To invest Rs 50-60cr in Lifeline buy: Apollo Hospital

Apollo Hospital is in talks to take over Lifeline multi-specialty hospital in Old Mahabalipuram Road in Chennai. AK Krishnan, CFO, Apollo Hospital told CNBC-TV18 that there will be around Rs 50-60 crore of total investment going into this. "Our plan is to put this for use over the next three-four months", he added. 

Across states, the company has added 325 beds during FY13 and according to Krishnan it is now planning to add over 1,000 beds in FY14. He also informed that it has plans to establish Proton Therapy Center with investment of Rs 400 crore.

Below is the verbatim transcript of his interview to CNBC-TV18

Q: Could you confirm for us whether or not Apollo is indeed looking to buy the Lifeline Multi Speciality Hospital? How far negotiations have reached? What kind of monies will be involved in this acquisition if it happens?

A: You are right. We are in advance stages of taking over the Lifeline Hospital facility in Old Mahabalipuram Road in Chennai. This is part of our overall Chennai expansion plan. We now have 1,100 beds in Chennai and this is a long-term facility lease that we are looking at. We would be re-branding the facility and refurbishing this. Our plan is that we would be putting this for use over the next three-four months.

South Chennai has grown very well over the last five-six years. We have a focus of getting our Proton Therapy Center for cancer, which is going to be a comprehensive cancer facility care in a separate location in South Chennai. Lifeline is going to be there in the next three months. It is a 180 bedded hospital with focus on cardiac, neuro, orthopedics and critical care.

It is a long-term facility lease. It is a 29 plus 29 year lease that we are looking at. Our investment to refurbish the whole facility, medical equipments etc. would be around Rs 50-60 crore.

Q: What kind of total capacity addition are you looking at during the course of this year?

A: If you look at this year so far we have not added much capacity, but in the month of March we have added a 200 bedded hospital in the suburb of Chennai. That is in Ayanambakkam and is already operational as we speak.

There is another hospital in Bangalore which is a 125 bed hospital in Jayanagar and that is focused on neuro and ortho that we have commenced operations also in this quarter. That is around 325 beds that we would have added this fiscal, which is just in this quarter. Next year is going to be very exciting for us in the sense that we are planning almost around 1,000 new beds being added all over India.

There are around 525 beds which we are planning in Reach hospitals. Nellore would be a 200 bed hospital that should commence operation in Q1 end. We would be adding 200 beds in Trichy that is a new hospital that should commence operation again in Q1 end, Q2 beginning. We would have 125 beds starting up in Nasik that is again a Reach, so these are 525 beds. The Lifeline Hospital 180 beds will commence operation in Q2.

Chennai would be looking at another women and child which should be another 100 beds between Central Chennai and South Chennai. In Bangalore we are looking at a 180 bed hospital in Malleswaram. So, next year between all these facilities we would be adding another 1,000 beds on top of the 300 odd beds that we have just added.

The focus from the group perspective next year is to operationalize all of this, to ensure that we have the right mix of doctors, clinical staff and experts etc. To ensure that next two years are good for us.

Q: You have been talking about spinning off your retail pharmacy division. Any headway on that? Any clarity or timeline on by when you could close up that deal?

A: Not yet, nothing specific that we still have around it. Yes the retail pharmacy has done well. This year as the company we would have grown 20 percent on the top-line and over 30 percent on Profit After Tax (PAT), but if you look at retail pharmacies we have grown 30 percent top-line as part of the 20 percent.

More importantly, EBITDA of the retail pharmacies are at 3 percent, which is very good for us. We have said that we have the ability to take the EBITDA to 4-5 percent over the next 24 months on the back of same-store growth as well as private label, which is doing well.

Private label today is almost around 5 percent of our top-line and we are focused on further growing this and improving the profitability of this segment as well. At the right time we would be looking at a strategic player. We are not looking at it actively today, because we are seeing good growth and profitability. We would want to wait for sometime before we unlock the value at the right time.