Aspira Pathlab & Diagnostics Ltd Management Discussions.

Structure of Diagnostic Industry

The healthcare sector in India is poised for growth and it is expected to reach $280 Billion by 2020. Major contributing factors for this growth are sustained high rate of GDP, rising income levels, greater health awareness, larger incidence of lifestyle diseases (NCDs) and Government’s initiatives like PMJAY. Improved access to insurance is also bridging the gap in healthcare financing.

The Government of India approved the continuation of National Health Mission with a budget of 31,745 crore as announced in the Union Budget 2019- 20. The Ayushman Bharat - Pradhan Mantri Jan Arogya Yojana (PMJAY), the largest Government funded healthcare program targeting more than 500 million beneficiaries, was allocated 6,400 crore in Union Budget 2019-20.

The Indian Diagnostic Industry is highly fragmented. It is highly unorganized. As per CRISIL report, standalone labs constitute 48% of the market and hospital-based labs make up for 37%, thereby amounting to a combined cover of 85% of the entire diagnostic market. Diagnostic chains cover close to 15% of the overall diagnostic market, of which, pan-India chains cover 35-40%, with the balance 60-65% managed by regional chains. The regional labs lack professional management and systems. The pan India lab are unable to provide the personalized service that a customer expects. This provides good opportunities for players such as Aspira Pathlab to create a separate segment that can blend the good of the two worlds.

Following key trends are expected to drive sector growth in the ensuing years:

• Ageing Population: The population cohort above 65 years old is growing at 4%-4.5% p.a. in India. This population has seen the good period of Indian economy from late 90s and are therefore more health conscious.

• Rising Income: The rural population income is expected to move up to US$1,500-$2,000 and this provides opportunity for growth.

• Preventive Testing: The NCDs are on the rise and many awareness programs are emphasizing preventive healthcare.

Opportunities and Threats

The growth opportunities for a good diagnostic service provider is immense as enumerated earlier. However, there are many low cost labs and aggregators coming into the market. The aggregators are focused on building a digital platform and engaging with the customers. These developments can impact Aspira by impacting margins.


Aspira is focused on evidence based healthcare. More and more Doctors are also relying on diagnostic reports before prescribing therapy. Therefore, it is important to engage with the Doctors by adopting various digital technologies.

The switch from a local and a national lab to a regional lab which is also able to personalize services is evident.

Risk and concerns

Competition and pricing

The entry barrier is very low in the diagnostic labs segment. Therefore, many small labs come into the market every year. This puts pressure on the pricing of established players since they have much larger overheads. Trust, transparency and empathy would be important drivers to engage with the customers. Aspira is continuously working towards building its brand around these core values. Aspira has fully supported Government’s mandate for pricing for TB, Malaria etc.

The aggregators are going to increase their market share by offering a range of services and providing pricing options to the customers. However, Aspira has its own labs and therefore unlike the aggregators we stand committed to reliable reports. Aspira follows regulations and offers better service levels.

Network of labs

Aspira is focused on establishing itself as a strong regional player before scaling up its operations. Although we follow an asset light model, other costs are significantly high. Most of these cost are fornt ended and the payback period is high. We are therefore working on building the right systems and aggressively optimise the cost. We are adopting new technologies that would improve customer experience. Some of these are use of Chatbot, improving website, implementing patient engagement platform etc.

Financials Summarised Profit & Loss Statement

(Rs. In Lakhs)

Particulars FY 2019 FY 2018
Revenue from Operations 763.71 435.78
Other Income 25.32 22.05
Total Income 789.03 457.83
Cost of Material consumed 225.59 130.18
Employee Cost 447.36 342.38
Other Costs 415.47 350.56
Total expenditure 1088.42 823.12
Earnings before interest, tax, depreciation and amortisation (EBITDA) (299.39) (365.29)
Finance Cost 96.07 80.48
Depreciation and amortization 122.84 112.46
Profit before tax and exceptional item (518.29) (558.23)
Exceptional items 0 0
Profit before tax (518.29) (558.23)
Tax expense 0 0
Profit after tax (518.29) (558.23)

During the year under review the total income of the Company has increased to Rs. 789.03 lakhs as compared to previous year of Rs. 457.83 lakhs. Total expenses of the Company were Rs. 1307.33 lakhs as compared to previous year of Rs. 1016.06 lakhs. Loss of the Company stood at Rs. 518.29 lakhs as compared to previous year loss of Rs. 558.23 lakhs.

