Krsnaa Diagnostics Ltd (NSE: KRSNAA) Q2 2025 Earnings Call dated Oct. 28, 2024
Corporate Participants:
Rajendra Mutha — Chairman & Wholetime Director
Yash Mutha — Joint Managing Director
Pallavi Bhatevara — Executive Director
Mitesh Dave — Group Chief Executive
Pawan Daga — Chief Financial Officer
Analysts:
Jainil Shah — Analyst
Rajat Srivastava — Analyst
Pranay Khandelwal — Analyst
Surya Narayan Patra — Analyst
Neha Raichura — Analyst
Lokesh Manik — Analyst
Pallavi Deshpande — Analyst
Krishna Raj Kayarthaya — Analyst
Dhwanil Desai — Analyst
Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Krsnaa Diagnostics Limited Q2 FY ’25 Earnings Conference Call hosted by JM Financial. Before we begin, I would like to remind all participants that today’s call may contain statements that are forward-looking, including but without limitation, statements relating to the implementation of strategic initiatives and other statements relating to Krsnaa Diagnostics future business development, and economic performance.
While these forward-looking statements indicate our assessment and future expectations concerning the development of our business, a number of risks, uncertainties, and other unknown factors that could cause actual developments and results to differ materially from our expectations. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Jainil Shah from JM Financial. Thank you and over to you, sir.
Jainil Shah — Analyst
Hi, good afternoon everyone and welcome to the Q2 FY 2025 results conference call of Krsnaa Diagnostics Limited. Joining us today on the call are Mr. Rajendra Mutha, Chairman and Whole-Time Director; Mr. Yash Mutha, Joint Managing Director, Ms. Pallavi Bhatevara, Executive Director; Mr. Mitesh Dave, Group CEO; Mr. Pawan Daga, Chief Financial Officer; and Mr. Vivek Jain, Head, Investor Relations.
I would like to now hand over the call to Mr. Rajendra Mutha for his opening remarks. Thank you and over to you, sir.
Rajendra Mutha — Chairman & Wholetime Director
Thank you, Jainil. Namaskar. Good morning. Good morning. Good afternoon. [Foreign Speech]
Yash Mutha — Joint Managing Director
Thank you, Mr. Mutha. Good afternoon and thank you all for joining today’s earnings call. We are pleased to report yet another strong quarter marked by significant progress in our initiatives taken in the earlier years. Your company, Krsnaa Diagnostics, continues its upward growth trajectory, expanding our geographic footprint across multiple states and territories. Notably, we have secured major contracts in Jharkhand, Assam, Maharashtra, Madhya Pradesh, and Orissa.
With these recent wins, we are well-positioned to establish additional 45 radiology centers, one pathology lab, and 731 collection centers across India, further showcasing the exceptional capabilities of our in-house teams in delivering accessible and reliable diagnostic services. We are focused on expanding our reach by strategically opening new diagnostic centers in under-penetrated markets, particularly across Tier 2 and Tier 3 cities.
This initiative ensures that individuals in even the most remote areas can benefit from advanced diagnostic services, thereby contributing to the equitable access to high-quality healthcare beyond metropolitan regions. Our unwavering commitment to the highest quality standards, certified testing reagents and consumables, and the expertise of qualified radiologists and pathologists ensures unparalleled accuracy and precision in all our diagnostic services. Let me now walk you through some of our key developments for this quarter.
The first one are strategic investments in oncology and cardiac hospitals, which is Apulki Healthcare Private Limited. As part of our long-term vision, we have placed strong emphasis on expanding into high-growth healthcare sectors, particularly oncology and cardiac care. These sectors represent tremendous demand for advanced diagnostics and provide significant growth opportunities for our company. This quarter, we have received Board approvals for a strategic investment in oncology and cardiac hospitals through our partnership with Apulki Healthcare.
By aligning ourselves with these specialized institutions, we are enhancing our ability to offer cutting-edge diagnostic services. In oncology, this investment enables us to leverage the latest innovations in molecular diagnostics and immunotherapy. For cardiac hospitals, we would be focused on advanced biomarkers, significantly improving patient outcomes in areas such as early heart disease detection and monitoring. The investment offers several strategic advantages.
Number one, we will be exclusive diagnostic partner to the hospital, securing a 30-year contract with an option to extend for an additional 30 years, providing us with long-term revenue visibility. Our presence within the hospital allows us to offer integrated diagnostic services, providing a comprehensive range of diagnostics under one roof, a capability that extends beyond our typical PPP project scope. Additionally, these services will be priced according to the CGHS rates which is expected to enhance both our revenue realization and profit margins.
This investment is a key component of our broader strategy to capture the growing demand in the oncology and cardiac care, positioning us as the go-to diagnostic partner for hospitals at the forefront of patient care. Furthermore, it grants us access to a larger pool of clinical data, enabling us to further refine our AI-driven diagnostic tools and improve diagnostics accuracy across our service offerings. The next one is about a strategic partnership with United Imaging and Medikaa Bazaar.
We are thrilled to announce a strategic partnership with Medikaa Bazaar, India’s largest B2B healthcare procurement and supply chain solutions provider, and United Imaging, a global leader in advanced imaging technologies. This collaboration represents a INR300-plus-crore investment targeting the establishment of over 30 plus cutting-edge imaging and pathology centers across Tier 1, Tier 2, and Tier 3 cities in India.
This partnership, one of the largest and the most innovative in the Indian diagnostic space, brings together the best of technology and healthcare expertise, significantly enhancing patient care and accessibility. United Imaging, known for its state-of-the-art MRI, CT, PET-CT, and other advanced imaging solutions, along with Medikaa Bazaar’s extensive distribution capabilities, recognize Krsnaa Diagnostics as a pivotal partner due to our expansive reach and established reputation for delivering high-quality, affordable diagnostic services.
The key features of this partnership include special financing terms, where we have to pay 10% of the equipment, with the balance to be paid over six years, allowing us to improve cash management and bid for larger projects without putting immediate strain on our balance sheet. This collaboration will also allow us to scale our diagnostic capabilities in new markets with newer and cutting-edge technologies, enabling us in expanding our footprint in regions with significant healthcare needs.
Together, we will accelerate innovation and offer comprehensive diagnostic solutions to the hospitals, clinics, and healthcare providers across India. In conclusion, Krsnaa Diagnostics continues to gain market share across multiple regions, supported by strategic investments and partnerships that reinforce our leadership in the diagnostic space. As we expand, we are also focused on building a robust team and adopting new systems and processes that keep us ahead of the curve while maintaining our commitment to providing the best-quality diagnostics at affordable prices.
