An ambulance in need is noble business indeed

Among the top-five ambulance services, Ziqitza Healthcare needs to expand nationally & into non-emergency ambulance services

Shaffi Mather's mother choked in her sleep one night. Helpless, he drove her to the hospital and she survived. A week later, Mather's friend Ravi Krishna's mother collapsed in the US and within minutes 911 (the emergency number) helped him get an ambulance. That is when Mather and Krishna realised the acute need for an organised ambulance service in India.

In 2002, Mather, Krishna and three other friends - Sweta Mangal, Naresh Jain and Manish Sacheti - conceptualised Ziqitza Healthcare. Ziqitza is derived from the Sanskrit words chikitsa (medical treatment) and jigyasa (quest for knowledge).

In 2004, the company started with two ambulances, on a pilot basis as an NGO. Later, Sam Pitroda suggested life-saving ventures needed to be sustainable. "In 2004, if you dialled 102 (the government ambulance service), you were connected to the cremation ground. Ninety per cent ambulances then were used as hearse vans," recalls Mangal, chief executive.

The company landed 10 ambulances in Mumbai in 2005 and offers two emergency medical response services.

Ambulance service 1298: Launched in 2005 in Mumbai, it's a paid service working on cross-subsidisation: the rich (those going to Leelavati or Breach Candy hospitals) pay more and the poor (those going to government hospitals) pay less. The service is free for the very poor and for accidents & emergencies. There are about 100 ambulances available in Mumbai, Punjab, Bihar and Kerala. In three years, Ziqitza aims to cover Delhi, Kolkata, Chennai and Bangalore.

Emergency service 108: This works in partnership with state governments. This could be either free to patients or a paid service depending on the government's contract. It is operational in Bihar, Odisha, Punjab and Rajasthan, with about 800 ambulances.

Ziqitza offers two types of ambulances - Advanced and Basic Life Support. Advanced Life Support offers paramedics, defibrillator-cum-monitor, ventilator, syringe pump, pulse oxymeter, resuscitation kit, etc; Basic Life Support offers oxygen cylinder, blood pressure apparatus and stethoscope. "Basic Life Support charges Rs 1,400 for the first 10 km and Rs 18 a km thereafter. Advanced Life Support charges Rs 2,000 for the first 10 km and Rs 20 a km thereafter," says Mangal. Ziqitza employs about 5,000.

Early stage investor Anil Joshi says Indian health care is worth over $100 billion and expected to grow 15 per cent annually. The sector comprises hospitals, pharmaceuticals, diagnostics, medical equipment & supplies and insurance. There is no categorisation of emergency medical or ambulance services. The ambulance service market in the US is worth $8-9 billion, likely to grow 10 per cent a year.

Ziqitza is the second biggest ambulance service company in India, after GVK EMRI; others include G N Video and Pune-based BVG.

Says Ritesh Banglani, director at Helion Ventures, "Ziqitza is targeting a very big underserved market. The base of ambulances is far smaller than required, so demand generation should not be a problem. The company has shown good top line growth, indicative of strong execution. It is well-positioned to extend beyond ambulances - it is building a brand that stands for 'saving lives in an emergency'."

The five promoters together put in Rs 2 crore in Ziqitza. In 2007, Acumen Fund invested $1.5 million (Rs 5-6 crore) for a 33 per cent stake. Then Invision, IDFC, HDFC and Invalue invested close to Rs 15 crore in 2010. The company plans to raise another Rs 75 crore in six months. Mangal says 90 per cent of the company's business comes from 108 services because these are large government contracts. But margins are high in private business. In the first year of business (2006), Ziqitza's turnover was less than Rs 1 crore. In 2012-13, the turnover was Rs 105 crore with positive EBITDA (earnings before interest, taxes, depreciation and amortisation) and EBT. In 2014-15, the company expects a turnover of Rs 150 crore.

Banglani says ambulance services are capital-intensive. An ambulance costs Rs 15 lakh. "Their ability to raise equity and debt will be a key determinant of growth. Dependence on government contracts is high. This will reduce margins considerably and/or place them in competition with relatively unprofessional players. Often, companies also face considerable payment delays from government agencies," he says. "There is no clear definition of 'ambulance service'. Anyone can register a vehicle as an ambulance if there is a stretcher and an oxygen cylinder on board. There is no standardisation of staff. There is no accredited course for paramedics. Indian traffic rules are not in sync with emergency services. There should be transparency in dealing with tenders also," says Mangal.

However, there are still enough opportunities as states are taking initiatives to provide basic health services and will be coming out with tenders. And, the ambulance service business is still to go to the smaller towns.

FACT BOX
Area of business: Ambulance service
Started operations: 2005 (commercial)
Turnover: Rs 105 cr (2012-13); Rs 150 cr (likely in 2014-15)
Funding: $1.5 mn (Rs 5-6 cr) by Acumen Fund in 2007; Rs 15 cr by Invision, IDFC, HDFC & Invalue in 2010
EXPERT TAKE

EMRI was a pioneer in non-government ambulatory care in India. Much before the advent of the concept of corporate social responsibility, many for-profit entities have led the charge in technology interventions that made meaningful contribution to our society. The fall of Satyam led to the takeover of EMRI by GVK. Many players have now entered the fray and one of them is Ziqitza Healthcare.

I feel that ambulatory care in India is still in its infancy. We still have islands of excellence, unlike the uniform 911 service that is available across the US. A country where a pizza can reach faster than an ambulance, we still take more than an hour to reach an ambulance to a remote village in India. The cities are no better. Another neglected area is paramedics, who can make a strategic impact in a medical emergency.

Ziqitza provides interesting learning where initial experiments on the NGO model did not auger well for a scalable enterprise. It also demonstrates the fact that 'for-profits' can also serve neglected segments of the market while at the same time remain profitable and appeal to investors. As the late management guru, C K Prahalad, often spoke about the "fortune at the bottom of the pyramid", Ziqitza demonstrates that serving the underserved does not just provide volumes but can also be profitable.

Rama Subramaniam is lead architect and director of Blue Sky Angels, an initiative of Bangalore-based eHealth Technology Business Incubator