Investor Presentation
SHALBY LIMITED (BSE CODE: 540797 I SHALBY, NSE CODE: SHALBY) A leader in Joint Replacement surgeries in India with an established chain of multi-specialty tertiary care hospitals. AGENDA
01 BUSINESS OVERVIEW
02 FINANCIAL PERFORMANCE
03 STRATEGIC DIRECTION
04 APPENDIX
2 BUSINESS OVERVIEW OUR REGIONAL PRESENCE
Shalby has developed strong brand recognition in its core markets and is well positioned for further expansion
¾ National Presence ¾ International Presence (in Africa)
PUNJAB Mohali – 145 beds
RAJASTHAN Jaipur – 237 beds
GUJARAT Ahmedabad o SG – 201 beds o Krishna – 220 beds o Vijay – 27 beds o Naroda – 267 beds Vapi – 146 beds Surat – 243 beds
MADHYA PRADESH Indore – 243 beds Jabalpur – 233 beds MAHARASHTRA Upcoming Two Units Mumbai (Santacruz) – 175 beds MAHARASHTRA Nashik – 113 beds Ghatkoper (Zynova) – 50 beds Ghatkoper (Zyonova) – 100 beds 4 BUSINESS MODEL
Greenfield 907 Beds Brownfield 977 Beds Acquisition 366 Beds Franchise Lower capital requirement Lower capital New Growth Area Franchise
2017 Year 2015 Year Naroda 267 Beds Jabalpur 233 Beds
2017 Year 2007 Year Mohali SG 201 Beds 145 Beds Leased Santa Cruz 2024 Year 2023 Year 175 Beds Nashik 113 Beds
2017 Year 2015 Year 2012 Year Jaipur 237 Beds Indore 243 Beds Krishna 220 Beds
1994 Year 2017 Year 2012 Year Freehold Vijay 27 Beds Surat 243 Beds Vapi 146 Beds
Upcoming hospital developments Faster time to market Notes: 1. SG Group comprises of SG and Vijay. Surat Group comprises of Surat and Vapi 2. Fixed rent of Rs. 5L per month is paid by Shalby SG to Dr. Vikram Shah and Rs. 50,000 per month is paid by Vijay Shalby to Shalby Orthopedic and Research Centre in which Dr. Vikram Shah is a partner 5 3. Total bed count of 2012 includes 50 beds at Zynova-Shalby Hospital, Mumbai BUSINESS MODEL
Our Business Model – Optimising Capex and Opex
Optimize capex Operational planning with Efficiency due Inhouse to projects better capex team planning
Cost per bed ~ EBITDA upwards Rs. 4.5 millions of 20% which is for fully owned higher than set-up. Lower for industry average leased premises
Leveraging Better utilization Utilities planning Low economies of of space [and to optimize consumable scale through expensive real capex cost centralized estate] procurement
Lowest Capex and Opex per Focus on surgeries with higher Gradual ramp-up of bed bed margins and return ratios capacity 6 HOSPITAL MATURITY PROFILE
Shalby Hospitals generates positive EBITDAR Margin within 3 years of its operations
33% 13% 15% Avg. EBITDAR Margin Avg. EBITDAR Margin Avg. EBITDAR Margin
Naroda
SG Group Indore Jaipur Nashik
Krishna Jabalpur Surat Group Mohali Santa Cruz
8+ Years 5+ Years 3+ Years 2+ Years Pipeline
Pipeline focused on high ARPOB regions and Franchise rollout
Nashik Pipeline
Santa Cruz Pipeline SG Group Jaipur Naroda
Mohali Krishna Jabalpur Indore Surat Group
<200 Beds 200 – 230 Beds 231 – 240 Beds 241 – 260 Beds 261+ Beds
Note: Greenfield Brownfield Acquisition 1. All numbers are on Standalone and FY20 basis 7 HOSPITAL BUSINESS UPDATE
Santa Cruz Development Update Nashik Development Update
Business Model: Revenue Sharing Business Model: Revenue Sharing Bed Capacity: 175 Bed Capacity: 113 Operating and Management Term: 30 + 30 years Operating and Management Term: 30 years Operationalization Year: FY 2024 Operationalization Year: FY 2023 Estimated Cost: Rs. 1,600 million Estimated Cost: Rs. 310 million
Approval awaited from Brihanmumbai Municipal Brownfield development with Shalby to invest in Corporation (BMC) medical equipments
8 BOARD OF DIRECTORS
Experienced Board of Directors
Dr. Vikram Shah Chairman and Managing Director Mr. Shyamal Joshi Non-Executive Director
Over two and a half decades of professional healthcare experience across UK, USA and India, Dr. Shah has been serving as Director of the Department of Knee Associated with Shalby Hospitals since 2010, Mr. Joshi has significant experience in Replacement at Shalby Hospitals since 1993. Recognised for his outstanding various areas including corporate strategy and fund raising. he holds a Bachelor’s contribution in the field of orthopaedics on completion of 1,00,000 joint degree in Commerce from Gujarat University and is also a member of the ICAI. replacement surgeries, he received the ‘Times Man of the Year’ Award by Times of India Group in 2018.
