"We are bringing down the debt from Rs 3300 crore to Rs 2500 crore by the end of the financial year," said Suneeta Reddy, Managing Director of Apollo Hospitals to Moneycontrol.
Apollo Hospitals, India's largest healthcare provider, is focusing on cutting debt and improving operational performance in the coming quarters.
The debt of the hospital chain had ballooned as it kept adding new hospitals.
"We are bringing down the debt from Rs 3,300 crore to Rs 2,500 crore by the end of the financial year," Suneeta Reddy, Managing Director of Apollo Hospitals told Moneycontrol.
The stake sale in front-end pharmacy and exit of health insurance business should get us Rs 600 crore, and the rest of money will come from free cash flows from business, Reddy added.
Apollo sold its entire 50.8 percent stake in Apollo Munich Health Insurance to HDFC for Rs 1,336 crore. The transaction is expected to conclude by the end of October 2019.
Reddy said her other focus is to get a better return on capital employed (RoCE). She expects RoCE to be in the range of 13-14 percent aided by expanding revenues.
The company said it had completed a capacity expansion (capex) of Rs 3,000 crore. Apollo Hospitals has an operational 8,000-bed capacity, with a potential to expand to 10,000 beds.
Apollo now owns 70 hospitals with a total bed capacity of 10,167 beds. Of these 70 hospitals, 44 are owned by the company while five are managed by the company with 934 beds. The company also has 11-day care or short surgical stay centres with 267 beds and 11 cradles with 283 beds.
Apollo had sales of Rs 9,617 crore in FY19, with hospitals generating about 55 percent revenues. Little over 40 percent was from pharmacy stores and the rest from Apollo Health & Lifestyle (AHLL) that constitutes clinics and diagnostic centres.
The company operates about 3,500 pharmacy outlets
Private hospital chains are going through a challenging phase with their margins getting squeezed due to government regulation of stent and implants prices, negative GST impact and the rising cost of human resources, especially doctors.
Apollo promoters - the Reddy family divested a 3.6 percent stake in the company, bringing down their stake to 30.8 percent.
The proceeds of the sale will go towards repaying the money borrowed by pledging shares.
Reddy said they brought down the pledge position from 76 percent to around 58 percent, and are working towards reducing it to 20 percent by end of FY20.
Reddy said there will be no dilution of stake by the family and the net proceeds from the sale of the insurance business will be used to revoke the pledged shares.The pledging is becoming an overhang on the shares of Apollo, the revoking will help the interests of all stakeholders, Reddy said.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.