Vaidya Sane Ayurved Laboratories Limited (NSE: MADHAVBAUG) Q2 2025 Earnings Call dated Nov. 12, 2024
Corporate Participants:
Rohit Sane — Managing Director
Yogesh Walawalkar — Senior Vice President, Marketing and Corporate Relationships
Analysts:
Pushkar Jain — Analyst
Keshav Lahoti — Analyst
Chirag Shah — Analyst
Sachin Sodhi — Analyst
Manoj — Analyst
Sonali Gore — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to H1 FY ’25 Earnings Conference Call of Vaidya Sane Ayurved Laboratories Limited. [Operator Instructions]
This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call. The statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.
I now hand the conference over to Dr. Rohit Madhav Sane, Chairman and Managing Director from Vaidya Sane Ayurved Laboratories Limited. Thank you. And over to you, sir.
Rohit Sane — Managing Director
Thank you. Thank you, Neha. Good afternoon, everyone, and welcome to Vaidya Sane Ayurved Laboratories earnings call for the financial year ended September 30, 2024.
I would like to begin by expressing my gratitude to all of you taking the time to join us today. I have with me on call today Dr. Vidyut Bipin Ghag, the Whole-Time Director; Mr. Shripad Upasani, the Chief Executive Officer; Mr. Yogesh Walawalkar, our Senior Vice President, Marketing and Corporate Relationships; Mr. Narendra Pawar, our Chief Financial Officer; and Adfactors PR and our Investor Relations team. We have shared our results update presentation and I hope you all must have received it.
Talking about Vaidya Sane Laboratories, Vaidya Sane Laboratories works under the brand name Madhavbaug. Madhavbaug is a unique medical service institution which blends traditional medicine system with modern diagnostic techniques. We have more than a decade of expertise in disease reversal treatments for diabetes, blood pressure, heart disease, post-angioplasty, post-bypass surgery as well as pre-angioplasty, pre-bypass surgery and obesity. Such kind of non-communicable chronic disorders treat with the help of Ayurveda and lifestyle modification treatments. Founded in 2006 with a vision to reduce the mortality and morbidity due to the heart diseases and lifestyle disorders.
Our approach to treatment using non-invasive, multi-disciplinary and innovative therapies has helped establish Vaidya Sane as a dependable option for treating the chronic ailments. We provide healthcare services through Ayurvedic Cardiac Rehabilitation Centers. As on September 30, 2024, the company operates about 350 clinics across Jammu Kashmir, Punjab, Haryana, Uttarakhand, Delhi NCR, Uttar Pradesh, Madhya Pradesh, Rajasthan, Maharashtra, Gujarat, West Bengal, Odisha, Goa, Karnataka and Chhattisgarh. Out of these 33 are company owned, 63 are OPD centers and mini clinics and 254 are franchise clinics. We also operate three Cardiac Prevention and Rehabilitation hospitals in Khopoli, Nagpur and Visakhapatnam respectively. We empanelled with more than about five TPA and five insurance companies to offer cashless facilities at our Khopoli hospital.
I am excited to share with you several significant achievements and developments from the past year that demonstrate our continued growth, innovation and commitment to providing effective healthcare solutions. I am pleased to announce the appointment of Ms. Sapna Vaishnav as the Company Secretary and Compliance Officer, the key managerial person of Madhavbaug, effective 17 August, 2024. Ms. Sapna Vaishnav brings with her a wealth of experience in corporate governance, compliance and legal affairs and we are confident that her expertise will be instrumental in strengthening our internal controls enhancing regulatory compliance and supporting the continued growth of the organization.
I am also proud to highlight the success of our nationwide campaign that is Azadi Diabetes Se, which was launched in August, recognized as the month of Azadi from Diabetes. The campaign aimed to raise awareness about the potential to reverse type 2 diabetes through holistic Ayurvedic treatments. The key feature of this initiative was the Mega Glucose Tolerance Test event which took place across more than 90 Madhavbaug clinics in states including Maharashtra, Karnataka, Uttar Pradesh, Madhya Pradesh, Gujarat, Delhi, Belgaum and so on. Over 200 type 2 diabetes patients who have successfully achieved normal blood glucose levels without relying on allopathic medications participated in this event and undergoing our Chronic Disease Care therapy.
In addition to the GTT event, our clinics nationwide conducted a series of informational session, free health assessments and consultation with diabetes experts further reinforcing our commitment to providing sustainable Ayurvedic solutions to those affected by diabetes. This campaign has been a significant milestone in our mission to transform diabetes care and empower patients to take control of their health.
