Apollo Hospitals restructuring panel recommendations in a year: Suneeta Reddy

The company expects restructuring would help it to be future ready and improve flexibility

Healthcare major Apollo Hospitals Enterprise Ltd (AHEL) is expecting the six-member committee it formed to look into restructuring existing businesses to come out with its decisions in a year's time.

The company on Thursday said its Board of Directors has deliberated the possibility of various options to restructure the businesses by re-aligning the business lines as per verticals.

Suneeta Reddy, managing director of AHEL today told analysts that the company had incubated a lot of businesses and different businesses have different aspects to be focused on.

"We also believe that the format in healthcare could change over a period of time, so we need to be ready for the future," she said.

"Also, as we incubated our businesses, our pharmacy has grown along with the hospitals business. Each of the different businesses have different aspects not only with margins, but in terms of the talents, the performance, that are required. Keeping this in mind the board has created a committee to look at restructuring our current assets to enbale growth for the future," she added.

The Committee, comprising of members from the Board of Directors, former ICICI Chairman N Vaghul, Feedback Infra Pvt Ltd co-founder Vinayak Chatterjee, former Chairman of SeQuent Scientific Deepak Vaidya, KKR India CEO Sanjay Nayar and AHEL executive vice chairperson Shobana Kamineni, apart from Suneeta Reddy, is expected to come up with its findings in a year's time.

The proposal is aimed at exploring options to improve operational efficiencies and adding further growth of the businesses in compliance with the applicable laws. It would also be looking at creating greater flexibility through restructuring or transfer of the existing businesses into seperate legal entities, given the opportunity in the sector.

The restructuring committee is expected to immediately undertake steps to evaluate, determine and prepare a road map for the proposed restructuring, including engaging with relevant stakeholders, said the company's regulatory filing.

The company has three major business verticals - the healthcare, pharmacy and clinics - and the company is just looking at possibilities of achieving more growth by restructuring, said Akhileswaran Krishnan, group chief financial officer of AHEL. Besides, it also has a minority stake in Apollo Munich Health Insurance Co Ltd.

The company, a couple of years back, weighed options to hive off its pharmacy business into separate company and to bring in a partner, but the plan was later put on freeze.

In the company's Annual General Meeting held in Chennai last month, the CFO said that the Foreign Investment Promotion Board (FIPB) has asked the company to restructure its pharmacy business, among other things, in order to get approval for its Rs 750 crore rights issue application, which it has announced in 2015.

Answering specific queries of the shareholders related to the rights issue pending over a year now, Krishnan said, "They (FIPB) have been asking certain queries, they wanted some restructuring to be done in the pharmacy among others. The Board is carefully examining all of these," he added during the AGM.

The company is also of late focusing on retail healthcare activities, by expanding its clinics, diagnostic centres, speciality clinics and others, by bringing all the retail healthcare business under a subsidiary, Apollo Health & Lifestyle Ltd (AHLL). The current portfolio comprises of 11 Day surgery centres, 9 Cradles (birth care centres), 137 Diagnostic centres and 70 Clinics under AHLL, while 72 Dental Clinics, 44 Sugar Clinics and 6 Dialysis centres were also part of the extended network.

It has recently announced consolidation of its clinical assets for cancer treatment under the banner Apollo Cancer Institutes. Reddy said that the company is simultaneously evaluating the potential to similarly elevate the cardiac sciences practice, the neurosciences practice and transplant to be consolidated.

The company at present has 70 hospitals with total bed capacity of 9,774 beds as on June 30, 2016, of which 43 are owned hospitals including JVs/ subsidiaries and associates with 7,840 beds, eight managed hospitals with 1,434 beds. Of the 7,840 owned hospital beds capacity, 6,796 beds were operational and had an occupancy of 63%. The total number of pharmacies as on June 30, 2016 was 2,383.