Aster DM inks 15-year hospital O&M agreement with VHPL & Bharathi Education Trust

Aster DM Healthcare said that it has entered into a hospital operation and management agreement (O&M) with Vritika Hospitals (VHPL) & Bharathi Education Trust, for operating and managing G. Madegowda Super Specialty Hospital.

G. Madegowda Super Specialty Hospital (GMSSH) is located at Mandya city in the state of Karnataka and is a 100-bed tertiary super specialty hospital situated in Mandya town, 95 kms away from Bangalore.

The term of O&M is for 15 years with a lock in period of 5 years for the company and 15 years for VHPL & Bharathi Education trust.

Aster DM Healthcare, along with its subsidiaries in India, has existing installed capacity of 4,280 beds as on date. The company's occupancy was 66% percent of its existing capacity during FY 2021-22 and 72% percent during Q2 FY 2022-23.

With GMSSH, total installed capacity of the company shall be increased to 4,380 beds. The proposed capacity will be added within 3 months from the date of signing the O&M agreement.

The hospital building and infrastructure is being developed by VHPL & Bharathi Education trust. The company shall pay an interest free refundable security deposit of Rs 5 crore. The hospital may require further capex infusion to the tune of Rs 1.5 crore during the initial 2 years of operations and the same shall be infused through internal accruals of the company.

"This is a part of O&M asset light model to add 500-700 beds in India, which will have better returns with minimal capex investment, Aster DM said in a statement.

Aster DM Healthcare is primarily involved in the operations of healthcare facilities, retail pharmacies, and providing consultancy in areas relating to healthcare.

The company's consolidated net profit declined 56.8% to Rs 46.21 crore despite of 12.5% rise in net sales to Rs 2,816.30 crore in Q2 FY23 over Q2 FY22.

The scrip shed 0.17% to end at Rs 231.10 on the BSE on Friday.

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