Key Financial Ratio

Particulars FY2019 FY2018 Remarks
Debtors Turnover Ratio 9.59 12.28 It has improved due to better management of Inventory
Inventory Turnover Ratio 8.05 3.52 It has improved due to better management of receivables
Current Ratio 0.55 1.09 It has decreased due to loss.
Operating Profit Margin (67.86) (128.10) Ratios are in negative however there is improvement due to increase in Revenue
Net Profit Margin (67.86) (128.10) Ratios are in negative however there is improvement due to increase in Revenue
Return on Net Worth (99.83) (1667.35) It is due to increase in Shareholder equity

Strategy for growth

Aspira is executing the following strategy for growth:

• Create unique customer experience by personalising the offering and augmenting it with digital technologies.

• Strengthen the network of Doctors in the target areas

• Develop unique solutions for specialized segments like athletes, corporates etc.

• Associate with local labs that are threatened by the presence of collection centres of large labs.

• Expand menu and services

• Develop specialized, personalised health packages.

Internal Control systems and their adequacy

Company’s Internal Financial Controls effecting the financial statements are adequate and are operating effectively. During the financial year under review, the financial controls are tested for operating effectiveness through ongoing management monitoring and review process and independently by the Internal Audit Function and no reportable material weakness in the design or operation was observed.

Human Resources

Aspira is a new age lab. Human resources are the key to performance. As of March 31, 2019, the company has 83 employees on its payrolls. The focus during the year has been around enhancing the productivity of the workforce and increasing the sales team. The growth in business was achieved with marginal increase in workforce strength. This was achieved by active redeployment of resources, introducing multi-taskers and job enlargements. The Company has also invested in information technology solution for sales force automation and logistics automation thus aiding employee productivity.

SD/- SD/-
Dr. Pankaj J Shah Arvind K Bhanushali
Place: Mumbai Managing Director Director
Date: 20/07/2019 DIN :- 02836324 DIN: 00011903

Annexure II


[Pursuant to Section 197 of the Companies Act, 2013 (‘Act‘) and Rule 5(1) of the Companies (Appointment and Remuneration

of Managerial Personnel) Rules, 2014]

A. Ratio of remuneration of each Director to the median remuneration of the employees of the Company for the FY 2018-19 as well as the percentage increase in remuneration of each Director, Chief Financial Officer (CFO) and Company Secretary is as under:

Name of Director/Key Managerial Personnel Ratio to median remuneration % increase in remunerationover previousyear
Dr. Pankaj Shah (Managing Director) 34.55 15.95
Dr. Chander Puri (CEO and Executive Director) 18.06 57.16
Key Managerial Personnel
Mr. Balkrishna Talawadekar, Chief Financial Officer - 16.60
Ms. Mamta Mav, Company Secretary - 266.23

B. Percentage increase in the median remuneration of employees in the FY 2018-19: 89.86

C. Number of permanent employees on the rolls of the Company as on 31 March, 2019: 83

D. Comparison of average percentile increase in salary of employees other than the managerial personnel and the

percentile increase in the managerial remuneration:

% Change in remuneration
Average increase in salary of employees (other than managerial personnel) 29.46
Average increase in remuneration of managerial personnel 29.78

E. Affirmation:

It is affirmed that the remuneration paid to the Directors, Key Managerial Personnel and other employees is as per the Remuneration Policy of the Company.


SD/- SD/-
Place: Mumbai Dr. Pankaj J Shah Arvind K Bhanushali
Date: 20/07/2019 Managing Director Director
DIN :- 02836324 DIN: 00011903