Dr. Umesh Menon Dr. Ashok Bhatia Independent Director Non- Executive Director
With more than 40 years of professional experience, in the past Dr. Bhatia was Dr. Menon has experience in the areas of finance and cost accounting and is currently associated with Cadila Healthcare as President, Emerging Markets. Currently, he is also on the board of directors of Varis Management Services. He is a regular visiting an external consultant of McKinsey & Co and a visiting faculty member at IIM faculty member at Emirates Foundation and an international expert and trainer for the Ahmedabad, IIM Rohtak and IIT Gandhinagar. United Nations Industrial Development Organisation.
Mr. Tej Malhotra Ms. Sujana Shah Independent Director Independent Director
Mr. Malhotra has over four decades of experience in various industries both in Ms. Shah is a practicing Chartered Accountant and has vast experience of over 18 years India and internationally. Previously he held the positions of Senior Executive in the fields of finance, accounts, audit, direct and indirect taxes, banking and treasury. Director at GHCL, Technical Director at Idea Soda Ash and Calcium Chloride Presently she is a partner of V. R. Shah & Associates. She has also been the statutory and Company of Saudi Arabia and Executive Engineer (Mechanical) at Hindustan internal auditor of some of the most reputed public banks of India. Copper.
9 SENIOR MANAGEMENT
Senior Management
Mr. Shanay Shah Mr. Muraarie Rajan Principal Advisor to CMD President 25 years experience in corporate strategy, mergers and acquisitions and fund raising. With over six years of experience in the healthcare industry, Mr. Shah is involved in Worked at Wolfensohn & Company, Credit Suisse and JP Morgan in New York. Was overseeing the international business, investor relations and digital transformation Executive Director at Piramal Enterprises and JSW. Qualified as Chartered of Shalby Hospitals. Accountant from the UK and holds an MBA from MIT Sloan School of Management
Mr. Prahalad Rai Inani Dr. Nishita Shukla Chief Financial Officer Chief Operating Officer
Mr. Inani has over 24 years of experience in the fields of finance, accounts, Dr. Shukla holds a bachelors’ degree in Homeopathic Medicine and Surgery and has financial planning & analysis, budgeting, cost control, project costing and experience of over 13 years in the healthcare industry. As the Shalby Hospitals Group auditing. Previously he was associated with Apollo Hospitals, TM Goup of COO, her responsibilities include overseeing the overall business, clinical operations Companies and Octant Interactive Technologies. and administration of all hospital facilities.
Mr. Babu Thomas Mr. Jayesh Patel Chief Human Resource Officer Company Secretary and Compliance Officer
With over 25 years of experience in talent management, Mr. Thomas heads the With over 18 years of experience in the field of corporate law Mr. Patel is involved Human Resources and Operation functions of the Group. He is involved in strategic in the legal, corporate compliance and secretarial matters of Shalby Limited. HR initiatives, change management, talent acquisition, employee engagement, Shalby Academy and training and development.
10 FINANCIAL PERFORMANCE ANNUAL PERFORMANCE TRENDS
Increasing number of patients across all care formats reflects Shalby’s strong brand recognition
In Patients Day Care Out Patients
23,728 325,596 296,197 39,030 7.5% 19,674 20.6% 9.9% 36,311 Y-o-Y Y-o-Y 222,970 Y-o-Y 27,771
5,196
FY 18 FY 19 FY 20 FY 18 FY 19 FY 20 FY 18 FY 19 FY 20
ARPOB (In Rs.) Surgery Count
31,564 31,296 30,457 19,908 19,835 17,554
FY 18 FY 19 FY 20 FY 18 FY 19 FY 20 Significant impact on FY20 surgeries due to Covid-19 during March-20
12 ANNUAL PERFORMANCE TRENDS
Number of beds occupied increased by 8.9% y-o-y and occupancy rate of 38%
Hospital Revenue Mix by Care % of Revenue from Arthroplasty
11% 55% 12% 13% 45% 45% 2% 4% 5%
88% 84% 83%
FY 18 FY 19 FY 20 FY 18 FY 19 FY 20
In Patient Day Care Out Patient
No. of Beds Occupied Occupancy Rate ALOS (Days)
450 8.9% 37% 38% 413 4.15 4.22 Y-o-Y 29% 3.70 335
FY 18 FY 19 FY 20 FY 18 FY 19 FY 20 FY 18 FY 19 FY 20