We recently participated in the Ayush Medical Value Travel Summit where I had the honor of being part of an esteemed panel discussion on expanding frontiers opportunities in Ayush an integrated medical value travel. This summit brought together thought leaders and experts from the wellness and Ayush sectors to explore the future of integrated healthcare. During the session, I had the opportunity to highlight Madhavbaug’s unique approach which blends traditional Ayurvedic practices with modern medical technology to offer effective sustainable solutions especially in non-invasive cardiology and lifestyle related disorders. Our participation to this summit reaffirms our commitment to providing world class holistic healthcare to both domestic and international patients and underscores the growing role of Ayurveda in global medical value travel landscape.
Looking ahead, we are planning to expand our hospital network is the key focus for several reasons. Firstly, our hospitals are now NABH approved and backed by insurance, allowing us to offer cashless treatment options to our patients. With full NABH accreditation, we are also preparing to become empanel with the CGHS, enabling central government employees to receive treatment covered by the government. This makes our hospital model even more attractive. As we look to expand, we plan to increase capacities at our Khopoli hospital adding 100 more beds over the next 12 months to 18 months in phases.
Similarly, our Nagpur hospital, which currently has about 20 beds, will see an addition of 20 beds in the next 12 months to 18 months. Our long-term vision includes adding more 10 hospitals. However, instead of investing in new infrastructure, we plan to acquire existing hospitals or resorts and convert them into Madhavbaug facilities, thus adopting a franchise like model for growth looking for future hospitals in North India, Gujarat and few in the South of India also.
By 2030, we aim to establish about 1,000 clinics, 10 hospitals and 5,000 outpatient departments, particularly focusing on rural areas throughout India. Additionally, through our Institute of Preventive Cardiology, we are committed to train about 10,000 Ayurvedic physicians who will contribute to our growing network and help us continue to lead in the field of preventive healthcare. Together we are on the path of transformation and I look forward to the continued success and growth of Madhavbaug in the years to come.
In conclusion this has been a year of remarkable growth and expansion for our Vaidya Sane Ayurved Laboratories. Our dedication to integrating time on Ayurvedic principles with modern research and technologies delivering meaningful results and unlocking new avenues of progress. We remain steadfast in our mission to provide effective, holistic healthcare solutions that positively impacts the lives of our patients. We deeply appreciate your continued support and confidence in our vision. As we move forward, we look forward to sharing more updates on our continued growth and success.
Speaking about the overall industry, the Ayush sector in India has witnessed significant growth in recent years emerging as a prominent domain in terms of revenue and employment. Ayush encompasses traditional symptoms of medicines such as Ayurveda, Yoga, Unani, Siddha and Homeopathy. The sector includes clinics, wellness centers, research, herbal products, education and holistic health practices. India’s Ayush sector is rapidly expanding supported by increasing awareness, demand for natural therapies and government initiatives to promote traditional medicine systems. Ayush sector has experience a significant growth and is on track to achieve the valuation of $70 billion for the Ayush-based healthcare and wellness sector by the year 2025.
In March 2024, Union Minister of Health and Family Welfare Dr. Mansukh Mandaviya launched the Ayush ICMR Advance Center for Integrative Health Research at the AIIMS, emphasizing the importance of collaborative research in bridging traditional Ayush knowledge with modern scientific practices. The initiative aims to advance integrative health research integrating Ayush practices with modern medicine.
Innovative formulation such as AYUSH-64 has exhibited promising prospects in the management of various health conditions, heralding a new era of potential breakthroughs in healthcare. From a modest count of 334 colleges in 2014, the number has substantially now increased to an impressive total of 1,137 colleges as on the current year. This exponential growth underscores the burgeoning interest and recognition according to Ayush disciplines, reflecting a robust expansion and diversification within the education infrastructure supporting Ayush studies.
Now coming to our financial performance half year H1 FY ’25. Revenue from operations for H1 FY ’25 is INR41.80 crores as against INR51.10 crores in H1 FY ’24, year-on-year decrease of 18.20%. While the EBITDA excluding other income was INR5.76 crores in H1 FY ’25 as against INR2.68 crores in the year FY ’24 H1, increase of 115% on account of decrease in employee cost and other expenses. Profit after tax was INR3.26 crores in this H1 FY ’25 as against INR1.18 crores in H1 FY ’24. The basic EPS stood at INR3.59 in H1 FY ’25.
This is all from our side and we can now take questions.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Utkarsh Jain from Sequent Investments. Please go ahead.
Pushkar Jain
Okay. Hi, I am Pushkar Jain from Sequent Investments. So my question was regarding the marketing campaign that you had started last half year, so beside the marketing campaign, why have we not seeing an increase in sales or purchase?
