinics & individual owned premium Dental clinics on a revenuesharing formula. During FY2018 a total of 20 OPG machines were installed acrossBangalore Mumbai. Some of the key partners with whom we are providing our OPG servicesare Axiss Dental South Ampa Orthodontics Fortis & Aster Hospitals among others. Theresults have been so far encouraging and we continue to build on this strength by takingit to other cities in India involving more such clinics. Your company's activities aresupported by more than 2500 dentists in Mumbai. These imaging centres are run under thebrand name of "Scandent".
Your company took over 3 hospitals in Mumbai. They were an operating 15 bed hospitalfor management in Saki Naka a 25 bed hospital in Mahim and a 100 bed infrastructure multispecialty hospital in Mira Road in Mumbai. These acquisitions were done between August2017 and March 2018. Totally the bed capacity available for servicing for your companystands at 140 hospital beds with interests in medical diagnostics and pharmacy. The aimis to provide secondary level care and support for patients and service all basic needs ofthe patients in a cost efficient and convenient manner. This is being operated as aseparate division within your company and is operated under the brand name "FamilyCare". We expect every business in this segment to have an initial period of lossesbefore breaking even in operations as your company would have to make investments intoboth capex opex and also ensure on the compliance and management aspects of thesebusinesses. Your company is working on focusing and managing of these risk at all times.
As all these hospitals were either having financial stability issues or limited growthprospects our team is now focused on turning around every hospital under our managementby adopting centre specific strategies and building on existing business performances.Your company is now fully experiencing the requirements of the hospital business and looksforward to be a meaningful participant in this business. These business expansions arebeing funded through internal accruals balances and by borrowings from related groupentities.
Consequently Earnings before Interest Depreciation and Taxes (EBIDTA) for yourcompany for FY2018 grew by 353% to Rs 159 lakhs from Rs 45 lakhs the previous fiscal.Also given that our business model is asset light and performance oriented the netprofits for the company grew to Rs 86 lakhs in FY2018 from Rs 16 lakhs in the previousfiscal.
As your company has just turned around and does require some more time to mature itsbusinesses and operations the board of directors has decided to avoid declaring of anydividend for this year.
Business Outlook FY2018-19
Considering that the Indian national elections would be around by the beginning of nextyear it would be prudent to avoid expectations of any massive economic growth measures tobe unveiled in the last budget for this government. However as healthcare is apolitically sensitive subject there could be popular measures for public healthcareimplemented by the central government which may have a short term negative bias for theprivate sector business.
The proposed government agenda to give up to Rs 5 lakhs insurance cover per family peryear for more than 200 million families with marginal or no incomes can make thissignificant change to the healthcare business environment. Also the focus to reduce inputcosts for stents and other medical equipments could be a positive for our expansion plansin the hospital and diagnostics business. The risks primarily emanate from the ability ofour management to deliver on the business turnarounds and the pricing of our acquisitionsto ensure an early breakeven.
The recent consolidations and sell outs of some of the larger reputed and largerhospital brands remind us to be very cost effective in our approach and sensitive to theindustry ground scenarios. Several of the larger private hospitals and smaller hospitalchains are bleeding and/or do not have next generation leaders to lead their businesses.Borrowings have been the key reason for most large companies facing the challenge. Forsmaller set-ups it has been their inability to seek and secure the right teams to managetheir operations. Our interest in acquiring existing set-ups across a certain regionalong with rebranding of the same under "Family Care" and consolidating theiroperations and increasing our business efficiencies could be our way ahead in thisbusiness. We intend to deepen our learning in this business during FY2018. We would becontinuing our expansion of the OPG imaging networks this fiscal as well.
Dr. Gautam Deshpande