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 $372 Billion by 2022. Major contributing factors for this growth are greater health awareness among people, prevalence of lifestyle diseases, rising income and greater investment by both public and private players Improved access to insurance is also bridging the gap in healthcare financing.

The COVID-19 pandemic outbreak has further sensitized Governments and citizens across the world to the importance of healthcare infrastructure and the role the diagnostic industry will play in earlier detection, prevention and management of diseases.

The Government of India aims to increase healthcare spending to three percent of the Gross Domestic Product (GDP) by 2022.

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. The Indian diagnostic market (including radiology) is estimated to be at approximately 80,000 crore and private players are estimated to constitute around 45,000 crore of this market. 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. Especially after the COVID-19 breakout and the resulting lockdown, the shift in the industry from unorganized to organized players is expected to happen at a higher rate.

While diagnostic tests cannot treat patients or cure illnesses, it is an integral part of the healthcare value chain. Diagnostic tests improve patient care and help to limit healthcare spending by finding potential problems sooner.

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

• Ageing Population: The population of senior citizen i.e. 65 years and more is growing at 4%-4.5% p.a. in India. providing ample opportunity for the healthcare industry, especially the diagnostic industry.

• 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: Increasing awareness and the measures taken by the Government to promote preventive testing via tax cuts will become a tailwind for volume growth.

• Increasing health coverage: As population and life expectancy grows, the demand for health insurance will rise, thereby leading to an increasing requirement for diagnostic services

Opportunities and Threats

The fragmented structure of the industry provides the organized diagnostic players an opportunity to consolidate the smaller players. It is an effective way to expand geographical reach and penetration for the larger businesses.

Further regional brands are also emerging as national players, thereby leading to increased competition. E-commerce based offerings have also started to slowly creep into the industry and have initiated the onset of digitization of services, as they have in almost every other industry. With this increasing competition, margins are likely to remain stable and growth would be led by volumes and not pricing.

These developments can impact Aspira by impacting margins.


The future outlook for the diagnostics industry in India is favorable with the rapid technological advancements in the healthcare industry and doctors increasingly relying on evidence-based treatment. Instances and situations like the COVID-19 outbreak also further boost the importance of diagnostics as an integral part of healthcare and the awareness among people regarding preventive testing for lifestyle and chronic diseases.

With emphasis on providing quality services and compliance, the organized players will benefit from such developments. Hence, the switch in the industry from small, standalone players to larger more organized setup is also positive and welcome.

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.

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 Governments 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.

Regulatory intervention

Although largely operating through un-organized laboratories, the diagnostics industry is subject to intervention from the state or central governments in order to enhance testing. During seasonal epidemics, typical guidelines will fix certain pricing for a particular test/ panel on a temporary basis. Being cognizant of the important role it has to play in society, the Company is totally compliant with such requirements. Historically, the industry has witnessed capping for instances of Swine Flu, Dengue and Chikungunya.

Financials Summarised Profit & Loss Statement

Particulars FY 2020 FY 2019
Revenue from Operations 841.63 763.71
Other Income 28.79 25.31
Total Income 870.44 789.03
Cost of Material consumed 198.76 225.58
Employee Cost 494.77 447.36
Other Costs 330.87 415.46
Total expenditure 1291.60 1307.31
Finance Cost 101.16 96.07
Depreciation and amortization 166.04 122.84
Profit before tax and exceptional item (421.17) (518.28
Exceptional items - -
Profit before tax (421.17) (518.28)
Tax expense 2.89 0.01
Profit after tax (424.06) (518.29)

During the year under review the total income of the Company has increased to Rs. 870.44 lakhs as compared to previous year of Rs. 789.03 lakhs. Total expenses of the Company reduced to Rs. 1291.61 lakhs as compared to previous year of Rs. 1307.31 lakhs. Loss of the Company stood at Rs.424.06 lakhs as compared to previous year loss of Rs.518.29 lakhs.

Key Financial Ratio

Particulars FY2020 FY2019 Remarks
Debtors Turnover Ratio 13.92 9.59 It has improved due to better management of receivable.
Inventory Turnover Ratio 7.19 8.05 It has been constant due to better management of Inventory.
Current Ratio 0.64 0.55 It has little improved due to decrease in loss
Operating Profit Margin -50.04 -67.86 Ratio are in negative, however there is improvement due to increase in sales.
Net Profit Margin -50.38 -67.86 Ratio are in negative, however there is improvement due to increase in sales.
Return on Net Worth -111.57 -99.83 It is increase due to loss.

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.

• Develop online presence together with sharper focus on home collection of samples to drive customer convenience

• 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

Companys 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, 2020, the company has 88 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 technologysolutionforsalesforceautomationandlogisticsautomationthusaidingemployeeproductivity

SD/- SD/-
Dr. Pankaj J Shah Arvind K Bhanushali
Managing Director & CEO Director
Place: Mumbai DIN :- 02836324 DIN:00011903
Date: 29/08/2020