Adjusted 28% 34% 38% Occupancy Notes: 1. Occupancy rate is on the basis of operational beds. Adjusted occupancy rates is on the basis of FY20 operational beds of 1200 2. ALOS is without Day Care 13 HOSPITALS SPECIALTIES
Revenue by Hospital Specialty
50% 45% 45% 40% 30% 20% 11% 10% 11% 10% 11% 7% 9% 8% 9% 10% 6% 4% 4% 4% 5% 0% Arthroplasty Cardiac Science Cardia Care & Nephrology Neurology Oncology Other Ortho Others General Medicine
FY 19 FY 20
Number of Surgeries by Specialty Revenues by End Patient
16% Arthroplasty 60% Orthopedic 3% 21% 48% Nephrology 3% Surgery General Surgery 3% 4% 44% 48% Mix 27% 3% 23% 3% (Nos.) Cosmetic & Plastic Surgery 20% 7% 15% 6% Oncology 6% 4% 2% 8% 13% Cardiac Science Others 12% Self Pay Corporate Insurance Corporate Private Government FY 20 FY 19 FY 20 FY 19 Note: 1. All numbers are on Standalone basis 14 FINANCIAL PERFORMANCE
Total Revenue (Rs. Mn)
21.5% 6.9% 14.0% Y-o-Y Y-o-Y CAGR
5,042 4,715 3,880
FY 18 FY 19 FY 20
Significant impact on FY20 surgeries due to Covid-19 during March-20
15 FINANCIAL PERFORMANCE
Total EBITDA (Rs. Mn) Total PBT (Rs. Mn)
22.7% 567 19.7% 13.8% 12.6% 19.4% 8.1% Y-o-Y Y-o-Y 10.7% 11.3% 537
991 504 916 881
FY 18 FY 19 FY 20 FY 18 FY 19 FY 20
Despite subdued FY20 revenue growth, Shalby continued to deliver higher margins
16 FINANCIAL PERFORMANCE
Ongoing optimization of doctor cost and centralized sourcing of medical instruments, devices and consumables
Total Operating Expenses (Rs. Mn) Total Costs ex Finance Cost (Rs. Mn)
4,051 D&A Expenses 3,799 7% 8% 8% 2,999 10% 8% 10% Other Expenses 14% 16% 15% 10% 12% 12% Employee Benefit Expenses
59% Purchase and Change in 57% 55% Inventory Operative and Other FY 18 FY 19 FY 20 Expenses FY 18 FY 19 FY 20
Doctor Costs Consumables Other Operative Expense Employee Costs as % of Revenue from Operations as % of Revenue from Operations as % of Revenue from Operations as % of Revenue from Operations
26.9% 25.7% 23.8%
15.8% 14.8% 14.1% 14.0% 13.5% 11.9% 10.5% 10.1% 9.3%
FY 18 FY 19 FY 20 FY 18 FY 19 FY 20 FY 18 FY 19 FY 20 FY 18 FY 19 FY 20
Notes: 1. Total Operating Expenses comprises of Operative and other expenses, Purchase and Change in Inventory, Employee costs and Other Expenses 2. All numbers are on Consolidated basis 17 FINANCIAL PERFORMANCE
Total Profit after Tax (Rs. Mn)
(107) 460 10.4% 291 6.8% 5.7%
392 317 276
FY 18 FY 19 FY 20 Accounting Cash Tax Adjusted PAT FY20 Tax
Adjusted PAT FY20 reflects Profit after deduction of Cash MAT Tax outflow from PBT
Note: 1. Cash tax rate is calculated as Taxes outflow as per cash flow divided by PBT 18 HOSPITAL INVESTMENT JOURNEY
Return on Capital Employed currently reflects real estate investments and a relatively younger maturity portfolio
Shalby Branding Phase Investment Phase 2 Hospitals with 228 beds Added 8 Hospitals with 1,734 new beds
Current Occupancy of Phase IV Phase I – Capex Rs. 4 mn* Phase II – Capex Rs. 329 mn* Phase III Phase V – Capex Capex Rs. 4,811 mn* 38% reflects 1 Hospital with 27 Beds Launch of Shalby SG in 2007 Capex Rs. 1,103 mn* Rs. 678 mn* Launch of 5 New Hospitals: younger maturity Total 2 Hospitals with 228 Beds Launch of Vapi and Launch of 1 New Krishna Jabalpur, Indore, Jaipur, Naroda Hospital: Mohali of hospital portfolio Total 4 Hospitals with 594 and Surat Total 10 Hospitals given Phase IV Beds Total 9 Hospitals with 1,817 Beds with 1,962 Beds investments
70%
58% 60% 55% 48% 50% 43% 40%
30% 25% 24% 25%
20% 17% 13% 14% 13% 11% 10% 10% 7% 8% 0% 0% 0% ROCE on Avg Capital Employed on Avg Capital ROCE 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
ROCE on Avg CE
Notes: 1. ROCE is calculated as EBIT divided by Average Capital Employed. FY20 EBIT is excluding CSR Expense of ~Rs. 3 Crores 2. Total bed count of 1,962 at the end of FY20 is excluding Zynova bed count of 50 3. All numbers are on Standalone FY20 basis 4. Occupancy rate is calculated on operational number of beds 19 5. * Capex with respect to hospitals is actually spread over multiple years till 2020 HOSPITAL MARGIN PROFILE
Each hospital group makes a positive contribution at the Shalby level where corporate costs are 4.7% of total revenue
ARPOB Rs. 51,231 27,843 21,382 22,635 31,517 24,427 16,801
40%
35.6% 35%
30%
25.9% 25% 24.5% 23.2% Hospital and Other
