Weight Battle

CHENNAI: The diversified Hinduja Group is actively scouting for a partner to speed up the setting up of its first hospital in Chennai. One of the foreign collaborators whose name is doing the rounds is that of Massachusetts General Hospital (MGH) of the US.

If the alliance materialises, it would mark the entry of the first US hospital major into the healthcare mecca of the country.

On Tuesday, on the sidelines of the 60th annual general meeting of Ashok Leyland held in Chennai, company co-chairman Dheeraj Hinduja said as originally committed, the project is a certainty, but it is still working on its hospital blueprint. The group is considering a collaborative partner to move ahead in this direction. The global slowdown has impacted the plans to some extent, he told ET.

Asked whether it would be a 500-bed hospital project, he said the bed capacity has not yet been finalised. Initially, the group had outlined its intention to set up a hospital in the metro with a capacity of 250-300 beds to fit into its overall plan of having 5,000 beds across the country.

The Hinduja Group has a pact with Limitless, a global integrated real estate development arm of Dubai World, a Dubai government-owned entity. The joint venture envisages a spectrum of services, including medicare services and infrastructure in India and in places like Dubai.

During an earlier interaction with ET, Ashok Hinduja had said: “Limitless and ourselves have entered into a joint venture. In the 51:49 JV, we will have a 51% stake. The project will not only have infrastructure related to hospitals, but those related to real estate also.”

Along with its partner, it had proposed to set up a hospital chain across the country. After registering its presence in metros, the group had plans to enter tier-II towns.

Concurring that the group is actively evaluating several alliance possibilities to finalise its hospital project, Ashok Leyland MD R Seshasayee said it is looking for land in the city to tie up the venture. However, he did not specify any definitive timeline to firm up the project.

A dealmaker in the healthcare space, on condition of anonymity, said the Hinduja Group is believed to be in discussions with MGH, though a deal has not yet been sealed.

But since land is a key factor on which the hospital project hinges, there is a possibility that the London-based Hinduja Group could also forge a partnership with a local player, which has land bank at its disposal, an industry tracker said. On the progress of the group’s branding initiative, Dheeraj Hinduja said this matter would be taken up only in April next year. A dedicated agency is handling the matter.

It may be recalled that the group has already started re-branding some of its companies — Ennore Foundries, for instance, is now Hinduja Foundries — to identify itself with the Hinduja brand. One of the group’s new entities floated has been christened Hinduja Leyland Finance. With an initial capital of Rs 100 crore, this company has been launched to give impetus to dealer financing.

NEW DELHI: The Indian arm of the US-based medical devices maker Becton Dickinson (BD) has dragged the health ministry and three companies to the court, after a procurement tender was cancelled and a new one was floated. “We filed this lawsuit because the original tender is still open, the bids are all in, and we see no reason why the Indian government could not act on it,” said BD India managing director Ram Sharma.

The three companies that BD India has taken to court — Hindustan Syringes & Medical Devices, Iscon Surgicals and Chinese firm Wuxi Yushou Medical Appliances — participated in the original tender. BD India has charged the health ministry with the intention of buying products from its competitor for which it was the lowest price bidder.
The government has said BD is ‘exploiting the legal route for commercial purposes’ and the ministry had valid reasons to terminate the original tender.

BD indirectly benefits from such legal action because if the tender gets stuck, the government will be forced to procure syringes from global organisations, of which BD is a principal contractor, an official of an Indian company that took part in the tender said on condition of anonymity. The case is scheduled to be heard on July 28.

In September last year, the health ministry had floated a tender to procure 70 crore units of 0.5-ml and 4 crore units of 0.1-ml auto-disable syringes. In its petition to the Delhi High Court, BD said it was the lowest bidder for 24 of the 40-scheduled items when the bids were opened in November last year.

Earlier this year, following a request by the health ministry, BD agreed to supply about one crore units of 0.5-ml and 0.1-ml syringes at the bid price of Rs 2.20 and Rs 3.70 per syringe, respectively, the company added.