Thank you for your time, and with that, I will now hand over to Ms. Pallavi to take you through our recent project wins, as well as the status of our PPP project in the first half of the financial year. Over to you, Pallavi.
Pallavi Bhatevara — Executive Director
Thank you, Mr. Yash. Good afternoon, everyone, and I would like to take an opportunity to thank each one of you, in spite of being in the festive mood, to take time out and join today’s afternoon call. India’s diagnostic landscape is undergoing rapid transformation, largely driven by the growing prevalence of both non-communicable and infectious diseases. This has heightened the demand for evidence-based treatment and preventive healthcare solutions.
In response, we are investing in building an efficient, technology-enabled network designed to accommodate the increasing volume of samples and to enhance patient accessibility. Our focus continues to be on expanding and strengthening our pan-India network, ensuring we are well-positioned to meet the evolving needs of healthcare consumers. This strategy not only reinforces our market share, but also allows us to stay ahead in the states where we already have a significant presence.
We are pleased to share that we have successfully secured contracts to provide radiology and pathology services in two major hospitals in Ranchi, in the State of Jharkhand. This win not only marks our entry into a new state, but also opens up opportunities for further expansion to additional CPP projects and retail operations within Jharkhand. By establishing a strong presence in this region, we aim to bring high-quality diagnostic services to a broader population. I would like to now highlight some project updates in the recent times.
The CT-Scan project in Maharashtra. The implementation of this project is progressing swiftly. We have operationalized 11 centers in Q2 FY ’25, and the remaining centers are on track to be fully operational. From the next financial year onwards, we expect a significant ramp-up in business from this initiative. MRI projects in Maharashtra; we are set to establish 17 new MRI centers, and as of now, 5 centers are on track to be operationalized by the end of this financial year.
Once fully implemented, this project is expected to deliver improved realizations due to better pricing terms boosting overall revenue performance. MRI project in Madhya Pradesh; similar to Maharashtra, we are setting up 5 new MRI centers. Two centers are expected to be fully operational by the close of this financial year, contributing to our continued growth in this region. Orissa expansion; based on the exceptional quality of our services we have delivered, the State of Orissa has requested that we extend our services to an additional 600 centers in this quarter.
We were able to begin our operations in all 600 centers. This is a testament to the trust and confidence that our stakeholders have placed in our services. Assam; as of Q2, we have all 10 labs operational, and 652 collection centers are already operational, showing positive traction and contributing to early revenue growth. Over the past three months, we have successfully established 11 new CT centers, one pathology lab, and 869 pathology collection centers. Efforts are ongoing to stabilize operations and ensure that every center starts generating revenue in line with its operational expenses.
I would now like to hand over to Mitesh Deve to take you through our business, including initiatives in retail business in the first half of the financial year. I once again thank you all and wish you a very happy Diwali.
Mitesh Dave — Group Chief Executive
Hello and good afternoon everyone. Let me come straight to the what all our retail strategy and the expansion is what we are foraying into the retail space for now. So as a part of our growth strategy and considering a big vacuum around qualitative integrated radiology and pathology services today, right from metro to Tier 1 and Tier 2, 3, 4 towns, we are focusing on developing end-to-end retail capabilities and not restricted to any one particular business channel.
Our approach would be holistic in nature and would be patient-centric mainly, which resonates with the right to quality healthcare at pocket-friendly pricing and available 24 by 7. Our multimode strategy includes from online to offline, from analog to fully automated, from comfort of their homes to the critical needs during hospitalization, ensuring that our customers have access to quality and advanced diagnostic services all throughout. With increasing health awareness among the consumers, the demand for regular checkups and preventive screenings is also on the rise.
By tapping into this demand, we aim to go into the regions where we are already present and having existing diagnostic infrastructure. Our retail strategy would have strong focus on expansion in the B2C space and penetration in B2B and having PPP presence allow us to leverage these centers to bring in desired synergies. The diversification of our revenue streams is expected to add up our profit margins and further enhances returns. Our retail business strategy will be rolled out into the phase manner from major cities to begin with hype of the [Technical Issues] followed by Tier 2, 3, 4 towns, where we have already established presence through our existing PPP network.
Taking a little deeper into the business channels, in B2B space, our operations will be poised to penetrate deep within the geography across India, with multiple online models and offline state of our logistics. And primarily to serve the private hospital, nursing homes, smaller labs, our existing infrastructure well geared up to meet the desired requirements around the quality and tech, which is one of the major challenges today. In the B2C space, the core focus on the retail expansion will be through the building a strong B2C channel through multiple models, including COCO, POCO, FOFO, and many more to it, having dedicated a home visit team to cater the patients at their home.
Our aim is to get into the space of holistic diagnostic covering both illness and wellness together, with integrated services of the radiology and pathology at most of the location. To further make this diversification patient-centric, overall operations will be backed by user friendly apps, and many more digital initiatives with fully integrated systems at the back end to support entire operations in most agile and efficient manner. It will be supported by the highly efficient call center operations to 24 by 7 and any to handle any inquiries and well trained feet on seat to engage and leverage entire medical fraternity.
Key differentiator that we are really looking for is the patient experience, where we believe to enhance the experience through the technology, and technology plays a vital role in keeping the experience and quality in forefront. We have designed our patient journey, which is fully automated, right from test booking to report delivery and backed by post test consultation from registered healthcare professionals. Our retail website is ready to be launched soon and will further integrate into the automated processes.
Talking a little around marketing and other engagements, our marketing strategies designed to engage both consumer and the healthcare professionals. We have developed wellness packages tailored to the patient’s needs with a strong emphasis on digital marketing for consumer outreach and the lead generation. Additionally, CRM integration is being deployed across all the lead channels supported by our call center to ensure seamless end-to-end user experience.
For healthcare professional engagement, there are multiple strategies or multiple programs towards like CMEs, Continuous Medical Educations, roundtable meetings, creating boards and publications and many other academic programs to foster deeper relationships. And to talk a little on training and development to ensure ongoing excellence, we are continuously trained both on ground sales as well as inside sales teams. This focus on skill enhancements ensures deep understanding of our services, leading to improved communication with the clients and higher conversion rates.
We have ambitious plans to unlock growth opportunities positively impact the people’s lives and contribute to the advancement of the healthcare sector. Our commitment remains steadfast in delivering accessible, accurate, and affordable diagnostic solutions across the country. Further test marketing and soft launches already in progress in few of the cities soon will be followed through the hard launch and expansion.