EBITDA % EBITDA Margins
20%
14.7% 15% 19.7% 11.9% EBITDA Margins 10.9%
10% 8.5%
5% Corporate Cost 4.7%
nm 0% SG Group Krishna Naroda Indore Jaipur Surat Group Jabalpur Mohali
Notes: 1. Hospital and Other EBITDA Margins is a sum of Hospital EBITDA divided by Total Income and Other Income divided by Total Income 2. Corporate Cost primarily comprises of corporate employees, advertisements, CSR expenses, taxes and professional fees 3. All numbers are on FY20 basis 20 HOSPITAL MARGIN PROFILE
Shalby is able to operate hospitals profitability at EBITDA and EBITDAR levels even at a bed occupancy of 30%
Jaipur, Surat and Naroda which have been operational for less than 5 years are currently ramping up
30.5% Min. Occupancy 45.0%
40.0%
SG Group, 36.0% 35.0%
30.0%
Krishna, 25.9% 25.0% Naroda, 25.7% 20.0%
Surat Group, 10.9% 15.0% Jaipur, 11.9% Indore, 14.7% 10.5% EBITDAR Margins EBITDAR Margins % Min. EBITDAR 10.0%
Jabalpur, 10.5% 5.0%
0.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% 55.0% 60.0% 65.0% Bed Occupancy %
Notes: 1. Mohali is less than 3 years of operation hence not included 2. All numbers are on Standalone FY20 basis 21 3. Bubble size represents FY20 Standalone Revenue FINANCIAL PERFORMANCE
Cash Flow Statement (Rs. Mn) – FY20
4 • Mat tax outflow of Rs. 107 mn, Tax (176) receivables created of Rs. 95 mn 360 (202) • Maintenance capex of 3.9% of (198) Total Income 567 553 (109) • Net other investment activity of Rs. (161) mn (215) 31 • Interest received of Rs. 52 mn PBT D&A Other Non Working Taxes Paid Cash flow CapEx Other Cash from Free Cash • Debt and interest repayment of Cash Capital from Investments Financing Flow Rs. (150) mn Charges Changes operations • Dividend Payment of Rs. (65) mn
Cash Flow Statement (Rs. Mn) – FY19
• Maintenance capex of 7.6% of 26 Total Income 332 (333) • Net other investment activity of (94) Rs. 236 mn (315) 329 504 434 (512) • Interest received of Rs. 93 mn • Debt and interest repayment of (65) Rs. (512) mn PBT D&A Other Non Working Taxes Paid Cash flow CapEx Other Cash from Free Cash Cash Capital from Investments Financing Flow Charges Changes operations
Note: 1. All numbers are on Consolidated basis 22 FINANCIAL PERFORMANCE
Strong EBITDA to Cash Flow conversion rate of 55.9%. Unlevered balance sheet results in lower Return on Equity
ROE ROCE
7.7% 7.3% 6.9% 5.8% 5.2% 4.1% 3.5%
FY 18 FY 19 FY 20 FY20 Adjusted FY 18 FY 19 FY 20
CFO to EBITDA Capital Structure
55.9% 47.4% Figures in Rs Million FY 18 FY 19 FY 20
Gross Borrowings 1,137 708 622
15.8% Cash and Investments 1,162 862 1,021
Net Debt/ (Net Cash) (25) (154) (399) FY 18 FY 19 FY 20 Equity 7,515 7,798 7,992
Notes: 1. FY20 Adjusted ROE is calculated using Adjusted PAT for MAT cash outflow adjustment 2. ROCE is calculated as EBIT divided by Average Capital Employed (Total Assets – Total Current Liabilities) 23 3. All numbers are on consolidated basis FINANCIAL PERFORMANCE
Over last two years, Total Revenue increased by 14.0% and EBITDA by 6.1% CAGR with EBITDA margins at 19.7% Increasing number of patients across all care formats reflects Shalby’s strong brand recognition: In Patients 7.5%, Day Care 20.6% and Out Patients 9.9% Number of beds occupied increased by 8.9% y-o-y and current occupancy rate of 38%, increasing by 4% last year on a like for likebasis Shalby’s diversification strategy towards multi specialty will drive patient numbers, surgery count and occupancy rates going forward Arthroplasty surgeries are increasing in number but declining as a percentage of Total Revenue as part of the diversification strategy Arthroplasty to reach 35% of total revenues in the coming years with ARPOB reflecting other speciality offerings Revenues Relatively newer hospitals (Jaipur, Mohali, Naroda and Surat) payer mix now moving more towards self-pay which is expected to result in higher ARPOB Average length of stay increasing in line with greater trend towards non-arthroplasty surgeries Actively sourcing direct patient referrals from Kenya and Tanzania, in addition to partnerships with international hospitals
