The Hindu : Business : Apollo's mini-metros plan

Online edition of India's National Newspaper
Tuesday, Jul 26, 2005

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Business

Apollo's mini-metros plan

Special Correspondent

To set up a chain of 120-bed hospitals and cardiac centres

HEALTHY HEARTS, HEALTHY BALANCESHEET: The Chairman of Apollo Hospitals Group, Prathap C. Reddy, with the Director (Finance), Suneeta Reddy, at a press conference in Chennai on Monday. — Photo: Bijoy Ghosh

CHENNAI: Apollo Hospital Enterprises will use a part of the $70.2 million it raised recently through a GDR (global depository receipt) issue to set up 120-bed hospitals in seven mini-metros and a couple of pure cardiac hospitals in southern India.

Addressing a press conference here on Monday, Suneeta Reddy, Director (Finance), said a study on where to locate these 120-bed hospitals was currently on. A decision on locations would be made in two weeks. These hospitals would be fully owned by Apollo and would come into being in two years. Each would involve an investment of Rs. 15 crore, she said.

Ms. Suneeta Reddy said the speciality cardiac hospitals that Apollo was planning would involve an investment of around Rs. 40 crore each. She justified the move to set up speciality cardiac hospitals on the ground that nearly 40 per cent of Apollo's revenue came from cardiac treatment. "We looked at Bangalore and also Andhra Pradesh for cardiac hospitals,'' she said. Nothing, however, had been finalised as yet, she added.

The director said another Rs. 60 crore would be used to consolidate and upgrade the existing facilities of Apollo. A part of the GDR fund would also be utilised to finance the establishment of an institute of minimal invasive surgery.

The Chairman P. C. Reddy said the proposed institute would not only treat people, but also be used to train Apollo personnel.

Following a memorandum of understanding with Johns Hopkins Medicine International, a world leader in healthcare services, research and medical education, Apollo was planning to set up central reference labs in Chennai, Hyderabad and Delhi. "We will do high-end clinical tests here,'' he said. This would be a 50:50 joint venture with Johns Hopkins, who was expected to invest in medical equipment.

The Chairman said these labs would take off in 12 months.

Schroder, which had stayed invested in Apollo for long, had reportedly sold 12 per cent of its stake to Khazana Nasional of Malaysia in a negotiated deal. Schroder originally offered to sell their shares as part of the GDR offer. Subsequently, it had changed its mind and decided to settle for a direct sale. Shroder held 15.13 per cent stake in the company. Post-GDR issue, the equity had expanded by 16 per cent. The foreign owners held 55.86 per cent stake in the company now (26 per cent earlier). The promoters' holding would be around 28.9 per cent.

Ms. Suneeta Reddy indicated that Apollo would expand its pharma network. Close to 39 per cent of the company's revenue came from the pharma business. Apollo recorded a revenue of Rs. 157 crore during the quarter ended June 2005, up from Rs. 135 crore in the same quarter last year. The net profit for the June 2005 quarter was Rs. 14 crore (Rs. 10.50 crore).

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