New Delhi: Health care company Fortis Healthcare Ltd’s plans of setting up hospitals with real estate developers Emaar MGF Land Ltd and DLF Ltd appear to be going nowhere amid Fortis’ concerns over the sites that were proposed by both builders.
Fortis had signed an memorandum of agreement with DLF in January 2007 to set up 15 hospitals in townships being developed by the builder, India’s largest by market capitalization. Fortis was to hold a 51% stake in that venture but it was later revised upward to 74%. However, a final agreement is yet to be inked.
“We are still working on setting up projects,” said Shivinder Mohan Singh, chief executive officer of Fortis. “But the questions is where and how many, and is it appetizing enough? I think it is basically an issue of site selection for DLF and I guess in the current market this is not a priority for DLF.”
The number of hospitals is also down to four after Fortis found that most of the sites proposed by DLF didn’t have much consumer or commercial appeal, Singh said. “We realized that most of these township hospitals were not doable. Then the developer told us that of the 30 sites, only four or five will work. So, are we going to enter into a joint venture with you ( DLF) for four hospitals?”
On an earlier occasion, DLF spokesman Sanjey Roy had maintained that the agreement with Fortis was on track and the hospitals would be set up once DLF starts work on its townships.
Emaar MGF also has an memorandum of understanding with Fortis to develop hospitals in tier I, tier II and some smaller cities. Emaar plans to develop 25 hospitals with a capacity ranging from 75 to 125 beds over 10-12 years. “The agreement with Emaar is in a joint venture format and I am not aware of any dialogue with them in the last few months,” said Singh.
He said Emaar too was in the same situation as DLF—ambitious plans but offering remote sites that weren’t too appealing to Fortis.
“We realized it’s not doable,” says Singh. “The (sites) were too far, I mean you have a campus coming up in Manesar, what will I do with that?”
Singh says half of the sites offered had to be rejected. “That’s why it’s taken time,” he said. “Also, the opportunity that was perceived to begin with was not that big. We are not going to say we will do 30 hospitals and do only three. It doesn’t work that way with us.”
However, “Emaar MGF’s partnership with Fortis is on track and working towards developing hospitals that would be positioned as one stop shops for healthcare facilities in the tier one and tier two cities of India,” an Emaar MGF spokesperson said. “We are today in the advanced stage of identifying sites for these hospitals.”
Fortis, which has a similar tie-up with Ansal Properties and Infrastructure Ltd to set up a medicity within the developer’s Sushant Golf City township in Lucknow, says its agreement with Ansal is on track. “As for the 52 acres we bought from Ansal in Lucknow, that is happening. As and when the permission of the property comes to us, we will set up our facility,” Singh said. The medicity will be set up in seven years on 52 acres being purchased by Fortis from Ansal in Lucknow. An e-mail to Ansal didn’t elicit an immediate response.
Quite a few ambitious plans by most Indian builders have come unstuck amid a significant slowing of the economy, especially when it comes to real estate projects.