In 15 years, Ameera Shah transformed Metropolis Healthcare from a single lab in Mumbai to a chain of 135 laboratories raking in revenues of Rs. 650 crores in FY 2015. She’s now gearing up for the next phase of growth, one in which she wants to create a formidable diagnostics brand in two geographies – India and Africa. Her master goal: reach a valuation of Rs. 12,000 crores by 2020.
Every entrepreneur’s journey, when retold with the benefit of hindsight, can throw up valuable lessons on several aspects of managing a business. However, many such stories, often, tend to simplify the hardship that is entrepreneurship. The journey is often seen as a set of events that shaped up the venture to what it is today; but, in reality, it is much more complex than that. There are several unexplained events, day-to-day challenges that often get left out in such narratives and most importantly, the role played by team members in executing a strategy is often overlooked.
Having said that, when an entrepreneur looks back at his or her own journey and asks the question “what could I have done better?” it gives a whole new perspective to the narrative. One such story that we’d like to share here is that of an entrepreneur who was told by her father that whatever she becomes, she has to be the absolute best at it.
This is the journey of Ameera Shah, the woman leader of Metropolis Healthcare, the diagnostics company, who built her organisation block by block and led it to become an organisation with revenue of Rs. 650 crores spread across 7 countries. When Ameera joined her father’s business, Dr. Sushil Shah’s laboratory, in 2001, it was an 1800 square feet single laboratory in Gamdevi, Mumbai. Subsequently, in the same year, the laboratory was renamed to Metropolis and today, has grown to become a 135 laboratory chain not just popular in India but also in Srilanka, UAE, South Africa, Kenya and Ghana. Metropolis has expanded its tentacles in the last 15 years and grown to become an organisation with over 3500 employees, 135 laboratories, 1000 collection centres and has created a seamless network across India.
But all this has not come easy. Ameera admits that her best learning has come from a careful analysis of her own journey, and she aims to put it to use as she gears up for her next phase, what she calls Metropolis 2.0.
Here is Ameera’s 15-year journey split into three phases where she analyses her own decisions (or sometimes, the lack of them), approach to growth, marketing strategies adopted and the key lessons she learnt during these different phases.
Phase one: 2001 to 2005
It was all about establishing the business
A finance and business management graduate from the University of Texas, Austin, Shah realised early on in her career that a standard corporate career wasn’t for her. She saw the potential in her father, Dr. Sushil Shah’s diagnostic lab in Mumbai. She set herself the goal to build a pan-India brand in the diagnostics space. The reasoning was simple: “The industry was very fragmented with more than two lakh small pathology labs across India and most of them had no minimum standards,” recalls Ameera.
However, to understand the nuances of the industry, she had to get into the nitty-gritty of the business and, hence, she donned many hats. While doing this, she also retained her steadfast focus on establishing standard operating procedures, to ensure quality and consistent service across centers.
What immediately differentiated Metropolis from rest of the pack was its technical expertise and research, which became evident with the number of tests it offered. In 2002, it offered 500 varieties of tests while other pathology labs had 200. And this number increased to 1500 varieties of tests in 2005. “In fact, many hospitals started to outsource tests to us,” recalls Ameera, mentioning a key source of customer acquisition.
However, Ameera recognised the fact that Metropolis’ popularity was restricted to Mumbai. While the obvious approach would have been to expand the brand one city at a time, Ameera adopted a wanted to enter new markets through the acquisition of well-known, respected diagnostic labs. However, this wouldn’t be a big bang acquisition of a large number of centers; rather, it would be a small acquisition, which would then be used as the base to scale up.
Between 2003 and 2005, Metropolis started to forge alliances with well-known local brands that had a strong backend. Some of the early partnerships were with Sudharma in Kerala, Lister in Chennai and Desai Laboratories in Surat. Eventually, Metropolis went from being a single laboratory organisation to run over 10 labs with 150 collection centers by 2005.
“In 2005, we also expanded to Sri Lanka through a joint venture, thus setting up the agenda for expansion outside India,” says Ameera.
Setting the right tone
To make all this happen, the organisation needed to formulate a set of clear strategies:
One, Metropolis started acquiring laboratories for expanding its tentacles outside Mumbai while within the city it set up its own centres.
Two, the company started hiring people with a non-technical profile for purchase, customer care, marketing and other functions that it did not focus on earlier.
Three, the organisation felt the need to get accredited globally, to enhance the credibility of the brand. In 2004, it got its first accreditation from the National Accreditation Board of Testing and Calibration Laboratories, while in 2005 it got accredited by College of American Pathologists, an internationally recognized program and a unique one that utilizes teams of practicing laboratory professionals as inspectors.
Four, it also started increasing its technical processing ability and came up with new tests to help make it a serious, pan-India player.
At the end of this phase, the company was valued at approximately Rs. 135 crore with a revenue of Rs. 40 crore (from Rs. 15 crore in 2001).
Phase Two: 2006-2010
Global foray and alliances
Continuing its ascent, Metropolis started implementing a unique strategy of simultaneously growing in both domestic and global markets. The company was the first multinational in its sector and has over 10 years’ experience now in dealing with the vagaries of international markets. Its first international alliance was with the Navloka Group in Sri Lanka where it currently has about 50 labs and 200 centres. Realising the opportunity that emerging markets offered, the company also entered Dubai and South Africa very early in its lifecycle, while continuing to acquire labs in cities like Pune, Kerala and Gujarat.