Ongoing optimization of doctor costs within COGS resulting in a move from fixed pay to minimum guarantee to visiting doctor model Centralized sourcing of medical instruments, devices and other consumables across all Shalby doctors Costs Costs Greater than 95% of material purchases are from J&J and Meril India; less than 2% from Slaney, a promoter group company
PBT margins at 11.7% and PAT margins adjusted for cash tax at 9.1% Well capitalized balance sheet with Debt of Rs. 62 Crores, Cash and investments of Rs. 102 Cr Strong EBITDA to Cash Flow conversion rate of 55.9%
Returns Return on Capital Employed of 7.3% based on current occupancy rate of 38% Unlevered net debt balance sheet results in lower Return on Equity
Note: 1. All numbers are for FY20 period 24 H1 FY2021 PERFORMANCE UPDATE
Particulars (in Rs. Million) Q1 FY21 Q2 FY21 Q-o-Q Growth H1 FY21 Revenue from Operations 384 1,156 200.7% 1,541 Other Income 23 24 2.2% 47 Total Income 408 1,180 189.5% 1,587 Expenses COGS 271 633 133.9% 903 % of Revenue from Operations 70% 55% 59% Employee Benefit Expenses 88 143 61.9% 231 % of Revenue from Operations 23% 12% 15% Other Expenses 74 86 15.8% 160 % of Revenue from Operations 19% 7% 10% Total Operating Expenses 434 862 98.7% 1,295 % of Revenue from Operations 113% 75% 84%
EBITDA (25) 318 - 293 EBITDA Margins % (6.2)% 27.0% 18.5% Depreciation and Amortisation 90 92 2.5% 182 Finance Cost 12 8 (34.1)% 20 PBT (127) 219 - 92 Total tax (40) (26) (34.8)% (66) Effective Tax Rate % 31.4% (11.9)% (71.5)% PAT (87) 245 - 158 PAT Margins % (21.4)% 20.7% 9.9%
Notes: 1. Margins are calculated on the basis of Total Income 2. All numbers are on consolidated basis 25 H1 FY2021 PERFORMANCE UPDATE
Capital Structure Operational Performance
Q-o-Q Operational Metrics Q1 FY21 Q2 FY21 Figures in Rs Million Mar-20 June-20 Sep-20 Growth In Patient Count 3,664 7,573 106.7% Gross Borrowings 622 494 476 (Nos.) Day Care Patient Count 3,763 5,026 33.6% (Nos.) Cash and Investments 1,021 983 985 Out Patient Count 32,305 56,619 75.3% (Nos.) Surgeries Count 843 1,622 92.4%
ARPOB 21,848 24,837 13.7% Net Debt/ (Net Cash) (399) (489) (509) (Rs.) Bed Capacity 2,012 2,012 0.0% (Nos.) Equity 7,992 8,064 8,087 Operational Beds 1,200 1,200 0.0% (Nos.) Occupancy 205 489 138.4% (Beds) Note: 1. All numbers are on consolidated basis Occupancy (%) 17.1% 40.8% 138.4% (operational beds)
Average Length of Stay 5.10 5.94 16.6% (without Daycare)
Note: The operational bed count of 1,200 considers 36 operational beds at Zynova-Shalby Hospital, Mumbai, for which no other operational parameters are tracked
26 H1 FY2021 MANAGEMENT MESSAGE
Commenting on performance, Mr. Shanay Shah, President Said:
All our hospitals, except SG Shalby, have continued to treat Covid-19 patients and provide the required infrastructure support and medical facilities needed to try to address this ongoing unprecedented health crisis. In addition to having treated over 3,250 Covid-19 patients in total across our hospital group, during the lastquarterwehavealsoregisteredanincreaseinbotharthroplasty and orthopedics elective surgeries. As a result of this, we have seen a sharp rebound in both our business and financial key performance indicators during Q2 FY21.
During the quarter, Shalby delivered total income of Rs. 1,180 million, an increase of 189% on a q-o-q basis. This was due to bed occupancy levels moving up meaningfully to 41% in Q2 FY21 as compared to 39% in the same quarter last year. EBITDA returned to profitability at Rs. 318 million and margins improved significantly to 27.0%. The margin improvement was primarily driven by higher occupancy from Covid-19 patients coupled with lower consumption of materials and consumables. Overall, net profit was Rs. 245 million with margins of 20.7%. From a balance sheet perspective, Shalby remains well capitalized with net cash of Rs. 509 million at the end of September 2020 compared with Rs. 489 million last quarter.
With the removal of lockdown and travel restrictions, business activity started to show early signs of normalization, however Covid-19 cases continue to rise across the country. Our senior management team remains fully committed to ensure best in class healthcare facilities are being provided to patients across our hospital group. Furthermore, Shalby continues to provide patients with affordable home care medical services.
