Thyrocare Technologies Ltd Management Discussions

Overview

Thyrocare is one of the leading pan-India diagnostic chains that conducts an array of medical diagnostic tests and profiles of tests that centre on early detection and management of health disorders and diseases. We have processed more than 22.3 million non-covid samples in the last year, thus serving more than 15 million non covid patients, with remarkable turnaround time, accuracy in reporting and in compliance, mainly due to our decades long experience in dealing with the diagnostic needs of people. We performed more than 141 million clinical investigations during the previous year, highest compared to any of our peers in the industry and catered to more than 570 districts of the country.

As of March 31, 2023, we offered 720 distinct tests and 174 profiles of tests to detect many health disorders, including those relating to thyroid disorders, growth disorders, metabolism disorders, auto-immunity, diabetes, anemia, cardiovascular conditions, infertility and various infectious diseases. Our 43 profiles are administered under our "Aarogyam" brand, which offers patients a suite of wellness and preventive health care tests. We primarily operate our testing services through a fully automated Centralised Processing Laboratory (the "CPL") and have expanded our operations to include a network of Zonal Processing Laboratories (the "ZPLs"), Regional Processing Laboratories (the "RPLs") and Satellite Processing Laboratories (the "SPL").

Through our wholly owned subsidiary, Nueclear Healthcare Limited, we operate a network of molecular imaging centres in New Delhi, Navi Mumbai, Hyderabad, Central Mumbai, Western Mumbai, Nashik, Baroda, Surat and Bangalore, focused on early and effective cancer monitoring. We performed 30,800 PET-CT scans during the previous year throughout the county.

Our CPL, located in Navi Mumbai, is equipped with automated systems, diagnostic testing instruments and processes from leading international and Indian healthcare brands. The CPL is fully automated and driven by a barcoded and bi-directionally-interfaced system and laboratory information system. The CPL meets international standards of quality and has received global accreditations from College of American Pathologists (CAP), National Accreditation Board for Testing and Calibration Laboratories (NABL) and the ISO. We commenced setting up RPLs in 2014 and currently operate 20 RPLs in various key cities of the county which process samples sourced from the respective regions. We commenced setting up Zonal Processing Laboratories (ZPLs) in 2021, to ensure that these ZPLs perform certain advanced tests that are currently managed from the centralized processing laboratory. Currently we operate 3 ZPLs at Delhi, Bangalore and Kolkata and additionally we have also commissioned 4 satellite labs at Indore,Bangalore,Mumbai and Mohali for faster turnaround and better reach.

We collect samples through a pan-India network of authorized service providers , who in turn source these samples from local hospitals, laboratories, diagnostic centres, nursing homes, clinics and doctors that avail diagnostic services from us. As on March 31, 2023, we had a network of about 7400 active franchisees and more than 35000 touch points, comprising local hospitals, laboratories, diagnostic centres, nursing homes, clinics and doctors spread across more than 570 districts covering all the states within the country. Our widespread network of authorized service providers has enabled us to expand the reach of the CPL, RPLs,ZPL, SPLs thereby providing us with access to a larger customer base.

Through Nueclear, we are developing a growing network of molecular imaging centres that primarily focus on early and effective cancer screening. Each of our imaging centres use PET-CT scanners to assist in cancer diagnosis, staging, monitoring of treatment, and efficacy and evaluation of disease recurrence. We currently have 10 active operating PET-CT scanners in our 9 active imaging centres : two in New Delhi, and one each in Navi Mumbai, Hyderabad, central Mumbai, western Mumbai, Baroda, Nashik, Surat and Bangalore. Nueclear also owns and operates a medical cyclotron unit in Navi Mumbai, which produces the radioactive biomarker FDG required for PET-CT scanning. We believe we have developed a platform of affordable diagnostic services and are poised to further enhance our services and test offerings.

Our key competitive strengths are :

Quality in testing and reporting, supported by our accreditations.

Our tech integration enables us to serve our patients within the best possible turnaround time.

Our strong network in the country and trust of our patients.

Portfolio of specialized tests with an emphasis on wellness and preventive healthcare.

Multi-lab model driving volume growth and economies of scale.

Pan-India collection network supported by logistics, capabilities and information technology infrastructure.

Capital efficiencies in our diagnostic testing business.

Experienced senior leadership and management team.

These standalone and consolidated financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015, notified under Section 133 of

Companies Act, 2013, (the ‘Act) and other relevant provisions of the Act.

Industry structure and developments

The Indian diagnostic market is small when compared with developed countries, due to lower healthcare spending. In 2018, healthcare spending as a percentage of GDP in India was merely 3.5%, whereas for developed countries like the UK and USA, it was 10% and 17% of GDP respectively. The Indian diagnostic market is highly underpenetrated, with huge potential for growth. Research shows that it is a fast-growing segment of the overall healthcare market. The Indian diagnostic market is expected to grow at a CAGR of 20% over the next 3 financial years (Frost & Sullivan) due to multiple growth drivers such as aging population, rising insurance penetration and growing thrust of preventive care diagnostics. Currently about 25% of the total population is above 45 years of age and this is expected to cross 30%, leading to higher demand for diagnosis of diseases and disorders. That apart the population seeking insurance coverage is growing at a CAGR of 17% , that would also lead to growing demand for diagnostics through various other channels.

The industry is dominated by small and regional unorganized diagnostic laboratories, which control more than 70% of the total diagnostic market. Before the pandemic, due to significant latent demand emerging on the back of improved economic conditions in the country and a rapidly emerging urban population, a significant chunk of diagnostic business was getting converted from unorganized to organized. There are no entry barriers, therefore more and more unorganized players are entering into the space and there seems to be no significant shift in the share of organized players in the total diagnostic market. However, COVID-19 has deeply impacted the landscape of Indian diagnostics. There is increased reliance on organized players as local unorganized players are facing operational challenges. Besides, there is a higher degree of trust in established brands with high-tech and accredited laboratories.

According to industry estimates, the diagnostic market is anticipated to grow at 20%, with the general expectation that the organized chains of diagnostic laboratories would deliver growth at a higher rate. In Indias healthcare industry, diagnostic services play the role of an information intermediary, providing useful information for the accurate diagnosis and treatment of patients health conditions. The services of the diagnostic industry in India can be classified into pathology testing and imaging. Pathology testing or In Vitro Diagnostics (IVDs) involves collection of samples, in the form of blood, urine, stool, etc., for analysis, using laboratory equipment and technology to arrive at useful clinical information, to assist with diagnosis and treatment. The pathology testing segment includes biochemistry, immunology, haematology, urine analysis, molecular diagnosis and microbiology. Imaging diagnosis or radiology involves imaging procedures such as X-rays and ultrasounds, which show anatomical or physiological changes within a patients body and assist doctors in diagnosis. The imaging diagnostic segment also includes more complex tests, such as CT scans and MRIs, and highly specialized tests, such as PET-CT scans.

Strategy

Our strategic objective is to have sustainable productive growth by maintaining profit margins, without compromising on the quality or the delivery cost of our services.

Tests you can trust

Thyrocare as a brand has evolved over the years without compromise on the quality of our testing and reporting. With a legacy of more than 25 years, we are trusted by billions of patients across the country, for their diagnostic needs. We are a familiar brand name in the diagnostic industry and amongst doctors for our preventive healthcare profile offering. In fact, we have pioneered the preventive trend in the healthcare segment. Thyrocare that started by offering only 3 tests back in 1996, i.e. T3, T4 and TSH, now offer more than 720 tests on the platform, with unmatched quality and precision across the country. Our patients trust on our process and test results have birthed our new tagline "Tests You Can Trust", revamped with our new logo.

An invincible combination with Pharmeasy

Our association with Pharmeasy is uniquely advantaged in the diagnostic space. Our lean cost structure and national presence through a widespread B2B network, coupled with Pharmeasys technology support to scale operations at relatively low customer acquisition cost enables us to grow manifold in the coming years. We are targeting to cross sell diagnostic services through Pharmeasy platform that regularly evidences online search by users for buying medicines. We consider these associations as our potential customers in the coming years for selling diagnostic services.

