Laxmi Dental (NSE:LAXMIDENTL) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to LAXMIDENTL Limited q two FY twenty seven earnings conference call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. 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. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr.

0:46 Rajesh Kakkar, Chairperson and Hold Time Director. Thank you, and over to you, sir. Thank you. Good morning, everybody. A warm welcome to all of you, and thanks for joining our earnings call. I would like to take this opportunity to wish everyone a very happy and a prosperous Diwali. On this call, we are joined by our MD and CEO, Sameer Merchant CFO, Mr. Dharmesh Dattani and Strategic Growth Adviser our Investor Relations Advisers. The results and the presentations are uploaded on the Stock Exchange and Company website. I hope everybody has had a chance to look at them. I'm delighted to share that Q2 FY 'twenty seven was another positive quarter for us.

1:38 Building on the healthy start we made for FY 'twenty seven, we have delivered steady growth, healthy profitability and continued progress on the strategic priorities we have laid out for the year. Our revenue for Q2 FY 'twenty seven stood at INR 79.5 crores, recording a highest ever quarterly revenue as well as EBITDA. Our EBITDA for the quarter grew by 38.5% and PED grew by 17.6. EBITDA and PEG margin for the quarter stood at 19.212.6%, respectively. This improvement in profitability is a result of a better product mix and our continued focus on operational efficiency.

2:31 The growth was broad based across our core dental segments, dental laboratory, aligner solutions and pediatric dental products. This is exactly how we had engaged our digital strategy to play out. The scale of deployed with our dental partners over the past few years will mean to deepen our connection with this clinic and create higher recurring opportunities across our laboratory and aligner business. We are now seeing that ecosystem translate into consistent recurring business. I am also happy to say that both our dental lab and aligner business delivered solid performance during the quarter.

3:16 Our domestic dental lab, international lab as well as business, our clear aligner business delivered its highest ever quarterly revenue. Sameer will take you through the segment details shortly. Moving on to an important update on our IPO proceeds. We successfully got a shareholders' approval for updating the objects and extending the time line for utilizations. I would like to thank all our shareholders for their strong support and the confidence they have placed in us. The unutilized IPO fund of INR 48.1 crore will now be deployed towards building our own manufacturing infrastructure about INR 27 crores towards acquisition of land and constructions of building and infrastructure for dental laboratory and aligner manufacturing facilities and about INR 21 crores towards machinery, computer, equipment and other movable assets for the existing and new facilities.

4:25 This deployment is planned across FY 'twenty seven and FY 'twenty eight. Dentistry today is at a defining moment with digital technologies, artificial intelligence and precision manufacturing, transformation clinical practices. As India's only fully integrated dental product company, we remain focused on our growth strategies across geographies, product innovations, market reach, quality standards and achievement in our operations to create better efficiency and scalability. Now I will request Sameer to give you some more color on our business performance during the quarter. Thank you. Thank you, Rajeshwai.

5:11 Happy Diwali to everyone. Speaking about our segmental performance for the quarter. Our Dental Lab business grew by 22.7% Y o Y with a solid growth of 32% in the international lab and 15 in our domestic lab business. In the domestic market, the growth is driven by increasing digital adoption and deeper engagement with our dental partners through our hub and scope model. Our digital penetration in the domestic lab business has reached around 78% and remains firmly on track towards our medium term target of over 90%. Every scanner deployed does far more than digitize impression. It strengthens our connection with the dentist, improves accuracy and enhances workflow efficiency.

6:02 In international markets, the momentum reflects the strong relationship and market presence we have built across The U. S. A, The U. K. And Europe over the years. Along with our growing partnership with dental service organizations, we are also preparing for our participation in the International Dental Show in Cologne, Germany towards the end of the fiscal year, which will provide an excellent platform to showcase our products and further expand our global network. The cost of this event is already budgeted in our full year marketing expense. Our aligner solution business recorded a healthy growth of 23.5% Y o Y during the quarter. Within this segment, BIDENTL, our branded clear aligner business delivered a strong growth of 27.7% Y o Y, while media registered a 19.1% Y o Y increase in growth.

7:02 The performance in our clear aligner business reflects the growing acceptance of our illusion aligners among dentists and patients. This showcases the impact of our branding and promotional activities as well as superior product quality. Our pediatric dental business, KIDENTL, continued its strong growth trajectory, delivering a 16.7% Y o Y growth during the quarter as the business continues to scale up steadily. Scanner sales contribution for the quarter was INR 3.5 crore against INR 8.9 crore in the same period last year. We continue to evaluate our scanner road map in line with overall market situation. Scanner remains one of our strategic importance for us to scale the business with existing and new dentists along with cross selling opportunities.

