The Alchemy Of Growth

From 10 clinical labs in 2005, Dr Lal PathLabs has become the largest diagnostic chain in north India and is looking to expand to the eastern and southern markets. Can it sustain its momentum? The company thinks it can.

- Deepti Chaudhary

WHEN DR ARVIND Lal, chairman and managing director of diagnostic pathology services provider Dr Lal PathLabs, was trying to set up a new lab in Delhi in 1995, he faced an unexpected hurdle. He approached a bank he’d been banking with for years for a Rs 1 crore loan and didn’t expect any problems because his credit history and relationship with the bank were good. Also, business was going well at Dr Lal PathLabs, which had then become the first private laboratory to start HIV/AIDS testing in India.

But, surprisingly, the bank sat on the loan request for almost nine months. It finally approved the application after it learnt that Dr Lal had approached another bank. “Things happen and you have to take them in the right spirit. You take one step forward, half a step backward, but that’s life,” says 68-year-old Dr Lal.

It’s this spirit of patience that has helped him turn Dr Lal PathLabs into one of the biggest diagnostic firms in India. Today, the country’s first listed pathology services chain, which counts former Prime Minister Manmohan Singh and parliamentarian Shashi Tharoor among its customers, is a favourite of investors, employees, and creditors because of the value it has created for them. On May 14, the firm announced it had crossed the Rs 1,000 crore mark in annual revenues—the first diagnostic services firm to do so.

Investors were delighted at the news of the company’s financial health. The stock price of Dr Lal PathLabs rose over 9% in the two weeks following the announcement. The share price rise capped years of sustained growth in both the company’s revenue and profit in a competitive market. Since FY16 (it listed in December 2015), its revenues have grown over 60%, while the market cap is up more than 55% to over Rs 7,100 crore. The company, whose ranking rose to 325 from 403 in this year’s