Focus on B2B business

We continue to expand our network of collection points, comprising local hospitals, laboratories, diagnostic centres, nursing homes, clinics and doctors, currently spread across more than 570 districts by effectively addressing the turnaround time difficulties faced by the network. We have initiated an engagement with doctors through our field force. We continue to work as back-end service providers for our B2B channel partners, thereby providing affordable diagnostic solutions to our patients and opportunities for channel partners to grow with us, rather than competing against us at the regional level.

To achieve sustainable growth, our business strategy is crafted along the following lines :

Expansion of our wellness product offerings.

We have expanded our offerings substantially in the preventive care space.We introduced the plus and pro series in our flagship Aarogyam. We have also launched a set of Aarogyam 24x7 packages which are our non-fasting packages to offer round-the-clock diagnostic services on the wellness front. We have launched a new series of investigative packages under the brand name Jaanch. These packages are curated by doctors to help doctors and patients investigate specific chronic and lifestyle diseases in a much more targeted way. The way to think about it is that Aarogyam is our wellness brand, but Jaanch is our investigative or sickness brand. We now have doctor curated and targeted Jaanch profiles for hair fall, for fever, for PCOS, for thyroid, for any sickness or chronic condition. We have worked very closely with doctors to curate these packages to put the power of diagnosis in the hands of the patients and doctors and we have branded this series Jaanch and we have launched it across the country in the last few weeks.

We will continue to focus on the growth of our wellness and preventive healthcare offerings, in addition to expansion of our test offerings through aggressive price rationalization. As the leaders in preventive care diagnostic test offerings with ‘Aarogyam brand, we recognise the growth opportunity in this segment and are well positioned to leverage our expertise and brand. We are focusing a significant proportion of our marketing efforts on preventive diagnostic and wellness offerings.

We intend to expand our diagnostic test offerings through the acquisition of new technologies, including instruments and processes. Our initiative to launch high quality Tuberculosis testing through the ‘Focus TB campaign has already begun to garner volumes. We intend to expand our footprints into other parts of the country by replicating the dedicated Focus TB laboratory setup.

Strategic set-up of Zonal Processing Laboratories (ZPLs) for advanced tests to grow our network of RPLs and authorized service providers.

We intend to set-up zonal processing laboratories for advanced diagnostic testing, in strategic locations across the country. Since March 2020, our operations were largely affected due to restrictions on the movement of goods and personnel across states. This has also resulted in some revenue erosion from certain advanced tests, performed in our centralized processing laboratory apart from impacting our turnaround time for these tests. In view of the huge post-pandemic growth potential, in highly underpenetrated diagnostic markets we have set up a ZPL at Delhi, Bangalore and Kolkata. These ZPLs, akin to our centralized processing laboratory, can perform some of the most complex and advanced tests with a reasonable turnaround time that enables us to cater to patient needs and also simultaneously compete with regional and national players effectively.

We intend to strengthen and grow our coverage of regions across India through our network of RPLs, SPLs and authorized service providers. By expanding this network, we plan to expand our customer base, generate a higher volume of samples for processing, improve our turnaround time and optimize our logistic costs.

We plan on targeted expansion by continuing to open RPLs in locations in close proximity to rail or road networks and in markets that are expected to generate high volumes of samples. To sustain our future growth and client base, we are also focused on increasing the number and service quality of the authorized service providers. We intend to use the expanded network of RPLs, SPLs and authorized service providers to bolster brand visibility and increase the service accessibility. We have a strong presence throughout the country, spread equally in all states through our touch points. We are also targeting the uncovered client base by penetrating deeper into the key regions and offering on door services to smaller clinics, dispensaries, laboratories and hospitals.

Continue to develop our subsidiary business to provide affordable PET-CT scanning.

We currently have 9 imaging centres operating 10 active PET-CT scanners. We believe that having backward integration with our own cyclotron provides us with greater flexibility, reliability and cost effectiveness as we expand our operations. We intend to increase the number of PET-CT scans per centre that would enable the newly started centre to attain break even by more matured centres funding the deployment of additional centres.

The lockdown imposed during the pandemic caused huge disruption, as movement of patients and FDG was limited, during this period. Learning from the experience, we intend to ensure that our PET-CT operations are set-up or transferred to locations near our medical cyclotron or locations where sustainable availability of FDG can be ensured through tie-ups with local medical cyclotron vendors.. We intend to transfer existing PET-CTs to locations that can yield higher revenue with lower operational costs and activate those centres under dispute by settling the litigation.

Expand our service platform by developing new channels that leverage the strength of our brand and network.

We plan to increase the breadth of our testing and services platform through new channels that leverage our brand, multi-lab (regional processing) model and pan-India network of service providers.

We have 3 key pillars of growth. The first is our franchise business. The focus is to take our franchise business deeper into India with a focused test menu and provide our clients with a frictionless experience to transact with us and provide their customers the best testing experience that they can.

We continue to focus on private as well as public partnerships. In the public space, we will focus on TB and infectious disease where we are by far one of the strongest players in these segments with large screening programs partnering with health bodies and funding agencies who participate in this segment to provide better testing and care to the patients who are suffering from these diseases. Additionally, we will continue to expand our partnership across healthcare companies, hospitals, and other health services companies and enable them to provide diagnostic testing to their customers. The third area which is new from before is we believe we have a strong and robust B2B model with a core of execution. We believe there is a lot of opportunity to take this model internationally and we will start to look at emerging markets where we can bring this model to provide affordable testing into those markets.

Human Resource

At Thyrocare, we truly believe that the largest driving force of the organizations growth & success is our people. Our constant endeavor is to give our employees an engaging & learning environment with a strong foundation of trust for them to develop and thrive.

In the last year, we continued our journey on building talent internally and adding a host of young talent to our employee strength. We hired a total of 658 employees of which 45% were freshers (0 to 6 months experience). Our total headcount is now 1748.

With a young and enthusiastic workforce, it is imperative to invest in their learning & development which sets them up for success in their professional journey. In the past year, we clocked a total of 42,936 learning hours, maintaining a good mix of internal and external facilitators. We also encourage employees to pursue higher education through our program to fund their education fees.

As we recreate ourselves in FY 2024, the focus areas for our peoples agenda will be to invest in young talent, enhance our benefit offerings and continue our focus on employee development.

Financial Performance

These standalone financial statements have been prepared in accordance with the Indian Accounting Standards as notified by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 (‘the Act) read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016 (hereinafter referred to as the ‘Ind AS) and other relevant provisions of the Act.

The standalone financial statements were authorized for issue by the Companys Board of Directors on 23 May 2023.

I. Standalone Financial Performance

The management discussion and analysis given below relate to the audited standalone financial statements of Thyrocare Technologies Limited (hereinafter referred to as Thyrocare). The discussion should be read in conjunction with the financial statements and related notes to the financial statements for the year ended March 31, 2023.

Summary

Revenue from operations of Thyrocare aggregated to

486.46 crore in FY2023 as compared to 561.53 crore in FY2022, registering a de-growth of 13%.

Our non-COVID business aggregated to 457.2 crore in FY2023 as compared to 375.8 Cr resulting in 22% growth in FY2023 as compared with FY2022.

Earnings before interest, tax, depreciation and amortization (EBITDA) (unadjusted) of Thyrocare aggregated to Rs. 112.01 crore in FY2023 as compared to Rs 230.83 crore in FY2022. The normalized EBITDA after adjusting for provision for bad and doubtful debts and ESOPs costs was Rs. 142.51 crore (29.29%) as compared to Rs. 241.01 crore (42.92%) in FY2022.

Profit after tax and after exceptional items (PAT)

(unadjusted) of Thyrocare aggregated to Rs. 56.97 crore in FY2023 as compared to Rs 152.05 crore in FY2022.

Total Assets of Thyrocare after net off of liabilities aggregated to 521.04 crore in FY2023 as compared to Rs. 520.70 crore in FY2022.

Dividend

Thyrocare has determined that as a matter of policy, the net cash surplus after providing for tax, capital expenditure expected to be incurred during the next financial year, and any other anticipated requirement of funds, may be distributed among the shareholders as dividend for the financial year concerned. The Board of Directors on 07^th April 2023 have recommended and approved the payment of interim dividend of Rs. 18/-(Rupees Eighteen only) per equity share of the face value of Rs. 10/- each.

