Picture this : You walk into a diagnostic centre for a routine blood test. You know, sugar, cholesterol level and such. Now, in addition to the numerical values for these, the test report provides additional insights: It details the mean and median of the sugar and cholesterol levels of your last five tests, then compares them with others of your age, sex, and culture—food habits are, after all, influenced by one’s culture. Say you are Bengali, and the report says how you fare against other Bengalis your age and sex. Such data analysis can help you, and your doctor, understand your health better— how did that wedding you attended last week, and the sweets that flowed endlessly, affect you; is it line with the norm; is your cholesterol level high even for a samosa-loving city?

This is the technology-driven future Ameera Shah, the 38-year-old promoter and managing director of diagnostics firm Metropolis Healthcare, wants to offer. “The idea is to transform Metropolis from being a brick-and mortar services firm to a digitally enhanced, omnichannel, healthcare and wellness focussed company,” says Shah. Though Shah does not detail the size of the investment needed, she says Metropolis will “scale up investment in technology over the next five years”. Metropolis operates in India and Africa, and recorded a revenue of Rs 650 crore in FY18.

The transformation Shah wants might seem like a natural evolution in today’s world of Big Data and analytics where every company wants to be seen as a tech firm. Yet, close observers of Metropolis know its significance, for not so long ago, the company was going through a boardroom tussle— on one side were Shah and her father, Dr Sushil Shah, the founder of the company, and opposing them was G.S.K. Velu, then a major shareholder as well as CEO and managing director of Metropolis. “From 2006 to 2015, Metropolis went through a difficult phase at the board level which did not al - low for optimum business performance,” says Shah.

To understand the roots of the conflict, and how Shah survived it, one has to go back in time to 1981, when Dr Shah set up the business as a local pathology lab in Gamdevi, South Mumbai. Dr Shah ran it mostly singlehandedly, like a doctor would. In 2001, wanting to grow the company, and realising the need for someone with more business acumen, Dr Shah struck a partnership with Chennai-based Velu. Under the deal, the two held equal shares of Metropolis. Ameera Shah, then 21, was still a few months shy of returning from her finance graduation at University of Texas to join the business.

The first few years of the partnership went well, but by 2005, the Shahs and Velu had developed significant differences, and were vying for control of the organisation. Velu’s interest in his other businesses—he was also run - ning Trivitron Healthcare, a medical devices company, and Neuberg Diagnostics—was also a bone of contention. This, understandably, had a direct impact on Metropolis’ growth. Though Metropolis raised Rs 35 crore in private equity funds from ICICI Venture, an investment arm of ICICI Bank, in 2006, partly to fund acquisitions, the growth wasn’t as envisioned. Till 2010, Metropolis had grown to only 12 sample collection centres and 10 labs. For context, Dr Lal PathLabs—India’s largest diagnostics chain—operated about 1,000 centres and around 30 labs at the time.

In 2010, Shah saw the need to take more control. With the backing of ICICI Venture, she then took over as managing director and CEO of the business, while Velu was designated non-executive vice-chairman. At the time, the Shah family and Velu held a 40% stake each, and ICICI held the remaining 20%. The move to put Shah in the driver’s seat was also supported by U.S. private equity firm Warburg Pincus, which spent Rs 390 crore to acquire a 27% stake in the company, including all of ICICI Venture’s stake. Niten Malhan, former managing director and co-head for India at Warburg Pincus and founder of New Mark Capital, says it wasn’t “unclear” that the two sets of promoters at Metropolis had unresolved issues. “There may be a debate between shareholders, but we needed clarity on who will be in the driver’s seat—and we backed Ameera for that,” says Malhan, who was also on the board of Metropolis.

Warburg has since exited Metropolis, with Shah raising Rs 600 crore from KKR India, the Indian arm of U.S. private equity firm KKR, to buy out Warburg in 2015. (The debt has since been refinanced by Credit Suisse, Kotak Mahindra Bank, and Hero FinCorp). The same year, Velu sold his stake in the company to private equity firm The Carlyle Group for close to Rs 850 crore, drawing the partnership to a close. Today, the Shah family owns 68.46% of Metropolis, and Carlyle owns the rest.

 A Metropolis laboratory in Vidyavihar,Mumbai  
A Metropolis laboratory in Vidyavihar,Mumbai  
Image : Metropolis Healthcare

In hindsight, the investors were right in backing Shah. Metropolis today operates a network of 2,050 collection centres and 101 labs—catching up with the industry leader, Dr Lal PathLabs, which has 189 clinical labs, 1,759 patient service centres, and 5,021 pickup points. In Dr Shah’s words: “I ran Metropolis as any doctor would. Ameera brought in a strong business sense and built the organisation step by step.” Dr Shah is now the chairman of Metropolis.