With that, I would like to hand it over to Pawan to take through the entire financials and wishing you all a very happy Diwali and a New Year in advance. Thank you very much. Over to Pawan.
Pawan Daga — Chief Financial Officer
Thank you, Mr. Mikesh. Good afternoon, everyone. I’m pleased to present the financial highlights for the quarter and the half-year ending financial September 2024. In the first half of FY ’25, we witnessed a robust performance with total revenue from operations reaching INR356 crores, reflecting a significant 21% year-on-year growth. This growth is direct result of our continuous focus on operational efficiency and increasing contribution from recently operationalized centers.
Our EBITDA for the first half stood at INR94 crores, representing a 48% year-on-year growth and our PAT grew by 49% to reach to INR38 crores driven by our commitment to improving operational metrics and optimizing resource allocation. Now, moving on the second quarter of FY ’25, our total revenue amounted to INR186 crores, achieving a 20% year-on-year growth. EBITDA for the quarter was INR51 crores, reflecting a 57% year-on-year increase. Furthermore, our profit after tax stood at approx INR20 crores, demonstrating an 87% year-on-year growth with a margin of 11%, which underscores the financial strength of our operations.
From a balance sheet perspective, the company remains a net debt free with a cash and cash equivalent standing at INR220 crores. Further, as we continue to grow our PPP business, the initial ramp-up also has a bearing on the receivable as the invoicing and the billing process system are stabilized. As of 30th September 2024, the company receivables are valued at INR243 crores, out of which approx INR125 crores is attributed to two states and balance INR118 crores is attributable to a balance 16 states, which equates to less than 60 days.
The two states have principally agreed to release our outstanding dues in a subsequent deal. This deal is which are largely on account of procedural as well as certain budgetary approvals, the company is taking all required steps to recover its outstanding dues. However, we would like to add that almost all our projects are backed by [Indecipherable] and we are confident of recovering all our dues in a subsequent quarter, subsequent month, sorry.
Based on our initial estimate, we believe the receivable days will be around 90 days by the year end. And we are confident of continuing our trend to having a new budget [Phonetic], which have been our history since inception. During H1 FY ’25, we incurred a total capex of INR86 crores. As previously communicated that the total capex for FY ’25 is expected to be approximately INR170 crores, subject to execution timelines and existing projects.
Now, I end opening remarks and open a session for a question-and-answer.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Rajat from Tata MF. Please go ahead.
Rajat Srivastava
Yeah, hi. Thanks for taking my question. Sir, firstly, when I see your quarterly P&L, I see that your top line has grown by 20%. But when I see your other expenses and fees to hospitals and others, they seem to be largely flat or actually marginal decline there. Could you just explain what has happened here because these costs seem to be quite variable in nature, but instead they have declined on a Y-o-Y basis?
Yash Mutha
Yeah, Rajat, this is basically how the business mix of a revenue from project-to-project. That’s why the revenue here, which is fees to hospitals and others, which is variable in nature, which has been in line with the agreements with the business coordinators and the sharing which we have agreed on the respective projects. Plus the operational or other expenses, which is having a significant improvement in the cost saving related to the maintenance, the C&C, which we negotiated well with the vendors, and also a saving in a variable expenses. That’s all.
Rajat Srivastava
Sure, but I still don’t understand why should the fees to hospitals come down on an absolute basis also? Because your top line has grown by 20%, but there is a decline in fees to hospitals. So is this the new base should we take in terms of percentage to sales or there is some cost which you expect to come back in the subsequent quarters? That’s what I was trying to understand.
Yash Mutha
No, no. So as we mentioned in last year Q4, where our negotiation with the vendors, we continuously to take our business coordinator on our payroll, which significantly basically changed the mix and we onboard these employees on our P&L instead of outsourcing to business coordinators.
Rajat Srivastava
Sure. And in terms of new business initiatives, especially your B2C business, which you are trying to build, can you throw some more color on where exactly are you in that journey? And how much investment is it going to take for you over the next three to five years? Which geographies you are targeting? Can you throw some more color here?
Mitesh Dave
Yeah, hi, Mitesh this side. And I would be taking up this question. So hi, good morning. So while I’ll take up the question in two parts, one is what is the current status or where are we currently standing in our B2C journey or retail journey? And secondly, what is the investment which is expected over the three to five years? So to answer the first piece, as I said, we have already started our test marketing and the soft watch is currently in quiter cities.
And the basis is what all initial feedbacks which all are coming or observations which all are coming we are trying to plug it in, number one. Parallely, what all the initiatives that we are taking it up are having a very encouraging response from the overall market space, be it is the client side, be it is the consumer side or be it is the healthcare professional sides. So maybe in a month or so, we’ll look to get into the hard launch around the cities which are of the focus in nature. And soon, maybe by November mid or by December, we can expect to roll out and complete in two or three cities to begin with.
To answer first, to take up the second piece, wherein what is the investment which is really looking out for the next, spanning over the next three to five years. So having said that, we are trying to building our synergies in-house because we have our existing infra available through the PPP model and which as such supports our overall backend operations right from sample collections to the sample processing and result out.
So what really which is required is the adding up the feet on street and which caters out to the clients into the market, which is not really much of an investment that we are as such looking for. Parallely, getting into the penetration towards the business models, we have developed and further we are adding it up to our capabilities towards the digital space, which will suffice the need of penetration and expansion to that matter.
Rajat Srivastava
Sure. So if I understand it correctly, wherever you have existing PPP projects, there you will set up these. Those are the geographies which you will look to enter, right?
Mitesh Dave
Correct. So current span is around 18 states, if I have to tell you in brief. So that itself caters to close to 70% or 80% of the overall diagnostic market.
Rajat Srivastava
Sure. And lastly on this Rajasthan tender, can you provide some update what is happening there?
Pallavi Bhatevara
Yeah. Hi, good afternoon. The matter is still in the court and we are also awaiting for the positive results. However, we would like to emphasize on the point which we have always told is that with or without Rajasthan, our growth numbers, what we have projected will continue to grow in the same manner. If the court matter and things proceed further, that Rajasthan would be an additional revenue to our existing performance.
Rajat Srivastava
Sure. When is the next hearing expected for you?
Pallavi Bhatevara
So currently the date has not been come on the Board, but what we understand is from our legal is roughly anywhere in end of November.
Rajat Srivastava
Sure. Okay. Thanks. That’s it from my side.