The following table provides the details of the standalone financial performance of Thyrocare –

		FY2023		FY2022
		% of Income	% growth compared to FY2021		% of Income
Income from Operations	486.46	100.00	-13.4	561.53	100.00
Expenses
Cost of Materials consumed/ traded	156.37	32.14	-5.4	165.23	29.42
Employee benefits expense	102.61	21.09	74.4	58.82	10.47
Other expenses	115.47	23.74	8.3	106.65	18.99
Total Expenses	374.45	76.97	13.2	330.70	58.89
Earnings before interest, tax, depreciation and amortisation (EBITDA)	112.01	23.03	-51.5	230.83	41.11
Other income (net) excluding dividend & income from	1.83	0.38	-55.0	4.07	0.72
current investments
Dividend & income from current investments	3.56	0.73	6.9	3.33	0.59
Interest and Depreciation & amortization expense	36.33	7.47	17.8	30.85	5.49
Profit before exceptional item and tax	81.07	16.67	-60.9	207.38	36.93
Exceptional Items	-	0.00	-	-	0.00
Profit before tax (PBT)	81.07	16.67	-60.9	207.38	36.93
Tax expense	24.1	4.95	-56.4	55.33	9.85
Profit for the year (PAT)	56.97	11.71	-62.5	152.05	27.08

Revenue from operations

Revenue from operations decreased from Rs. 561.53 crore in FY2022 to Rs. 486.46 crore in FY2023, registering a de growth of 13.4% (growth of 18.4% in FY2022).

There is a steep de-growth in the COVID revenue as the cases have tremendously reduced in the country. However, our focus in increasing non-COVID business has resulted in 22% growth in FY2023 as compared with FY2022.

Expenses

Cost of material consumed

		FY2023		FY2022
		% of reven. from diagn. services	% growth compared to FY2022	% of reven. from diagn. services
Cost of materials consumed
Opening stock	23.00			21.82
Add: Adjustment on account of change in a/c policy	0.00			0.21
Purchases	153.09			162.76
	176.09			184.79
Less: Closing stock	26.03			23.00
Cost of material consumed [A]	150.06	30.85	-7.3	161.79	28.88
Material consumed comprises:
Reagents/ Diagnostics material	137.95	134.45	7.6	128.20	22.89
Consumables	12.1	10.48	-64.0	33.59	6.00
	150.06	30.85	-7.3	161.79	28.88

Cost of material consumed decreased from Rs. 161.79 crore in FY2022 to Rs. 150.06 crore in FY2023 and the cost of material consumed to revenue from diagnostic services was 30.85% in FY2023 (28.88% in FY2022). Cost of material consumed includes the cost of reagents, diagnostic materials and other consumables instrumental in processing the samples. The % cost of material consumed to diagnostic services has increased during the year mainly on account of reduction in the low cost Covid Revenue and due to Rupee depreciation against the US Dollar.

Cost of material traded

		FY2023		FY2022
		% of reven. from diagn. services	% growth compared to FY2022	% of reven. from sale
Purchase of stock-in-trade
Point of care testing devices and strips	6.11			4.32
	6.11			4.32
Changes in inventories of stock-in-trade
Inventories at the end of the year:
Point of care testing devices and strips	1.02			1.22
	1.02			1.22
Inventories at the beginning of the year:
Point of care testing devices and strips	1.22			0.34
	1.22			0.34
Net change	0.20			(0.88)
Cost of material traded [B]	6.31	120.42		3.44	55.93

Cost of material comprises cost of point of care testing devices and consumables procured, the same are traded under the brand name ‘ThyroMart, mainly since the previous financial year. The cost of goods traded were at Rs. 6.31 crore in FY2023 compared to Rs. 3.44 crore in FY2022. This also includes the cost of material consumed for diagnostic business internally at discounted costs to the network.

Cost of Materials consumed/ traded

		FY2023		FY2022
		% of reven. from sale	% growth compared to FY2022	% of reven. from sale
Cost of Materials consumed/ traded [A]+[B]	156.37	32.14	-5.36	165.23	29.42

The overall Cost of material consumed/ traded thus has decreased from Rs. 165.23 crore in FY2022 to Rs. 156.37 crore in FY2023. The cost of material consumed/ traded to income from operations was 32.14% (29.42% in FY2022).

Employee benefits expense

	FY2023		FY2022
	% of Income		% of Income
Salaries, wages and bonus	71.90	14.78	52.64	9.37
Contributions to provident and other funds	4.88	1.00	4.05	0.72
Employees stock compensation expense	21.17	4.35	2.30	0.41
Gratuity	1.75	0.36	0.78	0.14
Compensated absences	0.93	0.19	(2.83)	-0.50
Staff welfare expenses	1.98	0.41	1.88	0.33
	102.61	21.09	58.82	10.47

Total employee benefits expenses were Rs. 102.61 crore in FY2023, as increased from Rs. 58.82 crore in FY2022. The employees benefits expenses as percentage of income from operations was 21.09% in FY2023 (10.47% in FY2022). Employee benefit expenses increased Y-o-Y on account of additions in Senior Leadership, additions in the growth team to sustain growth and investments in quality personnel to fulfill NABL requirements over and above the average salary increments for employees of about 8-10% p. a. Additionally, variable pay was introduced to the employees across the organization for fostering performance oriented appraisals for their contribution.

The ESOPs cost has increased which is due to the ESOPs granted from parent group API Holdings to Thyrocare employees. This cost is recognized as share based payment in the P&L and appropriately recognized in the balance sheet as Equity contribution from the parent.

Note: Total value of the ESOPs granted from parent group are 45.53 Cr over a 6 year period ((Year 1 – 39.7%, Year 2 – 31.4%, Year 3 – 16.2%, Year 4 – 9.0%, Year 5 – 3.5%, Year 6 - 0.2%)

Other expenses
	FY2023		FY2022
	% of Income		% of Income
Service charges	39.21	8.06	37.44	6.67
Rent	3.93	0.81	2.16	0.38
Sales incentive	11.52	2.37	15.70	2.80
Business promotion	6.35	1.30	5.16	0.92
Advertisement expenses	0.00	0.00	0.13	0.02
Power and fuel and water	8.56	1.76	7.00	1.25
Printing and stationery	2.44	0.50	2.41	0.43
Postage and courier	3.48	0.71	3.59	0.64
Others	39.98	8.22	33.06	5.89
	115.47	23.74	106.65	18.99

Other expenses as percentage of revenue has increased to 23.74% in FY2023 (18.99% in FY2022). Other expenses primarily consisted of service charges, sales incentives, power & fuel, etc. Service charges contribute to 34% of the total costs (35% in FY2022) which comprises costs incurred for collection & handling of samples Sales incentives primarily represented incentives paid to Direct Sales Associates (DSAs) for patients referred to the Company and relates mainly to B2C business. Expenses in other category have gone up due to various reasons such as investments in technology infrastructure, quality & accreditations and new lab expansions.

Earnings before interest, tax, depreciation and amortization (EBITDA)

In FY2023 the EBITDA (unadjusted) was Rs. 112.01 crore (23.03% of income from operations) as compared to Rs. 230.83 crore (41.11% of income from operations) in FY2022. The normalized EBITDA after adjusting for provision for bad and doubtful debts and ESOPs costs was Rs. 142.51 crore (29.29%) as compared to rs. 241.01 crore (42.92%) in FY2022. The EBITDA has reduced due to decline in high margin COVID business, however the Non-Covid EBITDA has stayed at the same levels as compared to last year in Non-COVID business.

Other income (net)

	FY2023		FY2022
	% of Income		% of Income
Net gain on investments	3.56	0.72	4.07	0.72
Interest income	1.00	0.20	0.60	0.11
Others	0.83	0.17	2.73	0.48
	5.39	1.10	7.40	1.30

Depreciation and amortization

Depreciation and amortization increased from Rs, 28.47 crore in FY2022 (5.07% of income from operations) to Rs. 34.08 crore in FY2023 (7.01% of income from operations).

Profit before tax (PBT)

In FY2023, PBT was Rs. 81.07 crore (Rs. 207.38 crore in FY2022). As a percentage of income from operations, PBT was at 16.67% in FY2023 (36.93% in FY2022).

Tax expense

The effective tax rate for the Company is 25.17% and tax provision for the current year was Rs. 24.10 crore (Rs. 55.33 crore in FY2022).