7:57 Going forward, as part of our digitalization strategy, we plan to deploy scanners on a subscription model, reducing upfront adoption cost, making the solution more affordable for dentists while increasing their stickiness and driving incremental business for the company. Speaking about transition plan for domestic lab and aligner solutions, we currently operate our manufacturing from leased premises in Miraron across multiple vertically structured units, which has served us well so far, but with the increasing scale and complexity of our operations, a cell phone purpose built horizontal integrated facility is a strategic investment that will consolidate our operation, improve our workflow and efficiency and provide the capacity and scalability required for the next phase of our growth.

8:53 The transition from old plant to the new plant will happen in the plant and a gradual manner in order to avoid any impact on the regular operations of our business. Expected time line to complete this transition is by end of financial year 'twenty eight. We believe the potential for dentistry to grow both in India and globally is immense, with a continued investment towards expanding our capabilities and infrastructure, coupled with multi decade experience, strong dentist relationship and superior product quality, Laxmi Dental is well positioned to scale and capitalize on the rising growth opportunities in the medium to long term. I now hand it over to our CFO, Mr. Dharmesh Raghtani to take it forward. Thank you so much.

9:47 Thank you, and Happy Diwali to everyone. Let me give a glance at our consolidated financial performance during Q2 FY 'twenty seven. Revenue from operations stood at INR 79.5 crore, marking the highest ever quarterly revenue as against INR 72.3 crores in Q2 FY 'twenty six. Gross profit increased by 23.5 Y o Y to INR 61.2 crore. Gross margin expanded to 76.9 percentage compared with 68.5 percentage in the corresponding quarter last year, primarily driven by a favorable product mix. We have witnessed some margin improvement in our core dental segment as well. Other expenses were lower sequentially and grew year on year due to higher business promotion, freight costs and spend on AI led automation.

10:42 Other expenses stood at INR 14.8 crore. EBITDA grew by 38.5 percentage Y o Y to INR 15.3 crore, marking the highest quarterly EBITDA reported by the company. EBITDA margins expanded by approximately three ninety basis points to 19.2 percentage compared with 15.3 percentage in Q2 FY 'twenty six. Our adjusted EBITDA, which includes recorded EBITDA, 60% of GIFIDENTLET, 49 of IDBG, AIDENTLPAT and ESOP expenses stood at INR 16 crore for the quarter. Profit after tax grew by 17.6 percentage Y o Y to INR 10 crore. PEPT margin improved to 12.6 percentage compared with 11.8 percentage in Q2 FY 'twenty six.

11:34 Additionally, I would like to highlight that we have recently received a tariff refund of approximately INR 5.5 crores, excluding interest, which will be reflected in our Q3 FY 'twenty seven results. Moving on to our H1 FY 'twenty seven performance. Revenue from operations for the half year stood at INR 154.2 crore compared with INR 137.9 crore in H1 FY 'twenty six. Gross margin improved to 77.7 percentage compared with 70.8% in the corresponding period last year. EBITDA grew by 29.2% to INR 29.6 crore, while EBITDA margin expanded to 19.2% from 16.6% in H1 FY 'twenty six.

12:27 PAT increased by 20.7 percentage to INR 20.4 crore, with PAT margin improving to 13.2 percentage from 12.2 percentage in the corresponding period last year. The company continues to maintain debt maintain a debt free balance sheet. During H1 FY 'twenty seven, we incurred capital expenditures of approximately INR 16.7 crore. As of 09/30/2026, our cash and bank balances in '26 deposit and other investment stood at INR 97 crore. With this, we conclude our opening remarks and open the floor for Q and A. Thank you. Thank you very much. We will now begin with the question and answer Anyone who wishes to ask a question may press star and 1 on the touch tone telephone.

13:15 If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue are assembled. The first question is from the line of Laxmi Narayan from Durga Investment. Please go ahead. Yeah. Thank you. The question is that in terms of your sales, what is the mix of the channel, hospitals or to pharmacists or whichever way you're classifying? So I think our mix has never been on the pharmacy side.

14:04 So to clarify, we don't deal with pharmacies today. In terms of hospital versus the clinics, I would say majority is clinics because there are very less hospitals who are running a very efficient dental unit within the hospital. So it's even if it's there, it like will be less than 1%. So it's majority the clinics which are giving us business, and we are working with them. Okay. And what is the margin structure in terms of what the customer pays and what you realize, what is the markup usually that Helix has? So, again, it depends. See, we have spoken in the past, What we do is we provide our product and services based on the prescription, which is custom by a dentist.

14:57 Now when a dentist prescribes something to us, which is custom as per the patient need, the cost varies from product to product, services to services and also from teeth to teeth as well. In that scenario, it is the dentist's discretion as to what they think they should charge because it's an all in charge for you. Suppose you do a root canal, the doctor is grinding your teeth, the doctor is also cleaning your teeth, and then maybe more things that he's performing in terms of procedure within your mouth or on the teeth. So the charges, it's very hard for us to tell you that what is the markup. It just depends on so many factors. Sir, then what kind of receivables you have from this? Like, how how long does your credit terms like?