Operator
Thank you very much. [Operator Instructions] The next question is from the line of Surya Narayan from PhillipCapital. Please go ahead. [Technical Issues]
Yash Mutha
Mr. Surya Narayan, you are not very clear. If you can speak closer to the mic, please. Hello, we are not able to hear him.
Operator
Sir, the current participant in the question queue seems to be disconnected. May we move on to the next question?
Yash Mutha
Yes.
Operator
The next question is from the line of Pranay Khandelwal from Alpha Invesco. Please go ahead.
Pranay Khandelwal
Hi, thanks for the opportunity. Congratulations on a very good set of results and happy Diwali to all of you all as well. Just wanted to know, some clarification was given on the receivables in the opening commentary as well. So, I believe there’s some INR120 crores is from two states. Can we have a little more clarification?
How old are these receivables won? And if, like is it, is one of the states Himachal Pradesh or is it some other states now? Because I think we were having some troubles before with Himachal Pradesh and like the last quarter’s commentary was that we had in fact received some INR40 crores or so. So, some clarification on that.
Yash Mutha
So, like we mentioned in Pawan’s commentary, the receivables are for two states. One of them is, of course, Himachal Pradesh. The receivables are outstanding for various reasons. Like we mentioned, there are certain procedural delays as well as some of the budgetary approvals that the authorities have to get in place. But whatever communications we’ve had, even recently, a couple of days before this call as well, we received principal commitment by the authorities to release our outstanding dues, which we expect in the subsequent days to come through.
And we are equally tracking all these receivables. So, apart from this, if you look at our overall business and the receivables, it is well under control. Given in a space, around 18 states, there are one or two states which come up with these — problems at certain points in time. But this is not a regular feature of a business. It is certain states which have certain challenges.
Pranay Khandelwal
Okay, so we are expecting to get back to 90 days or so by the end of the year, right?
Yash Mutha
Yes, we are very confident about receiving this money and as well as by the end of the year, looking at a receivable position well within 90 days.
Pranay Khandelwal
Okay, and just on the breakup on the revenue side for the first half, let’s say this INR357 crores that we have done, how much is — is it from those two states and how much is from the balance 16 states that we have?
Yash Mutha
I don’t have the numbers with me at the moment, but I’ll have our Investor Relations, Vivek, to share the details.
Pranay Khandelwal
Okay, right. And just on the same front, while we are talking about the working capital, we see that our debt has increased. So what is our expectation on that front? We are also planning a capex for like, I think on the commentary, the commentary is that INR86 crore has been done, but based on the cash outflow for the first half, it is only INR55 crores.
So wanted a clarification on that as well — why is there a difference? And if let’s say, however much, INR100 crores, INR120 crores, whatever is left, and our working capital cycle is a little extended right now. So what is our outlook on debt by the end of year? And maybe let’s say next year as well, considering all the execution we are going to be doing.
Pawan Daga
Yeah, out of INR86 crores, some assets are procured or capitalized on a deferral payment where we are using a paper scan model so basis on that. And we have seen this working capital has an increase in this quarter, but as our receivables in future will be within 90 days, so our working capital requirement will further go down.
Pranay Khandelwal
Okay. So we are expecting the debt to come down, stay at the same level, or how are we thinking about it? And also this deferral payment, does that mean that the United Imaging deal has already started? Like, have we already started procuring from them?
Pawan Daga
So United will begin now in Q3. These are all our previous vendors, which GE, Fuji, and the Philips has provided certain approvals or a limit in that. And United also will start it in Q2, where we have procured one machine and will further procure more equipment as the days pass. Our receivable, on the first part of your question, our receivable will go down by March 25, as our receivable from the debtors will subsequently get collected, as we mentioned, two of the states where the receivable is slightly higher. So as we already received the commitment from this respective customer.
Pranay Khandelwal
Okay, what are we expecting the absolute amount to be?
Operator
Mr. Pranay, may I please request you to rejoin the question queue for a follow-up question.
Pranay Khandelwal
Just one last question, just one last, this is it. Absolute amount for receivables, that’s it. Like, what are we expecting an absolute amount of receivables at the [Indecipherable]?
Pawan Daga
Yeah, yeah, so our target is to collect all the value, it’s not any specific number, both the customer has given us the confirmation or assurance to get — the amount will be released very soon.
Pranay Khandelwal
Okay, all right, yeah, I’ll rejoin the queue, thank you.
Operator
Thank you very much. The next question is from the line of Surya Narayan from PhillipCapital India Private Limited. Please go ahead.
Surya Narayan Patra
Yeah, thanks for the opportunity, sir. My first question is about this [Indecipherable] arrangement. We have talked about, this is a special financing arrangement with the partners, which offers a 10%, means a scheme that 10% kind of offer and balance over 10-year period. But in terms of the 30 imaging center creation, what is the timeline that we would be expecting there? And what would be our strategy to tap, let’s say, the patient for the PET-CT, the cancer-oriented, because it could be possibly in the Tier 3, their oncology doctors may not be there, and hence tapping those kind of a patient would be a difficult one. So your thought process here.
Yash Mutha
So answering your first part of the question, for the 30 centers we expect decommissioning to happen anywhere between 18 to 24 months, given there is lead time to order the equipments and equipment getting delivered. As regards the PET-CT, yes, there are various strategies that we have currently put in place to get these patients into our center.
And one of the biggest advantages that we see is these centers are at prices which are highly affordable, especially on the CGHS price list. And again, these are in high urban-centric areas. So this allows us to leverage these captive kind of footfalls that come into these centers. Secondly, also the reporting that we will be doing through a blend of tele-radiology as well as advanced reporting will allow us to cater to these patients and thereby generate good footfalls at the center.
Surya Narayan Patra
So this is under the PPP arrangement only that you will be deploying the machinery. It is not over and above this arrangement, so that you will not be requiring any infrastructure to be created by yourself. Is that understanding correct?
Yash Mutha
So these PET-CTs are again through the PPP model itself, where it allows us to leverage the captive footfalls which are not being served in the market today.
Surya Narayan Patra
Sure. Second is about the [Indecipherable] arrangement. So what is the kind of investment? You said that investment has been done, right, sir? So no cash outflow that would be happening here onwards. So could you quantify that?
Yash Mutha
Yeah, as of now, the investment has not been done. We’ve received Board approvals and there are various condition decisions which are being finalized. The investment amount that we expect is in the tune of around INR25 crores to INR30 crores. And we’ll provide more details as we sign up the definitive agreements and we’ll keep you informed.