Profit for the year (PAT)

The net profit in FY2023 was Rs. 56.97 crore (11.71% of income from operations) as compared to Rs. 152.05 crore (27.08% of income from operations) in FY2022.

FINANCIAL POSITION – STANDALONE

Share capital

	FY2023		FY2022
	Number of shares	Amount	Number of shares	Amount
(a) Authorised
Equity shares of Rs. 10 each with equal voting rights	1,00,000	100.00	10,00,00,000	1,000.00
(b) Issued, subscribed and paid-up
Equity shares of Rs. 10 each with equal voting rights	5,29,30,043	52.93	5,29,03,332	52.90
Total	5,29,30,043	52.93	5,29,03,332	52.90

The Company has a single class of equity shares of par value of Rs. 10/- each. The authorized share capital stood at Rs. 100.00 crore, divided into 10 crore equity shares of Rs. 10/- each. The issued, subscribed and paid up capital stood at 52.93 crore as at March 31, 2023. During the current fiscal the Company has issued equity shares to eligible employees on conversion of stock options granted to employees.

The Company has issued share options plan for its employees, the details of the options granted as at March 31, 2023 are provided under the notes to the Standalone Financial Statement in the Annual Report.

Reserves and surplus

Reserves and surplus as at March 31, 2023 were Rs. 468.11 crore ( 467.80 crore as at March 31, 2022).

Capital reserve

Capital reserve as at March 31, 2023 amounted to Rs. 30.25 crore ( 30.25 crore as at March 31, 2022). Capital Reserve represents a) amounts received in earlier years from the selling shareholder at the time of the IPO towards reimbursement of certain expenses and b) fair value of the trademark "Whaters" (subsequently disposed off) assigned by Dr A Velumani (former promoter) in favor of the Company for no consideration.

Securities premium account

Securities premium as at March 31, 2023 amounted to Rs. 72.66 crore (Rs. 71.51 crore as at March 31, 2022) after adjustment on account of transfer of accumulated balance in stock option premium after exercise of stock options and adjustment towards equity shares bought back at premium. Securities premium represents the premium received on issue of shares. It is utilized in accordance with the provisions of the Companies Act, 2013.

Share option outstanding account

The Company has established various equity-settled share-based payment plans for certain categories of employees of the Company. The balance in the share option outstanding account represents the expenses recorded pursuant to the aforesaid schemes for which the options are not yet vested or exercised.

The balance as at March 31, 2023 was Rs. 4.51 crore (As at March 31, 2022 it was Rs. 3.43 crore), after adjustment on account of transfer of accumulated balance in stock option premium after exercise of stock options.

General reserve

General reserve as at March 31, 2023 were Rs. 9.17 crore, which was the same as per the previous year.

Capital redemption reserve

The Company bought back 9,58,900 equity shares for an aggregate amount of Rs. 63.00 crore being 1.78% of the total paid up equity share capital, at an average price of Rs. 656.90 per equity share, during FY2019. The equity shares bought back were extinguished on 12 October 2018 and 22 October 2018 and as per the provisions of the Companies Act, 2013, the Capital redemption reserve is used to record the reduction of the share capital of the Company on account of equity shares bought back out of the accumulated profits. It is created in accordance with the provisions of the Companies Act, 2013.

Surplus in the statement of profit and loss account

Balance in the statement of profit and loss as at March 31, 2023 was 331.64 crore ( 352.48 crore as at March 31, 2022) after appropriation towards dividend on equity shares and tax on dividend.

Non-current liabilities

	As at	As at	As at	As at	As at	As at
	31.03.2023	31.03.2022	31.03.2023	31.03.2022	31.03.2023	31.03.2022
Financial liabilities
Lease liabilities	14.46	16.01	-	-	14.46	16.01
Others	-	-	-	-	-	-
	14.46	16.01	-	-	14.46	16.01
Other than financial liabilities
Provision for employee benefits:
Provision for compensated absences	-	-	-	-	-	-
Provision for gratuity	-	-	3.17	0.17	3.17	0.17
	-	-	3.17	0.17	3.17	0.17
Total non-current liabilities	14.46	16.01	3.17	0.17	17.63	16.18

Total non-current liabilities – lease liability decreased to Rs. 14.46 crore as at March 31, 2023 (Rs.16.01 crore as at 31 March, 2022), with recognition of portion of long-term lease liability as current liabilities.

Current liabilities

In crore of INR	Trade payables		Financial liabilities		Provisions		Others		Total
	As at 31.03.2023	As at 31.03.2022	As at 31.03.2023	As at 31.03.2022	As at 31.03.2023	As at 31.03.2022	As at 31.03.2023	As at 31.03.2022	As at 31.03.2023	As at 31.03.2022
Financial liabilities
Trade payables	22.14	13.41	-	-	-	-	-	-	22.14	13.41
Lease liabilities	-	-	6.71	5.42	-	-	-	-	6.71	5.42
Security deposits received	-	-	14.73	15.89	-	-	-	-	14.73	15.89
Employees dues	-	-	0.98	5.29	-	-	-	-	0.98	5.29
Unclaimed dividend	-	-	0.16	0.23	-	-	-	-	0.16	0.23
Creditors for capital goods	-	-	6.82	1.02	-	-	-	-	6.82	1.02
	22.14	13.41	29.40	27.85	-	-	-	-	51.54	41.26
Other than financial liabilities
Provision for employee benefits:
Provision for CSR spend	-	-	-	-	1.36	-	-		1.36	-
Provision for compensated absences	-	-	-	-	2.02	2.12	-	-	2.02	2.12
Provision for gratuity	-	-	-	-	0.59	4.52	-	-	0.59	4.52
Current tax liabilities (net)	-	-	-	-	-	-	10.04	1.44	10.05	1.44
Contract liabilities	-	-	-	-	-	-	6.03	9.29	6.03	9.29
Statutory dues	-	-	-	-	-	-	1.62	1.66	1.62	1.66
	-	-	-	-	3.97	6.64	17.69	12.39	21.67	19.03
Total current liabilities	22.14	13.41	29.40	27.85	3.97	6.64	17.69	12.39	73.20	60.29

Total current liabilities increased to Rs. 73.20 crore as at March 31, 2023 (Rs. 60.29 crore as at March 31, 2022). The deviation was mainly on account of –Increase in expenses/ dues outstanding and payable as at the end of the financial year.

Increase in payable to creditors for capital goods.

Increase in recognition of lease liabilities for the long-term arrangements entered into this year.

Increase in current tax liabilities.

Decrease in employee benefit dues & contract liabilities

Property, plant and equipment, capital work-in-progress and investment property

The additions to gross block in FY2023 were:

Plant and equipment Rs. 29.56 crore (Rs. 28.95 crore in FY2022)

Furniture and fixtures Rs. 4.13 crore (Rs. 7.26 crore in FY2022)

Office equipment Rs. 1.95 crore (Rs. 3.43 crore in FY2022)

Computer, printer and scanner Rs.1.39 crore (Rs.1.79 crore in FY2022)

The capital work in progress on account of tangible assets was Rs. 0.82 crore as at March 31, 2023 (Rs. 2.15 crore as at March 31, 2022).

Investment in associate

The Company owns 30% stake in Equinox Labs Private Limited (‘Equinox) for a total purchase consideration of Rs. 20 crore. The equity shareholding in Equinox is disclosed under Investment in associate as at 31 March 2023.

Non-current assets

In crore of INR	Investments		Loans		Others		Total
	As at 31.03.2023	As at 31.03.2022	As at 31.03.2023	As at 31.03.2022	As at 31.03.2023	As at 31.03.2022	As at 31.03.2023	As at 31.03.2022
Financial assets
Investment in subsidiary	152.74	150.34	-	-	-	-	152.74	150.34
Loans to subsidiary	-	-	-	-	-	-	-	-
Security deposits	-	-	5.01	4.56	-	-	5.01	4.56
Bank balance in deposit accounts	-	-	-	-	0.19	3.46	0.19	3.46
Receivables for sub-leases	-	-	-	-	0.92	-	0.92	-
	152.74	150.34	5.01	4.56	1.11	3.46	158.86	158.36
Other than financial assets
Deferred tax assets	-	-	-	-	21.30	15.75	21.30	15.75
Other tax assets	-	-	-	-	17.36	8.69	17.36	8.69
Capital advances	-	-	-	-	0.09	10.00	0.09	10.00
Prepaid expenses	-	-	-	-	0.87	1.29	0.87	1.29
Balance with government authorities	-	-	-	-	0.52	0.52	0.52	0.52
	-	-	-	-	40.15	36.25	40.15	36.25
Total non-current assets	152.74	150.34	5.01	4.56	41.26	39.71	199.01	194.61

Investment in subsidiary

The Company assessed the recoverable amount of investment in the wholly owned subsidiary Nueclear Healthcare Limited, as at 31 March 2023, as the higher of Fair Value less Cost of Disposal (the ‘FVCOD) and the Value in Use (the ‘VIU), in view of the accumulated business losses since inception and also considering the changes in the market conditions and business environment in India.