However, in May this year, the government floated a new tender to buy the 0.5-ml syringes and BD also participated in this tender. When the bids were opened, BD emerged the lowest bidder for two of the eight items, while Hindustan Syringes & Medical Devices quoted the lowest price for the remaining six products. The following day, BD moved the high court alleging the health ministry of acting arbitrarily to buy the syringes from its competitor.

The company said the health ministry had terminated similar tenders in the past where BD emerged as the lowest bidder. A health ministry official said it has responded to BD’s petition explaining how the company was misusing the legal route. He declined to share details of its response as the matter is in the court. Indian companies say that because of such legal action to stall tenders, capacities at most of their plants remain underutilised.

NEW DELHI: Nasdaq-listed IT company iGate said it is keen to acquire companies in the health care and business process outsourcing space to scale up services.

"We have been looking for acquisition in health care & BPO space as these are the areas in which we are expanding. We would like to acquire a company to get more clients, skilled people and scale up our business," iGate CEO Phaneesh Murthy told PTI.

The company shares closed USD 6.81, down 5.15 per cent on Nasdaq on Friday.

Asked about the price the company would consider fair for the proposed acquisitions, he said "we are flexible on price but there are very few alternatives.. Even the companies are not willing to be sold as they know in these times their valuations are low".

In health care, which is fairly a new business, the company has bagged three clients and its BPO business (iTops), which currently contributes 15 per cent revenue, iGate is expecting that to double to 30 per cent over a couple of years.

iGate derives over 50 per cent of its revenue from financial services vertical, whereas the rest is contributed by media and entertainment, manufacturing and retail.

The California-based company posted a 22 per cent rise in quarterly net profit at USD 6.1 million for the supported by cost controls but its revenue slumped on a year-on-year basis.

Revenue from continuing operations for the second quarter ended June 30 stood at USD 46.8 million, compared with USD 44.8 million in the previous quarter and USD 56.2 million in the same period last year

The revenue fell by 16.72 per cent on y-o-y basis, however, it grew sequentially.

NEW DELHI: Fortis Healthcare plans to launch its Rs 1,000-crore rights issue next month, its managing director Shivinder Singh said on Friday after the Delhi-based hospital chain posted a 700% jump in net profit for the quarter ended June 30.

“We are looking at filing our letter of offer which is the final document to Sebi (the stock market regulator) in early to mid-August and I hope that the rights issue opens by the end of August,” Mr Singh told ET NOW.
The issue, announced in December last, was originally slated to hit the market in July.

The company recorded a net profit of Rs 7.55 crore in the first quarter, up from Rs 94 lakh in the year-ago period, while its consolidated sales increased 27% to Rs 188.54 crore. The company scrip gained nearly 1% to close at Rs 94.65 on the Bombay Stock Exchange (BSE).

Mr Singh attributed the big leap in profits to improved cost management and operational efficiencies and said the
hospital chain was hopeful of improving its margins. “We believe our current operating margins of 15% will continue to improve going forward and the EBITDA (earnings before interest , tax, depreciation and amortisation) should be touching higher levels on a go-forward basis ,” he said.

He also said the company was open to acquisitions as it eyes 6,000 beds and 40 hospitals by 2012. Currently Fortis runs 23 hospitals spread across the country. Mr Singh, however, refused to confirm if Fortis was in talks to buy Wockhardt Hospitals , saying he won’t comment on “market speculations” .

During the quarter, Fortis Healthcare got the management control of S L Raheja Hospital in Mumbai, adding 280 beds. It is looking for more similar deals.

The company intends to add 2,500-3 ,000 beds in the next three years. Its 550-bed hospital in Shalimar Bagh West Delhi will become operational by the third quarter. Next year, its 1,000-bed Medicity in Gurgaon will start with open 40-50 % capacity.