Interview Transcript

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

I've been in the industry for the last 30 years, focusing on labs and diagnostics. I spent 15 years in a hospital and another 15 years purely in diagnostics. I had the opportunity to work with one of the best companies in India, Dr. Lal PathLabs. I had two tenures there, from 2008 to 2009 and then from 2019 to December 2023. I left around 10 months ago, in December.

I also worked with a top company globally. I spent three and a half years there as a National Manager, overseeing field operations, rapid response labs, employer business, and drug abuse, covering close to eight functions in Indian operations with a team of 500 people. In a nutshell, I've worked across various scopes, from operations to logistics, and setting up diagnostics, including radiology and reference labs.

Over my 30-year career, I've set up more than 200 labs, including reference labs, diagnostic centers, and daycare centers. I had the chance to work with Medanta, setting up labs in India and internationally. During my second tenure at Dr. Lal PathLabs, I was based in Nairobi, Kenya, as a Country Manager for Pathology with Medanta. The Managing Director of Dr. Lal PathLabs, Dr. Om Manchanda, brought me from Kenya to set up a vertical for mergers and acquisitions (M&A).

They were looking for someone who could manage both partners, strategize, and drive inorganic growth through M&A. My role involved ensuring smooth transitions and growth for acquired organizations. The M&A strategy included both 100% acquisitions and a 70/30 partnership model, where Dr. Lal PathLabs held a 70% stake. I joined in 2019 as the first employee of this M&A vertical.

With a technical background, I handled technical due diligence and instrument setup. Setting up 200 labs is no small feat, as each city presents unique challenges. My experience includes both greenfield and brownfield projects, including M&A and HLM. In my second tenure, I was responsible for business and operations as well as sales for the western part of India in the M&A vertical. The growth rate was around 18% to 20% per annum, while Dr. Lal PathLabs itself was growing at 13% to 15%, now at 11% to 12%.

In Kenya, I managed a complete center, excluding inpatient services, with facilities for dialysis, optical, ophthalmology, and physiotherapy. I was involved in setting up networks, collection centers, franchisee B2B and B2C operations, and conducting ATL and BTL activities. Initially, in 2019, I was part of the board committee for a year or two, before the structure was formalized, and I reported to the COO. That's my background.

You mentioned you had two tenures with the company. I'm curious to know why you left after your second tenure. What prompted your decision to leave?

So, the initial phase was in 2008 and 2009. During that time, I was heading operations, but I got the opportunity to enter a new venture. There is a renowned building construction company in India, particularly in Delhi NCR, called Vatika. Vatika is a 35,000 crore INR company. They were entering the diagnostics field, and the owner approached me with a promising growth opportunity. They offered me a good position, and I joined as the first employee. They said, "We are building the complete infrastructure, so you'll have to develop marketing, sales, and everything from scratch." I saw it as a chance not only for growth but also to gain exposure and take the company to the next level. This experience propelled me further, and from there, I moved internationally. Then Dr. Om approached me, and I couldn't say no. He has always been a role model and mentor to me.

The second time was on December 2, 2019. I was based in Nairobi, Kenya, and was doing quite well. Dr. Om Manchanda initially approached me through the CHRO. They said, "At Dr. Lal PathLabs, we want to set up a reference lab in Kenya. Would you be able to do that?" After many meetings and projections, they initially considered me for the Kenya operations. However, the plan changed, and they offered a bigger opportunity. They wanted to focus on inorganic growth and develop the merger and acquisition department, asking me to lead it. They asked if I would be okay with coming to India. I agreed, and that's how I came to India in November and started on December 2, 2019. I joined the company just before Covid as the second in India.

And what are you up to now?

Currently, I'm working as a president with a company called Geneflow. This is a new venture, and we are in a very specialized segment, which is oncology. We focus on flow cytometry, molecular, and NGS. I'm working with one of my former colleagues, Dr. Sachin Jain, who is a hematopathologist. We worked together at Quest.