15:46 Usually, we are within thirty to forty five days. You know? I would say maybe sixty. Thirty to sixty days is our usual terms once we do a monthly invoice. So it's a monthly invoice that we do to a dentist since we share relationship with them since many, many years. And then they will pay within thirty, forty five or sixty days depending upon the term that we have and the size of the practice. Okay. And if you just look at it from the split of geographies or split of Tier one cities or metro, is there some kind of an indication as to what is your split and then which region or which particular demographic segment is actually growing faster? I think we have done well in last few years regarding creating, I would say, a scenario where the West, the North and the South are doing well for us. East is still newer.

16:40 We are still yet to do something bigger in the East. But in terms of growth, I would say all segments, whether it's Southwest or not, they're all doing fairly well. And is it the majority of your sales, maybe 80%, 90% of your sales is concentrated in top 10 cities in India? I wouldn't say that to that extent because we are currently present across close to 300 plus cities in India. So probably the top 20 would have a fair share of it. But there are a lot of other cities which are catching up as well. Tier two cities are also growing, Tier three cities are also growing. And at the same time, I think we should focus on the international aspect as well because we are doing well internationally in terms of countries as well. So we are now present close to 90 to 100 countries depending upon the product lines that we have.

17:44 And that also we are adding more and more as we speak. Okay. One last question on the international side. When you expand internationally, what is your way of expanding go to market? Is it you have some kind of a rep kind of a person who would or a rep office? How does it happen? Yes. Nice question. I think on the international side, there are a few areas. So we our business is divided basically into two categories. One is custom and one is standard. So the standard businesses that we have, which is the media solutions where the brand name is Over there, we are doing we have people. So we have people who do the media effort, and we appoint distributors across the country. Then distributor will sell in turn to the dentist or the aligner companies.

18:33 So that's one model. Model two is custom, where we are selling the aligners or zirconia crowns to different countries. And over there, the main goal is to go to a chain of dental clinics within those countries. So that's how the strategy is split between two products. Also at the same time, we are evaluating a lot of options to open a lab in countries as well. Okay. And your receivable cycle there like an invoice from India, how long it takes for you to get the money if you sell internationally? It's also very similar between thirty, forty five and sixty days. Okay. I mean, I hope you do air lifting of the products. Right? That's that's the mode of sending products. Correct?

19:24 Sorry. What listing? Air lifting. Essentially I would say it's by air. Yeah. It's by air. Majority is by air. Very little is by sea. Okay. Because things are very small in size. Right? It is so tiny that they won't make sense. So it's majority by air. Sometimes if there are certain things, then it's by sea. Sorry to interrupt, mister Naran. I'd request you to join back the queue for more follow-up questions. Thank you. The next question is from the line of Akshay Thakur from Hillers Capital Limited.

20:16 Congratulations on good results. So my first question is on aligner business. So your presentation says that you have 43% from Tier one cities and Tier two as in Tier three cities as well. So what is the strategy differential between targeting different cities And in this category, is there any strategic difference while targeting the audience in different tier two cities and tier three cities? Yes. So, Akshay, thank you so much for the compliment. I really appreciate it. So on the targeting part, I think one of the key factors is scanner because Tier two, Tier three has less access to digitization as compared to Tier one cities. So that's one. Number two is on the aligner category, there is pay as you go as well as compared to pay in full. So a lot of tire two, tire three where affordability becomes a question.

21:20 We can deliver aligner in phases since that customer is already a customer for our dental lab. So it becomes easier for us to deliver aligner in phases. Like suppose if you need 40 aligners for ten months, but you may use only four a month. So we are in a position, we have the software capability and the logistic capability to deliver you four by four. So we also only manufacture four, and we can deliver you four. So that way, the dentist can make the treatment more affordable. And also at the same time, we are doing a lot of public awareness initiatives as well with Carina being our brand ambassador. So we have seen that TYRE2, TYRE3, the response is, I would say, better than TYRE1 because TYRE1, everybody knows. But in TYRE2, TYRE3, when you get a brand at a good price, then I think the patient is willing to move forward. At the same time, the third strategy is the education part as well. So there are a lot of dentists in TYRE2, TYRE3 who are still new to aligners. So we are having great European leaders who are conducting workshops, who are making sure that they are driving this education for the dentists across tire two, tire three so that they can learn about aligners and implement aligners in their practice.

22:34 Okay. Thank you for that elaborate answer. So I have one follow-up question on the previous participant. You said that you are planning to open labs in other countries. Is that was that the correct answer? As in was that the correct interpretation which I had? Yes. Correct. So even last time, if you see, we had mentioned that we appointed a CEO in U. S, and we are looking to add a lab in U. S. Because since we have a CEO, we have we are building a good team over there, and you are seeing that our international business, U. S. Business is doing very well. So we now have the capability in terms creating semi automated lab out there. So that is one aspect of strategy, which we will move forward. And as and when things happen, we will keep everyone posted.