Surya Narayan Patra
Okay. Just last one question about the B2C strategy. The commercial launch, you indicated that the commercial launch of this strategy will be happening by December in two cities at least. But here, is that understanding correct that you would only be requiring the additional collection center for getting the samples? And whatever investment that would be required to build a collection center or collection point, that is the only kind of investment. If yes, what would be your strategy about those collection centers or getting arrangements for getting samples?
Yash Mutha
As we mentioned in the past as well, we continue to focus on creating or leveraging these infrastructures using an asset-light model. So like Mitesh mentioned in his commentary as well, the investment would only be to setting up, let’s say — the collection centers or the FOCOs and COCOs. So these do not require significant investments per se because the significant investment is mostly in the labs. The labs have already been put in place with the necessary equipments and the infrastructure. So we continue to harness this model of leveraging asset-light model to deliver more value for everyone.
Surya Narayan Patra
Okay, sure. Yeah, thank you, sir.
Operator
Thank you very much. The next question is from the line of Neha from Abakkus. Please go ahead.
Neha Raichura
Yeah, hi. Am I audible?
Yash Mutha
Yes, yes.
Neha Raichura
Good afternoon, everyone, and thanks for the opportunity. So if I look at the investor presentation, so the existing centers’ margins have come down in the quarter two versus quarter one, so any specific reasons to that? And also, like, how should one look at it going forward?
Yash Mutha
I don’t think so the margins have reduced. It has actually — because there’s a higher contribution from the ramping up of the new centers. So that is where you see — and there are some of the centers which have some — we are putting some incremental costs. But the margins will be more or less sustainable, and that’s how we see it in the future as well.
Neha Raichura
Okay. Because if I — in Q2 presentation, it was the H1 FY ’25 numbers mentioned, and in Q1, it is the Q1 numbers. So if I subtract that from the revenue and EBITDA numbers provided, it seems that margins have come down quarter-to-quarter. So — and also, like, for H1 as well, the margin for, like, the existing centers is about 36%. So you’re saying there’s no reduction in the margins?
Yash Mutha
Yes. So there’s no reduction in the margins. Yeah, Pawan, please go ahead.
Pawan Daga
Yeah, yeah. Pawan this side. There is no change or significant change in the margins. This is just basically quarter-on-quarter where we see the seasonal impacts in the respective locations or a couple of days, the machine break down, and other parameters. But apart from there is no significant change in the margins, yeah, we can see slightly change, but which are one of — or maybe some expenses which are — or as Yash has rightly mentioned, which is basically improvement in the new centers or new projects where the margin has improved. That’s why this makes us slightly have a subtraction compared to the last quarter.
Neha Raichura
Okay. So going forward, how should one look at the margins for the existing centers? Is it expected to increase or do we expect it to slightly taper down because there will be more addition as in transformation of new centers into existing centers?
Yash Mutha
So I believe the margins going forward will be sustainable and consistent with what you’re seeing. Of course, our efforts will be to increase the margins through various operational efficiencies like what you’ve demonstrated in this quarter. And we’ll try to work on and deliver on these in the subsequent quarters as well.
Neha Raichura
Okay, fair enough. And also like for revenue and EBITDA margin guidance, so we are largely in line with the guidance.
Operator
Can I please request you to rejoin the question queue for a follow-up question?
Neha Raichura
Okay, just one question I’ll ask and then we’ll rejoin. Is that okay? It’s just the second question. Hello? Yeah. So regarding the guidance, I wanted to understand that largely do we remain on the same line for revenue and also for EBITDA margins since our margins have improved in this quarter. Should one expect going forward that the margins should sustain in H2 to somewhat similar level to quarter two?
Yash Mutha
Yes. So the guidance that we’ve given and we are committed to delivering on those numbers that we’ve given as guidance, both in terms of EBITDA and revenue. The efforts will, of course, be to increase both on the revenue front as well as EBITDA. But these are what we believe are sustainable and that which we can achieve even in the H2 as well.
Neha Raichura
Okay, understood. And also regarding the fee to the hospitals line item, as the previous caller had also asked, is there a direct relation with the percentage of sales or there will be some variable cost because of which it is difficult to predict what fee to the hospitals can be going forward?
Yash Mutha
Yeah. So the fees to hospitals depend on each agreement that we have with the hospitals as well as the business partners on the various PPP projects. It keeps on varying. And as we’ve maintained even in the past as well, we try to see how we can reduce fees as a percentage of the overall revenue for various initiatives like Pawan mentioned where we take certain employees on our payrolls as well as other initiatives. So I believe this could be a baseline. But yes, we’ll try to see how we can reduce it even further as well. That’s our effort along with other operational efficiencies that we’re trying to bring in.
Neha Raichura
Okay. Thank you so much.
Operator
Thank you very much. The next question is from a line of Subrata Sarkar from Mount Intra Finance Private Limited. Please go ahead. Hello, ma’am. Hello. Ms. Subrata? Since there’s no response from Ms. Subrata, we’ll move on to the next question. The next question is from the line of Lokesh Manik from Vallum Capital. Please go ahead.
Lokesh Manik
Yeah. Hi. Good afternoon to the team and wishing you all a very happy Diwali in advance and a happy New Year. I just had one question on the business strategy, which is moving from capex driven to opex driven, wherein you mentioned a lot of the equipment will be done through vendor financing. So, this would ideally result in good cash flow in your hands. So, any discussion at the Board level in terms of deployment of this excess cash flow? How do you all plan to proceed with it?
Yash Mutha
Yes. So, if you see this, all the initiative that we are taking is also to ensure that the company creates significant value, whether it is in absolute cash, which can be reinvested into various new business opportunities, new projects, which will further create value for everyone, including our stakeholders. This could also result in — as and when the cash flows improve for us to declare additional dividends if that is a need. The whole idea behind this is to see how the company continues to grow, continues to create value for its stakeholders, and thereby even tapping into more areas or opportunities that we have not entered into.
Lokesh Manik
Great, great. That’s it from my side. Thank you so much.
Operator
Thank you. The next question is from the line of Pallavi Deshpande from Sameeksha Capital. Please go ahead.
Pallavi Deshpande
Yes. Thank you for taking my question. Just wanted to understand in terms of which are the new states that are likely — to go for a PPP model because given we are already in 17 or 18 states, and the southern states seem to be pretty self-sufficient in how they are able to manage it in-house. I’m just wondering where is the new — on the radiology side, not pathology, but on radiology, which are the new states that we can target?