In FY2023, the company entered into 51% profit sharing partnership in Pulse Hitech Health Services (Ghatkopar) LLP for a total purchase consideration of Rs. 2.55 crore. The same is disclosed as investment in subsidiary as at 31 March 2023.

Current assets

In crore of INR	Investments		Inventories		Trade receivables		Loans		Cash and bank balance		Others		Total
	As at	As at	As at	As at	As at	As at	As at	As at	As at	As at	As at	As at	As at	As at
	31.03.2023	31.03.2022	31.03.2023	31.03.2022	31.03.2023	31.03.2022	31.03.2023	31.03.2022	31.03.2023	31.03.2022	31.03.2023	31.03.2022	31.03.2023	31.03.2022
Financial assets
Investments in Mutual	101.19	89.05	-	-	-	-	-	-	-	-	-	-	101.19	89.05
Funds & NCDs (Quoted & measured at FVTPL)
Inventories	-	-	27.05	24.22	-	-	-	-	-	-	-	-	27.05	24.22
Trade receivables	-	-	-	-	83.31	92.78	-	-	-	-	-	-	83.31	92.78
Cash and bank balance	-	-	-	-	-	-	-	-	12.37	11.50	-	-	12.37	11.50
Other bank balances	-	-	-	-	-	-	-	-	4.02	0.50	-	-	4.02	0.50
Security deposits	-	-	-	-	-	-	3.09	0.73	-	-	-	-	3.09	0.73
Loans and advances to employees	-	-	-	-	-	-	-	0.06	-	-	-	-	-	0.06
Receivables for sub- leases	-	-	-	-	-	-	-	-	-	-	0.40	-	0.40	-
Other receivables towards sale of capital assets	-	-	-	-	-	-	-	-	-	-	-	1.21	-	1.21
	101.19	89.05	27.05	24.22	83.31	92.78	3.09	0.79	16.39	12.00	0.40	1.21	231.43	220.05
Other than financial assets
Advances for supply of goods and services	-	-	-	-	-	-	-	-	-	-	1.40	9.84	1.40	9.84
Prepaid expenses	-	-	-	-	-	-	-	-	-	-	2.54	1.13	2.54	1.13
	-	-	-	-	-	-	-	-	-	-	3.94	10.97	3.94	10.97
Total current assets	101.19	89.05	27.05	24.22	83.31	92.78	3.09	0.79	16.39	12.00	4.34	12.18	235.37	231.02

Inventories

Inventories as a percentage of income from operations were at 5.56% as at March 31, 2023 compared to 4.31% as at March 31, 2022. Inventories comprises of reagents, diagnostic material, consumables and stock in trade.

Trade receivables

Trade receivable as a percentage of income from operations were at 17.13% as at March 31, 2023 compared to 16.52% as at March 31, 2022. Total provision provided in books for credit impairment was Rs. 21.41 cr in FY2023 (Rs. 11.90 cr in FY2022). Trade receivables as at 31 March 2023 amounted to Rs. 83.31 crore (net off impairment), out of the total receivables, Rs. 72.39 crore (69%) related to government receivables (78% in FY2022).

Cash and bank balances

Cash and bank balances were Rs. 12.37 crore as at March 31, 2023 (Rs. 11.50 crore as at March 31, 2022).

CASH FLOW – STANDALONE

Thyrocare business generates cash from operations every year that is sufficient to manage the working capital and capital expenditure requirements. As per the dividend policy, the net cash surplus after providing for tax, capital expenditure expected to be incurred during the next financial year, and any other anticipated requirement of funds, the surplus cash may be distributed among the shareholders as dividend for the financial year concerned. Thyrocare has not availed any credit/ overdraft facility from any of the banks since its inception.

Summary of cash flow statement is given below -

In crore of INR	FY 2023	FY 2022
Net cash flows from / (used in) :
Operating activities	120.02	105.68
Investing activities	(31.65)	(12.32)
Financing activities	(87.50)	(86.91)
Net (Decrease)/ Increase in Cash and cash equivalent	0.87	6.45
Cash flow from operating activities -
In crore of INR	FY 2023	FY 2022
Operating profit before working capital changes	144.47	245.44
Adjustment for increase in working capital	4.25	(83.43)
Net income tax paid	(28.70)	(56.33)
Net cash flows from operating activities	120.02	105.68

In FY2023, Thyrocare generated net cash of Rs. 120.02 crore ( 105.68 crore in FY2022) from operating activities. This is attributable to:

• Decrease in operating profit before working capital changes to Rs. 144.47 crore in FY2023 (Rs. 245.44 crore in FY2022).

• Increase in cash flow from working capital to the extent of Rs. 4.25 crore in FY2023 (decrease of Rs. 83.43 crore in FY2022)

• Payment of taxes of Rs. 28.70 crore in FY2023 (Rs. 56.33 crore in FY2022).

Cash flows from investing activities

In crore of INR	FY 2023	FY 2022
Property, plant and equipment, additions to capital work in progress and capital advances (net)	(21.12)	(40.41)
Proceeds from sale of property, plant and equipment	0.10	0.79
Current investments (net)	(8.41)	18.48
(Investment in subsidary) / Repayment of loans by subsidiary	(2.55)	6.35
Lease payments received from sub-leases	-	0.13
(Investment in)/proceeds from maturity of term deposits	(0.26)	1.73
Interest received/ paid (net)	0.59	0.61
Net cash (used in) investing activities	(31.65)	(12.32)

In FY2023, cash used in investing activities was Rs. 31.65 crore ( 12.32 crore in FY2022).

During FY2023, cash used in investing activities was primarily attributable to:

• Purchase of Property, plant and equipment (net) Rs. 21.12 crore in FY 2023 (Rs. 40.41 crore in FY2022);

• Investment in subsidiary (51% stake in LLP) for Rs. 2.55 crore ( NIL in FY2022).

• Increase in current investment (net) to the tune of Rs. 8.41 crore (Additional (net) current investment of Rs. 18.48 crore in FY2022);

• Investments in bank deposits during the year for Rs.0.26 crore (maturity of Rs. 1.73 crore in FY2022)

Cash flows from financing activities

In crore of INR	FY 2023	FY 2022
Proceeds from issue of equity shares	0.03	0.03
Payment towards lease liabilities	(8.18)	(7.63)
Dividend paid on equity shares	(79.35)	(79.31)
Net cash (used in) financing activities	(87.50)	(86.91)

The payment of dividend in FY2023 was Rs.79.35 crore (Rs. 79.31 crore including dividend tax in FY2022).

II. Consolidated Financial Performance

The Consolidated Financial Statements relate to Thyrocare Technologies Limited (‘the Company), its subsidiary companies, Nueclear Healthcare Limited (‘wholly owned subsidiary), in which the Company has 100% equity holding as on 31 March 2023 (100% : 31 March 2022) & Pulse Hitech Health Services (Ghatkopar) LLP (‘Subsidiary), in which the company has 51% stake as on 31 March 2023 (NIL% : 31 March 2022) (hereinafter referred to as the "Group").

These consolidated Ind AS financial statements (hereinafter referred to as ‘consolidated financial statements) have been prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015, notified under Section 133 of Companies Act, 2013, (the ‘Act) and other relevant provisions of the Act.

Summary

Revenue from operations of the Group aggregated to Rs. 526.67 crore in FY2023 as compared to Rs. 588.86 crore in FY2022, registering a de-growth of 11%.