23:24 Okay. In terms of strategy, so lab business is a little labor intensive. India acts like a low employee cost strategy and export gives extra margins. How will the international lab be in place if the lab is set up abroad? So that's a very good question, Akshay. If you have seen our setup with the dental lab and the aligner, so there are some parts which can be really automated, especially aligner automate. So when we say a lab, that lab will not just produce crown. The lab, when we mean it will produce the crown as well as the aligner.

24:10 The good part is those all labs that we will plan in the future will be a hybrid module, where a lot of digital part of the lab will be done in India and only where required a physical presence of a person along with some semi automation and CNC machines or three d printing machines will be done in that respective country. So it's not going to be, say, 100% replica of what we have in Mumbai. It's going to be in person replica that we have in Mumbai. But any and every digital aspects of doing the job entry, doing the design, maybe customer communication, a lot of that will be done in India through hybrid. And I think important factor for all of us to understand is when we create a lab in a country like we have done in India as a spoke, forget about a country. Even in India, when we are in Mumbai, if you go to, say, Hyderabad and we open a smaller lab, it gives tremendous confidence to a dentist where if they have rash cases, something that is urgent, if they have cases where they may need an urgent intervention, they may need something which has to be fixed very quickly and cannot even travel to Mumbai.

25:23 So that sort of facility a dentist really appreciates, and it only enhances our wallet share with them once we do this. So that's the same strategy in different parts of the world where we if we are receiving business today of only outsourcing and if we go to that country and establish a domestic center, they are very happy to engage with us and be our dentist or our customer for the domestic lab as well or the domestic setup, like I said. And when I mean lab, I'm still clarifying that the lab will produce everything that we have, whether it's aligners, retainers, zirconia, anything and everything that is the most automated piece of our manufacturing. Anything which is too labor intensive will still be done in India. The next question is from the line of Priyank Parekh from Singularity Asset Management Company.

26:25 Sir, hello? Yes. You're on. Yes. Thanks. So I wanted to understand on the economics and the configuration of our new lab that we are planning. So will they produce everything starting from the shape then input material to the finished annihilers? Or it would be more focused over the finished products or finished products itself? Yes. I think it's a good question. So whatever we do in that country, it's going to be for finished products. See, anything which is standardized, I'm not sure if you have visited our facility, but to manufacture sheet, we have 50,000 square feet facility, and it's a standard product. So for anything which is standard, we at least at this point in time, we don't need multiple setups across the world to produce standard. We are capable of producing enough here in India and supply across the world.

27:28 What we are talking of the lab, which will deal majority, I would say, zirconia crowns and aligner retailers are finished products. And even in that, like we explained, it's going to be more hybrid process. Anything which can be done through digital will be done in India. And the thing that will need physical intervention will be done in that respective country. Okay. Okay. Understood. And what sort of capacity we are planning here in terms of if we see today's sales of our online house, would it be catering to all the sales and we would have some spare capacity or how we could look at this? So I think the way to look at it, in India, we can build capacity very fast. We are constantly if you see in terms of aligners, we have enough capacity to expand The plate is well to expand.

28:28 International, like I said, we are just updating people that this is part of our midterm to long term strategy. As and when we plan, we will come back to shareholders and give them the details about what's the capacity out there, what's the size over there, what's the intention to build, what could be the market size over there for the domestic business. So we will share those details when the time is right. For now, I think the strategy for everyone to understand is that we will plan something like that in the future. No. So I am asking about the new plant that we are planning, the capacity out there. Correct. So the new plant that we are planning, the capacity over there, I would say, let's focus on the size first because we have still not acquired the land. It's still in process.

29:16 Once we have it, once we start constructing, that's when we'll start getting into more details because we once we install semi automation there, we will calculate a lot of things. But in terms of just sheer size, we could build somewhere around 1.25 to 1.5 lakh square feet, which as per the current that we have is between, say, 35,000 to 40,000 square feet. So we're almost 3x or 3.5x in terms of size for the new capacity lab that we are planning in India. Okay. So if we are expanding this big, are we planning to sell to other aligners as well the products that we are going to make? Not in India. In India, we will sell it with our own brand. We have illusion aligners. We have Korean as a brand ambassador.

30:04 In India, the focus is very clear that we will sell under our own brand only. We don't intend to do any white labeling for anyone. The next question is from the line of Pavia Shah from Wallport Funds. I would like to see some data on, sir, how many touch points we have increased in terms of dental clinics that we are catering to over the last one or two years? And what kind of revenue share increase we have seen per clinic? Javier.