Rohit Sane
Yes. Pushkar, I am sure about why are you asking this question. Now what have we tried to do is we have tried to optimize the marketing campaign with various different ideas. We haven’t still figured out the complete option, but in next about a month or so we will be able to figure out the actual campaign and then we will be starting with the actual campaign that we are looking out for. I wanted to keep the complete communication very clear, hence the marketing campaign that we have started is just for the new footfall to preserve whatever we had, but the actual plans that we are on will be actually seen in this next coming, say about 10, 15 days itself.
Pushkar Jain
Okay, okay. And sir, what is the revenue guidance that we are looking at for full year?
Rohit Sane
I will be looking at a conservative figure how much — whatever we were in the last year, we will be looking out for the same revenue with better EBITDA as compared to the last year.
Pushkar Jain
Okay, sir. And can you update on the capex plan that we are planning on hospitals, like in Khopoli we are planning an addition to beds. So any update on that?
Rohit Sane
Yes. So as of now the permissions from the government authority is still pending, may be about a month or so would be required for that. But till then what have we seen is the basic plan that we have looked out is the land besides the Khopoli hospital we are trying to get that permission on this land and we will be building about 80 more beds on this land in which we will not be building it at a stroke directly, but we’ll be going with about 20 to 40 beds at a time. And this would cost us somewhere about say INR8 crores to INR10 crores as we go ahead, but majorly I think the acquisition would be internally itself.
Pushkar Jain
So the acquisition will be funded by the preferential allotment that we have done?
Rohit Sane
Yes. Most probably, yes.
Pushkar Jain
Okay, sir. Okay. Thanks a lot.
Operator
Thank you. [Operator Instructions] The first question is from the line of Keshav from BHFC [Phonetic] Securities. Please go ahead.
Keshav Lahoti
Hi. Thank you so much, sir, for giving me the opportunity to ask questions. So you have very broadly mentioned that it is employee cost coming down which has led to a rise in profitability. So what are the other measures we are undertaken so that the profits have gone up? And the sales for this half year was around INR41 crores, so what are you projecting as sales for the full year? And what can we look at in terms of numbers for the full year? Are we looking at a 15% EBITDA margin which will sustain going forward? This is question number one. Give us some projection of sales for the full year and what are the steps — how has the profitability gone up besides the decrease in the employee cost?
Question number two is, hospital business is a cash cow. So we are — what steps are we taking so that we — give us some clarity on what is the way for the hospital business going forward? How are we growing? And the third question is on the FMCG business. Can you give us some clue on what is happening in Madhavprash? Madhavprash is like I think becoming a household name. What is happening in the FMCG business? What are you doing about it? Can you give us some clue on these three questions I have?
Rohit Sane
Sure, sure. So thank you, Keshav, for asking this question. About the turnover, as I just spoke, this whole year I will be looking at a conservative figure of the same turnover that was there in the last year. So that is our conservative proposition as of now. While the EBITDA margin that you asked about, yes, we will be planning to keep it to where we are right now. And I am sure that keeping that EBITDA margin towards that level should not be so difficult.
Now how I have reached over here is obviously the reduction in HR cost has helped us as well as last year the online sales that we had done which had resulted into higher COGS. Now in this year, we haven’t gone for those kinds of online sales through Vaidya Sane and hence the COGS has also seen a good optimization in over here. As well the other expenses that we had, wherein the professional fees which were about more than 9% in the last year that has reduced down to 7%. And with the growth in the revenue, the professional fees will still drop down below 7%. So that is how the total expenditure control has helped to improve the EBITDA and the profit margins.
Talking about the question about hospital business, yes, we are looking out to expand the hospital business as just what I explained. Now we are full NABH for our hospital. And in that case, we will be going for CGHS empanelment wherein we will be having a direct correlation for the central government health scheme, due to which we will be having much more number of patients acquired for the hospital itself. Hence, we will be increasing the hospital infrastructure as we go ahead in next 12 to 18 months. And this increase in the total infrastructure for the hospital, we will be able to accommodate the CGHS patients also.
So as well for the Kondhali hospital, we are also planning to increase more 20 beds in the Kondhali Nagpur hospital in next 12 to 18 months that will also help us to get in because that is also NABH approved now and the insurance companies, the tie-up has also begun for that hospital also. So going ahead, we will be also looking out for various other hospitals and various different geographies. And majorly, we will be looking out for ready infrastructure where it will be directly a plug and play model and that will give us a good hospital bed acquisition which will help us to increase our revenues in the future.