Non-Covid revenue aggregated to Rs. 497.41 crore in FY2023 as compared to Rs. 403.15 Crore in FY2022, registering a growth of 23.38 %

Earnings before interest, tax, depreciation and amortization (EBITDA) of Group aggregated to Rs. 120.05 crore (22.79% of income from operations) in FY2023 as compared to Rs. 234.89 crore (39.89% of income from operations) in FY2022, registering a de-growth of 49%. The normalized EBITDA after adjusting for provision for bad and doubtful debts and ESOPs costs was Rs. 150.53 crore (28.58%) as compared to Rs.245.03 crore (41.61%) in FY2022.

Profit after tax and after exceptional items (PAT) of the Group aggregated to Rs. 64.36 crore in FY2023 as compared to Rs. 176.14 crore in FY2022.

Total Assets of Group after net off of liabilities aggregated to Rs. 535.22 crore in FY2023 as compared to Rs. 526.57 crore in FY2022.

		FY2023		FY2022
		% of Income	% growth compared to FY 2022		% of Income
Income from Operations	526.67	100.00	-10.56	588.86	100.00
Expenses
Cost of Materials consumed/ traded	163.23	30.99	-3.81	169.69	28.82
Employee benefits expense	106.15	20.15	73.65	61.13	10.38
Other expenses	137.24	26.06	11.44	123.15	20.91
Total Expenses	406.62	77.21	14.87	353.97	60.11
Earnings before interest, tax, depreciation and amortisation (EBITDA)	120.05	22.79	-48.89	234.89	39.89
"Other income (net) excluding dividend & income from current investments"	3.05	0.58	-87.31	24.03	4.08
Dividend & income from current investments	5.37	1.02	2.87	5.22	0.89
Interest and Depreciation & amortisation expense	41.06	7.80	13.31	36.24	6.15
Profit before exceptional item and tax	87.41	16.60	-61.65	227.90	38.70
Share of profit in associate entity	1.18	0.22	-756.67	(0.18)	-0.03
Profit before tax (PBT)	88.59	16.82	-61.10	227.72	38.67
Tax expense	24.23	4.60	-53.03	51.58	8.76
Profit for the year (PAT)	64.36	12.22	-63.46	176.14	29.91

Revenue from operations

Revenue from operations decreased from Rs. 588.86 crore in FY2022 to Rs. 526.67 crore in FY2023, registering a de-growth of 11%.

The Consolidated Revenue from operations primarily comprised of income from diagnostic services, income from imaging services primarily 18F-FDG (Fluoro Deoxy Glucose) whole body PET CT imaging service, sale of consumables for diagnostic services, trading of point of care testing devices and sale of excess radioactive bio-marker FDG required for PET-CT scanning.

Expenses

Cost of material consumed

		FY2023		FY2022
		% of income from operations	% growth compared to FY 2022		% of income from operations
Cost of materials consumed
Opening stock	23.31			23.02
Add: Adjustment on account of change in a/c policy	0			0.21
Purchases	160.26			166.33
	183.57			189.56
Less: Closing stock	26.65			23.31
Cost of material consumed [A]	156.92	29.79	-5.61	166.25	28.23
Material consumed comprises:
Reagents/ Diagnostics material	137.97	26.20	7.62	128.20	21.77
Radiopharmaceuticals	2.35	0.45	-47.31	4.46	0.76
Consumables	16.60	3.15	-50.58	33.59	5.70
	156.92	29.79	-5.61	166.25	28.23

The Cost of material consumed decreased from Rs. 166.25 crore in FY2022 to Rs. 156.92crore in FY2023, the cost of material consumed to revenue from operations was 29.79% (28.23% in FY2022).

The cost of material consumed primarily comprised of (a) reagents for diagnostic testing and consumables used for processing, (b) Consumable for laboratory, (c) Consumption for FDG and consumables used for imaging centres such as contrast, films etc.

The % cost of material consumed to diagnostic services has increased during the year mainly on account of reduction in the low cost Covid Revenue and due to Rupee depreciation against the US Dollar.

Cost of material traded

		FY2023		FY2022
		% of income from traded goods	% growth compared to FY 2022		% of income from traded goods
Purchase of stock-in-trade
Point of care testing devices and strips	6.11			4.32
	6.11			4.32
Changes in inventories of stock-in-trade
Inventories at the end of the year:
Point of care testing devices and strips	1.02			1.22
	1.02			1.22
Inventories at the beginning of the year:
Point of care testing devices and strips	1.21			0.34
	1.21			0.34
Net change	0.19			(0.88)
Cost of material traded [B]	6.30	120.46	83.14	3.44	256.72

The discussions about the cost of material traded is already included under the discussion on standalone financial statement of Thyrocare.

Cost of Materials consumed/ traded

		FY2023		FY2022
		% of income from operations	% growth compared to FY 2022		% of income from operations
Cost of Materials consumed/ traded [A]+[B]	163.23	30.99	-3.81	169.69	28.82

The overall Cost of material consumed/ traded thus has decreased from Rs. 169.69 crore in FY2022 to Rs. 163.22crore in FY2023, the cost of material consumed/ traded to income from operations was 30.99% (28.82% in FY2022).

Employee benefits expense

	FY2023		FY2022
	% of Income		% of Income
Salaries, wages and bonus	75.17	14.27	54.70	9.29
Contributions to provident and other funds	5.05	0.96	4.19	0.71
Employees stock compensation expense	21.17	4.02	2.32	0.39
Gratuity	1.79	0.34	0.85	0.14
Compensated absences	0.98	0.19	(2.83)	-0.48
Staff welfare expenses	1.99	0.38	1.90	0.32
	106.15	20.16	61.13	10.38

Total employee benefits expenses were Rs. 106.15 crore in FY2023, increased from Rs. 61.13 crore in FY2022. The employee benefits expenses as percentage of income from operations were 20.16% in FY2023 (10.38% in FY2022).

Employee benefit expenses increased Y-o-Y on account of additions in Senior Leadership, additions in the growth team to sustain growth and investments in quality personnel to fulfill NABL requirements over and above the average salary increments for employees of about 8-10% p. a. Additionally, variable pay was introduced to the employees across the organization for fostering performance oriented appraisals for their contribution.

The ESOPs cost has increased which is due to the ESOPs granted from parent group API Holdings to Thyrocare employees. This cost is recognized as share based payment in the P&L and appropriately recognized in the balance sheet as Equity contribution from the parent.

Note: Total value of the ESOPs granted from parent group are 45.53 Cr over a 6 year period ((Year 1 – 39.7%, Year 2 – 31.4%, Year 3 – 16.2%, Year 4 – 9.0%, Year 5 – 3.5%, Year 6 - 0.2%)

Other expenses

	FY2023		FY2022
	% of Income		% of Income
Service charges	39.21	7.44	37.40	6.35
Rent	5.61	1.07	3.00	0.51
Sales incentive	12.75	2.42	16.00	2.72
Legal and professional fees	16.85	3.20	11.38	1.93
Power and fuel and water	10.70	2.03	8.40	1.43
Advertisement expenses	0	0.00	0.10	0.02
Business promotion	6.44	1.22	5.20	0.88
Postage and courier	3.48	0.66	3.60	0.61
Printing and stationery	2.60	0.49	2.50	0.42
Repairs and maintenance - Machinery	12.73	2.42	9.20	1.56
Others	26.87	5.10	26.37	4.48
	137.24	26.06	123.15	20.91

Other expenses as percentage of revenue had marginally increased from 20.91% in FY2022 to 26.06% in FY2023.

Earnings before interest, tax, depreciation and amortization (EBITDA)

In FY2023 EBITDA was Rs. 120.05crore (22.79 % of income from operations) as compared to Rs.234.89 crore (39.89% of income from operations) in FY2022. The normalized EBITDA after adjusting for provision for bad and doubtful debts and ESOPs costs was Rs 150.53 crore (28.58%) as compared to Rs. 245.03 crore (41.61%) in FY2022.

Other income (net)

	FY2023		FY2022
	% of Income		% of Income
Net gain on investments	5.37	1.00	5.22	0.84
Interest income	1.38	0.26	0.71	0.11
Others	1.67	0.31	23.32	3.77
	8.42	1.57	29.25	4.73

Depreciation and amortization

Depreciation and amortization was Rs. 38.71 crore in FY2023 (7.35% of income from operations) compared to Rs. 33.87crore in FY2022 (5.75% of income from operations).

