Fortis to raise Rs 450 cr as part of additional capex

As part of an additional outlay of Rs 600 crore to fund its capital expenditure programmes, Fortis Healthcare plans to raise Rs 450 crore through a combination of term loans from banks as well as internal accruals, the company said.

Yogesh Sareen, chief financial officer, said 60 per cent of this would be raised through internal accrual and the remainder by term loans from banks.

“The additional outlay of Rs 600 crore is proposed to be spent over the next two years. We currently have seven greenfield projects on hand, including the 450-bed Gurgaon Medicity project, for which we raised Rs 150 crore through a rights issue last year. There is also the Shalimar Baug project, set to become operational next month,” Sareen said.

India’s second largest hospital chain has pursued an aggressive expansion path over the past year through new projects, buys and O&M (operations and management) contracts.

Fortis is contemplating raising an additional Rs 200 crore by the end of the year for the Gurgaon Medicity project through a strategic equity sale if the requirement arises, Sareen said. The Medicity is set to become operational in the fourth quarter of 2010-2011. “We have maintained a comfortable debt-to-equity ratio of 0.4:1. Therefore, we are keeping our options open on future fundraising requirements,” Sareen added.

Almost 60 per cent of the company’s revenues currently come in from the cardiac (43 per cent), orthopaedics (8 per cent), neuro (5 per cent) and renal (4 per cent) segments. Fortis recently signed an O&M contract with Haryana-based M K Hospital. “O&M contracts ensure that we maintain our brand visibility,” Sareen said.

The acquisition of 10 Wockhardt Hospitals countrywide last year had led to the addition of 1,900 beds, increasing Fortis’ total bed base to 6,609.

Fortis posted a 44 per cent rise in net sales to Rs 233 crore during the third quarter ending December and 327 per cent growth in net profit after tax to Rs 22 crore. Net sales in 2008-09 was Rs 631 crore. The top line is expected to touch Rs 961 crore in 2009-10 and Rs 1,470 crore in 2010-2011.