Manipal Health to invest Rs 2,000 crore in 5 years

Written by Pallavi Ail | Mumbai | Updated: Sep 3 2014, 14:52pm hrs
Manipal healthManipal Health Enterprises expects to fund the expansion through a mix of equity and debt and internal accruals.
Privately-held Manipal Health Enterprises, which operates Manipal Hospitals, is planning to invest around Rs 2,000 crore in the next five years and nearly doubling the capacity of beds to 7,000 in the same period, the companys new CEO Ajay Bakshi said.

Bakshi, who assumed reins of the company part of the Manipal Education and Medical Group on August 12, has charted out a national and international expansion plan that mainly involves growth through acquisitions. Growth is very important on our agenda. We are looking at more than doubling our capacity within the next five years, mostly owned beds, said Bakshi.

Of the approximately 5,200 beds managed by Manipal across 16 hospitals, nearly 2,000 are owned by the company, which means Manipal invested capital in them while the remaining 3,000 beds are managed by the company. The managed beds are owned by Kasturba Medical College, an arm of the Manipal group. (Capex) really depends on what we acquire. A lot of this will be acquisitions and not all of it will be new constructions. We feel, especially in India, that there are a lot of hospitals available that could be taken over and run better than the original owners, Bakshi told FE. A good benchmark, typically, is R50-60 lakh per bed for a hospital.

The company expects to fund the expansion through a mix of equity and debt and internal accruals. We have a pretty good record of private equity investment. Whoever has invested in Manipal in the past and exited has got handsome returns. The injection of equity will be further supported by debt, because we have a pretty good debt leverage right now. We have the possibility of increasing debt significantly, Bakshi said. Manipal will also use cash at its disposal, as he said it is important that hospitals start becoming self-sustainable rather than always seeking funding from outside.

The company is planning to list in future, though there are no concrete plans as on date. Listing is on the horizon. We have had discussions around it because we have a very good reputation in the private space, Bakshi said.

The companys major investors include foreign venture capital firm Indium IV Mauritius Holdings, which holds 17.46% stake, while private equity player India Value Fund holds a 6.98% share in the company. Manipal Education & Medical Group, the holding company of the group, bought back Kotak India PE Funds share of 5.44% in late-2013.

The company recorded a profit of R15.22 crore for year ended March on revenue of R688.02 crore. On an annual basis, profit had nearly doubled while revenue increased 16%, according to documents filed with the corporate affairs ministry.

Bakshi debunked the assumption that the hospital chain is looking to expand only in tier-II or III cities. We want to become a national network, which means that we must be in Delhi and Mumbai. We are actively looking at starting in those places. He, however, added that tier-II and III cities are important, as they are growing, attracting investment.

Manipal University has a large campus in Dubai and we are looking at entering Dubai in some form or the other. It may be a medical school or it may be a hospital, it may be both, said Bakshi.