Cloud Over Apollo Plan To Pick 50% In Duncan Gleneagles

Uncertainty looms over Apollo Hospitals Enterprises' (AHEL) plans to acquire a 50 per cent holding in Duncan Gleneagles Hospitals of Kolkata. "The deal might be difficult," sources closes to the deal said.

AHEL, the flagship company of the Dr Pratap C Reddy-promoted Apollo group which operates hospitals and clinics under the 'Apollo' brand, was close to acquiring a 50 per cent stake in Duncan Gleneagles by buying out the G P Goenka-promoted Duncan Industries' pie in the 225-bed hospital.

This would have given Apollo a physical presence in Kolkata for the first time. The hospital chain is already managing the AMRI Hospital there.

The sources said: "It has been difficult. The deal has to come at a price which is worthwhile for Apollo."

There was speculation that the deal has been sealed at Rs 17-19 crore. However, the sources said a final decision had yet to be taken and negotiations might begin after January 5, 2002.

Gleneagles is facing severe cost overruns. Apollo, while aiming to turn around the hospital, had drawn up plans to make fresh investment in upgrading it.

The sources said that in the past few weeks Apollo first decided to pick up a minority shareholding of around 26 per cent in view of the cash crunch.

It also has plans to take up the hospital on an operations-and-management (O&M) contract instead of making an investment in equity. The company is willing to lend its brand name to Duncan Gleneagles.

The sources said an O&M contract is likely to fructify, if the financial deal is not. In such a scenario, the Apollo group will charge Gleneagles -- a part of the Parkway group of Singapore -- a management fee for operating and managing the hospital.

AHEL had found that the hospital required a major facelift in terms of number of beds, quality of service, etc. There was a proposal to increase the size of the hospital from 225 beds to 300 beds, so as to divert patients from the eastern states and Bangladesh going to Apollo Chennai or Apollo New Delhi to Kolkata.

Around 3,000 patients from Bangladesh were admitted to Apollo Chennai last year, with a similar number visiting Apollo New Delhi. This hospital is owned by Indraprastha Medical Corporation, in which AHEL, the New Delhi government and the public have stake.