Keshav Lahoti
I got it. So my follow-up on the first question is, so can we assume our sales figure of around — a turnover of around INR100 crores for the current year and 15% EBITDA margin which would work out to INR15 crores EBITDA and around INR7 crores to INR8 crores of PAT for the full year? Is that a fair assumption to make, sir?
Rohit Sane
Yes. INR97 crores to INR100 crores is what we are looking out for with the same EBITDA margins that we have achieved.
Keshav Lahoti
So we can assume that INR2.3 crores PAT, that can easily go to INR7 crores to INR8 crores for the full year?
Rohit Sane
Seems so.
Keshav Lahoti
Okay, okay. Thank you. And can you give us some clarity on the FMCG business, sir? What are we looking at over here?
Rohit Sane
So in last say about six months, we have achieved to sell about 13,000 Madhavprash online and that is through our subsidiary that is Dynamic, the company that we have, the manufacturing company. So that manufacturing company has its own online marketing division which is trying to market Madhavprash online. And in last say about six months, we have sold somewhere more than about 13,000 units and we are going conservative over there because the COGS shouldn’t increase over there itself. So that is what the plan is about.
So the marketing cost keeping in control. We are trying to flare up the marketing. And in the coming six months, we aim to have double number of Madhavprash being sold in this and due to which we are getting good amount of enquiries from the actual retail units also who want to have that Madhavprash with their units. So gradually, the FMCG kind of retail availability will also increase, but as usual, we are concentrating on our online division as of now because we are available on Tata 1mg, we are available on all the online shops, Flipkart as well as Amazon. Now the online availability of Madhavprash is quite good as compared to the earlier condition and that will help us to boost up the sales as we go ahead.
Keshav Lahoti
Thank you, sir. That’s all from my end. I just want to add as a note that it’s basically a 700% jump in profit is what we are looking at for the full year. Last year we did a profit of INR96 lakhs, INR99 lakhs. And this year, if you are looking at INR7 crores plus, it’s a 700% jump, 7 times jump. Thank you so much. That’s all from my end, sir.
Rohit Sane
Thank you.
Operator
Thank you. The next question is from the line of Chirag Shah from White Pine Investment Management. Please go ahead.
Chirag Shah
Sir, thanks for the opportunity. Sir, my first question is — before I actually ask my question, sir, just wanted — if you can just refresh what is the extent of dilution on this preferential conversion and when it will happen?
Rohit Sane
Can you ask your question again? Your voice was cracking.
Chirag Shah
Yeah. Sir, what is the extent of dilution that will happen on conversion of preferential? And when are the 18 months coming to an end?
Rohit Sane
About the preferential shares that I will be subscribing to, the total dilution, I am not completely sure with the typical figures, but I will be able to give you as soon as I get those typical with decimals. But on a gross…
Chirag Shah
Sir, approximate is fine.
Rohit Sane
On a gross level, if you see, it should be lesser than 5%. So the status of that is I am still in a process of having the funds ready for my subscriptions. So may be in a month or so, I should be finalizing the whole thing. I am looking positively towards it.
Chirag Shah
Okay. Because it’s more than 12 months, right? So it’s closer to the 18 months?
Rohit Sane
Yes.
Chirag Shah
Okay. So it’s less than 5% is the dilution?
Rohit Sane
Yes.
Chirag Shah
Okay. Second question is between hospital, clinic and FMCG models, which is the one you would be more keen to focus on for next — given that size, which is more keen where you want to focus on? Because trying to focus on everything is probably not the right time.
Rohit Sane
Very true. So we will be majorly focusing on the hospitals because the EBITDA margin of hospitals is quite strong as compared to others. So hospital concentration would be the first priority, second would be the clinic and third is going to be the FMCG because FMCG is going to take its own time. It is not going to be overnight as such. So we will be having a gradual and say about 10% to 15%, 20% of concentration on the FMCG, 50% to 60% of concentration would be on the hospitals and remaining would be on the clinics.
Chirag Shah
So if you can just help to understand how we are looking to add the number of beds? And what is the key challenge because some of the other Ayurveda companies are expanding at a much faster pace, that’s what? And are you looking in which states — how are you looking at concentration of your hospitals in terms of location?
Rohit Sane
Yes. As of now, if at all we see, the major kind of expansion in this year is going to be with the Khopoli hospital and the existing Nagpur hospital where we already have still more space with us. That is the first thing. Second, we will be planning to expand ourselves in Gujarat and the North India because we already have our branding and marketing activities being done over there, so that will also help the hospitals to grow over there. So major expansion would be happening in the North India as well as in the Gujarat.
Chirag Shah
In terms of number of beds that you have employed at aggregate level?
