‘Listing of equity shares will enhance our visibility and brand image’

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Ameera Shah, Managing Director, Metropolis Healthcare, reveals more about the company’s plan post IPO, in an interaction with Sanjiv Das

Metropolis was listed at 9 per cent premium at the issue price. What does it mean for the company?
The listing post IPO at a premium is a testimony to our competitive strengths and attractive financial profile.
Our key competitive strengths include (i) Being one of the leading diagnostics companies in India well positioned to leverage the expected industry growth;
(ii) Widespread operational network, young patient touch point network and asset-light growth of service network;
(iii) Comprehensive test menu with wide range of clinical laboratory tests and profiles;
(iv) Strong and established brand with focus on quality and customer service;
(v) Robust information technology structure with focus on improving efficiency;
(vi) Established track record of successful acquisition and integration in India and overseas; and
(vii) Experienced senior management team and qualified operational personnel.

How is the IPO going to benefit Metropolis ?
The objects of the IPO offer are to achieve the benefits of listing the equity shares on the stock exchanges and for the offer for sale. Further, our company expects that listing of the equity shares will enhance our visibility and brand image and provide liquidity to our shareholders. The listing provides a public market for the equity shares in India.

It will also help us pursue the key elements of our business strategy as follows:

  • Continue to focus on organic growth initiatives to expand our reach
  • Continue our focus on providing quality tests and services
  • Focus on the expansion of our service network
  • Focus on increasing our business from individual patients
  • Pursue new avenues of growth
  • Focus on consolidation opportunities in a largely unorganised diagnostic sector.

Are you anticipating any risk factors associated with the IPO?
Some of the key risk factors which are more relevant, are

  • Highly-competitive and fragmented industry
  • Limitation of trained human resource availability
  • Vulnerability to technological advancements
  • Challenge in entering new geographies
  • Capability to launch new tests
  • Pricing pressures
  • Capability to optimise operational expenditures
  • Government policies: Lack of a comprehensive and stringent regulatory framework.

What will be your strategy for growth from here on?
We will continue to focus on organic growth initiatives to expand our reach. We have developed a highly differentiated and focussed growth strategy of dividing the key target cities in which we operate into Focus Cities, Seeding Cities and Other Key Cities, on the basis of our market share, the strength of our brand, operational history, experience and the quality of our team. We channel resource in being the dominant player in these cities.

We have identified five focus cities, for the financial year 2019 — Mumbai, Bengaluru, Chennai, Surat and Pune.

We intend to deepen our penetration in Focus Cities by (i) Increasing the number of Third Party PSCs;

(ii) Enhancing our laboratory capacity and test menu by adding latest machines and technology;
(iii) Expanding business derived from individual patients;
(iv) Employing focussed sales and marketing teams to generate walk-ins through targeted marketing strategies and use of the customer relationship management (CRM) marketing tool;
(v) Doctor engagement through medical awareness initiatives and meetings with medical practitioners; and
(vi) Increased focus on home collection service and wellness offerings. We intend to evaluate the list of Focus Cities on a yearly basis to ensure that our resources are deployed in line with our growth strategy.

We have identified eight Seeding Cities and regions which are expected to have strong growth potential, comprising Rajkot, Nashik, Nagpur, Kochi, Raipur, National Capital Region (NCR), Kolkata and Guwahati (Seeding Cities).

We intend to expand our network in Seeding Cities by

(i) Increasing the number of patient touch points;
(ii) Expanding our test offerings; and
(iii) Employing targeted marketing strategies to grow our business.

We intend to convert some of these Seeding Cities into Focus Cities, in a phased manner, after these cities meet our internal benchmarks.

We have identified 166 other key cities (Other Key Cities) in which we either have our satellite or express laboratories or ARCs. In our view, some of these Other Key Cities have the potential of becoming Seeding Cities in the medium term.