I was transferred to Mumbai with Dr. Lal PathLabs. The only reason I left Dr. Lal was because, when I joined for a second stint, I thought I would retire there. Anyone coming back for a second stint is definitely looking for a long-term engagement. This second stint lasted more than four years. However, the role I was given involved a shift to Mumbai, where they made a significant acquisition, Suburban, 100%. They moved the entire PUPL M&A team to Suburban, including four people. I was in charge of head operations, and there was a CEO, an IT person, and a marketing person.

When I was transferred, instead of a corporate role, I was given a position in a regional reference lab, which I didn't enjoy. I was managing Pan India and then shifted to a regional level. Although the ticket size was high, sales were removed from my responsibilities because I was handling West India. These changes, along with some reporting changes, left me unhappy. I spoke to Dr. Om about it. Our conversation was very cordial. I told him I wasn't happy and wasn't working at my usual pace. He understood and said, "Currently, there is no scope." I gave a three-month notice and then parted ways.

You mentioned a couple of other points, which I'll come back to. Since Om was instrumental in many things you did, I'm sure you saw the recent announcement that he's handing over responsibilities to Shankha Banerjee and becoming an advisor. What's your take on that?

If you look at the entire journey, when I was in my first inning in 2008 and 2009, Dr. Om Manchanda joined Dr. Lal in 2006. I witnessed the journey from a 60 crore turnover to a turnover of 2,200 crores. He was instrumental in bringing that culture, establishing the corporate setup, and creating the corporate office. Everyone used to approach Dr. Lal to get things done, and he really built up those aspects. It was shocking for me when the decision was made to appoint Shankha Banerjee. Shankha used to be, if I'm not mistaken, the Chief Strategy Officer, then he was given a different role, and later he took on the COO role at Dr. Lal PathLabs. He was then shifted to Mumbai to oversee Suburban as a Group CEO, and now he has been brought back as the CEO for Dr. Lal PathLabs. It was a bit surprising. I think if Dr. Om is still there, he might be on the advisory board. Dr. Lal is still a very good company with strong practices and growth. The Indian market is very competitive, so companies have to think of different strategies.

In Tier 1 and metropolitan areas, it's a fixed pie, and any new player will have to come with a different strategy. It might take three to five years for the picture to become clear, but they will be taking a chunk out of that pie. This has led to slower growth for Dr. Lal PathLabs, which is now growing at 11% to 12%. However, their bottom line EBITDA margin remains intact at 28% to 30%. They focus on maintaining the bottom line, especially in consumption, power, material, and manpower. They multitask, and if someone leaves, they don't hire externally; they develop someone internally to upgrade to that level. This gives them a competitive edge. For instance, the CEO of the M&A company left, and no replacement was taken. Bharath Uppiliappan, who was the CEO of Dr. Lal, also left, and no one was brought in to replace him. It has been managed internally. I think the current strategy is good, focusing on Tier 3 and Tier 4 cities.

Before discussing acquisitions, particularly Suburban and other opportunities given your background and the focus on Tier 3 and 4, I want to spend a couple of minutes on acquisitions. But before that, since you spent time with Dr. Om and the larger management team, I want to get a better understanding of your experience with Arvind Lal and his wife, Dr. Vandana Lal.

Could you provide more insight into how they perceive the business, the opportunity set, and, more importantly, the integrity of the management team? They've grown nicely. Of course, we'll come back to whether the pie is growing or not, but I would like to hear about your experience interacting with them and your viewpoint on the quality of the management team, particularly the founding family.

I interacted with Dr. Om maybe once a month, mainly during quarterly business review meetings. I find Dr. Om to be a reasonable, sensible, and visionary person. Regarding Dr. Arvind Lal, he is very strong and well-respected in the market. The entire industry recognizes the name Dr. Arvind Lal, and he is known for making structural changes in the business. His reputation is very high, especially in North India and even in some parts of the South. People regard him as ethical and clear in his practices.