30:51 Good morning. I think on that, whenever we are communicating, we're trying to explain people, there are two aspects for everyone to understand for India. Aspect one is for us to take our network as digital as possible. That's our priority currently, where we have reached 78%, and we have been candid saying that we want to be at 90%, 95% so that in a layman's language, which I've explained in the past is we are running an ATM and a cashier in our manufacturing facility. So our goal is to eliminate the cashier and go towards an ATM. So that's our current priority. Now in terms of reaching out to the number of clinics, yes, so we have added a certain, but like I said, our majority focus is digitizing them and not towards increasing.

31:45 So the current KPI or the KRA for salesperson is to make sure that they're digital. And one of the aspects that we are doing is by increasing the wallet share per dentist is our hub and spoke model. So where as a hub, sitting in Mumbai, see a dentist from Delhi is giving us X amount of business. But if we are giving him the opportunity to have a lab in Delhi as well, which is us, then the wallet share increases because he feels the comfort of working with two labs. Already majority of the dentists, they work with two labs. So if we are the two labs, then it gives more comfort to them because the billing is single, Their key opinion or the point of contact that they have, the key account manager is one. So it's much more simpler. So that's the current strategy right now. I think expanding the footprint, adding more dentists probably will come in next financial year once we reach our target of digitizing majority of our network. Then I think that foundation will be built where we will start adding more and more dentists.

32:47 But even if we keep adding more and more dentists, it's important that we will only focus on the digital dentists or people who are adopting our scanner deployment with the campaigns that we are running right now. So thank you for that answer. So would it be possible for you to throw a light at how our wallet share has grown vis a vis our clinic that we are catering to? Would that be possible for you to explain? So right now, right now, as I said, I can't give you granular details, but we have internal... Our dashboards and stuff for us to see how we are increasing dentist since once we have the hub and spoke model. So if you open a spoke in a certain city, we are clearly seeing a trend where the same dentist, the same store, like you said, in store growth. We are seeing the same dentist increasing his or her wallet share.

33:49 Okay. Fair enough. I'll get back to the queue. Thank you so much. Thank you. Thank you. The next question is from the line of Varshanvi from DYDX Advisors. I have a couple of questions. Sorry to interrupt, miss. You... You're sounding very distant from the microphone.

34:34 Hello. May I audible now? Yes, sir. Please proceed now. Yeah. So I have a couple of questions. Firstly, if we've seen h one FY '27, a fixed rate rental revenue grew approximately 33%, while a share of profits from JV has declined by 35%. So are there any one off in this or margins have been contracted in KITFIDENTL? So neither there is a one off, neither there is a margin contraction. We were having a start up for last three years, which is now... No. Start up benefit can be availed for three years only, which is now not there. So we are paying regular tax on it. So that's why you are seeing a drop in terms of share. There is nothing else which has changed.

35:25 This is taxation impact. Right? Correct. Correct. Second thing is, and now as a company, management plans to deploy scanners under a subscription model instead of a claim to the dentist. So how will this subscription will be structured? Will the pricing will be structured, and what payback period is expected on the investment? So there are... So currently, what we have launched is something called as pink revolution. You know, if you follow our social media. So we have launched for women in dentistry to start with, and soon we should have a blue revolution hopefully on the men's day. So that's the plan right now. In terms of the current subscription model, it's 50,000 in terms of deposit, and it's 3,000 plus GST in terms of subscription per month till the time the customer wishes to use the scanner. And we are only giving the scanner. The laptop is purchased and owned by the dentist themselves.

36:29 And then there is a commitment of 25,000 business per month by them. So that way, we are increasing the stickiness so that they give us the business because now we are the owner of the scanner. They are still not the owners. And at the same time, this makes the product more affordable in terms of for them to invest Because right now, just apart from the scanners, I think, which we mentioned, the laptop pricings are going over the roof, which we all know. It's not like hidden parts. You know me. Everybody knows that the cost of laptop is going very high. And for a scanner to operate, you need a very high end laptop, which previously used to be in the range of like 1 lakh and now it's almost close to 2 lakhs. So the laptop pricing has gone up a lot. So that is why we came up with the thought of creating a subscription model, which is also in the midterm to long term interest of the company that if we are able to deploy x number of scanners, which will give us 3 lakh business a year, then that's like an additional revenue which we are generating, which is Assured.

37:30 And at the same time, we have clearly seen that when we do something like this, the dentist doesn't stop at 25,000. 25,000 is just a base threshold. You know, we have dentists who are also giving us maybe 1 lakh, 1.5 or 2 lakh of business per month by having the scanner. So we are very positive that once the scanner is deployed with any dentist. And if you ask any dentist that once you have the scanner, will your practice grow? And I would say unanimous, 100 of them will say, yes, this is a very good growth builder for the practice. So we are very positive about our initiative, and we'll keep everyone posted as and when things pan out. Okay. And the last question is how sales have grown basically in cities after introducing hub and spoke model compared to the pre implementation period? Like, last time we met, then yes.

