The Hyderabad-headquartered tertiary care healthcare chain - BGS Global, has put its expansion plans on the ice. Instead, it wants to focus on consolidating its business after having expanded quite rapidly from a 500-bed chain to a 2,100-bed chain in under five years.
The group, which has eight hospitals, had initially planned to raise about Rs 200 crore. The funds were also to allow it to grow inorganically. But, the prevailing interest rates being quite high in the country and the weak market conditions has made the group revisit its expansion plans. The group has hence truncated its plans to raise funds. It will raise Rs 100 crore for which it is in talks with a couple of investors from the US.
“The whole financial system is not conducive for new projects, and so we felt that once we have robust cash flows, we will look at more projects,” Dr K Ravindranath, chairman and managing director, Global Hospitals, told Business Standard.
“In two years we should have a fair amount of accruals. We are in advanced stages of talks with one or two good friends. It will be equivalent to private equity,” he said. In a month or two the fund raising plans will be finalised, he added. The funds will ensure that the seven hospitals are able to run smoothly. The funds are expected to be spent on software, staff and for better things in existing hospitals.
After March, he expects the cash situation to be very comfortable. Meanwhile, it is in talks with investment firms to raise the funds. The chain is building capacity and with robust cash flows it hopes that it will not need to raise much money.
Despite the economic slowdown and the increase in input costs because of the rupee fall, the group claims that its revenues have not been hit too hard. It has been facing cost pressures including interest rates pressures and rising import costs.
The group which had revenues of less than Rs 300 crore last fiscal hopes to see its revenues cross Rs 500 crore in the current fiscal.
The 400-bed Mumbai hospital which came on steam this year will facilitate that.
The group had an EBITDA margin of 20-25 per cent last fiscal and a gross profit of 9-10 per cent.