During business review and board meetings, Dr. Arvind Lal communicates clearly from top management to the bottom. I admire both Dr. Arvind Lal and Dr. Om Manchanda for their vision and precise communication. Their thought process is clear and precise for the entire team. Now, regarding Dr. Vandana Lal, she speaks less but is very quality-oriented, focused, and knowledgeable. She is still involved with the quality team, including Dr. Seema Kocher, the principal director of quality.

I had many opportunities to interact with Dr. Vandana Lal. She is clear, cautious, and emphasizes quality to all chief labs and directors. Dr. Lal is known for ethical practices and quality. If asked which company I would rank number one based on these features, I would still name Dr. Lal as number one.

That's a good endorsement. I'm interested in how companies reinvest in their business, sometimes through acquisitions. Dr. Lal has made a significant acquisition in the West Suburban. You spent time in Suburban. Were you involved in the original analysis?

No, but I can provide a high-level overview based on my understanding, but I wasn't involved in the strategic decision. A team, including Dr. Om Manchanda, Dr. Arvind Lal, the CFO, and a dedicated business development manager, handled the acquisition. They sometimes sought third-party assistance for assessments.

In your estimation, has the acquisition been a successful one for Dr. Lal?

No.

Why do you say that?

Even though I say no for now, when you do an acquisition, especially since this was the largest one, you have to consider certain factors. I learned from reliable sources, and even during my time there, that the evaluation of Suburban was based on a 300 crore turnover.

The money paid and the evaluation were based on a 300 crore turnover. From what I gathered, there might be some variations, but this is the information I have, and I'm sharing it transparently with you. In fact, the original business was 150 crore, meaning 50% of the business was related to Covid.

When you acquire a lab with a 300 crore turnover and base the evaluation on that, paying an amount according to a factor like 2.5 or 3, but the actual assessment turns out to be 150 crore, you need to drive growth because of the amount paid.

Suburban, for instance, already had all its branches and was operating at low-cost margins. Dr. Sanjeev Arora, as the owner, was deeply involved in every activity, making many decisions independently. When a corporate entity comes in, there are structural changes, including increased manpower costs due to compliance requirements.

With acquisitions, certain terms require salary structure adjustments for long-term employees. Although experts are driving the business, and it is growing, the expected return or growth hasn't materialized as anticipated.

I was sent from the corporate office to a Suburban location with a strategic plan, but I felt I wasn't fully justifying my role. More structure could have been beneficial. Dr. Lal is involved in mergers and acquisitions, and other companies like Metropolis have also faced challenges with similar acquisitions.

These processes require proper synchronization, transparency, and a dedicated execution team. The management should collaborate closely, especially considering the 70-30 ownership split, where 30% still belongs to the local owner who has been running the business economically for 25 years. For example, CPL in Indore, which was acquired, is experiencing good growth at 18% with strong margins. The owner is actively involved, ensuring success.

Despite focusing on these strategies, challenges arise, such as staff turnover. When Shankha was placed there, the previous CEO, Sushant, felt insecure and left. The key is to understand how the business was run for decades and how to effectively integrate and drive it forward.

Even though Suburban hasn't been a great success, hasn't Dr. Lal done smaller acquisitions that are performing well? Have those been successful?

Yes, they are doing well. Let me give you an example. We did an acquisition in Indore in August 2019. It was a lab doing around 12 crore per annum. Last year, if I'm not mistaken, it closed at 28 crore. Similarly, Amin's Pathology in Vadodara was doing around 5 crore per annum when we took over. Now, it's close to 12 crore. This model is not a 100% acquisition; it's a 70-30 model, where 30% remains with the original owners. In 2008 and 2009, they acquired Paliwal, which was doing around 5 crore. Last year, it was close to 50 crore.

So maybe that's the path for them. Instead of big acquisitions, they should focus on smaller ones or partnerships, like 70-30 or 80-20 deals.