Rohit Sane
As of now, in next 12 to 18 months, we will be looking out for about 40 to 60 beds to be added in Khopoli hospital and the Kondhali hospital. But about other hospital expansion, we are — right now, I am trying to consolidate and concentrate on the whole messaging and the total marketing strategies that we are looking out for. So about six to eight months I will be not looking out to open up a new hospital as of now, but the existing hospitals I would like to always have more beds into it and that is what we are going on with. But in the coming next year, I will be much more aggressive with the number of beds.
Chirag Shah
And sir, if I can just ask, what is per day per bed realization broadly at existing Khopoli, Kondhali, all the three location where we have the hospitals?
Rohit Sane
Yes. Per day per bed realization is about INR8,000 to INR10,000 per day per bed.
Chirag Shah
Okay. And you also indicated that we are looking at a franchisee model in hospital. Did I understand it correctly?
Rohit Sane
Yes.
Chirag Shah
And any specific reason for — and when you say franchisee, what do you mean, if you can explain? A typical franchisee model or there is something else in your mind?
Rohit Sane
No. This will be called as a franchise model, but it would be a bit different as compared to the clinic franchisee. We have both the options open in which there are few doctors who are in talking terms with us for Madhya Pradesh and all other sections where they use to work with Madhavbaug and they would like to start the hospital at their own places where they have their own infrastructure build. They wanted the brand of Madhavbaug along with them and that is where the conversation is going on. So that is one kind of franchise. But rest of the franchise would be related to rental as well as the infrastructure, renovation and the acquisition of the infrastructure. That would be the franchise model that I am looking out for.
Operator
I hope this answers your question, Chirag. Mr. Chirag, I hope this answer your question. Thank you. [Operator Instructions] The next question is from the line of Sachin Sodhi from Loop Estate Private Limited. Please go ahead.
Sachin Sodhi
Yeah, hi. Am I audible?
Rohit Sane
Yes, Sachin.
Sachin Sodhi
Yeah. Thanks, Rohitji, for the call. Almost all questions have been answered. My point at least to see sir, can you explain about how you see Ayushman covered this Ayurvedic in their scheme? And how well you prepared for this? Because I am sorry, but the number of beds you are stocking, I think is it enough to grow along with the pace?
Rohit Sane
Yes, I will try to specify. Ayushman Bharat, the scheme is supposed to be launched yet. It is about 50 to 70 different packages that the government is going to have in its own kitty related to Ayurvedic treatments. And obviously, yes, as soon as the Ayushman Bharat is done, there would be a huge surge in the number of patients who can be treated actually. So that is one.
Second, if we talk about how are we equipping ourselves for Ayushman Bharat, Ayushman Bharat would need NABH accredited hospital, that is what we are as of now. We have the land acquired with us. We have all the basic necessities that we need to grow up with and coming up with an infrastructure with the pre-fabricated thing is also not going to be a difficult job as well. The existing model that we have with our hospitals, in which we usually accommodate in our hospital every individual room, there is only one patient accommodated every room. So even though the demand with Ayushman Bharat increases, we will be able to accommodate two patients in that single room and the same occupancy can be increased 50% or 60% more than what we have as of now.
As well as when we talk about the clinics, we are as of now utilizing about 45% to 50% of the clinic slots that we have in the 350 clinics. So there is a huge amount of space where we can accommodate inside the clinic as well. The clinic timings are about 10 to 7. If required, we can even expand the clinic timings. So as of now whatever infrastructure we have that is good enough to accommodate 3 times of more patients what we accommodate as of now. As well along with that, when we go ahead, as of now if at all you see, the clinic model as well as the hospital model is too strong, so that none of the franchise have been said to be leaving us and that is because the model that has been formed with the Ayurvedic doctor being the franchise owner that is too strong and that is how the growth will be happening in the future.
So I am quite strong and confident about it that once the Ayushman Bharat is open for actual Ayurveda patients, I think we are in a good position to accommodate those patients. And about the growth, as I just explained with the number of beds that we will be increasing, but the occupancy and the capacity of the patients that can be accommodated will be increasing in the same proportion as I spoke about.
Sachin Sodhi
Thank you. Thank you, Rohitji.
Rohit Sane
Thank you, Sachin.
Operator
Thank you. The next question is from the line of Manoj from Rajani Enterprises. Please go ahead. Mr. Manoj, your line has been unmuted, please go ahead with your question. Mr. Manoj? Mr. Manoj, your line has been unmuted, please go ahead with your question.
Manoj
Hello?
Rohit Sane
Yes, Manoj.
Manoj
Hi, sir. Congratulations on a good set of numbers. So basically just wanted to know like what is the exact impact of the marketing that we have been doing. So personal experience, I saw an ad on Instagram, so social media is something I believe we are targeting as well, right?
