The transition has been deliberate, but unusual: Rahul Khosla

Interview with President, Max Group

Rahul Khosla takes charge as Max Group President, the senior most executive in the Rs 15,000-crore group, after founder Analjit Singh takes the back seat. In an interaction with Sudipto Dey & Deepak Patel, Khosla shares the group's growth plans. Exceprts:

What does the demerger of the group into three firms, and the fact that the promoter - Analjit Singh - is stepping down from operational role, mean?

The founder sponsor (Analjit Singh) had decided to take the back seat four years ago, by stepping aside as managing director. Two years back he also stepped aside as executive chairman, and then became non-executive chairman. So, this has been a planned and orderly progression of succession plan. So, now he becomes founder and chairman emeritus, and will not be on the board of some of the companies. This transition has been deliberate, but very unusual for the Indian market. But he will remain an engaged shareholder, and remain connected to the group which he founded.

What it means for the group for the next three to five years is that we are now clarifying the structure so that each of our firms has the right mix of resources to grow.

Where do you see the group in the next three to five years?

Max Financial Services will be listed. This will mean virtual listing of Max Life Insurance, and its intrinsic value will be reflected in the stock price of Max Financial Services. The company is now matured, cash-rich, and leadership stable. We are geared for mergers and acquisitions. We don't have an obligation towards our foreign partner to grow their stake. The growth part of life insurance business is very high. It is anyway growing in high teens, organically.

In the health care business, we have the opportunity to create Asia's largest single-location hospital in the heart of South Delhi (Saket). Over the next three to five years we will have 3,500 beds in the national capital region, as against 1,500 beds now. We expect the business to clock growth in topline, bottomline and expand in terms of number of beds and market share.

We already made a deal to increase Bupa's stake to 49 per cent. That will bring in some Rs 200 crore into the holding company. This business is growing at 30-35 per cent every year. We may not see inorganic growth in health insurance business, but its growth is expected to be 25-30 per cent every year.

Over the next five years our aspiration for the group is to clock compounded annual growth rate of 20-25 per cent in both market cap and revenues, while profitability will be more as the businesses mature. Each of our businesses is sitting on a powder keg of dynamite growth.

What new businesses would the third listed arm, Max Ventures & Industries - to be headed by Analjit Singh - look at?

First, we want to stay focused to make sure the packaging business does well. But, Singh may explore other opportunities where he has interest. He wants to be originator of a business, not a financier. He has been doing something on the hospitality side, while education has been another passion. But there is nothing concrete yet.

Are you open to entering into allied businesses in each of the verticals?

Not that we looking at them currently, but we are open to look at adjacencies and allied businesses, such as pharmacy, diagnostics, pathology. Our priority of the healthcare business is to grow the core, and make sure that it delivers.