Profit before tax (PBT)

In FY2023, PBT was Rs. 88.59 crore (Rs. 227.72 crore in FY2022).

Tax expense

Tax expenses were at Rs. 24.23 crore in FY2023 compared to Rs. 51.58 crore in FY2022.

Profit for the year (PAT)

The net profit in FY2023 was Rs. 64.36 crore (12.22% of income from operations) as compared to Rs. 176.14 crore (29.91% of income from operations) in FY2022.

FINANCIAL POSITION – CONSOLIDATED

Share capital

	FY2023		FY2022
	Number of shares	Amount	Number of shares	Amount
(a) Authorised
Equity shares of Rs. 10 each with equal voting rights	1,00,000	100.00	10,00,00,000	1,000.00
(b) Issued, subscribed and paid-up
Equity shares of Rs. 10 each with equal voting rights	5,29,30,043	52.93	5,29,03,332	52.90
Total	5,29,30,043	52.93	5,29,03,332	52.90

The Company has a single class of equity shares of par value of Rs. 10/- each. The authorized share capital of the Company stood at Rs. 100.00 crore, divided into 10 crore equity shares of Rs. 10/- each. The issued, subscribed and paid up capital stood at Rs. 52.93 crore as at March 31, 2023.

The Group has disclosed the issued, subscribed and paid-up capital net-off the equity shares held by the Employees Stock Option Trust. The group has also issued shares on exercising of options by employees.

Reserves and surplus

Reserves and surplus as at March 31, 2023 were Rs. 481.37 crore (Rs. 473.67crore as at March 31, 2022).

Capital reserve

Capital Reserve represents a) amounts received in earlier years from the selling shareholder at the time of the IPO towards reimbursement of certain expenses and b) fair value of the trademark "Whaters" (subsequently disposed off) assigned by Dr A Velumani (former promoter) in favor of the Company for no consideration. Capital reserve as at March 31, 2023 amounted to Rs. 31.71 crore.

Securities premium account

Securities premium represents the premium received on issue of shares. It is utilized in accordance with the provisions of the Companies Act, 2013. Securities premium as at March 31, 2023 amounted to Rs. 72.66 crore. (Rs. 71.51 crore as at March 31, 2022)

Share option outstanding account

The group has established various equity-settled share-based payment plans for certain categories of employees of the Group. The balance in the share option outstanding account represents the expenses recorded pursuant to the aforesaid schemes for which the options are not yet vested or exercised.

The balance as at March 31, 2023 was Rs. 4.53 crore (As at March 31, 2022 it was Rs. 3.44 crore), after adjustment on account of transfer of accumulated balance in stock option premium after exercise of stock options.

General reserve

General reserve is used to record the transfer from retained earnings of the company. It is utilized in accordance with the provisions of the Companies Act, 2013. General reserve as at March 31, 2023 were Rs. 9.17 crore, which was the same as per the previous year.

Surplus in the statement of profit and loss account

Balance in the statement of profit and loss as at March 31, 2023 was Rs 343.42 crore (Rs 356.88 crore as at March 31, 2022) after appropriation towards dividend on equity shares and tax on dividend.

Non-current liabilities

In crore of INR	Lease liabilities		Provisions		Others		Total
	As at 31.03.2023	As at 31.03.2022	As at 31.03.2023	As at 31.03.2022	As at 31.03.2023	As at 31.03.2022	As at 31.03.2023	As at 31.03.2022
Financial liabilities
Lease liabilities	16.12	15.70	-	-	-	-	16.12	15.70
	16.12	15.70	-	-	-	-	16.12	15.70
Other than financial liabilities
Provision for employee benefits:
Provision for gratuity	-	-	3.30	0.27	-	-	3.30	0.27
Deferred Tax liabilities					0.98	0.60	0.98	0.60
	-	-	3.30	0.27	0.98	0.60	4.28	0.87
Total non-current liabilities	16.12	15.70	3.30	0.27	0.98	0.60	20.40	16.57

Total non-current liabilities increased to 20.40 crore as at March 31, 2023 ( 16.57 crore as at March 31, 2022), with recognition of long-term lease liability on account of new arrangement entered into in the current financial year.

Current liabilities

In crore of INR	Trade payables		Other financial		Provisions		Others		Total
			liabilities
	As at	As at	As at	As at	As at	As at	As at	As at	As at	As at
	31.03.2023	31.03.2022	31.03.2023	31.03.2022	31.03.2023	31.03.2022	31.03.2023	31.03.2022	31.03.2023	31.03.2022
Financial liabilities
Trade payables	23.99	16.53	-	-	-	-	-	-	23.99	16.53
Lease liabilities	-	-	7.19	5.00	-	-	-	-	7.19	5.00
Security deposits received	-	-	15.58	16.74	-	-	-	-	15.58	16.74
Employees dues	-	-	1.02	5.53	-	-	-	-	1.02	5.53
Unclaimed dividend	-	-	0.16	1.02	-	-	-	-	0.16	1.02
Creditors for capital goods	-	-	7.17	0.40	-	-	-	-	7.17	0.40
	23.99	16.53	31.12	28.69	-	-	-	-	55.11	45.22
Other than financial liabilities
Provision for employee benefits:
Provision for compensated absences	-	-	-	-	2.09	2.17	-	-	2.09	2.17
Provision for gratuity	-	-	-	-	0.59	4.52	-	-	0.59	4.52
Provision for CSR spending	-	-	-	-	1.36	-	-	-	1.36	-
Current tax liabilities (net)	-	-	-	-	-	-	10.04	1.44	10.04	1.44
Contract liabilities	-	-	-	-	-	-	6.08	9.34	6.08	9.34
Statutory dues	-	-	-	-	-	-	1.83	1.83	1.83	1.83
	-	-	-	-	4.04	6.69	17.95	12.61	21.99	19.30
Total current liabilities	23.99	16.53	31.12	28.69	4.04	6.69	17.95	12.61	77.10	64.52

Total current liabilities increased to 77.10 crore as at March 31, 2023 ( 64.52 crore as at March .31, 2022). The deviation was mainly on account of –

• Increase in trade payables and outstanding & creditors for capital goods

• Decrease in the security deposits paid to parties for surety against short term contracts;

• Decrease in advances received from customers against which services were provided in the next fiscal;

• Increase in current tax liabilities of FY2023.

Property, plant and equipment, capital work-in-progress and investment property

The additions to gross block in FY2023 were:

Plant and equipment Rs 32.19 crore (Rs 28.95 crore in FY2022)

Furniture and fixtures Rs 4.28 crore (Rs 7.26 crore in FY2022)

Office equipment Rs 2.39 crore (Rs 3.45 crore in FY2022)

Computer, printer and scanner Rs 1.39 crore (Rs 1.79 crore in FY2022)

The capital work in progress on account of tangible assets was Rs 1.61 crore as at March 31, 2023 (Rs 2.95 crore as at March 31, 2022).

Equity accounted investees

The Company owns 30% stake in Equinox Labs Private Limited (‘Equinox) for a total purchase consideration of Rs 20 crore.

The equity shareholding in Equinox is disclosed under Investment in associate as at 31 March 2023.

