Apollo opens 200-bed hospital in Nellore, AP

So we see a very good potential for state-of-the-art high quality care in tier-II towns. People are beginning to say that they do not want to travel anymore and they are looking for facilities in their cities itself.

Reema: Can you tell us the kind of investment that was needed for this 200 bed hospital in Nellore? As well as given that it is a tier-II city just for our understanding can you tell us the kind of margins that you are expected to enjoy? What the company is forecasted in terms of going ahead the capacity utilisation as well as the expansion plans if any?

A: The project cost is about Rs 145 crore. We own the facility, the land, the building etc. We will see margins upwards of 15 percent in the project and definitely reach a breakeven within 24 months. Nellore is really a bustling town and while it is a B-class city it has good number of middle class and upper middle class. It is an education hub. It is an industrial hub as well and we are very close to the highway so we expect to be serving population there.

We have also created a very advanced ICU so we will be treating and curing high-end patients that used to drive to Chennai. We have also created infrastructure, the eICU starts where it is connected to Chennai as well as Hyderabad. It is a continuous online monitoring of all parameters. So all the multi specialist who are available in the ICU’s in Chennai would be available to treat patients in Nellore. This is an advanced and a new model so we are expecting a very good response to this.

Sumaira: This required an investment of about Rs 145 crore. What is the additional capex you are looking for FY16?

A: For this particular facility there is no real additional capex required because it is a new facility. Across the group there will be replacement capex as well as new facilities coming up. This would be in the region of about Rs 300-500 crore depending on which projects you are talking about.

Sumaira: This required an investment of about Rs 145 crore. What is the additional capex you are looking for FY16?

A: For this particular facility there is no real additional capex required because it is a new facility. Across the group there will be replacement capex as well as new facilities coming up. This would be in the region of about Rs 300-500 crore depending on which projects you are talking about.

Reema: The hospital has done various acquisitions, the Nova specialty. You have got this hospital in Nellore there was Hetero as well. All that will come on stream next year. Can you tell us what we can reasonably expect revenues as well as margins for Apollo Hospital on a consolidated basis given some many things have got added recently?

A: As it is expected we do not throw any forward looking kind of numbers or indication but the growth rate is expected to be a healthy growth rate around 18 percent.

Sumaira: Last time post your Q3 numbers the sense that we got was that two of your hospitals had achieved EBITDA breakeven. When can we expect the rest of your units to follow suit?

A: For Nellore Hospital like I said will be 18-24 months, Nashik is fairly new facility about 7 months old that has been a little slower. However, Jayanagar which is our extremely specialty Orthopedic hospital in Bangalore will reach breakeven this year. So it is different depending on the geography the number of months it has been in an operation but over all we see a 24-36 months breakeven across all infrastructures that we create.

Reema: Even for Nova Specialty hospitals what would the breakeven be? Would it be in excess of 24 months and also the kind of margins you hope to enjoy?

A: Nova will clearly take 24 months, there are certain facility with Nova we are repurposing to get transformed into High end Cradle. Cradle is our boutique birthing centre and we enjoy good margins upward of 22 percent in the Cradle format. The Nova’s will have an 18 percent margin in the beginning but later they go as high as 25-26 percent.