Thyrocare chief sees a sales growth of 25% in third quarter

Diagnostics company Thyrocare Technologies felt the blow of demonetisation in the month of November but was back on its feet and saw growth at 24 percent in the month under review. Speaking to CNBC-TV18, A Velumani, the company's chief said that Thyrocare should see a sales growth of 25 percent, with a variation of 2 percent in the third quarter. He also mentioned that the fourth quarter is the strongest quarter for the company. Below is the verbatim transcript of A Velumani’s interview to Latha Venkatesh and Nigel D’Souza on CNBC-TV18.Latha: What is the demonetisation impact? People who come will have to come anyway but did you nevertheless see a fall?A: We sigh a fall between November 8 and November 21, some 15 days. We felt that this quarter could be low but when we ended November, we looked at the numbers November to November and there was a healthy 24 percent growth. So, we believe that it was just a worry, not truly a down. Nigel: November showed a growth, what about December, how is it panning out? Also, I wanted to understand, what is the average size in terms of billing, currently and if you could compare it maybe with a year back? A: Billing per specimen we receive revenue of around Rs 174 which works out to be per patient roughly around Rs 220 and it is not anything which has changed last year to this year. In some low value products, we put pressure and in some high value products, equally we put pressure. So, I think that is not changing. December has been as it was expected because usually winter healthcare is supposed to be bit cool. North India literally the workload comes down to 40 percent; South doesn’t come down. So, we were aware and we were prepared, between December 7 and January 15, the business will have a low. That makes Q4 the tallest quarter of the year. Sometimes, Q4 is twice that of Q3, to that extent because Diwali, Dusshera, everything puts the seasonal pressure and then comes winter. In between it was supposed to be good. Latha: Which is your strongest quarter? A: Q4. Latha: I thought more people fall sick in monsoons? A: I think monsoon crowd is not my core business because that is chikungunya, dengue, malaria, that is in the pathology side, I am in biochemistry side. So, for me, year ending, exhausting the healthcare Budget, for a company or for an individual and some of the programs which we run also is having date of expiry of March 31. Not only that, the winter, when it withdraws, in summer it bounces back. So, whatever goes in winter, we are aware that it comes in next quarter. Latha: Your product Aarogyam, which is your preventive health segment, accounts for about 44 percent of the revenue? A: 52 percent as of today. Latha: Wouldn’t that have taken a beating during demonetisation? One could have postponed these checks? A: Surprisingly, all my Aarogyam is online booked and booked using credit card. It is 100 percent online booked and by credit card. So, there was not anything noticed.Nigel: What you are telling us is that you saw 20 percent growth plus in November. December is as you were expecting, so, for this quarter we will see a growth of more than 20 percent, that is the run rate you have been doing, 20-25 percent. A: 20 percent I am very safely committing. It should be somewhere around 25 percent plus or minus 2 percent. Nigel: Another quick query, how many centers do you have in terms of testing, I believe you have one in Navi Mumbai. Are you looking to setup another one, just explain that to us, how many centers you have in the country? A: We have one main center, 2 lakh square feet in Navi Mumbai. We have six regional processing laboratories in six major metros in the country which covers around 300 kilometer radius market. This we came in only one year back so that we can improvise the turnaround time for the tier II and tier III towns. They are doing well; six of them have already reached their full capacity. The next calendar year, we plan to put in another six. By year 2020 we should have 25 standing and running and these 25 will be not of size what we have in Navi Mumbai. They are around 5,000-6,000 square feet. One thing to be kept in mind, they are not patient engagement centers; they are floors for processing the specimen of the locality. Latha: Will you be able to maintain this 25 percent or 20 percent topline growth over the next two years? A: I think the industry, when it is growing 16-17 percent, the organized players should not find 20 plus any challenge. The top 10 players should be doing 30 percent is my estimation. However, you know, there is always a disruption; somebody becomes aggressive, they take away some small market so finally you will end up maybe 23-24 percent is very much doable. Nigel: We get various queries when we host various seminars with regards to stock markets, etc. One such query that I received was Thyrocare has so many testing centers and anyway the samples are going by plane, can they come from abroad, are you looking at the Middle East? Currently what kind of contribution it gives to your revenues? A: I have a better market share in Bahrain than what I have in India because we had put up a floor in Bahrain and that Bahrain floor, being a small country could very well address to the country needs. We do get specimen from Kuwait, Qatar, Oman, also Saudi Arabia two to three cities. I have a reason to believe -- the model is so powerful, we would be able to get the preventive care profiles from across the world. I am not going aggressive, but I have a reason to believe we are the only choice for the countries who have higher cost in manpower, in floor cost, etc. However, it is going to be a long journey, not an aggressive one I intend to do, we are currently very powerful in the Gulf Cooperation Council (GCC).