Apollo gears up for Rs 2,000 cr expansion

The Rs 8,700 cr market capitalisation hospital chain, as on March 31, 2012, had a debt of Rs 797 cr

The country’s biggest hospital chain, Apollo Hospitals Enterprises Ltd (AHEL), is planning to invest around Rs 2,000 crore to add 2,500 beds between 2013 and 2015. It may be noted, it is presently in the process of adding around 1,500 beds at an outlay of around Rs 2,000 crore and its gearing up for the next round of expansion.

The additional capacity will be taken up post the present expansion. Apollo Hospitals is one of the largest hospital networks in Asia with 5,908 owned and 2,038 managed beds across 36 owned and 13 managed hospitals as on June 30, 2012. In 2011-12, the bed occupancy ratio was 71.2 per cent and average revenue per occupied bed increased by 9.3 per cent CAGR (fiscal 2008-12) to Rs 20,455 in 2011-12.

“We are on track to add 1,500 beds of which 500 beds have already been added. We are now working on the next phase of expansion plan which is for 2013-14 and 2014-15. The plan is to add 2,500 beds,” Prathap C Reddy, chairman, Apollo Hospitals Group, told Business Standard.

The hospital chain is planning to give a major thrust on expansion into tier II and tier III cities to fuel growth. It is also adding another six robots at an investment of around $1.5 million each across its hospital network, said Reddy.

He added, the Bombay Stock exchange-listed company has a comfortable debt-equity ratio. “We can push a little more and take more debt.” The Rs 8,700 crore market capitalisation hospital chain, as on March 31, 2012, had a debt of Rs 797 crore.

Asked if the company is open to equity infusion through a stake dilution, he said, “People are willing to give us money. Earlier, we were planning a debt-equity ratio of 1:1. Today, we are able to service it at 1.5:1. Some foreign and domestic investors have shown interest and we are looking at it. As far as possible, we don’t want to dilute,” said Reddy.

It may be noted, global private equity firm Apax Partners LLP is looking to sell its 10 per cent stake in Apollo Hospitals Enterprise Ltd, in a deal that could raise around $250 million or more, according to reports.

Malaysian sovereign fund Khazanah Nasional Bhd, which already holds a 10.85 per cent stake in Apollo Hospitals, is one of the funds in talks with Apax. Other investors interested in an Apollo stake are Blackstone Group LP and Bain Capital.