Apollo Hosp to set up 10 hospitals in tier-II cities

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Apollo Hosp to set up 10 hospitals in tier-II cities

Citi has recommended a series of buy on various healthcare stocks. And on Day-2 of the Citi India Investor Conference 2008 held in Mumbai and Delhi, Sunita Reddy, Ex-Director of Finance, Apollo Hospitals, said of the one stock in focus, they plan to set up ten 100-bed hospitals in tier-II cities, in around a year, reports CNBC-TV18.

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Citi has recommended a series of buy on various healthcare stocks. And on Day-2 of the Citi India Investor Conference 2008 held in Mumbai and Delhi, Sunita Reddy , Ex-Director of Finance, Apollo Hospitals , said of the one stock in focus, they plan to set up ten 100-bed hospitals in tier-II cities, in around a year.

Apollo Hospitals adds one pharmacy every 33 hours and this year they've added 300 pharmacies. She said that the group may look at unlocking value in allied businesses.

Excerpts from an interview with Sunita Reddy:

Q: How does the tax holiday announcement by the Finance Minister for expansion of hospitals in tier-I and tier-II cities benefit a hospital chain like yours?

A: Most certainly, the expansion in tier-II cities is something that we have had on the cards for the past three years. We have already acquired landbanks in several of these cities, which includes Vizag, Bhubaneswar, Kakinada. So, it is a huge benefit for those hospitals that were planning to setup. These would be 100-bed hospitals. We are planning 10 such hospitals. We have already identified the cities, land acquisition is taking place. We believe that it would take us another 12 months to get these beds up. Beyond that, since these projects are low capital, they should breakeven in three years.

Q: 1,700 beds is what you intend to add over the next three years. How many of these are going to be in existing facilities and how many of the new hospitals that you intend to launch are going to be ownership versus the kind of joint venture that you have with Eleanor?

A: Joint ventures, I think there are none on the cards, maybe a small hospital in Bellary. The rest are all going to be owned entirely by Apollo. There is also one in Mumbai, which is 300 beds. So, those 1,700 beds would be owned entirely by Apollo, out of which 500 will come up in Chennai, another 500 will come up in Hyderabad. The rest would be in tier-II cities.

Q: How close is the retail pharmacy business to a turnaround in FY09?

A: It has already turned around. We have got 530 retail pharmacies; total number of pharmacies is 610. EBITDA margins right now are depressed because of the aggressive rollout. We are adding a pharmacy every 33 hours. We have added 300 pharmacies this year. But the pharmacy division as a whole is making a profit and showing a topline growth of 39%.

Q: Are you looking at unlocking value because currently your pharmacy business, your Health Street medical BPO - they are all under the same umbrella. Would you be looking at listing any of these entities or unlocking value over the next year or so?

A: Certainly, but we might have to reconsider the timeframe. But we are certainly looking at unlocking value in these two.