We will also continue our focus on providing quality tests and services. The quality and reliability of our tests and services are critical to our success. Our vision is to help doctors treat their patients better and our strategy is to take the following steps in this regard:

  • Upgrading our technology for better quality, efficiency and reliability;
  • Consistent value addition to tests being offered; and
  • Promoting disease and disorder specific profiles, to allow doctors to receive comprehensive view of the patient’s disease status.

We are also actively involved in campaigns focussed on creating awareness of particular conditions such as cancer, lifestyle diseases, monsoon diseases, and the importance of periodic testing.
We are also focussing on the expansion of our service network. Going forward, we are particularly focussed on using the Third Party PSC model for expanding the geographical reach of our service network, due to its high scalability and limited capital expenditure involved. We also intend to grow our Owned PSCs in Focus and Seeding Cities. We expect that a wider geographic reach will expand our customer base as well as improve our profitability by allowing us to better leverage our infrastructure. We will also continue to seek strategic partnerships with key third-party patient service centres in India, Africa and the Middle East to expand our geographic reach. Our focus is also to increase our business from individual patients.

We intend to pursue several new avenues of growth, including: growing our offering of test packages; pursuing scientific upselling of tests: participating in select public-private partnership tenders; increase focus on contract research.

What are your expansion plans for the Indian and global markets?
I would like to reiterate that growth in the Indian market will be our single most priority in the next three years. Let me touch upon markets outside India. Our revenue from operations outside India was Rs 400.10 million and Rs 520.72 million, which accounted for 7.15 per cent and 8.09 per cent of our revenue from operations for the nine months period ended December 31, 2018 and financial year 2018, respectively. Outside India, we have laboratory operations in Ghana, Kenya, Zambia, Mauritius and Sri Lanka. In addition, we have also entered into agreements with third parties for collection and processing of specimens in Nepal, Nigeria, the UAE and Oman. As of December 31, 2018, we have an operational network of 10 clinical laboratories, 26 patient touch points and seven ARCs, outside India.

Outside India, as of December 31, 2018, our laboratory network consists of : (i) Four RRLs, located in Kenya, Zambia, Ghana and Sri Lanka;
(ii) One satellite laboratory in Ghana; and
(iii) Five express laboratories, out of which four are located in Kenya and one is located in Sri Lanka. In addition, we have also set-up a laboratory in Mauritius under the LIH model. We have also entered into agreements with third parties for collection and processing of specimens in Nepal, Nigeria, the UAE and Oman. As of December 31, 2018, we have a service network of 26 patient touch points and seven ARCs, outside India. The specimens that we receive from these countries are imported in compliance with the Indian Council of Medical Research guidelines for the import of test specimens.
We will also continue to seek strategic partnerships with key third-party patient service centres in India, Africa and the Middle East.

In comparison to your competitors, Metropolis is said to have better return ratio with return on net worth. How do you maintain this?
Our weighted average for Return on Net Worth for FY16 to FY18 was 27.41 per cent on consolidated basis and 29.11 per cent on standalone basis. We had attractive RoCE given our asset-light model – High ROCE of 64 per cent in FY18. Asset light: ~ 90 per cent of incremental Individual patients touchpoints added in last two years were third-party.

  • Metropolis’ young network and Individual patients transition will be a key driver of its revenue growth and margin expansion.
  • 20.7 per cent Individual patients Revenue CAGR in Focus Cities
  • Young Network: 75 per cent of the existing Individual patients touch points added during FY2016-18
  • Average realisation of Rs 402/test and Rs 835/patient
  • Consistent EBITDA margin of ~28 per cent over the last three years
  • Higher test volumes is the key contributor to growth
  • High proportion of specialised and semi-specialised tests leading to higher revenue per test / patient
  • Higher test volume and test mix change through upselling and offering customised packages are the key drivers of growth
  • The company has an established track record of successful acquisition and integration
  • Bringing in industry practices
  • Quality controls and standards
  • Standardised machines and SOPs


Ameera ShahEBITDAIPOMetropolis HealthcareSanjiv Das
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