Healthcare major Apollo Hospitals on Wednesday said it wants to switch to an asset-light model which will focus on taking facilities on contracts and may go for smaller acquisitions of up to Rs 300 crore.
The company also hinted at going slow on investments from here, saying extracting benefits from past bets will be the focus now through margin expansion.
The over three-decade-old company, which was in the news for issues with excess share pledging by the promoters and also stake sales in units including its insurance JV and the pharmacy business runs 72 hospitals at present.
“We are not looking to sell more stakes and will be doing smaller, bolt-in acquisitions of up to Rs 300 crore from now,” its managing director Suneeta Reddy told reporters here.
She said it has invested Rs 3,000 crore in the last 30 months at a time when very few were investing and added that the focus now will be on profit growth through “reaping in” the investments by improving utilisation levels.
Its chairman Prathap C Reddy also said that there is “no desperation for money”. The company’s debt stood at Rs 3,200 crore as of June.
Suneeta, his daughter, said the company will be adopting an “asset-light” model from here, which will focus more on taking up hospitals for operational management.
The chairman said a similar model is followed in the hospitality industry and also hospitals abroad, where the asset owner is different from one who runs the enterprise.
Suneeta said the company is looking at acquisitions like the one in Lucknow which it did for reaching out to a newer geography, and pointed out to Nagpur and Kanpur as other cities where it will be interested to acquire assets.
She said it is also focusing on doubling the share of medical tourism in its revenues to 20 per cent by 2022.
India has inherent strengths like low cost per bed and good clinical talent which delivers quality care, he said, adding the government should give more fillip to the sector’s growth like it did for information technology.
In return, the medical tourism sector can deliver forex income, good health of citizens and also jobs.
There is also an attempt to double the share of private labels to 14 per cent of the pharmacy business revenues in the next two years, she said, adding that at present, the private labels deliver a pre-tax margin of over 30 per cent as against the single digits for the pharmacy business.
Prathap Reddy said the company is also looking to sign up with medical technology company Meditronic to acquire robotic devices for carrying out surgeries.
The company will start manufacturing the device by December and plans to manufacture 100 units, he said, adding that Apollo alone would be interested in a third of the production.
Its hospitals presently have eight robotics arms deployed made by the company Da Vinci for which it has invested USD 16 million, he said, adding that the cost of consumables for such surgeries is high at over Rs 1.5 lakh.
Suneeta said 30 per cent of the surgeries carried out at the chain have some element of automation at present.
Prathap Reddy said there will be a dire need of people who can render medical services at the world level in the days ahead due to a slowdown in population growths in advance economies and India can play an important role there.
Better training to students, including adopting electronic means of teaching is the need at present, he said.
Source: Economic Times