Note: 1. All numbers are on Consolidated basis
27 STRATEGIC DIRECTION CARDIAC GROWTH
The Cardiac growth story in India
~ 2,00,000
~ 50,000 Year 2017 CAGR – 29% in 30 years. ~ 5,000 Surgeries Currently growing @ 2-3%
Year 2004 ~ 500 Year 1994 Surgeries Surgeries Wide procedure penetration to Tier 2 and 3 cities Year 1984 Surgeries
29 FRANCHISE MARKET OPPORTUNITY
Knee Replacement - The big opportunity
~ 2,05,000
~ 1,28,000
In terms of volume Year 2020 for joint pain and ~ 80,000 knee problems, Surgeries potential patient base of Year 2016 population over 45 years in India is ~ 50,000 Surgeries 343 mn Year 2012 In India, Joint Surgeries replacement ~ 17,500 surgeries are expected to Year 2008 grow at a Current size of CAGR of 11-12% orthopedic Surgeries Asian till 2024 implants market population 15 to reach in India is times more ~0.4 mn US$1,604 mn in Year 2004 prone to Arthritis 2019 and is of knee than expected to Surgeries their western reach US$ 2,881 counter parts mn by 2024
30 FRANCHISE MODEL ASSET LIGHT
Minimum Requirement • Standalone Building with focus only on Orthopedics • Carpet Area: Min. 10,000 sq. ft. and Max. 30,000 sq. ft. • Bed Capacity: Min. 25 and Max. 50 beds • Agreement period: 10 years • Located in key catchment area • Brownfield project
Potential Partners • Businessmen • Real Estate Owners • Hospital Owners • Doctors
Shalby Shalby Financial Model Shalby Franchise System Operations Operations • Pure Revenue Sharing Model system • No minimum Guarantee to be paid Shalby • OPEX to be managed by Shalby in case of FOSO and by franchisee Shalby in case of FOFO Brand Brand Operations Model • All employees at the franchise will be trained in Shalby‐system by Shalby’s Learning & Development Team • Shalby’s STANDARD OPERATING PROCEDURE for all systems and Franchise Owned –Shalby processes Franchise Owned – Franchise • Shalby’s HOSPITAL INFORMATION SYSTEM will be implemented for Operated (FOSO) Operated (FOFO) uniform service delivery 31 HOMECARE SERVICE OFFERINGS
Present offerings Future offerings
• Home COVID-19 care • ICU Setup @home package • Nursing (incl. critical care) • Chronic disease • Attendant management • Physiotherapy • Pathology • Rehabiliation • Medical Equipment • Pharmacy @home • Personalised & tech • Home visits by doctors enabled integrated services
Strategy: • The healthcare dynamics in India all point towards a high need for affordable medical services required at home 32 CARE CARD PRIMARY FEATURES
Membership Fee : Rs 2500/- Membership Fee : Rs 5000/- • Complimentary Health check-up: Worth Rs 2500/- • Complimentary Health check-up: Worth Rs 5000/- • OPD Services discount: Consultations(20%), • OPD Services discount: Consultations(20%), Lab & Diagnostics (15%) Lab & Diagnostics (15%) • OP Pharmacy discount: 10% • OP Pharmacy discount: 10% • IP Services discount: 15% • IP Services discount: 25% • Super-specialty Surgery discount: NA • Super-specialty Surgery discount: 15% • Room Category: Economy • Room Category: Economy, Twin-sharing
Strategy: • Mechanism to promote health awareness and brand loyalty • Provide affordable healthcare services to the people who do not have Mediclaim/Insurance 33 APPENDIX ORGANISATION STRUCTURE
¾ CORPORATE STRUCTURE ¾ UNIT LEVEL STRUCTURE
Unit CAO
Chairman & Managing Director Clinical Applications Corporate development
Accounts Advisor to Group VP President CFO CHRO CIO HR CMD COO Projects Hospitality
Cluster COO CORPORATE SUB-FUNCTIONS IT/Systems Billing
Unit CAO Pharmacy Admin/Operations/Eng. Quality UNIT TEAMS SCM Nursing Internal Auditor Statutory Auditor Radiology & Pathology
PWC T R Chadha & Co LLP
35 HOSPITAL BUSINESS UPDATE
Commencement 2007 | 13 Years Catchment: Ahmedabad and surrounding areas of Gujarat, Rajasthan and Mumbai No. of beds / Occupancy 201 | 50.3% • Cardiac science business increased by 28.6% compared to SG SG Group Type of Arrangement Leased – Fixed Rent Q2 FY20 SG Group • Average occupancy continue to increase in Q2 FY21 Revenue Contribution % 32.8% • Home care increased by 50% compared to Q2 FY20
Commencement 1994 | 26 Years
No. of beds / Occupancy 27 | 11.1% Catchment: Ahmedabad and surrounding areas of Gujarat • Vijay was one of the first to start Covid-19 treatment in Vijay Type of Arrangement Freehold Ahmedabad Revenue Contribution% 0.4%
Commencement 2012 | 8 Years Catchment: Ahmedabad and surrounding areas of Gujarat and No. of beds / Occupancy 220 | 36.9% Rajasthan. Also attracts international patients