Rohit Sane
Yes, yes. So if at all we see, I think Mr. Yogesh, our Chief Marketing Officer, will be able to put some light on to it. Yogesh, can you answer this?
Yogesh Walawalkar
Yeah. Manoj, thanks for your question. Earlier we use to focus more on the — if you compare, on the — we had a product first strategy. But right now what we are doing through various platforms what we are using through digital media or other mediums is focusing more on the treatment, so that the treatment comes in the picture because we want to be known as a treatment first company. So right now the entire marketing, still we are optimizing it, but our entire focus is on using social media as well as the other platforms like television and BTL campaigns around this particular treatment modalities.
Manoj
All right, sir. That helps. And also, sir, what is the number of the treatment that we have received or enquires compared to the last year or — I mean, the same like H1 FY ’24?
Yogesh Walawalkar
So if you see, last time, we use to — we had Madhavprash as our prime product and we use to give for every Madhavprash we had a check-up coupon we use to give it for free of cost. So the free check-up was the campaign. But this time, we haven’t promoted the Madhavprash or the free check-up campaign. We have focused on the treatment consultation as our first this thing, so leads have — like enquires have not gone down. The enquires are same around, we have got around 1.5 lakhs enquiries, 1.6 lakhs enquires and we have received 33,000 patients who have visited our clinics.
Manoj
All right, sir. So I guess, the impact has been visible. Sir, one last thing. I just — I guess, there was some event that happened on Sunday. So if you would just give some details on that?
Yogesh Walawalkar
Yes. So I think Dr. Sane is the founder and he has launched this event. So he will answer it because that got a very good success over Pan India. So I expect Dr. Sane to answer this question.
Rohit Sane
Right, right. So Manoj, yes, this event which was conducted on Sunday, this was on the behalf of the World Diabetes Day that will be celebrated on 14th of November, so we conducted this event on 10, in which about all these 350 clinics had participated with their patients, in which more than 1,300 diabetic patients who are now free from diabetes because of our treatment in last 90 days.
These 1,300 patients had come up to their clinics for this test, in which 75 grams of glucose these people were supposed to consume. And after consuming 75 grams of glucose, these diabetic patients were supposed to get their blood sugar test done once again after two hours of having the 75 grams of glucose. And I am proud to say that about 75% of those patients have tested to be normal post their treatment of 90 days and about 10% to 15% patients have seen to been impaired which we’ll still improve in next about a month or two. So this we have tried to showcase the strength of Madhavbaug treatment that is within 90 days itself for diabetic patients we are so strong that we can reverse their diabetes to an extent where even the GTT test can be seen to be normal.
So on the behalf of this World Diabetes Day, we had done this event, in which different modern physicians from various different institutes had also joined up for this event and they recognized our work. And this will help us to showcase our confidence through our doctors as well as through our patients who had participated in this event. And this will help us to boost the total brand value in the patients’ mind, which will again help us to have more number of patients in the coming months.
Manoj
Thank you, sir. That actually helps a lot in the analysis. That’s it from my side, sir.
Rohit Sane
Thank you, Manoj.
Operator
Thank you. The next follow-up question is from the line of Utkarsh Jain from Sequent Investments. Please go ahead.
Pushkar Jain
Hi, sir. I just wanted to know what is the average occupancy that we are having in H1?
Rohit Sane
Utkarsh, I can’t hear you. Your voice is cracking.
Pushkar Jain
Hi. Pushkar Jain from Sequent Investments. I just wanted to ask you the average occupancy that you saw in H1 across hospitals.
Rohit Sane
As of now this H1 occupancy of Khopoli hospital was about 80%, 85%, while the Nagpur hospital, the occupancy has increased from 60% to about 70%, 75%. And in Vizag, the Visakhapatnam, the occupancy has now been about 20%. So that is the overall occupancy of these hospitals.
Pushkar Jain
Visakhapatnam also 80%, am I right?
Rohit Sane
No, no, 20%. It has just began.
Pushkar Jain
New hospital that is why. Okay, okay. Thanks a lot.
Rohit Sane
Yes.
Operator
Thank you. The next follow-up question is from the line of Chirag Shah from White Pine Investment Management. Please go ahead.
Chirag Shah
Thanks for the opportunity, sir. Sir, it’s my commitment of last one year, sorry if I am repeating the question. On the hospital side, wanted to understand the franchisee part. You indicated one is own doctor who want to start their own practice. Then apart from this, that is where I got disconnected. If you can just continue?