Between 2010 and 2014, Shah put her stamp on the company by changing the organisation’s culture and putting in place adequate internal systems and processes. Metropolis had largely grown through acquisitions, strik - ing equity partnerships with promoters of as many as 25 diagnostics businesses. Many of these partners were more doctors than entrepreneurs. And several of these businesses were running on parallel systems of financial control and procurement, with no reconciliation. Shah brought all of these under one common technology-backed system—from the front end to the back end, with built-in accountability for cash flows, procurement, and other business processes. Many of Me - tropolis’ partners, who weren’t aligned with the new vision of being a more performanceled organisation, were let go, and most of the remaining standalone ventures merged into the parent company.

Shah also didn’t hesitate to exit from under - performing markets, such as Dubai and South Africa, and increased the focus on growth markets in Africa such as Kenya, Zambia, and Ghana. Metropolis also separated from its partner in Sri Lanka and decided to operate there directly. Shah doesn’t find Sri Lanka a lucrative market any longer and plans to exit from it altogether.

Harsh Mariwala, chairman of consumer goods giant Marico, describes Shah as “ambitious, committed and charged”. She serves as a director on the board of Marico Kaya, a Marico subsidiary. Shah’s ambition isn’t limited to Metropolis’ technological transformation. She also wants Metropolis to expand geographically—beyond the west and south of the country to the northern and eastern markets, where Dr Lal PathLabs has been traditionally strong. To do this, Shah says, Metropolis has to acquire. “We are not interested in doing mergers and acquisitions with partners who aren’t on our wavelength. The most important thing in a merger is the ability to work together in the long term. You have to be on the same page, otherwise it is a disaster.”

But Shah has to see that the growth is viable financially. Since taking over the business, she has been able to improve Metropolis’ earnings before interest, tax, depreciation, and amortisation, from 15% as a share of revenues in FY10 to 30% in FY18. Metropolis’ marquee investors, certainly, seem confident. Neeraj Bharadwaj, managing director for The Carlyle Group in India, says India’s diagnostic healthcare industry has significant “runway for growth”.

Credit ratings agency Crisil says the diagnostic services market in India has grown at a compounded annual growth rate of around 16% since FY15, and is pegged at Rs 60,000 crore at the end of FY18. Much of this is accounted for by unorganised players, with organised diagnostic chains such as SRL Diagnostics, Dr Lal PathLabs, and Metropolis catering to only 15% of the market. But investors say the organised players are well positioned to take a greater share of the pie. “With increasing instances of lifestyle diseases and per capita spending on diagnostic services increasing, a strong franchise in India that has a reputation for quality is an attractive proposition,” says Bharadwaj.

Shah knows she needs a strong professional team at the helm to realise her ambitions. She hired Vijender Singh, a seasoned healthcare professional who has worked with Dr Lal PathLabs and Ranbaxy, as Metropolis’ CEO in 2016. Other senior recruits include a chief marketing officer hired from Sodexo, the French food coupon and employee benefits company; a chief human resources officer from NSE; and a chief information officer from RBL Bank.

Singh, who is responsible for day-to-day operations at Metropolis, says the company’s focus is to grow its B2C (business-to-consumer) vertical that caters to retail customers. Previously, much of Metropolis’ revenue came from its partnerships with other pathological labs. Singh says, since he joined, Metropolis has increased the share of income from its B2C business—which caters to customers at its retail labs— from around 10% to 20% to 47%. He says he wants the share to be 70%. The B2C business has a higher profit margin. The shift in focus meant that Metropolis had to rapidly scale up its footprint in the markets in which it operated. But setting up franchisee centres takes time. Hence, Metropolis set up the first few centres on its own. Singh says between February and April of 2016, Metropolis set up as many as 100 centres. “Once we had a decent footprint on our own, we put a pause on building our own centres and shifted focus towards getting more franchisees on board.”

Metropolis is, however, not looking away from the B2B segment. In fact, the company has developed a model under which it will run the operations of its client labs in exchange for a share of revenues. “There is a lot of excitement in the company as people sense a good opportunity with Metropolis,” says Singh. “Employees are learning to drive a business through execution excellence.”

Employee satisfaction is important, so is investor satisfaction. Shah is particularly pleased that investors who have put in their money in Metropolis—be it ICICI Venture, Warburg Pincus, KKR or even Velu—have got good returns. This record could be significant as the grapevine has it that Metropolis may go public soon (Shah won’t confirm or deny it). The strong backing the promoter group of the Shah family has from investors will only help the cause.

But ultimately it is not about how Metropolis raises money—through an IPO or from private equity players—it is about how Shah and her team are able to grow. On that aspect, says Sanjay Nayar, CEO of KKR India, Shah’s record has been “simply stellar in terms of growth”. More important, he says is “the quality of what she has built”.

(The article was originally published in June 2018 issue of the magazine.)

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