Type of Arrangement Freehold • Average occupancy continue to increase in Q2 FY21 Krishna • Critical care specialty witnessed good traction Revenue Contribution% 12.3%
Commencement 2017 | 3 Years Catchment: Ahmedabad and surrounding areas of Gujarat No. of beds / Occupancy 267 | 55.1% • Treated more than 500 Covid-19 positive patients Type of Arrangement Leased – Revenue Share • Growth in oncology, nephrology, cardiology and critical care Naroda • Tie-up with nearby nursing home and consultants Revenue Contribution% 8.0%
Notes: 36 1. Revenue contribution % is a contribution to total hospital revenue Q2 FY21 Business Update 2. All numbers are on Standalone FY20 basis HOSPITAL BUSINESS UPDATE
Commencement 2017 | 3 Years Catchment: South Gujarat, North Maharashtra (including Mumbai) No. of beds / Occupancy 243 | 39.1% • Treated more than 600 Covid-19 patients Surat Group
Surat Type of Arrangement Freehold • Highest ever occupancy in ICU • Great response to Covid-19 home care packages Revenue Contribution% 10.0%
Commencement 2012 | 8 Years Catchment: South Gujarat
No. of beds / Occupancy 146 | 20.0% • First private hospital to start Covid-19 treatment in Valsad
Vapi Type of Arrangement Freehold district • Delivered first healthy baby of Covid-19 positive mother in Revenue Contribution% 1.4% Vapi
Commencement 2012 | 8 Years Catchment: Madhya Pradesh No. of beds / Occupancy 243 I 46.0% • Star consultants engaged in departments of cardiology, neuro Type of Arrangement Freehold Indore surgery , general surgery on visiting mode
Revenue Contribution% 13.0%
Commencement 2015 | 5 Years Catchment: Madhya Pradesh No. of beds / Occupancy 233 | 35.3% • Treated more than 200 Covid-19 patients Type of Arrangement Leased – Revenue Share • Starting of Covid-19 ICU Services
Jabaplpur • Digital promotion of clinical services Revenue Contribution% 7.6%
Notes: 1. Revenue contribution % is a contribution to total hospital revenue Q2 FY21 Business Update 37 2. All numbers are on Standalone FY20 basis HOSPITAL BUSINESS UPDATE
Commencement 2017 | 2+ Years Catchment: Punjab, Uttrakhand
No. of beds / Occupancy 145 | 24.7% • Top floor dedicated for Covid-19 patients • Major specialties like arthroplasty, urology and medicine showing Type of Arrangement Freehold recovery in Q2 FY2021 Mohali • Revenue sharing arrangement with top orthopedic surgeons of Revenue Contribution% 3.7% tri-city (Mohali, Chandigarh & Panchkula)
Commencement 2017 | 3 Years Catchment: Rajasthan, Western UP, Punjab, Delhi
No. of beds / Occupancy 237 | 36.0% • Zero doctor attrition amidst the Covid-19 crisis • Highest number of child deliveries amongst all corporate
Jaipur Type of Arrangement Freehold multispecialty hospitals in Jaipur • Growth in Spine, cardiac, gynae neonatal & internal medicine Revenue Contribution% 10.8% • Good occupancy levels with highest ever in September 2020
Commencement 2017 | 3 Years Catchment: Mumbai No. of beds / Occupancy 50 / na • Converted into Covid-19 facility from 1st June to 31st Aug 2020 Type of Arrangement O&M Model • 24 beds were given for Covid-19 including 15 beds in ICU Zynova • Rebound in occupancy levels in Q2 FY21 Revenue Contribution% na
Q2 FY21 Business Update
Notes: 1. Revenue contribution % is a contribution to total hospital revenue 2. All numbers are on Standalone FY20 basis 38 ANNUAL PERFORMANCE TRENDS
Particulars (in Rs. Million) FY 18 FY 19 FY 20 CAGR Revenue from Operations 3,780 4,623 4,869 13.5% Other Income 100 93 174 31.7% Total Income 3,880 4,715 5,042 14.0% Expenses COGS 2,219 2,833 2,953 15.4% % of Revenue from Operations 59% 61% 61% Employee Benefit Expenses 451 646 655 20.5% % of Revenue from Operations 12% 14% 13% Other Expenses 330 320 443 15.9% % of Revenue from Operations 9% 7% 9% Total Operating Expenses 2,999 3,799 4,051 16.2% % of Revenue from Operations 79% 82% 83%
EBITDA 881 916 991 2.3% EBITDA Margins % 22.7% 19.4% 19.7% Depreciation and Amortisation 229 332 360 Finance Cost 115 81 64 PBT 537 504 567 2.8% Total tax 146 187 291 Effective Tax Rate % 27.2% 37.1% 51.3% PAT 392 317 276 (16.1)% PAT Margins % 10.1% 6.7% 5.5%
Note: Margins are calculated on the basis of Total Income 39 ANNUAL PERFORMANCE TRENDS
Operational Metrics FY 18 FY 19 FY 20 CAGR
In Patient Count 27,771 36,311 39,030 18.6% (Nos.)
Day Care Patient Count 5,196 19,674 23,728 113.7% (Nos.)
Out Patient Count 2,22,970 2,96,197 3,25,596 20.8% (Nos.)
Surgeries Count 17,554 19,908 19,835 6.3%
ARPOB 31,564 31,296 30,457 (1.8)% (Rs.)
Bed Capacity 2,012 2,012 2,012 0.0% (Nos.)
Operational Beds 1,150 1,102 1,200 2.2% (Nos.)
