We are actively looking at Africa: Devi Shetty & A Raghuvanshi

Interview with chairman & vice-chairman, Narayana Health

After making its debut in Malaysia, Narayana Health chairman Devi Shetty is looking to expand into the African market. Devi Shetty along with A Raghuvanshi, vice chairman, managing director & group chief executive officer of the company tell Digbijay Mishra in an interview that talks are in different stages with several people, for Narayana Health's foray into South Africa. Domestically too, it might go for partnerships to plug the infrastructure gap in healthcare, while plans are in place to provide over 30 per cent cheaper services in its super specialty hospitals in India's smaller towns. Excerpts:

What is the road ahead and what plans have you chalked out?

Shetty: Our target is to build super-specialty hospitals in Tier 2 and Tier 3 cities. There are 100 towns in India with a population of half a million to one million where there is no super-specialty hospital. If somebody has a heart attack in West Bengal, he has to come to Kolkata. Hence, the intention is to be near every district and we are starting with 100 towns.

Does that mean the metro market is now getting absorbed?

Shetty: No, there is huge demand. In metros too, hospitals are in certain locations and it takes two to three hours to reach them from other parts of the city. Thus, distance is a major factor.

Raghuvanshi: We have recently started projects in Uttar Pradesh and we are looking at consolidating our presence in the market. We are looking at three main clusters. That's the plan. We are also ready to commission a hospital in Guwahati next month which is starting with 200 beds. But eventually, it would be 350. We are also ready to start construction of a project in Odisha this year. The plan is to have, on an average, five to six hospitals this year.

You recently ventured into Malaysia. What are the new geographies you are looking at?

Raghuvanshi: We are actively looking at projects in Africa. There is a huge opportunity there because it is a grossly underserved market. There is also an Indian diaspora in Africa. We are targeting both, north and west Africa. We are in talks with several people who have shown interest. We would go via joint ventures.

Why are you so keen on Africa?

Raghuvanshi: In Nigeria, Africa's most populous nation, there are just two medical centres which conduct heart surgeries. Many Africans come to India for treatment. This shows the magnitude of opportunity that exists on the continent. We want to give expertise to those who want to invest in infrastructure in Africa. We are thus looking at projects which would mutually benefit us.

What would be pricing like in your low cost hospitals in Indian towns?

Raghuvanshi: Our Mysore centre is designed and built in a manner to keep the cost low. Typically compared to other hospitals in Mysore's vicinity, our costs are 10-15 per cent lower. But when you compare it with Bangalore, it is almost 35 per cent cheaper.

How many such low cost hospitals are on the cards?

Raghuvanshi: Our plans for towns with a population of 1 million each would be the same. We have a cluster strategy. We should have 14 such units in the next five years, which is part of a Rs 1,000 crore expansion plan.

Any plans for domestic acquisitions?

Raghuvanshi: If there is a good relationship which could emerge, we would definitely consider that. But as of now, there is nothing. We believe in forging partnerships and all sorts of partnerships are required in the healthcare sector. We are looking at it.

After heart and cancer specialty, what's next?

Shetty: Procedure-oriented specialty. The idea is to be number one in procedure, just like in heart treatment, where we are numero uno. Ten per cent of India's heart surgeries are done by us. Similarly for cancer. We want every hospital of ours to be a heart and cancer treatment hospital.

Is the healthcare business recession proof?

Shetty: It is recession proof in the initial stages but if the country goes down, then everyone would. As of now, it might not affect my business, but we are concerned about what is happening in the country.

What sort of demand-supply gap exists in the present scenario?

Shetty: We are short of one million doctors, two million nurses and close to three million beds. If you start 100 medical colleges for the next five years, that would result into a sufficient number of doctors by 2025.

Do you think private equity companies are loosing interest in Indian healthcare?

Shetty: Only serious players are coming forward. The time frame they are looking at, might not be the right time frame. So they have to be patient. In this industry, you just can't get returns like in the information technology industry. But if they have the patience to wait long enough, they would get the benefits.

Are you looking at raising money from private equities?

Shetty: We are sufficiently capitalised now. We are nowhere close to raising money and there is no such plan any soon.