Shalby Care Card, a loyalty program, has been launched for those who don’t have insurance: Shanay Vikram Shah

Shanay Vikram Shah, Director, Shalby Hospital, talks about the March quarter results, COVID impact on the business and CapEx plans among others during an interview with Swati Khandelwal, Zee Business. Edited Excerpts: 

Q: Results of Q4FY20 have been weak as revenue is down by 3.5% from the corresponding quarter of the last fiscal, there is a loss in the business and EBITDA is 81% down. What led to this fall in numbers and by when do you see recovery is coming in the bottom line?

A: There are three to four things like our top line has declined as compared to the same quarter of last year because we faced a revenue loss of around Rs 12-15 crore in the last eight days of March essentially due to COVID. We have revenue of around Rs 1.50 crore per day. Secondly, the doctors and the employees haven’t taken any kind of salary cuts in March, which had an impact of around Rs 7-8 crore on that part. If that is adjusted in the EBITDA margin than the quarter will turn normal for us and we have performed well in the quarter. 

Besides, there was a taxation impact, particularly on Shalby. There was a government rule for companies’ turnover below Rs 400 crore in 2017-18 but there is a tax change in which the period has been shifted to 2018-19. Our turnover is above Rs 400 crore and that’s why there is a Rs 20 crore impact on the PAT, but it is a book entry. Our company falls under Minimum Alternate Tax that’s why our cash flow in terms of tax than it falls under 16-17% tax bracket, which is paid in tax. Thus, a thing that is visible in the result is a book entry.

Q: Going forward what is the outlook for the future? Do you think that you will return soon on the pre-COVID numbers?

A: As far as what we will be doing in the future is concerned than COVID has had an impact in April and May but have received a positive response since May 17, 2020, when the Lockdown 4.0 was implemented as people are fearing less and reaching to the hospitals, getting their surgeries done. So, we are very confident that we will reach the pre-COVID levels in the next 15-20 days. 

We are doing a few new things like 

We have launched a Shalby Care Card, which is a loyalty programme that will increase the consumers’ stickiness. There are two types of cards and are (a) Silver card and (b) Gold card. 60% population of India’s population makes out of pocket payments at the hospitals as they can’t take the insurance. So, the card will target those who don’t have insurance or they can’t get it. So, it is going to be a big driver for the company in this financial year. 

We are bringing a franchisee model. Shalby is doing the big work in the Arthroplasty and we perform 8,000-9,000 replacements, out of 1.50 lakh knee replacements done in India. This is the largest one in the world. However, we are planning to leverage it in metros, Tier-I, Tier-II and Tier-III cities. It is an asset-light model. Under the process, a hospital in any city for instance in Jodhpur, Rajasthan, with local orthopaedic surgeons can use the protocols of Shalby to conduct the surgery and the patients can take its benefits there itself. They will not need to reach the hospital. It is a scalable model and it will be launched by the end of this quarter or the start of the next quarter. We are very positive about it and believe that we will be able to use its asset-light model. 

We have incorporated a new company named Marsh Medical. Currently, 80% of the medical devices used in India are imported. And, going by the call of our Prime Minister Narendra Modi for being an Atmanirbhar (Self-Reliant), we are planning to start working on the locally made medical devices. The best part of the company is that a large part of the manufactured devices will be consumed at our hospitals.

Thus, we are planning to work on orthopaedic implants and medical devices. 

 Q: In your results, there was a 5 times increases in other income when compared with the previous year’s numbers. Would you like to throw some light on that? What is your CapEx plan? 

A: Two reasons led to an increase in others income and they are (i) Many of the vendors were brought on board when the CapEx cycle was on but now, we are not supposed to return that money to them because of the cost-cutting measures that have been done. So, right back of the money has been completed; and (ii) we have done many things over the years like insurance. If the insurance money is not realized due to any reason then we are not supposed to pay the money to the doctors. The right-back of that money has been completed. Thus, the money that we are not supposed to pay to the consultants has been written back into the books. 

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As far as CapEx plans are concerned then we have two new projects, at Nashik and Mumbai’s Asha Parekh Hospital. These two projects have been running slowly for the last 3-6 months due to COVID. However, we don’t have any plans for CapEx reduction. We will go ahead with the CapEx that was planned and are expecting that the Nashik project will start in the fiscal year 2022-23 and Mumbai’s project will start in 2023-24.