Occupancy 335 413 450 15.9% (Beds)
Occupancy (%) 29.0% 37.0% 38.0% 14.5% (operational beds)
Average Length of Stay 3.70 4.15 4.22 6.8% (without Daycare)
Note: The operational bed count of 1,200 considers 36 operational beds at Zynova-Shalby Hospital, Mumbai, for which no other operational parameters are tracked
40 DISCLAIMER
By attending the meeting/telephonic call where this presentation is made, you agree to be bound by the trailing restrictions regarding the information disclosed in this presentation. This presentation has been prepared by Shalby Limited (the “Company”) solely for information purposes without any regard to any specific objectives, financial situations or information needs of any particular person and does not constitute a recommendation regarding the securities of the Company.
This presentation, its contents and any oral information provided in connection with this presentation are strictly confidential and should not be copied, published or reproduced in any form or distributed, disseminated or disclosed, in whole or part, by recipients directly or indirectly to any other person. Failure to comply with this restriction may constitute a violation of applicable securities laws. This presentation contains certain statements that are or may be forward-looking statements. These statements include descriptions regarding the intent, belief or current expectations of the Company or its directors and officers with respect to the results of operations and financial condition of the Company. These statements can be recognized by the use of words such as “believes”, “expects,” “predicts”, “plans,” “will,” “estimates,” “projects,” “intends”, “aims”, “anticipates”, “targets” or other words of similar meaning. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those in such forward-looking statements as a result of various factors and assumptions which the Company believes to be reasonable in light of its operating experience in recent years. The risks and uncertainties relating to these statements include, but not limited to, risks and uncertainties, regarding fluctuations in earnings, our ability to manage growth and competition, among others. The Company does not undertake any obligation to revise or update any forward-looking statement that may be made from time to time by or on behalf of the Company. Any investment in securities issued by the Company will also involve certain risks. There may be additional material risks that are currently not considered to be material or of which the Company, its promoters, any placement agent, their respective advisers or representatives are unaware. Against the background of these risks, uncertainties and other factors, viewers of this presentation are cautioned not to place undue reliance on these forward-looking statements. The Company, its promoters, any placement agent, their respective advisers or representatives assume no responsibility to update forward-looking statements or to adapt them to future events or developments. Accordingly, any reliance you place on such forward-looking statements will be at your sole risk.
SHALBY LIMITED I Regd Off: Opp. Karnavati Club, S.G. Road, Ahmedabad – 380015, Gujarat, India. Phone: 079 4020 3000 Fax: +91 79 4020 3109 |
Website: www.shalby.org | CIN: L85110GJ2004PLC044667 www.shalby.org 41 DISCLAIMER
The information contained in this presentation has not been independently verified and have been solely prepared by the Company. The information in this presentation is in summary form and does not purport to be complete. No representation, warranty, guarantee or undertaking, express or implied, is or will be made as to, and no reliance should be placed on, the accuracy, completeness, correctness or fairness of the information, estimates, projections and opinions contained in this presentation. Potential investors must make their own assessment of the relevance, accuracy and adequacy of the information contained in this presentation and must make such independent investigation as they may consider necessary or appropriate for such purpose. Such information and opinions are in all events not current after the date of this presentation. Further, past performance of the Company is not necessarily indicative of its future results. Any opinions expressed in this presentation or the contents of this presentation are subject to change without notice. This presentation should not be construed as legal, tax, investment or other advice. Neither the Company or its promoters, nor any placement agent or their respective advisers or representatives shall have any responsibility or liability whatsoever (for negligence or otherwise) for any loss howsoever arising from this presentation or its contents or otherwise arising in connection therewith. The information set out herein may be subject to updating, completion, revision, verification and amendment and such information may change materially. Neither the Company, its promoters, any placement agent, nor any of their respective advisers or representatives is under any obligation to update or keep current the information contained herein.
This presentation does not constitute or form part of and should not be construed as, directly or indirectly, any advertisement, offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Company by any person whether by way of private placement or to the public, in any jurisdiction, including in India, the United States, Australia, Canada or Japan, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any investment decision or any contract or commitment therefor. Investing in securities involves certain risks and potential investors should note that the value of the securities may go down or up. Accordingly, potential investors should obtain and must conduct their own investigation and analysis of the relevant information carefully before investing. Securities of the Company may not be offered or sold in the United States, except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements under the United States Securities Act of 1933, as amended (the “Securities Act”). By reviewing this presentation, you are deemed to have represented and agreed that you and any person you represent are outside of the United States.
This presentation is not a prospectus, a statement in lieu of a prospectus, an offering circular, invitation, an advertisement or an offer document under the Companies Act, 2013, the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, each as amended, or any other applicable law in India. This presentation contains the Company’s audited financial information as at and for the financial year ending March 31, 2020 and as at and for the six month period ended September 30, 2020. Investors should be aware that such financial information may be subject to certain adjustments during the course of audit/review and the audited/reviewed financial statements of the Company, when announced, may differ from those contained in this presentation.
SHALBY LIMITED I Regd Off: Opp. Karnavati Club, S.G. Road, Ahmedabad – 380015, Gujarat, India. Phone: 079 4020 3000 Fax: +91 79 4020 3109 |
Website: www.shalby.org | CIN: L85110GJ2004PLC044667 www.shalby.org 42