Kolkata: Sanjiv Goenka, chairman of the RP-Sanjiv Goenka Group, has taken control of at least 80% equity stake in Woodlands Medical Centre, one of Kolkata’s most respected hospitals, through a court-approved restructuring of debt and equity of the firm that runs it.
This marks the newly formed RP-Sanjiv Goenka group’s formal entry into healthcare. It isn’t immediately known, though, whether the hospital is to be brought under the umbrella of the group.
“I feel that Woodlands was part of Kolkata’s landscape and needs to be thoroughly revamped and modernized,” said Goenka. “There’s huge capital expenditure involved… A lot has been spent in the past 12 months, and a lot more will be spent over the next 24-36 months.”
He refused to comment on the hospital’s equity and debt restructuring.
Healthcare entry: Sanjiv Goenka, chairman, RP-SG Group; Harikrishna Katragadda/Mint
Built with donations and contributions to equity from hundreds of British and Indian companies in Kolkata in the 1940s, Woodlands Medical Centre in the upscale Alipore area was commissioned in 1959.
It stands on a 96-cottah plot, which previously belonged to the royal family of Cooch Behar. One cottah is one-sixtieth of an acre.
The 240-bed Woodlands Medical Centre derived its name from Woodlands Palace, which stood on the plot now occupied by the hospital.
According to the latest regulatory filings, Woodlands Medical Centre’s 666 shareowners included Tata Steel Ltd, ITC Ltd, Cesc Ltd, Voltas Ltd, Bata India Ltd, Williamson Magor and Co. Ltd, European banks such as Lloyds Bank, Standard Chartered Bank, ABN Amro Bank and Hong Kong and Shanghai Banking Corp. Ltd, and even insurers including Royal Insurance Ltd and Sun Life Assurance Co. of Canada, which were nationalized.
Most of these companies had bought shares in the 1940s and 1950s. The firm, though, had a small equity base of Rs 5 lakh divided into 50,000 shares of Rs 10 each.
Since 1994, Goenka was the hospital’s non-executive chairman, and controlled it with his voting rights on debentures he held in the firm.
Earlier this year, Woodlands Medical Centre Ltd got merged with an associate firm, Woodlands Multispeciality Hospital Ltd. Under the restructuring scheme, debentures in Woodlands Medical Centre got converted into equity shares at face value.
This resulted in Goenka’s voting rights getting converted into equity stake, and his management control into ownership.
The court documents say no valuation was done of Woodlands Medical Centre because one of the key purposes of the merger was to “rationalize the shareholding” of the hospital.
As of 20 September 2010, the company had received Rs 37.04 lakh in debentures, according to regulatory filings. More money was infused before the merger was concluded in April-May, but it isn’t immediately known how much.
“For years, Goenka was the only person to provide funds to Woodlands through debentures,” said a person closely associated with the hospital. “Though he had asked others to contribute, no one took interest in Woodlands because there were issues with control. As a result, he managed to ramp up his voting rights.”
Over the years, a number of companies including ITC withdrew their nominees from Woodlands Medical Centre’s board, according to this person, who did not want to be named. “It seems everyone else had lost interest in Woodlands.”
Meanwhile, Goenka has begun rebuilding the hospital. Its management is likely to hire Morphogenesis, an architecture firm, to advise it on revamping the hospital. By Goenka’s estimates, this is going to cost in excess of Rs 50 crore, and the amount is to be spent over the next few years.
Aveek Datta in Mumbai contributed to this story.