To start 25 centres in next 36-48 months: Thyrocare

Recently-listed medical diagnostics firm Thyrocare Technologies' saw its topline grow 32 percent to Rs 241 crore in fiscal year 2016, the company declared to exchanges over the weekend. In an interview with CNBC-TV18, A Velumani, CEO and CMD of the company, said that it aims to maintain the revenue growth in FY17.Thyrocare's operating margin was around 40.2 percent and profit after tax saw a jump of 15 percent to Rs 51.80 crore in FY16.He maintained that the company does not plan to cut prices of its services, and will continue to work towards achieving a steady growth in the years ahead.  To boost volume growth, Velumani said that the company will expand its regional presence and increase the number of processing centres by 25 in next 36-48 months.Below is the transcript of A Velumani’s interview with Nigel D’souza on CNBC-TV18.Q: In terms of the topline, it is looking good, 32 percent to be precise in the last fiscal. Come FY17, what kind of a number are we looking at?A: We did 10-12 percent only two years back. Last year we did 20 percent. This year we are doing 30 percent. I think I should not tell a number what is likely next year. Though it could be challenging to see anything more than 30 percent easy, we should be doing 30 plus.Q: So, we can maintain that 30 percent odd?A: Yes.Q: Let us talk about your margins. I was just looking at the past margins. I was noticing that in fact margins now at around 38.5-39 percent or thereabouts. You expect it to maintain at that levels? At one point of time, maybe a couple of years ago, it was at around 45 percent. So, is this topline growth and volume growth coming at the cost of margins or do you expect it to stabilise at these levels?A: We were 42 percent plus or minus 2 percent for a pretty long period. Last year, we were 40.7-40.8 percent. This year, we are 40.2 as a standalone balance sheet of the laboratory. So, we do not see a reason to go less than 40 percent.However, having said that competition would chase us. A lot of unorganised players are becoming a bit more aggressive too. So, this could be challenging, maybe by 0.5-1 percent, but then we have a comfort of sacrificing it if you are truly worried about the growth. Growth 30 percent plus, this earnings before interest, taxes, depreciation and amortisation (EBITDA) should be manageable.Q: Let us talk about the competition. There are some kind of competition that is coming in. Is pricing under pressure? Could pricing be under pressure going ahead as well? Is there an option to cut prices or try to scale down your prices and try to push through volumes?A: We did it 20-30 months back. We went down to a growth as low as the industry growth. For a leader to go down to industry growth is a worry. So, we did do tweaking of the prices, especially in thyroid and we were concerned it might result into erosion of profitability. But to our surprise, the profits have been doing much better than what they were doing earlier.So, in fact, now it becomes a fearless exercise. If at all, tomorrow if we have to do, we can certainly tweak it, but I must tell until the growth is there, not to touch the price. Work on aggression to sustain the growth.Q: Let us talk about your expansion plans. You were looking at some kind of expansion in Bhopal or Bengaluru, at least some of these articles indicate. Could you tell us what is he update on that? By when can this come on stream? And in terms of revenues, once it comes on stream what can it add in terms of revenues?A: We have already five running. We expected this year, EBITDA to have some disturbance because of the additional new facilities. Fortunately, it is not truly disturbing, which means now funds is not a problem, EBITDA is not a problem, so we can very well replicate at least another 25. But at the same time, producing a capacity without having a true work load will only be more for ego. So, I am going to go a bit slow on it.On the initial public offering (IPO) period, for setting a good tone for the IPO, I said 25 in 24 months, but I might take it 36 months or if necessary even go to 48 months because why to spend unnecessarily if there is no work load pushing.Having said that, will that result into an increased business, increased topline? Certainly. It should add not less than 3-5 percent to the topline extra than the conventional model of single laboratory. In fact, that is for exactly in which we felt we must invest.Q: The last time you joined us, you clarified in terms of the entire Maharashtra Association of Resident Doctors (MARD) issue that was playing out, any kind of feedback that has come in there? Is that case closed? You had cleared out your stance, but have you received any more responses post that?A: I think it is a bit surprising that I have not received any official communication on it. So I would certainly be attending to it the minute I receive it, but nothing has been communicated to me officially.Q: So as of now, no communication has come in?A: Zero.