38:29 In... Introduced a scoping. Right? You said. So how how basically sales have grown in the cities where we added a scope? So it has grown well, if I understood the question. So city by city, as we are adding spoke, as the spoke will mature, it will have a bamboo tree kind of an effect, where if this what we have clearly seen is the spoke is three months old, there is X amount of growth. Once it becomes six months, there's X amount of growth. And majority of our spoke are within that one to three months, I think only one or two are beyond three months. So we are seeing a very, very positive trend. So if you see, last quarter, we grew, say, domestic by single digit and this quarter is 15%, and we are hoping and we are very confident that we will see more and more over the next quarters.

39:37 The next question is from the line of Vinay from Pareto Capital Limited. So my question is largely around the aligner business. Can we understand more on the aligner that how much sale is coming from direct maybe the finished product versus the certain SKUs which we are selling to B2B or maybe to the lab? We had given a split. So if you see on Slide eight, there is a split where the aligner solutions where it's almost like a fifty-fifty or 50 five-forty five kind of split that we have. So in the aligner, we have done INR 13.2 crores. And in the B2B business, which we sell the raw material to India and international, majority is international, it's about INR 11.5 crores.

40:35 Got it. Got it. And on the finished side, which is B2C, how is everything realized over there? Pretty good. So we are seeing a good Okay. And as a strategy, you know, the focus is more reaching out direct to the consumer or, you know, we want to be focused more through labs or maybe the clinic? So we are very, very clear in our strategy that we are a B2B2C company where we educate the patient, but our last message in every communication is ask your dentist. Because we truly believe that if it is controlled by a dentist, then the efficacy of the treatment is much, much, much higher than if it's done direct.

41:40 Got it. Any insight on the margin drivers? I think it moved from a pretty decent move from last year versus this year. What is the major contributor to that? I think we have done well on a lot of aspects. It's not just one aspect. And we are very confident that we will keep working on multiple aspects, it's product mix, whether it's the digitization effort, whether it's operational efficiency that we are building and whether it's AI led initiatives that we are adding. All of this is contributing to this. And as and when we move forward with more and more initiatives, we are very confident that things will only do better. And current aligner is 100% enough, right, in terms of manufacturing?

42:29 Yes, yes, yes. Everything we manufacture, we are not a third party thing. So whether it's the sheets, and we encourage anyone, everyone who would like to visit our facility. Those who have, they can clearly see that everything that we do is remanufactured it ourselves. Got it. And more on the landscape, currently, think aligner, there are a handful of brands who are trying to capture the market, right? There are some international, there are Indian brand as well. So in terms of landscape, where we see ourselves and what is your anticipation in terms of getting more business on the aligner of the overall TAM, if I can understand more on the possibility how it can be how big it can become in the next three to five years?

43:18 So I think in terms of see, see, the landscape has always been there. Like we have seen the landscape in dental labs since last probably thirty six years of our existence. So even in aligner, it's not unexpected that the landscape will be there. It probably some years, it may be more aggressive based on certain people getting funded and but it will all rationalize pretty soon. So we feel in the next two, three, four, five years, it is going to rationalize. There are going to be top one, two, three, four players, and we are definitely going to be among them. What number it will be, time will tell. Our aspiration is always to be the one. But we feel that the plus factor on an aligner case for a dentist is very, very important.

44:07 While some small things may happen here and there, eventually, any dental treatment or any dental product, it's a matter of trust. And that's what we have been able to build so far for last thirty six years. So we don't see that as a challenge on a mid- to long term, maybe one or two quarters, sometimes there could be certain situations. But we are experienced enough to manage and navigate and keep working towards our midterm to long term goals. And also just on one side note, there you are in India, we are selling aligners in multiple countries across the world. So when we create those labs in different parts of the world, whether it's U. S, U. K, Europe, we are going to sell aligners in those territories as well. The next question is from the line of Sanjay Chowdhur, an individual investor.

45:12 I'll start with a couple of housekeeping questions. Your international growth has been quite strong in rupee terms, of course. Can you give a sense of what has been the trend in the constant currency growth Y o Y this quarter and last couple of quarters as well? Sure. I would say, Sanjay, it's in the range of maybe, say, 8% to 10%, depends on which month the realization comes in, like dollar is fluctuating a lot, but I would say that could be the range. And that has been sort of range bound, 8% to 10% Y o Y growth, constant currency? I would not it may not be constant. It like I said, it just depends on a few aspects.

