“The fund coming from this will be used to pay the debt. We are targeting to bring down the debt to around Rs 2,500 crore by the end of the financial year, from over Rs 3,000 crore at present,” said A Krishnan, chief finance officer of AHEL.
The company is also expecting Rs 300-350 crore to come from the restructuring of pharmacy business under which it is transferring the front end of this business to a separate company (in which new investors such as Jhelum Investment Fund, DSP BlackRock Chairman Hemendra Kothari, and Enam Securities are investing, according to an announcement last year). This, along with free cash flow, is expected to help the company bring down debt to the targeted level of Rs 2,500 crore.
Apollo Hospitals has been on an expansion mode, investing big in infrastructure and bringing in advanced technologies such as Proton Therapy for cancer treatment. These have resulted in a higher debt.
It has added 13 new hospitals with more than 2,400 beds in the past few years with over Rs 2,000 crore of capital employed, the company had said last September. It has 70 hospitals with total bed capacity of 10,167 as on March 31.
The promoters had pledged around 74 per cent of their 34 per cent stake in the company, as part of unwinding of the deal with private equity player KKR, which infused around Rs 550 crore in AHEL’s holding company PCR Investments in October 2013. The pledged shares were later brought down to 68 per cent of the promoter shareholding. The proceedings from the stake sales in insurance joint venture and the pharmacy front-end would be coming in by September or October, he added.
The company has also said it is looking to bring in a long-term investor for its Apollo Proton Cancer Centre, the only such facility in the country, and is planning to form a special purpose vehicle for the same. While the plan is yet not finalised, if it happens this will help the company further reduce the debt.