“We Plan to Add 1,000-1,200 Beds over Next Three-Four Years”,says Fortis CEO

Healthwire Bureau

New Delhi, January 27-As reports indicate that the Securities and Exchange Board of India (SEBI) has urged the Supreme Court (SC) to allow IHH’s open offer for the company to go ahead, saying the move is mandatory under the takeover code, Fortis Healthcare has come on the radar.

Ashutosh Raghuvanshi, MD and CEO of Fortis Healthcare said, “The matter is sub judice, so we have to wait but SEBI has made an appeal to the honourable SC and we expect it to be addressed by the court,” according to a CNBC-TV18 report.

“Fortis Healthcare has an inherent strength because of the good talent that we have available, and some of the quality of assets and their location,” he said from the business point of view.

He also said that a lot of things have changed for Fortis Healthcare, since IHH came on board. Earlier, their debt situation was precarious. The company had not made enough investments into capex – both in maintenance as well as growth.

Now since IHH has brought in Rs 4,000 crore of primary equity, which has helped the company improve their ratios, things have changed now, said Raghuvanshi.

As a result of that, the company has been able to make around Rs 300 crore of capex investments this year-mainly into replacements and upgradation and a bit of growth, he further said.

“We are committed to do similar capex in next three-five years as well,” he said.

“Other than that, our interest rates were hovering somewhere around 14-15 percent because of all kinds of penal interest. That has now come down to 10 percent because the rating upgrade due to performance improvement, as well as the parent company coming in,” he added according to the report.

“What we need to clearly distinguish here is that there are ownership issues that have a lot of uncertainty, and legal proceedings going on. However, at the operational level, the company has an inherent strength and that will hold us in long-term,” Raghuvanshi further clarified.

“Currently we are not facing any major problem because we have certain alliances, but the banks are circumspect and need further clarity. However, if the situation continues and clarity doesn’t emerge over the next few months, then we may have to find alternative ways to fund our growth,” said Raghuvanshi with regards to liquidity.

As of now, because of internal accruals and reasonably good operations we are not facing any challenges on liquidity front, he said.

While mentioning the guidance front, he said, “I would not like give a forward looking number, but we do expect to increase our capacity within the existing hospitals. We have a plan to add about 1,000-1,200 beds over the next three-four years. Close to 250 beds are going to come online by the end of this financial year itself, and those will bring a growth rate of about 10 percent and I would say that it would reflect in the margins as well.”

“The diagnostic business has its own dynamics. The growth rates have been relatively lower compared to the peers in the industry. We have grown about 5-6 percent this year. We have been looking at the business with the same intensity as we are looking at the hospitals and we expect that the margins are likely to expand further. The growth is likely to grow into double-digits within next two-three quarters,” he said on diagnostic business.

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