Interview with Krsnaa Diagnostics Ltd

The projects which are underway will pave further growth opportunities for Krsnaa in terms of the footprint as well as growth in business and cashflows, voices Yash Mutha, Executive Director, Krsnaa Diagnostics Ltd.

To tap the growing and underpenetrated diagnostic market, Krsnaa Diagnostics is using the PPP tender model. Can you explain the same?

The Public-Private Partnership (PPP) model is a crucial driver in increasing access to and raising awareness about the need for healthcare facilities throughout India. It has a huge potential, particularly in underpenetrated rural India. With the increasing popularity of government initiatives such as Ayushman Bharat, the change appears imminent, boosting the PPP model in the diagnostic business. Because the government recognises the value of private partnerships in the healthcare business, PPP models in diagnostics have gained popularity in the last five years.

The PPP model enables the sector to expand its services by leveraging existing health infrastructure. This strategy attempts to increase the reach of services while lowering costs, since services may now be provided at existing healthcare service delivery hubs such as government hospitals, private health centres, and community health centres in Tier I and II cities. This not only reduces the need for travel but also helps to cut out-of-pocket expenses.

The approach is likely to expand further as India focuses more on strengthening primary healthcare centres, expanding the number of health and wellness centres, and shifting policy away from curative treatment and toward preventative care.

Can you comment on your ongoing as well as future Capex plans?

Currently, Krsnaa has won various tenders including the state of Punjab, Himachal Pradesh, and Maharashtra, wherein capital expenditure is being incurred for establishing diagnostic centres. The company shall also be participating in tenders for other states including Rajasthan, Bihar etc, wherein capital expenditure will be required to be incurred. However, with our existing internal accruals and vendor financing, we believe that we shall be able to complete the projects without the need for raising capital. These projects which are underway will pave further growth opportunities for Krsnaa in terms of the footprint as well as growth in business and cashflows.

What kind of technological advancements are you making to cope with future growth expectations?

We have already tied up with players to provide Digital pathology solutions and ensure that technology is used as an enabler to ensure premium diagnostic services are being made available to the remotest corner of the country at highly disruptive prices.

For states like Himachal Pradesh and Jammu, we are exploring leveraging drone services so that samples can be collected and transported through drones thereby saving transit time and ensuring faster delivery of samples and faster reporting to the patients.

We are also increasing our social media engagement including various enablers such as an improved mobile app, social media engagement through health awareness and free cancer camps, associating with the nursing home, charitable institute, and corporate tie-ups and associating with various e-Commerce aggregators.

In terms of Artificial Intelligence, we have plans to leverage AI for enhancing diagnostics capabilities. We intend to create an intelligent dashboard for analysing historical trends and further enhancing value-added services. Considering the pan-India data that we possess due to our strong presence in deeper markets, allows us to leverage digital solutions for radiology and pathology services.

What are the biggest challenges you are facing currently?

Except for delayed project completion due to factors beyond our control, which we have overcome to a greater extent, we are not facing any other challenge.

With the rise in the competitive intensity in the diagnostics space, how do you plan to retain and further expand your market share?

India has been traditionally an out-of-pocket healthcare market with low penetration of insurance. As a result, pricing is a key factor in such markets. Krsnaa follows a unique business model wherein it participates in PPP tenders. In these tenders’ authorities expect a discount on CGHS rates, (CGHS rates are normally 30% to 40% lower than the market rates) and we offer discounts on these rates. At Krsnaa leveraging our decade-long experience. We know how to provide diagnostic services at these rates leveraging NABL/NABH accredited labs and centres and we have seen existing players usually are not able to match these rates.

Further new entrants are trying to enter the markets by lowering the prices, the impact of such heightened competition is being felt by existing established players and could impact their businesses. But the increased competitive pricing does not impact us as our prices are already lower even than those offered by new entrants and hence does not impact our existing market share.

Further, our PPP agreements are normally 10-year+ agreements giving us long-term visibility in terms of revenues and hence do not impact our existing market share. Also, Krsnaa has launched our B2C network wherein we plan to establish a footprint through 600 collection centres across 5 states. This along with PPP projects will also allow us to increase our market share.