Restructuring the organisation
And all this growth did not miss the sharp eyes of an investor and in 2006 the company received its first round of institutional investment from ICICI Ventures, which invested about Rs. 35 crore for a minority stake. Eventually, in 2010, ICICI Ventures exited Metropolis with about 4x returns and at the same time Warburg Pincus came on board as an investor.
However, as Metropolis had a disorganised structure with no clear leader then, it was obstructing its growth. Ameera and three others were working together since 2001 on building the organisation. And hence, when ICICI Ventures exited its investment in 2010, Metropolis reorganised its board and Ameera became the Managing Director of the organisation, while everyone else became non-executive directors. This helped the company to scale up well.
While all this was happening on the organisation front, Ameera started observing that her customers were getting more affluent, well-travelled and as a result their expectations were changing. While Metropolis was used to offering home collection services, it decided to expand and organize this service in 2006, with the idea of making it a key differentiator.
While growth was happening on one end, the organisation started to make investments on the backend as well. Ameera says, “In hindsight, I feel we should have focused a lot more on systems and processes during this phase, but we were short of management bandwidth.”
In 2010, the company operated 30 labs, over 400 collection centres and offered 3500 varieties of tests.
Phase three – 2011-2015
Scaling the business
“An exciting and a productive period,” says Ameera, about the last five years. It started with building a robust backend. This gained paramount importance as there were many individual labs entering its stable and they had to start thinking like a group and relate to the brand called Metropolis. “To make them come around with our best practices was a challenge but it was core to brand,” she says.
The organisation also started integrating all the labs, creating a common platform for finance, IT, HR, stores and material handling. “This was particularly important as our business is a distributive business with centres all around the country and integrating them and putting in the right controls was essential,” says Ameera, emphasizing on its importance.
While the company acquired labs in India and outside, it realised that it didn’t have density in the market. “For example, we didn’t have too many centres in Mumbai. It was important for us to start dominating some markets and build density in those markets rather than being across too many countries,” shares Ameera.
With respect to its global strategy, the company took a firm decision to stay focused only on Africa, going forward. While Metropolis will be open to exploring opportunities, it has decided not to add too many geographies. “For now, we have decided to focus only on Africa as it has the opportunity of panning out just like it did in the Indian market,” shares Ameera.
From no marketing in 2001-05, the company gradually built its marketing strategy and had a clear framework by the second half of 2011-15. “For the first three years, marketing was very minimal, while in the last two years we stepped up our spend, especially on building Metropolis into a strong consumer brand,” shares Ameera.
On the organisational structure front, one of the most important changes that took place was when Warburg Pincus exited its whole 27 per cent investment in April 2015. The promoter family bought back this stake with financial support from KKR, the global private equity major, and other industrialists. “I orchestrated an exit for Warburg, where I bought their share out myself in March 2015. One of the other financial investors, Dr. Velu, also exited in September 2015 (He was investor from 2001),” shares Ameera. This was important for creating a clean shareholding structure.
Making the natural progress
During each phase, the expectation of the consumer grew with time and the 2011-15 timeframe was no different. The consumer became health conscious and people started managing their well-being more proactively.
In this phase, Metropolis grew at a CAGR of 25 per cent (while the industry growth rate was between 12 and 15 per cent), touching revenues of Rs. 650 crore in FY 2015. It currently employs 3500 people and operates 135 labs and 1000 centres in 7 countries.
Phase four – 2016 to 2020
Ameera believes that there are three key foundations – an established network of centres, strong backend, and a well-aligned board structure – that’ll augur well as she gears up for the next phase of Metropolis.
“I am looking at the future from a progressive perspective, rather than having a retrospective view,” she says. The previous phase was a mix of growth and clean up, but the next one, she believes, will be a lot more focused.
“We will take a concentrated and aggressive stance. We are also evolving to bring in more professionals. Recently, we appointed a CEO and rejigged our senior management structure. Of course, the role of the promoter will continue to be crucial,” she explains.
Ameera says, “While many opportunities come up, learning to say no is crucial. The opportunities you go after must align with the overall goals of the organization.” Like most consumer-facing businesses, Metropolis aims to strengthen its understanding of customers and stay nimble enough to grab opportunities as they come up.
A key strategy for the next phase is to build regional dominance and not fragmented dominance. For Metropolis, its Western and Southern regions are strong markets and the team aims to build dominance in these geographies while its Northern and Eastern markets are very opportune areas that it aims to go aggressive on in the coming years.
Internationally, Metropolis aims to focus on the African market and in the next five years it aims to touch Rs. 100 crore in top line from that region.
Metropolis’ goal for 2020 is very clear: from its current valuation of approximately Rs. 4000 crores, Ameera hopes to reach a valuation of Rs. 12,000 crores to Rs. 15,000 crores within the next five years. As we draw this conversation to a close, Ameera says, “Valuation encapsulates many things – profit, balance sheet, quality and defensibility of business and what the market thinks about your brand. Our strategy is to deliver on all these fronts.”
Poornima Kavlekar is Consulting Editor at The Smart CEO Media Labs, the content creation partner for Beyond Basics@Wealth Advisors. She specializes in writing articles based on interviews with business leaders, entrepreneurs and investors in India. Till date, she has interviewed over 200 entrepreneurs and leaders from India’s entrepreneurship ecosystem. For Beyond Basics, Poornima will specialize in interviewing leading money managers, fund managers and chief investment officers of India’s leading asset management companies.