45:59 No. I mean, I would actually request you to sort of... If you can provide this on a consistent basis because the brokerage obviously is high and fluctuates a lot. Yeah. I understand. Strip out your currency impact and give a sense of your underlying business to really help if you can. Sure. Definitely. Yeah. And and, you know, your gross margin sort of fluctuate a lot because of the scanner mix. What has been... On a on a excluding scanner basis, what has been the gross margin this quarter and how has it moved on a q o q y o y basis? So excluding the scanner, we are in the range of, say, 77%, 76.9% to be percent, but 77%. And that has been historically it's been in that range, 75% to 77% is the range depending upon the product mix that we have.

46:54 Okay. Just And a last bit on that, what sort of explains this quarter on quarter gross margin decline? Decline? No, gross gross margin. There is no decline. In fact, there is an increase in gross margin this quarter as compared to last quarter and also Y o Y as well. Excluding Okay. The Maybe I'll just... Okay. Maybe I'll just redo the number, but I thought the gross margins are down. Okay. Okay. And, you know, now just following up on, you know, margin related questions. You know? What are sort of margin headwinds and tailwinds, you know, that you see over the medium term, let's say, terms of big picture?

47:41 So I think the big picture is, if you see our P and L people is one of the area where there is cost. But like I said, they have been important in terms of scaling the operations right now and also in the future as we adopt a lot of AI automation, these are the people who will be really impactful in terms of driving growth as well. So I think the future formula is very simple. We drive sales, we control the cost of people because apart from that, more or less, everything is under control. It's like a tap. So if you have to do more marketing, we can always control the marketing spend. In terms of gross margins, it's pretty stable right now. So we don't expect that to change much. And the only area that we can constantly improve with our processes and the people efficiency through semi automation, AI and a lot of product mix as well. So that's the medium- to long term strategy.

48:41 Okay. So you're indicating gross margins are sort of at the near optimal level already? I would say there is a chance to improve, but like 77% may not become 85% or 90%. It's not going to happen in that range. 77% could become 78%, 79%, maybe borderline 80%. So there could be some improvement there. But majority will come from people in process. Like you see, our scanners went down. We started doing business. We are at like 19% in terms of margin. So as soon as this scales up even more, our people costs remain similar. And once we have, say, the newer setup, we adopt newer automation, AI, that cost will be not proportionate. So people cost will not grow in the same percentage of our growth, but it will always grow slower. That is where the margin contribution will start happening even further.

49:34 Understood. You talked about the subscription model. I'm wondering if you've done any sort of pilots of this model and what might have what has been your experience? It's good. In fact, we did a pilot, and then we went live with that, I would say, about just three weeks back, and it has given tremendous response. We have seen wonderful response to this initiative where, see, people want to go digital, correct? If you ask any dentist, do they wish to go digital? Their answer is always yes. It's not that they don't want digital dentistry. Everybody wants digital dentistry. It's so convenient for a patient. It's so convenient for a dentist. But cost was one of the hindrance for all of them. And in fact, last year when we did very well by about 1,000 scanners, this year, one of the hurdle came in laptop, where the laptop prices doubled. So dentists start thinking that there is no rush for a dentist to go digital. They want to do it, but they are not going to do it if the cost is high.

50:34 So we kind of came up with a model where even if the cost of the laptop is slightly higher, if the scanner can be under subscription, then it becomes still a smaller adoption. So instead of, say, before the dentist had to spend 4.2 lakhs or 4.4 lakhs last year, then it became 5.2 lakhs or 5.4 lakhs this year. With our subscription, it's like 2.5 lakhs. So they can spend 1.6 to 2 lakhs for a laptop, 50,000 deposit, and they can go digital. They can start the digital initiative. And there's a lot of good payback for them. The OpEx cost reduces, the cost of impression that they're taking physically goes down. The growth part becomes better because if you come in as a patient, they are giving you a three d consultation versus a standard consultation.

51:20 Then in terms of speed, it's faster. Suppose you want to just scan and send it to your dental lab, it just takes five minutes for them to send. So there's so many benefits of going digital, which we are sure, you know, in the next two to three years, this will do very well. But in terms of, you know, specifically, in terms of scalability of this, you know, you have a certain volume of scan... Scanner sales. But compared to that volume, what could be the volume of the scanner seeded through the subscription model if you on a going forward basis relative to Yes. Right now, the trends are early, but we believe that we could deploy much more than what we have sold in the past. So I'm saying on a flow basis, like in a quarter or annual basis, you've been selling a certain number of kind of, I believe, like 1,000. I know, sir.

52:12 Yes, last year, we were at about two fifty per quarter in terms of run rate. This year, we have hardly sold two fifteen in probably six months' time or even lesser. But like I said, it's only been two weeks that we have launched a subscription campaign. We have without giving you a specific number, we have few thousand leads, which we have received. So we are just evaluating how it moves forward. Maybe next quarter when we do a call, we should be able to give you some good number in terms of how much we were able to deploy in a quarter. Because this has still started like end of October and still Diwali coming up for the next four days. So we are seeing that people are preferring to take the deployment post Diwali. Right. Right. And just last question... Sorry to interrupt, Mr. Chawla. I'd request you to join back the queue for more follow-up questions.

