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Business News/ Companies / News/  Paras Healthcare plans to double capacity with 500 crore capex in 2 years, says MD Dharminder Nagar
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Paras Healthcare plans to double capacity with ₹500 crore capex in 2 years, says MD Dharminder Nagar

The company recently bought a hospital from Fortis Healthcare in Udaipur
  • Paras Healthcare recently entered into a partnership with Heavy Engineering Corp to open a 300-bed multi super specialty hospital in Ranchi
  • Photo: MintPremium
    Photo: Mint

    NEW DELHI : Gurugram-based hospital chain Paras Healthcare Pvt Ltd plans to spend roughly 500 crore in capital expenditure in around two years to double its capacity to 2,000 beds, Managing Director Dharminder Nagar told Mint in an interview.

    The healthcare chain, which is focused on smaller cities in North India, currently has eight tertiary hospitals, and plans to have around 10-12 of them in two years, he said.

    The company recently bought a hospital from Fortis Healthcare in Udaipur, and also entered into a partnership with Heavy Engineering Corp to open a 300-bed multi super specialty hospital in Ranchi.

    In the interview, Nagar discusses the Paras Group company’s expansion strategies and its funding plans, along with a possible initial public offering in three years. Edited excerpts:

    Paras Healthcare recently acquired a new hospital and also entered into a partnership with another But all of these are in smaller towns. What is your strategy for expansion?

    We have grown as a healthcare enterprise since starting in 2006, and have focused on North India. We are very committed to providing healthcare to the middle class in North India. We also want to provide access where there is either a lack of quality access or no access to healthcare facilities. We started in Gurugram when there was no hospital. Then we expanded into Bihar, with facilities at Patna and Darbhanga, and then got into Panchkula. We bought a 200-bed hospital at Udaipur, and are setting up one at Ranchi in a partnership with Heavy Engineering Corp. We have added 250 beds this year and next year will add another 250 beds.

    How many hospitals will you be setting up in the foreseeable future?

    We currently have eight hospitals, and plan to have 10-12 hospitals in the next two years. In terms of beds, we have around 1,000 operational beds now, and by 2020-end we plan to have 1,400 beds. In two years, our target is 2,000 beds. We will spend roughly 500 crore on capital expansion.

    Do you plan to raise additional funds going forward? Are you planning to go public?

    We raised about $42 million from Creador, Malaysia-based fund, around two years back, and used some of the funds and debt for our last expansion. The next round of expansion would be through internal accruals and the investment. Our capital expansion is lower because we use an asset light model of long-term leases and operations and management.

    If we look at the next three to four years, we may do another round of private equity funding or in three years, we may go for an IPO (initial public offering), depending on our scale. There is a plan that we get to the 2000 beds. At that moment, if there are market opportunities for any acquisition and expansion in North India we want to serve, we may use the instrument of private equity or public market.

    How is your business model different from other hospital chains like Fortis Healthcare, Apollo Hospitals, or Narayana Hrudayalaya?

    Paras Healthcare has always catered to the middle class. We try to make sure that our capital and operational expenditure don’t affect patients. Narayana Hrudayalaya is also focussed on providing good healthcare for the middle class but they seem to be focussed on the cardiac sciences and provides value there, whereas Paras Healthcare provides value across specialties. Also while Narayana Hrudayalaya is focussed primarily on South India, we are doing it in North India. Also, in North India, the population is higher and the problem of access is bigger. We are focussed on Jammu & Kashmir to Madhya Pradesh, and Rajasthan to Jharkhand.

    What are you views on Ayushman Bharat?

    We are already part of Ayushman Bharat. We recently got our Darbhanga hospital into the scheme. It is a good programme, and while there is criticism about package rates and some hospitals not being a part of it, I feel we need to look at it from a 5-10 year timeline. In 5-10 years, Ayushman Bharat would be a great scheme because currently there are two issues for healthcare in India. One is that there are not enough doctors and the second is the ability to pay. Ayushman Bharat solves the issue of payment and I believe Indian entrepreneurs have the ability and vision to set up hospitals that cater to patients with various paying abilities, and with a good business model.

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    Published: 11 Dec 2019, 06:49 PM IST
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