When looking at either Suburban, which you managed, or at the corporate level, what were the two or three KPIs you focused on to gauge business growth? Were there specific KPIs like revenue per patient, revenue per lab, or revenue per test?

Yes, so my KPIs were primarily focused on operations. My first responsibility was to manage operations, not just the bottom line. We focused on reducing consumption without adding manpower, introducing new tests based on volume, and closing low-volume tests to manage consumption better.

When acquiring a lab, the first step is to align it with LPL standards. We ensure that reagents at the corporate level are integrated. We evaluate the top 20 high-volume tests to determine the cost per test. Changing instruments or reagents for these tests can immediately reduce costs and consumption. Training manpower and expanding the network are also crucial.

Regarding KPIs, one was reducing consumption while fostering growth. Setting up the network and franchise model was key. Local partners often lacked organization and exposure. They sought corporate acquisition to grow under a corporate umbrella. Dr. Lal's strategy was to acquire labs in areas where they weren't strong.

Let me give you an example. When they acquired the Indore lab, which is a central path lab, it was quite small. Despite its size, it was the number one lab in Indore, doing around 1 crore business per month, resulting in a 12 crore annual turnover. This was a key focus area.

The plan was structured in phases. First three months, six months, nine months, and by end of a year you should have a structure that you've shifted and you've put your own processes there. This brings in corporate growth and expansion. I'm not saying the small level people are unaware of what they are doing, but yes, it's a permutation combination because that person is still growing their own lab at some pace.

The second foremost was differentiating the lab after acquisition, typically at a 70-30 ratio. Dr. Om's vision was clear, he would communicate to me clearly that I should build a good reference lab.

For instance, when I took over the Indore lab, I established a robust reference lab, about 6,000 to 7,000 square feet on a single floor, focusing on molecular capabilities. When Covid-19 hit, this lab became the third in the entire network of 280 labs under Dr. Lal PathLabs to conduct Covid testing, achieving a monthly business of 5 crore rupees.

This restructuring gave confidence to partners, showing Dr. Lal's impact on transforming the scenario. Previously, Indore wasn't very tech-savvy, but we introduced advancements like registration on tablets.

Similarly, in Vadodara, after acquiring APRL, we expanded and set up a good reference lab. This led to growth and consolidation. Dr. Lal's strategy in areas where they are not strong involves running two labs within a 2-3 kilometer radius under different entities. They retain the original lab names to avoid sending the wrong message, gradually building confidence and structure over a year.

This consolidation involves merging bigger labs with smaller ones, reducing overheads like manpower and electricity, and shifting the workload to the absorbed lab. This ensures no client impact and efficient synchronization. Similar consolidations have been done in Maharashtra as well.

You spent some time in the south as well. I understand from your background.

Yes, in the south, we acquired a lab in Bangalore called Chandra. Chandra was doing business close to around 11 crore, with 90% B2B and 10% B2C. It was a 70-30 acquisition. They have three units, two HLM and one main lab in Malaysia.

On a pan-India basis, Dr. Lal is obviously stronger and more concentrated in the north and the east. Suburban gave them the west. They did this acquisition in Bangalore, so there's some presence there. But the south is still a relatively small market. If you were in Shankha's shoes today, how would you think about filling that void in the south? Would you focus on organic or acquisitive growth?

I think I would prefer organic growth. I'll tell you why. I can give you a very good example. In 2008 and 2009, I was taking care of operations pan-India, including greenfield, brownfield, and M&A projects. We did very few M&As, maybe one or two, and the third was HLM. During my 24-month tenure, I set up 24 labs in India. When I returned in 2019, after 10 years, I saw each of those labs or HLMs doing business from 12 crore to 30 crore. It was like planting a seed, nurturing it, and then seeing the tree bear fruit after 10 years.

So, whether it's the south or any other region, one strategy should be network expansion. They should expand their market presence, whether through satellite labs, regional labs, or something else. However, every market has a different scenario. Even if I've set up 200 labs, setting up a new one will still present challenges because the region, people, and mentalities are different. Everything is different in each geography.

