Apollo Hospitals Enterprise Ltd (AHEL) is planning to expand its boutique maternity and childbirth hospital network, The Cradle, by adding 8-10 centres in the next two years. The focus will be on metro cities.
The Cradle, under Apollo Health and Lifestyle Ltd (AHLL), a subsidiary of AHEL, is setting up its own hospitals than going for franchisee and expects to spend around Rs 15 crore on each centre, said company officials.
The company, at present, has three hospitals under the model, one within its Hyderabad facility and two franchisee models in Gurgaon and Calicut.
With a focus on setting up own facilities in future, it recently started operations at the fourth facility Apollo Koramangala Cradle Ltd, Bangalore — with 15-20 beds, according to sources close to the development.
“The places we are looking at to set up Cradles include the metros — Delhi, Mumbai and Kolkata — and plans are to have 8-10 hospitals in 18-24 months,” said Sudhir Diggikar, CEO, AHLL.
The average bed size would be about 24 and target segment Section A or B customers, which are in or close to the affluent category. The company has not decided on sourcing of funds, but it would be a combination of debt and equity, said a senior official from AHLL.
The company is first looking at setting up owned models in metro cities, then consolidate and later look at franchisee model for expansion in Tier II and III cities. But the metros would be the one where the company would set up the COCO (company owned company operated) model.
AHLL, which manages Apollo Clinics across the country, is looking at the same strategic fit of owned project model in its expansion of clinics too.
This would help the company expand quickly in major cities as setting up owned clinic is much quicker here than franchisee models. The increase in the cost of real estate is the key driver to expand quickly, said Ravindra Pai, senior vice-president, marketing, AHLL.
From around 70 clinics till March 30, 2012, the company is ramping up the base to 100. These would be completed by the end of fiscal 2013 and major locations will be the metro especially Delhi, Pune, Bangalore, Chennai and Hyderabad.
Explaining the potential of the Cradle business, the officials said it would vary depending upon the location and the revenue models would also keep varying depending upon the size of the set up. However, AHLL expects the Cradle to clock in revenues gradually growing from around Rs 10 crore to around Rs 25 crore in a duration of four years.
AHLL, a wholly-owned subsidiary of the company, is engaged in the business of providing primary healthcare facilities through a network of franchised clinics across India offering specialist consultation, diagnostics, preventive health checks, telemedicine facilities and a 24-hour pharmacy all under one roof. For the year ended March 31, 2012, AHLL recorded consolidated revenues of Rs 36.3 crore and a net loss of Rs 1.11 crore.