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Dear Shareholders,

The dramatic current situation has put the great strengths of Metropolis on display yet again. Our employees stayed attuned to their responsibilities by continuing to outperform and overcome this extraordinary situation. Our expertise and experience of over 26 years in RNA PCR helped us prepare to meet the testing needs and challenges. Our strong, scientific, and technical team of over 2,000 members, led by a team of 200 doctors and pathologists, have together enabled the Company in achieving this feat.

The Diagnostic Industry is at the cusp of a transformation

At a macro level, we strongly believe COVID-19 will change the operating dynamics for Indian Diagnostics industry. As a result, the organised and capable testing laboratories like ours, will be the biggest beneficiaries of this change. Let us see how:

  1. As per estimation, unorganised and standalone labs are facing severe cost pressures due to lockdown. The faster adoption of quality standards partly enforced by Government and partly forced upon by customers, indirectly, could result in the closure of operations for many of unorganised standalone labs. A faster consolidation in the industry, along with changes in the regulatory framework is also anticipated soon.
  2. Customers are now anticipated to place quality over pricing when it comes to diagnostics. Higher quality standards, authentic reports, after sales service and doctor engagement will be the key deciding factors in the lab selection process. This is where the organised labs will outscore unorganised ones. Safety and hygiene will take a lead and we will use this as an opportunity to utilise our professional services and gain market share.
  3. The current health scare of COVID-19 is set to bring about a change in the mindset of Indian customers. An increasing number of customers will now evaluate and label diagnostics chains as COVID-19 capable and non-COVID-19 capable. With these tests becoming the new norm, a higher market share is expected to shift towards the COVID-19-capable labs, as was seen in the past with SARS 4. Diagnostics chains with a lean balance sheet, strong consumer-connect, high brand recall and high-quality standards will gain market share.
  4. Diagnostics chains with a lean balance sheet, strong consumer-connect, high brand recall and high-quality standards will gain market share.

The current situation has paved way for huge growth opportunities for a focused player like Metropolis. Here are some of the opportunities we identify in the times to come:

  1. Increase our market share in focus cities through network expansions, improving productivity per centre and generating higher revenue from Wellness.
  2. Home visits are expected to gain preference and popularity over walk-in centers. We are gearing and scaling this up and expect this to be an opportunity for the organised and trusted brands. It will play a pivotal role in gaining more market share, allowing rationalisation of front-end network and cost savings.
  3. Continue growing our share of B2B in North and East aggressively, using the additional capacity created in Delhi Lab and by expanding our network to smaller towns in North East India.
  4. Metropolis witnessed a good growth in Wellness testing in Tier-2 towns across India when we launched ‘TruHealth’ in 37 cities. Today, 8% of our revenues come from Wellness and we are now expanding our wellness services to focus cities as well.
  5. We will focus on scientific up-selling by leveraging our vast capabilities in molecular diagnostic, oncology, and cytogenetics. We have a huge advantage here due to less competition and higher margins due to advanced technologies, skilled manpower and complex processes involved.

Marketing leading performance

Our total revenue from operations increased by 12.6% from ` 760 Crores in FY 2018-19 to ` 856 Crores in FY 2019-20. The earnings before interest, depreciation, tax, and amortisation increased by 12.9% from ` 200 Crores in FY 2018-19 to ` 232 Crores in FY 2019-20. Profit after tax increased by 3.2% from `124 Crores in FY 2018-19 to ` 128 Crores in FY 2019-20.

For FY 2019-20, we reported Patient visits of 10mn, a milestone, witnessing a growth of 11.3% on YoY basis. Our patient tests grew faster at 19.62mn, registering a growth of 15.7%. Our B2C revenues in focus cities was up by 15.5% on YoY basis from Rs. 233cr in FY 2018-19 to Rs. 269 cr in FY 2019-20. In Focused Cities, B2C revenues share stood at 56% in FY 2019-20 as compared to 52% in FY 2018-19.

Our network expansion and utilisation strategies continue gaining traction. From expansion of network we have now moved on to consolidation while focusing more on productivity and profitability of each lab. Our focus will be to increase the throughput at our labs. This will not only give us revenue uptick but better utilization levels as well, leading to operating leverage and margin increase and better return ratios.

To expand our geographical reach and command an unmatched leadership position in our target markets, we recently acquired four frontend labs in Surat, a focus city for Metropolis.

Metropolis is at a transformational phase today and all set to take the next leap of growth. Some of the most important on-going strategies include

  • Strengthening our corporate team for the next leap
  • Building digital capabilities and technology initiatives to engage with consumers and doctors
  • Building automating processes and systems to handle future scale
  • Enhancing efficiencies and productivity in system for better cost management

We have completed successful implementation of an enhanced registration and invoicing system and further initiated automation on various levels by introducing Inventory Management System, Payment Platform System, and the financial module Oracle Net suite.

Going forward, we would continue towards increasing the utilisation of our lab networks, increasing revenue per centre, rationalising service network and increasing our sales team’s focus towards non-COVID-19 business. We believe we are poised to achieve greater heights in the coming quarters as the economics and dynamics for the standalone and unorganised labs shifts majorly.

Lastly, I would like to take this opportunity to thank our patients, the 4,500 member Metropolis family, our shareholders and our board of directors; all of you make Metropolis what it is today and we are grateful for your association.

Yours truly,

Ameera Shah

Managing Director