I feel the south is a market they should focus on with a 70-30 approach. They should look for partners who are experts in that region because they know the pulse of the market. There are many players doing very well in the south. From my perspective, I would not only focus on expansion but also on partnering with local experts to grow together. The idea is to bring together the cultures and build confidence and understanding.

To truly understand that market, someone needs to conduct a deep dive to explore why we are not present and why others are successful. That is the area of focus. Previously, in the west, there were very few players, holding around 8% to 10%. Now, if you look at the west, they have captured 18% to 22% of the total turnover. I believe the same level of focus should be applied to the south, which is also a promising market.

You mentioned HLM, which stands for hospital-based hospital labs. When I examine the entire market, it appears that almost 50% of the business is conducted by hospital labs, whether they are HLMs or hospital-owned labs. That accounts for 50%, while the other 50% is where operators like Metropolis, Dr. Lal, and others are active, along with numerous smaller regional and local players.

That's a very good question. It was on my mind as well. I used to go and meet a lot of hospital owners. One thing that has changed is that hospitals are now entering the diagnostic sector. For example, Apollo Diagnostics is doing well, with around 500 crore in turnover this year. They are flourishing because they see diagnostics as a marketable area. Without diagnostics, patients would never be referred by doctors to hospitals due to the fear that specialized doctors might retain those patients.

For instance, look at Max Healthcare; they are doing around 150 crore in turnover. Medanta has also entered the sector because the person who was heading Apollo's business joined Medanta two years ago. Just a few days ago, I spoke with the chairman of a hospital chain. He asked if I could bring a team to plan a replica model of House of Diagnostics (HOD). HOD is a chain developed by the Sogani family, which includes doctors and businessmen like Dr. S.K. Sogani, a neurosurgeon. Their business model is B2C, with around 50 setups, including 25 to 30 in Delhi NCR.

They don't set up city MRI, PET scan, or radiology centers, and their prices are 50% of the market rate. They have both radiology and pathology setups. For example, a few months ago, my wife needed tests, including a PET scan, for breast carcinoma. I immediately thought of HOD. Anyone who asks me where to go for radiology or pathology tests, I recommend House of Diagnostics because they offer everything and pass the margin directly to the customer. The hospital chain chairman wants to discuss replicating HOD's model. He has a couple of hospitals and is expanding his business. He wants to set up a diagnostics network, knowing it will be costly but with high returns in B2C, managing cash flows effectively.

Do you see the hospital's 50% share taking over a bigger chunk of the other 50% over time?

Yes, I'll explain what they're currently doing. For example, Apollo might have 50 hospitals. Medanta, on the other hand, has about seven hospitals. When Medanta started their diagnostic division, they initially set up a network within the city where they were present. The first level of support was through the hospital lab for their clients.

Once the business reached a certain level, they established an independent lab. You can't merge that business with a hospital lab for too long because the setup for hospital staff and doctors is different. They feel they are working for a hospital and are paid by the hospital, so they might not prioritize testing for external labs. Some form of incentivization is done, which I understand from internal knowledge. This approach benefits the hospital, but it may take some time for everyone to get a piece of this opportunity.

Before continuing down that path, let's go back to Dr. Lal and the other pan India operators. They seem to offer regular tests and some specialized tests. Do you have any idea about the revenue split between regular and specialized tests, and what the margin split might be?

If you're talking about volume, 80% caters to routine testing. Yes, routine testing makes up 80%, 15% is specialized testing, and 5% is super specialized or esoteric tests.

Value-wise, even though the volume is high, the value is comparatively less. Routine tests contribute around 60% to 65% to the revenue because of the high volume. Many people are now opting for wellness drives, which was less than 10% before but now contributes 25%, especially for Dr. Lal. They have initiatives like Swasth Super 4, which accounts for 24% of their total business.

So, the margins for super specialized and specialized tests are likely to remain lower because there are fewer tests. Is that the correct way to think about it?