Yash Mutha
I’m sorry if you can just repeat the question. Your voice is not very clear.
Pallavi Deshpande
Yeah. So my question was regarding growth, which are the new states that we can target for the radiology segment, given that — the southern states seem to be pretty self-sufficient and doing a good job in-house. So on the radiology side, which are the new states that could come up for — PPP models?
Yash Mutha
So in terms of PPP states — while it’s too early for us to give any comment, but yes, there are around five to six states that we are aware of which are in — which might come up with these PPP projects, including some of the southern states. So there is a significant opportunity that still exists for Krsnaa to tap into, and we are currently looking into these opportunities and we’ll give you timely updates.
Pallavi Deshpande
Right. And my second question would be with regard to, like you mentioned about — the number of employees are wanted, because you mentioned about the fees to hospitals coming down because the employees seem to be coming on our roll, but even that share percentage, it’s not increased. You know, the share of employee expense to revenue is stable at 18%, 19%. So just wanted to understand that better.
Yash Mutha
Yeah, so typically how it works is when we give revenue share to these business coordinators who work with us on the PPP projects, sometimes they support us through various — employees work that they do for us. And over a period of time when we onboard these employees, so the share of that we give to them has to, of course, go down.
Now, that doesn’t necessarily translate into — if there’s an X percentage drop in the revenue share that means there’s a Y or equivalent increase in the employee cost. The revenue share is a combination of various elements or work that we do for us. But yes, as I mentioned earlier, our plan is to continue focusing on how we bring in operational efficiencies, looking at these various costs and how we can streamline them to create better margins.
Pallavi Deshpande
Lastly on Maharashtra, the contract is at a pretty good rate, I understand, close to [Technical Issues]. So, what is the kind of machinery, the CT scan machine that is being — as a part of the contract that is being offered?
Yash Mutha
So, the equipment that we’ll be deploying, these are all as per the — tender specifications that the government has given as part of the tender. So, those are the equipment that will be deployed.
Pallavi Deshpande
So, it will be 64 or 32? Thank you.
Yash Mutha
Can you just repeat the question?
Pallavi Deshpande
Yeah, so this should be 64 or 32 slides?
Pawan Daga
We have 1.5 tesla MRI, 32 slides and 1.5 tesla MRI.
Pallavi Deshpande
Okay, okay, right, thank you so much.
Operator
Thank you very much. The next question is from the line of Krishna Raj from Ekvity. Please go ahead.
Krishna Raj Kayarthaya
Good afternoon. Thank you for taking my question. So, could you please help me with the breakdown of margins between radiology and pathology in an EBITDA level? Where is it higher and where is it more?
Yash Mutha
Yeah. So, typically at the center level, the radiology margins are higher than the pathology margins primarily because — the pathology consumable rates are higher and that’s how we would all the way the business we do at Cisco [Phonetic].
Krishna Raj Kayarthaya
Okay. And if you were to set up a new lab in any city, what is the tentative time from getting the lab set up and getting the approval? What would be an ideal timeframe?
Yash Mutha
You are asking this question from a PPP perspective?
Krishna Raj Kayarthaya
Yes.
Yash Mutha
Yeah. So when we have to set up a lab in any of the PPP projects, the timelines could be — in setting up and getting the approvals could be as — couple of months and sometimes in some cases — depending on the government to give us a site handover, it might take anywhere between three to six months.
Krishna Raj Kayarthaya
Okay. Thank you. Yeah. Thank you.
Operator
Thank you very much. The next question is from the line of Dhwanil Desai from Turtle Capital. Please go ahead.
Dhwanil Desai
Hi. Good afternoon. Am I audible?
Yash Mutha
Yes, you are audible. Go ahead, please.
Dhwanil Desai
Yeah. Yeah. Sir, my first question, Yash, is that — I think in the beginning of the year, we had guided for 25% EBITDA margin and we are now significantly above that and we are saying that we will be able to maintain it. So is there any change in the earlier assumptions which have happened, which is making you confident for maintaining — higher margin than what we expected?
Yash Mutha
There haven’t been any changes. This is something we’ve been communicating even in the last year and the year before where as the business keeps on maturing, the centers ramp up. You will see certainly an improvement in the margins. Number two, we’ve also taken various strategic initiatives in bringing in operational efficiencies which have also helped in — bringing more contribution from respective projects. So, overall, we are committed to delivering the EBITDA margins as the guidance we’ve given and we look forward to ensuring how we can further improve from what we’ve delivered in the past and hopefully we’ll be able to continue to maintain the trend that we’ve achieved so far.
Dhwanil Desai
Okay. And second question, probably more of a clarification. I think you said that in Orissa, because of our good work, the government has asked us to set up another 600 centers. So, this is in addition to whatever we have done till now, right? So, an additional 600. Is that right?
Yash Mutha
Yes. So, these are additional centers that they wanted us to cover under the PPP initiative and which we are gladly happy to do this, which will ensure that Krsnaa is able to deliver its diagnostic services even in the underserved regions where there is a lack of these kind of advanced facilities and advanced diagnostic services.
Dhwanil Desai
Okay, got it. Thank you. That’s it from my side.
Operator
Thank you very much. The next question is from the line of Anil Sarin [Phonetic] from K16 Advisory [Phonetic]. Please go ahead.
Analyst
Hi. Good afternoon. Thanks for the opportunity. So, I think this question has been asked earlier also, but I’m still not clear about the gross margin and the EBITDA margin profile, because the margins have gone up. The EBITDA margins have gone up vis-a-vis the previous year, thanks to the other expenses being lower this time relative to what they were last time. And the reason given to the earlier caller was that some of the outsourced services have been in-housed, and as such, the other expenses or the overheads are going to be lower on a continuing basis, on a permanent basis going forward. Is my understanding correct?
Yash Mutha
Correct. So, we’ve mentioned this in the previous calls as well. What we do is the fees to hospitals, and to give you a bit of context, whenever we start up a new PPP project, these are far-front [Phonetic] locations, so we leverage the local partners there, and since it’s a ramp-up phase — we require their support, whether it is manpower processes, even infrastructure. So, there’s a certain amount of revenue share that is given to them.
Over the years, as the business stabilizes, we look at these revenue sharing arrangements and try to see how we can negotiate it better and further see how the expenses because when we do it in-house, there are certain economies of scale that Krsnaa has today, which we can leverage, and therefore explore reducing these expenses. So, we believe this trend will continue. Yes, as and when a new PPP project comes, you might see for a particular project, the revenue shares, or there might be a certain increase, but on a long-term basis, on an annual basis, this is the kind of fees to hospitals or expenses that we see in the coming quarters.
