Apollo Hospitals gears up for Rs 2000 cr expansion plan

Other investors who are interested in Apollo stake are Blackstone Group LP, Bain Capital

Country's leading hospital chain Apollo Hospitals Enterprises Ltd (AHEL) is planning to invest around Rs 2,000 crore to add 2500 beds between 2013 and 2015. It may be noted, currently it is in the process of adding around 1500 beds with an outlay of around Rs 2,000 crore and its gearing up for the next round.

The additional capacity addition will be taken up post the current expansion. Apollo Hospitals is one of the largest hospital networks in Asia with 5,908 owned and 2,038 managed beds across 36 owned and 13 managed hospitals as on June 30, 2012. In 2011-12 the bed occupancy ratio was at 71.2% and average revenue per occupied bed increased by 9.3 per cent CAGR (fiscal 2008-12) to Rs 20,455 in 2011-12.

“We are on track to add 1500 beds, of which 500 beds already been added. We are now working on the next phase of expansion plan, which is for 2013-14 and 2014-15. The plan is to add 2500 beds”, Prathap C Reddy, chairman, Apollo Hospitals Group told Business Standard.

The hospital chain is planning to give major thrust on tier II and III cities to fuel growth and also on automation as part of expansion. Apollo will add another six robots with an investment of around $1.5 million in each across its hospital chain network, said Reddy.

He added, the Bombay Stock exchange-listed company has comfortable debt-equity ratio. “We can push a little more and take more debt”.  The Rs 8,700 crore market capitalization hospital chain as on March 31, 2012 had a debt of Rs 797 crore.

Asked whether the company is open for equity infusion through stake dilution, he said, “people are willing to give us the money, earlier we were planning a debt-equity ratio of 1:1. Today we are able to service it at 1.5:1. Some foreign and domestic investors have shown interest, we are looking at it. As far as possible we don't want to dilute,” said Reddy.

It may be noted, global private equity firm Apax Partners LLP is looking to sell its 10 percent stake in Apollo Hospitals Enterprise Ltd, in a deal that could raise around $250 million or more, according to reports.

Malaysian sovereign fund Khazanah Nasional Bhd KHAZA.UL, which already holds a 10.85 percent stake in Apollo Hospitals (APLH.NS), is one of the funds in talks with Apax. Other investors who are interested in Apollo
stake are Blackstone Group LP and Bain Capital.