So, in super specialized areas, you have slightly lower margins. However, in specialized areas, the margins are better because the volume is high. The best part about Dr. Lal PathLabs is that they have worked very hard. If you look at their bottom line, especially the profit levels, which are around 28% to 30%, it's impressive. Their entire focus is on consumption, both lab-wise and center-wise. Each CEO is designated to focus on this. In board meetings and monthly review meetings, the principal directors focus on reducing consumption by 1% or 2%. Overall, if I'm not mistaken, they are between 15% to 16%.

I used to attend many meetings, and if you ask me about the ideal percentage of reagent consumption relative to sales, I would say between 18% to 22%. They are broadly at 15% to 16%, which is impressive. However, some labs have higher consumption. In routine tests, it may be 13% to 14%, but in specialized or super specialized tests, it can go up to 45%. This balances out to around 15% to 18%.

When I started spending time in this space, trying to learn about the company, one thing that stood out was the home collection part of the business. Particularly in rural towns and smaller areas, home collection is significant. It seems like almost everyone is doing it these days. Is that correct?

Everyone is doing this these days. I'll give you an example because I've worked very closely in rural areas, especially in places like Bhandara, Yavatmal, and Sangli, some places in Maharashtra. I did a lot of activations and flyer distributions, not just in parks where people exercise and are health-conscious, but even door-to-door. Despite these efforts, I wasn't able to generate a strong home collection there. The mindset in these small areas is that people prefer to go and give their blood samples in person for confidence. Change is happening, but slowly.

In Tier 1 and metropolitan cities, and even in some Tier 2 cities, people prefer someone to come to them. However, I believe people want an end-to-end journey. As a client or patient, if I want my collection done, I should know, like when booking an Uber or Ola, that someone is coming at a specific time. I should be able to track the process in real-time, from the collection to the sample reaching the lab, sorting, distribution, and processing. I'm very process-oriented and believe in a transparent journey for any person. That's why many labs are designed to be transparent, allowing you to see the testing process through glass. We have done a couple of these.

You're emphasizing the need for a more technology-oriented customer service. For example, we have Domino's Pizza here. You can place an order on your phone, and as soon as you do, you can track the entire process of your pizza. It goes into the oven, it's now out of the oven, it's being boxed, and it's ready for pickup. You can literally watch the whole process move. Perhaps that's the customer facing IT development that the company can focus on. It's interesting to hear you say that some of the rural people don't necessarily appreciate the home collection.

I've tried not only one city but many cities. I asked why it is not coming up, and they said, "No, sir, they do not prefer to come here." We have distributed, and believe me, I was very focused. I ensured that every lab was involved because I was doing a weekly call with the lab admins or a lab administrator. There was a specific program given on how they should send messages and make calls.

They were making 50 calls daily to these people, and for walk-ins, they would say, "Sir, madam, welcome. We do have home collection facilities as well." Initially, I told them to offer it for free to create a habit, hoping we would start capturing more. However, it didn't work out as I expected. The response was only 1% to 2%, not the way I envisioned. The feedback was that people were happy to go there and get it done.

The other question, more strategy-oriented, is about Dr. Lal, for example, offering many tests, both regular and specialized. There is a company like Thyrocare that focuses exclusively on thyroid-related tests. That seems to be their area of focus. What are your views on focusing on just one or fewer tests versus offering a variety of tests and increasing the number of tests offered? What's your take? Which approach has worked across the space?

If you look at Thyrocare, when it started, the name itself was associated only with thyroid testing. If someone needed a thyroid test, it was Thyrocare. They were collecting samples from all over India, and initially, processing was done only at night. By morning, all the labs were ready with the reports. That's how Thyrocare became known.