Analyst
Okay. So, my next question is about the revenue growth. Earlier we were targeting around 25% revenue growth, even in a good scenario, thinking of going much beyond that and reaching 30% also during the fiscal year ’25. However, at the halfway point, we are around 21% up. So, that puts a lot of stress on the second half. Are we good with the 25% revenue growth for this year?
Yash Mutha
Yes, we are confident and committed to ensure that we’ll achieve the 25% growth guidance that we’ve given for this year. See, these are PPP projects, and you know, at certain times, there are delays or there could be phases of the ramp up. But when I look at it holistically, for the entire year, we are good to achieve what we believe for the 25% guidance that we’ve given. And this is excluding the Rajasthan project that we’ve been discussing about.
Analyst
Understood. Thanks so much. Just the last point that I had, or the last question that I had, this Apulki, there’ll be only two radiology labs that you will set up for them?
Yash Mutha
So, as of now, they have two hospitals coming up, as and when — they are also working to have more hospitals in this place. So, as and when these hospitals come up, we are the exclusive partners with them. So, we will be able to work on this. And these will be both, radio and patho, both.
Pawan Daga
This will be complete diagnostic setup. It’s not restricted to radiology. The Apulki, where we are setting up the entire diagnostics facility.
Analyst
Okay, thanks. And this 23% stake, are we going to hold it here or gradually increase it or, I mean, what is the outlay towards this part of the business?
Yash Mutha
Well, as I said, this is a strategic initiative we’ve taken. As of now whether we’ll take more stake I think it’ll be too early to comment. I think once both the sides work towards it, and we see whatever milestones we’ve set out for being achieved, we can certainly come back and update about how we look at the future stakes.
Analyst
Great. Thank you so much and happy Diwali to all of you.
Yash Mutha
Thank you. Wish you all a happy Diwali.
Operator
Thank you very much. The next question is from the line of Vivek Kumar [Phonetic] from Best Pulse Research and Advisory [Phonetic]. Please go ahead.
Analyst
Thanks, sir. Are you able to hear me, sir?
Yash Mutha
Yes, yes, we are able to hear you.
Analyst
So, what is the receivable amount you said from these two states outstanding which you are expected to receive in a few days or weeks?
Yash Mutha
This is around INR120 crores.
Analyst
Sir, I understand this procedural one-off, but will these one-offs keep happening every one, two years, because one or two states here and there will keep happening, and we have to model for these kinds of things happening, which you can be able to collect, I understand. But when you say procedural and technical, can you even throw more light, because why will governments stop this in the sense, like, if not for elections, okay. So, elections, I understand, but any other reasons which looks like a risk to you, which we are not able to imagine as investors, because you are working closely with the government.
Yash Mutha
It’s a fair question. See, basically, what we spoke about the procedural delays is — certain approvals that the authorities have to take in place, and this is something we’ve not just seen now. Over the last 10 years, we’ve seen that some of the states, when they plan for the tender, there are certain approvals, when the business increases they also have to take it internally. As well as, there are example — some of the officers get transferred.
So, there are multiple reasons why these delays happen. I wouldn’t be able to pinpoint a specific reason, but yes, considering that you’re working hand-in-hand with the government, as well as the NHM, and like Pawan also mentioned, we have received commitments from the authorities that the money will be released in the subsequent month. Just to add, if you see the way at Krsnaa — given that we are the largest PPP player, our experience is the biggest in the PPP, and we have continued to maintain a zero write-off on all our receivables till date. So, that is where this confidence comes up, that yes, these are delays, and they are part of the business, and we expect to recover our receivables in the subsequent days.
Analyst
So, these are bureaucratic procedural delays, nothing to do with some doubts that they have or some issues that they have with our company, right?
Yash Mutha
No, no, no. So, these are all procedural. They’ll come up with their respective audits and checks and balances, but in our, whatever information we have, these are all procedural delays that we are currently seeing at both these projects.
Analyst
Because we will not be able to imagine what kind of risk play out, so that’s why I asked this question. So, is there anything that can recur in other states?
Yash Mutha
No, the risk has also been seen both by the management as well as — at different levels. So, we don’t anticipate any other risk attached to these receivables.
Analyst
Okay. Have you ever seen, sir, any state government refusing, and what do you normally do if they refuse for some unreasonable reason they give and they just stop? Is there something that we can do as a part of the tender or just asking?
Yash Mutha
Could you just repeat the question?
Analyst
No, if somebody, is there, where there are cases, cases where state government refused to do, giving unfair reasons and if Krsnaa can do something about it, like, I’m just asking in general, not about these receivables, in general.
Yash Mutha
Yeah, see, we are not — we are a service provider and we are PPP partners. So, if the partner is, for whatever reasons, is not able to fulfill their commitments, we stand by our commitments and we’ll continue to provide the services, but if necessary, we’ll also suspend our operations. Just one second.
Pallavi Bhatevara
To answer this question further, the agreement what we’ve signed with the state government is not only the state government, all our projects are NHM backed. So, these projects have budgetary compliances, which comes from NHM also. Also, most of the states have now a dedicated team, like a post monitoring unit. There are monthly governance meetings.
So, I don’t think, abruptly, some state will just stand up and say that — we will not pay you, because this is a monthly cycle what follows and hence, we don’t foresee this. However, to answer your question, that in the agreement, there are clauses, which protect us as service provider, in case of such incidences, we have the arbitrary path to take.
Yash Mutha
And we’ve not seen any such kind of event — in our entire history so far, where we had to go. I think it’s a partnership that we all are working towards.
Analyst
Thank you, sir. Thank you very much, sir. Thank you, ma’am.
Operator
Thank you very much. The next question is from the line of Dipali Mansal [Phonetic], who is an Individual Investor. Please go ahead.
Analyst
Hello, sir. Good afternoon. My first question is I wanted to know the extent of Apulki revenue potential? Like, what is the timeline of revenue we are looking at, because we have heard that it is a 30-year contract and we are investing somewhat like INR30 crores in it. So, what kind of revenue are we looking from Apulki and from Medikaa and United also?
Yash Mutha
So, Apulki — hospitals will be operationalized in the next, I think, from January onwards. And in terms of the revenue potential, I think we will be able to predict that in the subsequent quarters, once the agreements are executed because currently, as I said, there are a couple of conditions that have been finalized. So, hopefully, in the next quarters, we will be able to give you guidance in terms of what revenue we expect out of these projects.
