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Our plan is to be among top three healthcare players in next 3-5 years: Nitish Shetty, Aster DM Healthcare

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“We are planning to deploy close to 1,700 beds in the next three years. These 1,700 beds are going to be a combo of brownfield projects and greenfield projects,” says Nitish Shetty, CEO, Aster DM Healthcare.

Let us start by what will be the key focus areas for Aster DM in the India business now given that we are seeing that this separation has been completed with the India and the GCC business?
The most difficult part of segregation that has happened now is that transaction has happened. It is good news for us. So, with that, India has become a pure play entity now. We have big plans for Aster India. We have aspirations to be among the top three in the country because we see a window of opportunity to be among the top three in the country.

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For that, we have a very clear, laid out plan going forward for the next three to five years. We are planning to deploy close to 1,700 beds in the next three years. These 1,700 beds are going to be a combo of brownfield projects and greenfield projects.

60% of that 1,700 beds are going to be brownfield projects. When I say brownfield, it is an expansion of the existing infrastructure, existing hospitals, adding additional beds to the existing hospitals.

Greenfield is going to be two hospitals in Kerala, one in North Kerala and one in South Kerala. North Kerala hospital is going to be 250 beds and down south in Trivandrum, it is going to be 450 beded hospital.

These two hospitals will be commissioned in 2026 and 2027. So, that is the organic growth plan we have. But we also have plans to explore the possibility of extending from where we are present now in Kerala and Karnataka, extending further into Tamil Nadu and Maharashtra. We have plans. We also are open to the inorganic growth path which is the merger and acquisition. We are actively looking at it. Now, post-segregation, we will be actively looking at those opportunities. So, if any like-minded or we find an opportunity to acquire entity which has a similar presence like us with clustered approach, that would be a great help in expanding our footprints even in the northern geography like UP and other markets, north-eastern markets. So, our plan is to be among top three players in the next three to five years.

By when can we see all the approvals on the dividend coming in?
Yes, that is the kind of decision the board has to make now. Post this transaction the board will be making a decision based on the capital requirement for the future growth and what is the best way to reward our shareholders. The board will be deciding very soon. I would not be in the position to clear the comment on the board’s behalf because the board has to make a final decision.

And how do you plan to fund the capex – via internal accruals or are you going to look to raise money via debt?
See, most of our hospitals are reaching a mature state and we are generating enough cash. For the organic growth, which I mentioned, we are planning to deploy 1,700 beds, we need something close to 1,000 crores, which I feel we are very confident of generating through internal accruals.

For the inorganic expansion, we might use our share as a currency or might use some sale proceeds to acquire another asset. But for organic growth of 1,700 beds, I think we can fund it through internal accruals and we do not need to leverage on our balance sheet.

But the company is also planning to add around 1,700 beds by FY27. So, any specific treatment that you are eyeing in terms of these bed additions that you will have, what is the focus there?
See, we have been very successful in the geography where we are present, like in Kerala and in Karnataka, that has got to do basically with our clustered approach.

In Karnataka, we have 1,000 beds, in Andhra 1,000 beds. This cluster approach has helped in acquiring talent and delivering quality care. Having said that, this model we are planning to replicate in other geography because we know this model works well. Because this clustered approach will help us in maximizing our management bandwidth and also the healthcare is more a word of mouth and referral based.

So, cluster approach helps us in dominating the market, being very visible and giving highest quality healthcare.
Our speciality focus has been on the tertiary and quaternary care. We do primary and secondary, but our focus is in the tertiary and quaternary care.

Another aspect of course is that we have delivered this tertiary and quaternary care in tier II, tier III cities. Most of hospital chains are renewed in the large cities because of their availability of talent.

But the differentiator we have brought into market is that 75% of our business are in tier II, tier III, like Kochi or Calicut or Vijayawada or Kolhapur.

We are confident of building the similar model in the newer geographies also. Like if we venture into Maharashtra, Tamil Nadu, or even northern states like UP, where there is an opportunity, we feel we have the management and experience to deploy our model there and be successful.

And since your occupancy and ARPOB are lower in comparison to some of the peers, how do you see this number growing?
Occupancy, we are closing to 70% now. In the Kerala market, we are close to 80% occupancy. In other geographies, we are in 50 to 60. But we are hopeful of increasing the occupancy to overall 80% in the next three years in all our geographies, that is the occupancy part.

And ARPOB has been relatively low compared to our competition. We see good traction happening there also because of the work we are doing, the patient mix which is changing in our hospital and hospitals are also maturing in various geographies of us. So, in that sense, we see an ARPOB going from 40 to mid-50s in the next three to five years.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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