Rohit Sane
I will tell you once again. So you were right that there are few doctors who are practicing with us and now they want to have their own hospital. That is one model. The second model is about having hospitals where the infrastructure is already ready with somebody and it could be a resort, it could be a typical building with good amount of free space with it where we can have the actual concept of Madhavbaug in over there. Such infrastructure, people are ready to have the renovation and all the set-up as what is required by Madhavbaug and then we can have a revenue sharing model with them. We will be calling that as a franchise model itself. So there are two different kinds of franchise model that we are looking out for.
Chirag Shah
The management control, the treatment control will be with your, right?
Rohit Sane
Will be ours, yes.
Chirag Shah
Okay. And the franchisee will be responsible for that? Okay, great.
Rohit Sane
No, no.
Chirag Shah
Thanks for clarifying this. Sir second, the house-keeping question. If you can just highlight or refresh on this professional fees which has come down. What it was? Where it is today? Where it will be? And why it will come down further?
Rohit Sane
The professional fees you mean to say?
Chirag Shah
Yes.
Rohit Sane
Yes, I will tell you. Now there were several professional people like the MD physicians who used to report the stress test and their 2D echo as well as there were several related to pathology testing. Whatever modern investigation we needed that was one. Now we have renegotiated with them. We have tried to have newer partners who have offered us better rates than the earlier. That is one of the reasons for this professional fee to reduce down in the total. That is one.
As well, we had renewed few contracts with other professionals which has helped us to reduce down the professional fees. And I see that if at all now whatever strategy we are going to put in, the revenue as soon as it increases to the expectation what we are looking out, the professional fees percentage will be still more better in the numbers that I am looking out for.
Chirag Shah
Sir what is the number in H1? And how should we look at it?
Rohit Sane
Again your voice cracked.
Chirag Shah
Sir, what is the number in H1? And how should we look at in ’26 and ’27?
Rohit Sane
So as of now in H1 this year, we are about — professional fees were somewhat about INR3 crores in the last six months, while earlier year first half it was about INR4 crores, INR4.5 crores of professional fees in the earlier year.
Chirag Shah
Annual or half year?
Rohit Sane
Half year.
Chirag Shah
Half year. Okay.
Rohit Sane
Yes. So there is where the optimization has gone in. And I am sure that as the turnover increases, the percentage-wise figures will improve still more better because it is almost going to be the same. Somewhere it is going to increase to a certain extent, but not to the level as what we had in the last year H1.
Chirag Shah
So if you could help to understand when do you incur these professional fees? Is it a fixed cost kind of a thing?
Rohit Sane
I will tell you. Like for example, we have 2D echo kind of investigations, we have stress test investigations, we have ECG reporting, we have PFT reporting, so these kinds of reporting where the modern investigations are supposed to be performed, we need a signature and a reporting from the modern physicians. So due to this integrated model, we are supposed to have — we have a kind of connectivity in between the modern physicians and our Ayurvedic physicians. So this kind of connectivity what we need, this is where the professional fees comes in place.
Chirag Shah
This will be more of a variable cost, right? Per patient it could be?
Rohit Sane
Yes, yes, 100%. Yes, you are absolutely right. It is per patient, but when we have re-negotiated the rates, the per patient cost has reduced down.
Chirag Shah
Okay. So in that kind it is per patient cost the re-negotiation has happened, so now it is more variable in nature?
Rohit Sane
Yes, yes, it is variable. It is not a fixed cost.
Chirag Shah
It is not a fixed cost. Okay. And this is done for patients coming by clinic or it is done for patients who get hospitalized?
Rohit Sane
Both.
Chirag Shah
Okay, okay. And sir, one last question if I can ask is, any thoughts on how are you looking to expand your hospitals in terms of location? Are you preferring to be closer to the existing locations or you are looking at completely newer location to expand? How are you selecting your hospital location?
Rohit Sane
Yes, yes. The first preference for hospital location is going to be a place which is very similar to what we have in our mind like our Khopoli and the Nagpur hospital. It could be something like a resort which is not working to that extent which has a minimum 50 bed capacity. That would be one that we will be looking out for. The locations, the geographies that we will be looking out major will be in the North India as well as in the states of Gujarat or Rajasthan. So this is where we are looking out to expand after Maharashtra for the hospitals.
Chirag Shah
Sir, why I am asking is, if I look at your clinic concentration is more in…
Rohit Sane
Maharashtra.
Chirag Shah
Yeah. And apart from Maharashtra, sir, your branding is not well established outside Maharashtra for clinics also?
Rohit Sane
Very true. You are right.
Chirag Shah
That is why I was asking that how are you ensuring that branding will happen for you when you put this hospitals? As I see, Madhya Pradesh, Gujarat and Uttar Pradesh are where you have maximum numbers of hospitals.