53:04 Sure. Happy to go back. Thank you. The next question from the line of Tushar Manudhani from Motilal Osaal Financial Services Limited. Please go ahead. Yes. Thanks for the opportunity, sir. Just on the scanner, just to conclude one one aspect here, is there a flexibility for us to move the scanner from one dentist to another considering or studying their pattern in terms of the patient flow? Tushar. Or will the scanner be stationed completely at a particular dentist place? So there will be two models, Tushar. Model one is where we are if the dentist gives you a deposit, if the dentist is paying the subscription and if the dentist is committing to the volume that they have committed, the channel remains with the dentist.

53:53 If the dentist is not able to give us the appropriate business, say, in a month, then sales team will go and meet, hey, doc, you were not able to do enough. He may say, oh, I was not well. I was out on a holiday. Don't worry this month, it should be fine. If the number is fine, everyone's happy. Suppose this happens for two months, then since we are still the owner of the scanner, we will take back the scanner, and we will deploy at some other dentist. Got it, sir. And lastly, like, I presume there will be certain limitation because now that investment is going to sit from the balance sheet of Laxmi Dental. And you... While, you know, the... From a dollar's point of view, it would be beneficial as the capital moves from his pocket to now Laxmi Dental's pocket, so which is where there would be certain limitation in terms of number of scanners that could be deployed.

54:46 So from that perspective, if you could throw in terms of like, how many scanners you intend to put up on the subscription basis? And what happens to someone who has recently bought? Is there a flexibility for him to get into subscription? Because the world will spread, and so the other dentists will also demand a similar model from you? And how are you going to look for that factor? So I think even it's been out since last two, two point five weeks, we have not received any response from anyone who says, oh, I own this scanner now. I want to move to subscription because anyone who wants to own, even during this campaign of subscription to Shar for last two point five weeks, we have still sold almost 14 scanners.

55:34 So there are still dentists who may say, no, no, I don't want this restriction of giving you business because these are locked scanners that we are giving. These are not open scanners. So they may feel that many deposit to rent, do subscription, to lock scanner, I'd rather buy. So we are still selling. So in fact, this has also increased both scenarios where the adoption is increasing through deployment. And also, it's creating some sales funnel for us for people who want to buy the scanner as well. So we don't see that as a challenge at all. And now your question to how many number, more the merrier. If we can deploy more because their subscription is taking care of the depreciation that we have and the ROI period of deploying these scanners is very, very quick.

56:21 So we can really, really improve a lot of parameters if we are able to deploy a lot. If we deploy a thousand, that's like, you know, almost if you see per month, 25,000 into 1,000, that's the amount of 2.5 crores of the business that is coming to us. Got it. And is there any competitor who would be doing such kind of subscription based scanner setup for dentists? Right now, we don't know. We haven't seen because we just started two weeks back. If people will come and copy, you know, don't know right now. But even if they do, I don't think it's gonna be a lot of players because it's it's not easy. You know? You have to build a lot of tech around it. You have to have a lot of skill set in terms of how you would deploy this, how you manage the subscription, how you manage the log scanner updates. It's it's not easy. So if there could be... And I'm saying it'll still be good. You know, if this happens, like you and me have discussed in the past, and I've explained to many of them that this will only take business away from the unorganized player because they may not be able to offer it.

57:33 The next question is from the line of Priyank Parekh from Singularity Asset Management Company. First, I want to understand on our margin moment. The margin improvement that we have seen all the time, especially in the aligner segment, how would we attribute this to the better realization versus the better efficiency? Directionally, if you can give a sense on the realization. Sure. So I think it's a mix of both. I would not put it on one.

58:20 So it is realization as well as efficiency as well. And in the future, like I said, majority will come from efficiency. Only, I would say, a minor portion will come from either realization or the COGS. Majority aspect of our business will rely on how much efficiency we can build in terms of people and processes. Okay. And what sort of quarterly run rate of new cases we are seeing, if you can so I know the annual number, but what sort of quarterly run rate we can assume? So whatever you have seen this quarter, I would say majority of the increase is happening through volume.

59:14 So if next quarter, say, we are x percentage in terms of growth, that 90% of that is driven through volume. So in terms of the number of cases, I am asking? So number of cases just... So, you know, I think we we have internally, but that's not something that we usually share out because those are internal numbers. Understood. Understood. But again, if there is something that you would like, you can definitely get in touch with SGA. We are happy to do a call and give you some aspect of it. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

1:00:13 Thank you. With this, I conclude the call. If you have any further queries, please contact SGA, our Investor Relations adviser. Thank you, everyone, for joining us today on this earnings call. Thank you. Thank you, Mr. P. Thank you. On behalf of Laxmi Dental Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.