Enterprise Ltd (AHEL), India's largest healthcare provider by market value, is considering the acquisition of small hospitals in northern and western parts of India.
The company, which has been pursuing plans for the rights issue of around Rs 750 crore, said that it would look at other modes of fund raising also if the approvals for the rights issue is not coming by in next six months.
had last year acquired a majority stake in Guwahati-based Assam Hospitals and has now entered into the North-East market through the facility. The plans are to look at further expanding its presence with the acquisition of small hospitals in north and west of the country, said Akhileswaran Krishnan, chief financial officer, AHEL.
"We are looking at small hospital assets, in various locations and we continue to look at options. At this point in time it is early to comment on that. The geographies we are looking at is northern and western parts the country and the target would be of asset size of Rs 200-300 crore. Funds will be internal accruals and part of the fund raising," he said.
The hospital chain is expected to invest around Rs 300 crore during this year for its ongoing expansion plans, including setting up of a Proton Therapy centre, for cancer treatment, for the first time in the country.
Its proposal to raise around Rs 750 crore through rights issue has been stuck at Foreign Investment Promotion Board (FIPB) for several months for various reasons including the structure of its pharmacy business, which could fall under multi brand outlet category. Even as the government has stopped FIPB operations, the approval from the concerned authorities are yet to come and the company would look at other options in six months if the approval is not in place.
This is expected to reduce its debt and partly to fund the proposed acquisitions. The company currently has a gross debt of Rs 2,700 crore and net debt of around Rs 2,400 crore, which is expected to go up as it is investing in capacity in the near future. It would look at containing the debt level at around Rs 2,500 crore.
It has posted a decline of 51.2 per cent in net profit at Rs 35.21 crore during the quarter ended June 30, 2017, as compared to Rs 72.17 crore during the same quarter of previous fiscal. The decline in net profit is primarily due to impact of higher depreciation and interest costs on the over 2000 new beds created in the last 3 years, the benefits of which will be visible in higher EBITDA in the next 2?3 years, said the company.
Taking the inorganic route
* Apollo Hospitals Enterprise has been pursuing plans for a rights issue of about Rs 750 crore
* The money proposed to be raised is meant partly to reduce debt and partly to fund the proposed acquisitions
* The chain is expected to invest around Rs 300 crore this year for its ongoing expansion
* The company has a gross debt of Rs 2,700 crore and a net debt of Rs 2,400 crore
* Last year, Apollo Hospitals Enterprise acquired majority stake in Guwahati-based Assam Hospitals. The acqusition marked the hospital chain’s entry into the northeast market
It has incurred a loss of around Rs 15 crore in its Navi Mumbai facility, launched last year. The new facilities including the Navi Mumbai hospital, is expected to start contributing to the earnings in near future. Especially, the Navi Mumbai facility is expected to break even in FY19.