Fortis looks to harvest synergy between global & domestic biz

Written by fe Bureau | New Delhi | Updated: May 30 2012, 06:26am hrs
To leverage synergies between its freshly integrated international business, previously owned by Malvinder and Shivinder Singh, and its domestic healthcare business, Fortis Healthcare has set up a global supply chain organisation and a global shared services platform.

Meant to unlock synergies in supply chain efficiencies, the global supply chain organisation would be headed by Gagan Bedi, who worked as a senior director with Phillips Healthcare at the Netherlands. For the same, he has already relocated to Singapore. This arm would look at benefits that may accrue to Fortiss Indian and overseas business because of its size and interdependence. For instance, this division, among its other functions, would try to take advantage of economies of scale to negotiate pricing for consumables and other bulk buys for the organisation.

In its second initiative, Fortis Healthcare has tied up with Infosys to create a global shared services platform. This would look at integrating suitable back-end systems and processes. Thirdly, on the clinical side, cross-consultation of doctors across geographies has already begun within the Fortis network, Vishal Bali, group CEO, Fortis Healthcare, said. While doctors in India have started helping their counterparts in Vietnam, similar initiatives are on between Fortiss Hong Kong business and Singapore business, Bali said.

During the quarter, Fortis completed its acquisition of Fortis Healthcare International. The integrated entity now straddles across multiple geographies in Asia-Pacific regions in four verticals of primary health care, day-care specialty, diagnostics and hospitals. Additionally, it is spinning off its non-core businesses into an independent company and would be listing it at the Singapore Exchange with an aim to raise R2,000 crore. This would serve two purpose. It would help the company shed its debt burden that stands at R5,000 crore at present.

It would also help it attain an asset light model it has been striving for. The listing planned on Singapore Exchange Securities Trading will happen through group unit Religare Health Trust, which would have the mandate to invest in medical and healthcare assets and services in Asia, Australasia and emerging markets.

For the fourth quarter of financial year 2012, Fortis has posted a net profit of R42 crore, which it said, implies a 41% jump since the corresponding quarter in the previous year. However, these figures are not comparable in strict terms, considering Q4 profit factors in financials of multiple overseas business, which were integrated in the Fortis network in the concerned quarter.

Consolidated global revenues of the company in the quarter stood at R1,279 crore against R421 crore in fourth quarter of FY11. Of this, the international business contributed about half at R637 crore. In November, Fortis Healthcare (India) had said that it would acquire Singapore-based Fortis Healthcare International, privately-owned by the Indian company's founders, for $665 million. For FY2012, net profits of Fortis Healthcare stood at R72 crore, an over 40% dip since FY when it posted a profit of Rs. 124 crore.