If you look at Thyrocare's model now, they are more into B2B, but they also focus on B2C. They are involved in preventive health checkups and wellness drives. Thyroid is not their sole focus anymore. In the B2B market, there are certain test batteries with net transfer prices. Thyrocare, which started with thyroid, and other companies like Dr. Lal, Metropolis, and Agilus (formerly SRL) provide these net prices to their franchisees or B2B customers, which are pickup points.

For example, the MRP of a thyroid test in India is between 780 to 750 rupees. The price given to franchisees, under B2C to the pickup points, is 80 rupees, and some even offer it for 60 rupees. Tests like FT3, FT4, and TSH are at the same level. There are test batteries with 40 to 55 tests, called Super 40, Super 50, or Super 55. When they tie up with a franchisee, they offer discounts of 25%, 30%, or 35% based on the region.

Additionally, the net prices of these tests give the partner an edge with another 10% discount. If a partner gets a 25% discount on MRP, the net prices of these 40 tests, like 80 rupees for thyroid instead of 700, B12 at 150 rupees, and Vitamin D at 200 rupees instead of 1100 or 900, provide an advantage. Tests like LH, FSH, and E2 are included in these test batteries, allowing partners to earn more. This is the strategy. Now, regarding the test menu, Dr. Lal has the highest test menu in India.

When you compare other places like Metropolis or HLS, they are investing a lot in technology. I have insights from Metropolis and SRL. However, Dr. Lal is a much better technology-driven company with a high test menu. When I was there, each lab was evaluated monthly for the total workload of in-house and outsourced tests. The outsourcing was within the company, as one subsidiary was billing and transferring to Dr. Lal PathLabs, which was a 100% subsidiary under M&A.

My idea was to evaluate these tests, especially when some tests had low volume, leading to higher costs. Initially, for the first two months, I would call the salesperson to encourage doctors to promote these tests. If after three months there was no improvement, I would change these in-house tests to outsourced due to low volume. Similarly, if the outsourced volume increased, I would shift them in-house.

For example, there was a place with many HPLC tests, especially for hemoglobinopathies and HB electrophoresis. These were outsourced within the company. I realized that by putting this instrument in-house, not only would I recover the costs, but I could also build the business and offer a better turnaround time. Instead of a three-day report, I could provide it the same or next day. This monthly evaluation aligns with Dr. Lal's strategy, reducing consumption from 22% to 25% to 16% to 18%. With a turnover of 2,200, even a 1% reduction in consumption results in significant savings.

So you prefer this large menu offering for evaluation.

Yes, you should evaluate this menu. Satellite lab, regional lab. Monthly evaluations should occur, and low-volume tests should be outsourced while high-volume tests should be managed in-house.

I think we're almost out of time, but I have one more question. My question is a broader one. Since you were at Quest, a major lab in the US, it seems they weren't as successful in India. As competition increases, with hospital-based labs gaining more market share and new players entering the market, companies like Quest are exiting. What factors make these successful companies struggle in India's diagnostics sector? I'd like to wrap up the call with your insights from your Quest and other experiences.

I've worked with two multinational companies during my 10 years. One was Quest USA, and the second was Gribbles Australia. Gribbles came to India in 2001-2004. I was a part of it from day one as a lab admin or a lab manager driving that business. Gribbles had certain processes, and they would not compromise. The model working now in India is the low-cost model. So one should know how to attain the maximum profit by spending the least. Even at my current position, you wouldn't believe we are for profit. It is small scale, but I ensure that I'm stretched completely with my strengths, my staff, with everything. Every few months I think about how to bring the costs down, while maintaining quality.

Gribbles left India in four years, handing over to Metropolis. The issue was that every head of department was Australian, with high salaries and luxury perks. They refused to pay for electricity, insisting on ethical standards, and we ran the lab on a generator for a year-and-a-half. They insisted on importing reagents, which was a strategic drawback. Quest faced similar issues. They were process-oriented but needed to understand how to operate at a lower cost and drive growth. If leaders aren't performing, they should be replaced within two years. It's essential to have a lean team that can drive the business aggressively, efficiently, and economically. That's the mantra I follow to run a business.