Rohit Sane
Yes, yes, absolutely right. So as I said, Madhya Pradesh, we are already in talking terms with a doctor who has already approached us. So that is one. About Rajasthan and Gujarat, Gujarat is a very, very potential area for Ayurveda that is why we are looking out for as well as Rajasthan also is a very potential area because already the Rajasthan government has accredited the Ayurveda for their pensioners as well as for the government employees. So there is where we will be planning to set-up ourselves. That will give us a boost in our revenues with that kind of hospital.
Chirag Shah
And sir, last thing is, which all government agencies you are tied up already because VDA has a separate procedure of approvals. So even in Maharashtra, even in Mumbai there are different agencies who work at a central level, armed forces for example, have their own accreditation process. So where are we? Which all entities are we approaching on a 12-month for accreditation in this CGHS type of scheme?
Rohit Sane
Yes. So we have now started approaching the CGHS. That is one. And in next four to six months, the application for all these government agencies will be done. So we are now hiring a person in next say about a month or so he will be joining who will be doing all these things for us.
Chirag Shah
Okay.
Rohit Sane
Thank you.
Chirag Shah
Yeah. Thank you very much.
Operator
Thank you. The next question is from the line of Sonali Gore [Phonetic], an Individual Investor. Please go ahead.
Sonali Gore
Hello?
Rohit Sane
Yes, Sonali.
Sonali Gore
Yes. So my question was regarding EBITDA. And this time we can see there is a good improvement in EBITDA margin. May I know what led to this positive impact?
Rohit Sane
Okay. I will tell you. It has been a combination of three, four things. The first one was the HR cost earlier which was about 27.5% in the last year H1, now it is somewhere about 24.5% to 25% of the HR cost. That is the first difference that we have been seeing. But this will still improve as we go ahead because once the top-line increases, the EBITDA will still improve because of this effect of HR.
Second is going to be about the COGS, the cost Of goods sold. Earlier when it was about 28% to 29% of COGS, now it is about 22% to 23% of COGS which is being seen. And this is majorly attributed to the online sale that we use to do in the last year which attracted higher COGS because that was only product sale. But now when we have product plus services which are being sold through the clinics and hospitals, so the COGS has reduced down towards 22%, 23%. So that is the second impact that we could see the improvement.
The third improvement in EBITDA is seen because of the professional fees that has reduced from about say 9.5%, 10% to about 7%, 7.1% somewhere to that extent. So that is how these three major things have affected the total EBITDA improvement.
Sonali Gore
Okay, okay. Got it. And so how much more margin improvement can we see going further?
Rohit Sane
With the numbers increasing in the top-line, the EBITDA margins will improve substantially beyond here because the HR cost is going to be the same, COGS will vary to somewhere about 22% to 23%, 24% max and obviously the professional fees will not vary to such an extent, so that also will not increase to such an extent as well as the rent and taxes also is going to stay the same. So increase in the top-line is going to add directly to the EBITDA.
Sonali Gore
Okay, understood. Just one more question. What is our revenue contribution from various business divisions?
Rohit Sane
About 20% odd is from the hospitals, while rest comes from the clinics.
Sonali Gore
Can you tell me the EBITDA margins for this each of the business divisions?
Rohit Sane
Yes. When you talk about hospital, all these hospitals the EBITDA margins ranges from about 30% to 50%, 55% with the occupancy that we had still in this past so many months. But as soon as we have occupancy increasing all over in these three hospitals, the EBITDA margin can go still beyond 50% also in the hospitals, while in the clinics as of now the EBITDA margin ranges somewhere from 5% to 7% or maybe 10% to a certain extent. But as we improve, because these are in — the company clinics that we have as of now are majorly in the other geographies where we have just began and the branding is still in this process. But when the top-line with the clinics also increases, the total gross margin that we have in the clinics is about 70%. So with that kind of gross margin, the EBITDA can still improve, it is just a matter of time and increase in the top-line.
Sonali Gore
Okay, okay. Understood. Thank you, sir.
Rohit Sane
Thank you, Sonali.
Operator
Thank you. Ladies and gentlemen, we will take this as the last question. I now hand the conference over to Dr. Rohit Madhav Sane, Chairman and Managing Director from Vaidya Sane Ayurved Laboratories Limited for closing comments.
Rohit Sane
Thank you. I would like to thank you all for taking time out and attending this call. I am also thankful to each member of the Madhavbaug family as well as our clients, patients, banks, investors, financial institutions and all other stakeholders. For any other queries or information that you need, please get in touch with our Investor Relations team. So till then, thank you very much.
Operator
[Operator Closing Remarks]