Non-current assets
In crore of INR	Loans		Others		Total
	As at	As at	As at	As at	As at	As at
	31.03.2023	31.03.2022	31.03.2023	31.03.2022	31.03.2023	31.03.2022
Financial assets
Security deposits	6.08	5.59	-	-	6.08	5.59
Bank balance in deposit accounts	-	-	0.21	3.46	0.21	3.46
	6.08	5.59	0.21	3.46	6.29	9.05
Other than financial assets
Deferred tax assets	-	-	12.27	6.49	12.27	6.49
Other tax assets	-	-	18.55	9.88	18.55	9.88
Capital advances	-	-	3.69	-	3.69	-
Prepaid expenses	-	-	0.86	1.29	0.86	1.29
Balance with government authorities	-	-	0.52	0.52	0.52	0.52
Advances for supply of goods	-	-	-	1.59	-	1.59
	-	-	35.89	19.77	35.89	19.77
Total non-current assets	6.08	5.59	36.10	23.23	42.18	28.82

Current assets

In crore of INR	Investments		Inventories		Trade receivables		Cash and bank balance		Others		Total
	As at	As at	As at	As at	As at	As at	As at	As at	As at	As at	As at	As at
	31.03.2023	31.03.2022	31.03.2023	31.03.2022	31.03.2023	31.03.2022	31.03.2023	31.03.2022	31.03.2023	31.03.2022	31.03.2023	31.03.2022
Financial assets
Investments in Mutual	122.30	125.21	-	-	-	-	-	-	-	-	122.30	125.21
Funds & NCDs (Quoted & measured at FVTPL)
Inventories	-	-	27.67	24.53	-	-	-	-	-	-	27.67	24.53
Trade receivables	-	-	-	-	85.12	93.20	-	-	-	-	85.12	93.20
Cash and bank balance	-	-	-	-	-	-	17.77	13.63	-	-	17.77	13.63
Other bank balances	-	-	-	-	-	-	10.70	0.28	-	-	10.70	0.28
Security deposits	-	-	-	-	-	-	-	-	3.51	0.61	3.51	0.61
Loans and advances to employees	-	-	-	-	-	-	-	-	-	0.06	-	0.06
Other receivables	-	-	-	-	-	-	-	-	0.35	1.22	0.35	1.22
Interest accrued on deposits	-	-	-	-	-	-	-	-	0.20	-	0.20	-
	122.30	125.21	27.67	24.53	85.12	93.20	28.47	13.91	4.05	1.89	267.60	258.74
Other than financial
assets
Advances for supply of	-	-	-	-	-	-	-	-	2.56	9.90	2.56	9.90
goods and services
Balance with government authorities	-	-	-	-	-	-	-	-	0.20	0.16	0.20	0.16
Prepaid expenses	-	-	-	-	-	-	-	-	2.56	1.22	2.56	1.22
	-	-	-	-	-	-	-	-	5.32	11.28	5.32	11.28
Total current assets	122.30	125.21	27.67	24.53	85.12	93.20	28.47	13.91	9.37	13.17	272.92	270.02

Inventories

Inventories as a percentage of income from operations were at 5.25% as at March 31, 2023 compared to 4.17% as at March 31, 2022. Inventories comprises reagents, diagnostic material, consumables and stock in trade.

Trade receivables

Trade receivable as a percentage of income from operations were at 16.16% as at March 31, 2023 compared to 15.83% as at March 31, 2022.

CASH FLOW – CONSOLIDATED

The Group business generates cash from operations every year that is sufficient to manage the working capital and capital expenditure requirements. The Group has not availed any credit/ overdraft facility from any of the banks since its inception.

Summary of cash flow statement is given below -

In crore of INR	FY 2023	FY 2022
Net cash flows from / (used in) :
Operating activities	129.31	113.41
Investing activities	(38.99)	(23.57)
Financing activities	(86.18)	(89.41)
Net (Decrease)/ Increase in Cash and cash equiv.	4.14	0.43
Cash flow from operating activities -
In crore of INR	FY 2023	FY 2022
Operating profit before working capital changes	151.98	249.39
Adjustment for increase in working capital	5.79	(79.22)
Net income tax paid	(28.46)	(56.76)
Net cash flows from operating activities	129.31	113.41

In FY2023, Group generated net cash of Rs. 129.31 crore (Rs.113.41 crore in FY2022) from operating activities.

Cash flows from investing activities

In crore of INR	FY 2023	FY 2022
Property, plant and equipment, additions to capital work in	(43.65)	(37.83)
progress and capital advances (net)
Proceeds from sale of property, plant and equipment	2.10	22.93
Proceeds from sale of business undertaking	-	4.25
Current investments (net)	8.45	(15.52)
(Investment in)/ Proceeds from Maturity of term deposits	(7.19)	1.87
Interest received/ paid (net)	1.30	0.73
Net cash (used in) investing activities	(38.99)	(23.57)

In FY2023, cash used in investing activities was Rs 38.99 crore (Rs 23.57 crore in FY2022).

During FY2023, cash used in investing activities was primarily attributable to:

• Purchase of Property, plant and equipment (net) Rs 43.65 crore (Rs 37.83 crore in FY2022); and

• Sale of current investment.

• Investments in Bank deposits

Cash flows from financing activities
In crore of INR	FY 2023	FY 2022
Proceeds from issue of equity shares	0.03	0.03
Payment towards lease liabilities	(7.78)	(7.76)
Dividend paid on equity shares	(79.35)	(79.31)
Interest paid	-	(2.37)
Proceeds towards contribution from non-controlling shareholders in subsidiary	0.92
Net cash (used in) financing activities	(86.18)	(89.41)

The payment of dividend in FY2023 was Rs 79.35 crore (Rs 79.31 crore in FY2022).

III. Segment performance

The Group has identified business segments as its primary segment. Revenue and expenses directly attributable to segments are reported under each reportable primary segment. The following table presents a summary of revenue by industry segments.

		Segment revenue
In crore of INR		(% aggregate revenue)
	FY 2023	FY 2022	FY 2023	FY 2022	% Growth
Diagnostic Testing Services	481.2	555.36	91.37	94.31	-13%
Imaging Services	40.21	27.34	7.63	4.64	47%
Others	5.24	6.16	0.99	1.05	-15%
	526.67	588.86	100.00	100.00	-11%

In FY2023, revenue from diagnostic testing services contributed the largest share to revenue (91.37%) at a de-growth rate of 2.94%.

IV. Related Party Transaction

These have been discussed in detail in the Notes to the Standalone Financial Statements in the Annual Report.

V. Key financial ratios

In accordance with the SEBI (Listing Obligations and Disclosure Requirement 2018) (Amendment) Regulations, 2018, the Company is required to give details of significant changes, if any in key sector-specific financial ratios. This apart the Company has also disclosed the ratios as prescribed pursuant to the amendment to Schedule III of the Companies Act, 2013, in the notes to the financial statement.

The Company has identified the following ratios as key financial ratios :

In crore of INR	Standalone		Consolidated
	FY 2023	FY 2022	FY 2023	FY 2022
Revenue growth (%)	(13.4)	18.4	(10.6)	19.1
EBITDA margin (%)	23.0	41.1	22.8	39.9
Net profit margin (%)	11.7	27.1	12.2	29.9
Price / Earnings (times)	NA	NA	51.91	18.5
Basic EPS ()	10.8	28.8	12.2	33.3
Liquid cash as a % of revenue from operations	24.2	18.0	28.6	23.6
Return on net worth	10.9	29.2	12.0	33.5
Return on capital employed (ROCE) $	47.7	110.9	42.8	104.1
Market capitalisattion to revenue from operations ()	NA	NA	6.3	5.5

$ RoCE = Profit before exceptional items and tax / (Tangible assets/ Investment property & assests held for sale + Capital work-in-progress + Inventories + Trade receivables + Short term financial assets + Other current assets – Current liabilities)

8. Outlook, risks and concerns

This section lists forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those suggested by the forward-looking statements due to risks or uncertainties associated with respect to, but not limited to, regulatory changes pertaining to the industry in India in which our Company operates and our ability to respond to them, our ability to successfully implement our strategy, our growth and expansion, technological changes, our Companys exposure to market risks, general economic and political conditions in India which have an impact on its business activities or investments, the monetary and fiscal policies of India, inflation or deflation, unanticipated turbulence in any or all of interest rates or foreign exchange rates or both, equity prices and other rates or prices, the performance of the financial markets in India and globally, changes in domestic laws, regulations and taxes and changes in the competitive environment.

Certain important factors that could cause actual results to differ materially from our Companys expectations include, but are not limited to, the following – operating highly-competitive and fragmented industry and our business, financial condition and results of operations may be adversely affected if we are not able to compete effectively; negative publicity or other harm to our reputation, brand or customer perception of our brand;disruption in operations of any our laboratories or offerings of particular tests; delay or interruption in transportation of samples to the laboratory and regional processing laboratories and our dependence on hub-and-spoke business model complemented by the regional processing laboratories; failure to attract and retain authorized service providers;failure of our equipment, information technology and other technological systems; and changes in technologies and/or the introduction of new technology could reduce demand for our pathology testing services.

operational risk associated with molecular imaging business may have an effect on results of operations and financial conditions.

Changing laws, rules, regulations and government policies with reference to our businesses.

9. Internal control systems and their adequacy

The CEO and CFO certification provided in the CEO and CFO certification section of the Annual Report discusses the adequacy of our internal control systems and procedures.