Demonetisation: Fortis Health sales dip 10-15%; co looks at digital payment mode

Fortis Healthcare's revenues have declined by around 10-15 percent post demonetisation, says Bhavdeep Singh, CEO, Fortis Healthcare. The affect has been most visible in rural areas.Singh says Fortis is looking at other payment options like digital wallets and is doing its best to not turn patients away.The company's demerger with SRL Diagnostics is expected to be completed halfway into calendar year 2017.Below is the verbatim transcript of Bhavdeep Singh’s interview to Prashant Nair and Ekta Batra on CNBC-TV18. Ekta: It has been a month since demonetisation. We understand that most hospitals as well as diagnostic companies have recovered in the past couple of weeks. There was a little bit of bleep just two weeks after demonetisation. Was that your experience and if you can just detail to us how volumes might be impacted in Q3? A: The demonetisation, it is clearly having an impact on business. While we all support what is happening, we all believe it is good for the country, the reality is that it has left people clearly with a big surprise and some challenges. We have been impacted. More impact has been in the low double digits from a percentage basis and we certainly believe that over time it is going to come back. Has it come back completely? It has not. We continue to feel the impact because typically when you talk to people, I think what happened in November, once it got announced there were planned surgeries, planned procedures, so, many people continued to, if somebody had a knee surgery planned or some sort of other procedure planed, they went ahead with it. What we are seeing now is that the planned procedures are down. I think people are trapped for cash, they don’t know what to do, they are trying to figure things out, so, clearly it is having an impact on business. With that said, what we are doing is, we have done two-three things that I think are worth mentioning. Number one is that every one of our hospitals, a clear mandate and every one of our hospitals I applaud all of them because we haven’t turned anybody away. If there is an emergency situation, any sort of critical care situation, we are making sure that we take care of our patients if there is absolutely some emergency situation. The other thing we have done is we have setup free internal medicine OPDs, so, if there is anybody who comes in and they need some sort of a consult, we are not turning people away. So, I think in our industry, I think we have to be responsible and do the right thing and we certainly believe in doing that. The other thing we have done is we have taken to the streets to make sure that you have thousands and thousands of people who are waiting on lines at ATMs, I can tell you that as of this week, we have actually given over 1 lakh people, we have gone to the ATM lines, we have given them water, biscuits because we want our communities to know that Fortis stands with them. At a hospital level, we are looking at alternate payment platforms. So, while we have always accepted credit cards, we do accept cheques -- we have made that clear as well, we are looking at all the alternative payment platforms, all the Paytms and the Mobikwiks and such, we are certainly making all of that available. So, I think it is again it took us all for a bit of a jolt. Healthcare knows no boundaries, if you are sick, you are sick, you need to be treated and we certainly want to do the right thing and we are. We believe we will get past it and we are taking measures we can to help us get over that hump. Prashant: When you said low double digit impact, could you give a ballpark range between what and what in terms of impact? A: Depending on the location, I think we are impacted more in rural areas. I think the impact is anywhere between 10-13 percent and as high as 14-15 percent. So, it is going to vary. Again, I think that in a more urban area, where people have more prevalence of credit cards and people use alternate payment methods, I think it is going to be less. I think when you start getting out in some of the secondary tertiary cities; I would say again 10-13 percent range. It should steady off at some point soon but we continue to work through it. Ekta: Wanted to ask you about an update with regards to the SRL demerger, where does it stand at this point in time, how many of your approvals are done with and how many are pending? A: It is not so much about how many, we are going to be shortly will be filing with the Supreme Court for approval and there is as you can imagine in a situation like this, there are multiple levels of approval and we are working through the normal process. Our board gave us the go ahead to move forward with this two to three months back. We are doing that, we are going through all the formalities, all the regulatory filings that need to be done we will be filing with the court soon. I believe that the demerger clearly we believe it is going to go through, we think it is a good thing, it is a good unlocking of value and we expect it to be complete somewhere around middle of the year, fiscal calendar year. Ekta: If I am not mistaken and correct me if I am wrong, you have around 35 percent of private equity holding in SRL Diagnostics. What would happen to their holding once there is this demerger that takes place and are they looking for exit options something that they were considering some time ago, has there been any progress on that front or they are planning to just stay on and not do anything with their holdings currently? A: I think these are options that investors have. We have announced in terms of for every share we have today that we are going to be backing into the Malar equity that we have, the Fortis Malar Hospital. I think these are the options they have. I think that people are going to wait to see how things unfold and there has been talk, people have talked about exits, I think that this is going to be a stock that is going to be very much in demand. It is a company that is doing exceptionally well and I think all investors as they would in any situation, I think as the demerger unfolds and as there is more and more interest, I think they will decide what is right. However, I don’t know that there is a clear path articulated at this point. I think it will get decided as we go forward.