Analyst
And what about United Imaging and Medikaa, sir?
Yash Mutha
Sorry, could you repeat the question?
Analyst
What about United Imaging? Because we already started that you have procured one machine for United Imaging. And what is the timeline of revenue we are looking at, sir?
Yash Mutha
So, United Imaging is a vendor or OEM manufacturer through whom we are procuring these equipments. These equipments are part of our PPP project that we won. For example, Madhya Pradesh, the MRI project that we won. So, some of these equipments will be sourced from United Imaging. And, as I mentioned, these centers will be operationalized in the subsequent quarters. And the revenue will, of course, definitely come in the next fiscal year.
Analyst
Alright, sir. Next question is, sir.
Operator
May I please request you to return to the question queue for a follow-up question?
Analyst
Just ask one question, please. There is a sharp increase in EBITDA margin for the new centers. Do you think we can maintain this, sir?
Yash Mutha
Yes. So, as I’ve been mentioning, our effort is to maintain these margin trends. Whatever we’ve achieved so far, which has been an outcome of various operational efficiencies, we believe to maintain these margins in the coming quarters as well.
Operator
Thank you very much. The next question is from the line of Neha from Abakkus. Please go ahead.
Neha Raichura
Yeah, hi. So, just two questions from my side. One is what was the split of radiology and pathology for this quarter?
Yash Mutha
Yeah, Pawan, go ahead please.
Pawan Daga
Our radiology and pathology now reaches to 50%-50% in terms of the revenue contribution.
Neha Raichura
Okay. So, even with the pathology contribution increasing, the overall EBITDA margin has gone up. So, does that mean that it is basically led by the operating leverage?
Yash Mutha
Could you repeat the question, please?
Neha Raichura
Yeah, yeah. I was just asking that so even with increasing overall contribution from the pathology, the margins have gone up this quarter. So, is it mainly because of the operating leverage playing out?
Yash Mutha
It’s a combination of multiple factors. One is, of course, the increase in revenues that have come through a combination of radiology and pathology. It is also because of the operational initiatives that we have taken. Some of these are cost-saving measures. Some of these are in terms of maintaining a lean cost model. So, all these various factors have helped us to bring in these margins. And we expect the margins to continue even in the subsequent quarters.
Neha Raichura
Understood. And then secondly, our capex, we had guided that it would be around INR170 crore for the year. So, we stay on that or is there any change on the capex front?
Yash Mutha
No, I think it’s the same. We continue to maintain that kind of capex for the year.
Neha Raichura
Okay. Thank you so much.
Operator
Thank you very much. The next question is from the line of Pranay Khandelwal from Alpha Invesco. Please go ahead.
Pranay Khandelwal
Hi. Thanks for the follow-up opportunity. I wanted to ask about this BMC tender that we have. 600 collections centers but I think for quite some time they are under implementation for 473. Like, that number is not moving down. So, what could be the reason for that?
Rajendra Mutha
[Foreign Speech].
Pranay Khandelwal
[Foreign Speech].
Rajendra Mutha
[Foreign Speech].
Pranay Khandelwal
Okay. Thank you. And on the pipeline side, I think we had a recent call with Arian [Phonetic] or something. So, we had mentioned Bihar is in the pipeline, Bihar state or something. So, anything on the pipeline? What do we have?
Yash Mutha
Yes. So, there are a couple of projects as I mentioned earlier. We are chasing them. And we will be giving an update soon — once we have more clarity on these projects.
Pranay Khandelwal
Okay. And just wanted to clarify one thing. You said about the cancer hospital that Apulki is doing. They are going to start the construction process in January or they are going to complete the construction process in January?
Yash Mutha
Construction is completed. Equipment installation is going on. May be February 8, hospital will be started.
Pranay Khandelwal
February 8, hospital will be started. And our center in the hospital will be February only or February itself our center in the hospital or February?
Yash Mutha
In February, we expect to start our radiology, pathology centers inside the hospital.
Pranay Khandelwal
Okay. And what about PET-CT? I assume we will be foraying into that as well.
Yash Mutha
Yes. Yes.
Pranay Khandelwal
Okay. So, that will also be started by that time.
Yash Mutha
Yes.
Pranay Khandelwal
Okay. All right. That will be all. Thank you.
Operator
Thank you very much. [Operator Instructions] The next question is from the line of Pallavi Deshpande from Sameeksha Capital. Please go ahead.
Pallavi Deshpande
Yes. I just wanted to understand better this coverage for above 70 citizens that the government announced. So, we have already the NHM which provides — for the, and under that program, the [Indecipherable] diagnostic service. So, this is, how does this — this will increase the scope for the number of patients and that you can cater to because does this apply to radiology first or it applies only for Medikaa?
Yash Mutha
No. Yeah. Coverage is actually for both and it is for the senior citizens who can avail these services. So, this will certainly complement and bring in more patients to our centers. Now, those patients who want to cover under the free diagnostic scheme, they can choose, whereas the senior citizens can use the Ayushman Bharat route to come in and avail these services.
Pallavi Deshpande
Right. And sir, any change in that guidance? I mean, in terms of you were doing 1,000 scans per machine per month for this year and what kind of a number can we look at? This was FY ’24 number.
Yash Mutha
Yeah. I think that guidance still remains the same. There is no change in that assumption or the guidance that we have given.
Pallavi Deshpande
Right. So, our growth will be more realization driven in that case because the volume number is remaining the same?
Yash Mutha
No. This is, as I said, a baseline assumption we look at when we do our PPP projects. There are certain of the projects which do higher than the 1,000 baseline. So, yes, we focus both on increasing volumes as well as — leveraging the pricing wherever possible.
Pallavi Deshpande
Right. Thank you so much.
Operator
Thank you very much. As there are no further questions from the participants, I would now like to hand the conference over to Mr. Yash Mutha for closing comments. Thank you and over to you, sir.
Yash Mutha
Sure. Thank you. Thank you everyone for joining our Q2 FY ’25 earnings call. We trust that we were able to address all of your questions. If there are any remaining queries, please don’t hesitate to reach out to our Head of Investor Relationship, Mr. Vivek Jain, who will be happy to assist you. On behalf of Krsnaa Diagnostics, we would like to wish each and every one of you and your loved ones a very happy Diwali and a prosperous New Year. We look forward to engaging with you in the upcoming quarters. Thank you once again for your time and your continued support. Thank you.
Operator
[Operator Closing Remarks]