New Delhi: Fortis Healthcare Ltd plans to invest $500 million (Rs1,970 crore) to achieve its target of 40 hospitals by 2010-11, focusing on improving its presence in the West and South to get a pan-India presence, according to Fortis’ group managing director Shivinder Mohan Singh.
Expansion mode: Group managing director Shivinder Mohan Singh.
Singh said about half the money would come from internal resources, including proceeds from a May initial public offering of shares, as well as debt. He did not rule out a second public offer or infusion of additional funds through private equity.
The Delhi-based Rs512 crore company had already established a toehold in the West and South—it acquired Hiranandani’s hospital project in Vashi, Navi Mumbai, for about Rs25 crore and Chennai-based Mallar hospital for a similar sum.
The second largest hospital chain in the country, behind Apollo Healthcare Enterprises Ltd, Fortis has a network of 13 hospitals with 2,200 beds.
Private hospitals generated $15.51 billion in revenues in 2006 and are expected to generate $36 billion by 2012, according to a study by Ernst&Young and industry body Ficci.
Fortis’ shares closed 3.74% lower at Rs82.45 per share on Bombay Stock Exchange on Monday. They had debuted at Rs108 in May.
“Our company is new and people are unable to figure out how to value it,” claims Singh when discussing Fortis’ share prices.
“Then, we have a negative bottom line and investors don’t see that favourably. Another significant component is that people don’t understand the depth and scope of our company plans and growth.
He declined to predict when Fortis would report a profit.
Singh expressed strong views on the role of private, for-profit hospitals in terms of their larger responsibility of providing access to health care. “In health care, it is the responsibility of the government rather than the private sector to provide for the masses,” he said.
“How much impact can the top five players have, with a total marketshare of less than 2%? The government needs to figure out what’s their health agenda for the country and what they can do to fix it.”