I don't want a Ranbaxy or a Vijay Mallya legacy, says Analjit Singh

Analjit Singh
The Max Healthcare board on Monday cleared the proposal of KKR-backed Radiant Life to acquire a majority stake in the firm via merger. Chairman Analjit Singh tells Surajeet Das Gupta and Veena Mani about his reasons to exit healthcare and his new focus areas. Edited excerpts:

What is the reason for your exit from healthcare business?  
It is something analogous to what happened in telecom to us. We had a licence in Mumbai and started operations. We participated in biddings for three circles of Gujarat, Maharashtra, and Punjab, but the winning bid was four times ours. I quickly saw the writing on the wall, that this is a business of scale and for the big boys. Despite having 13 hospitals, the political and business risk of being concentrated in the National Capital Region was a challenge. With the deal, we have diversity through hospitals in Mumbai and an increase in scale in Delhi that will mitigate the headwinds we have faced in margins due to pricing of procedures, devices and nursing wages.  

But why sell the business, could you have not expanded to other regions on your own or with KKR? 
I am sensitive to the fact that we must exit business with the same elegance that we entered it. I don't want a negative legacy. In all the businesses we have exited, we have built it from the ground up. And after our exit, they have become even bigger. I don't want a Ranbaxy or a (embattled liquor businessman Vijay) Mallya legacy. I want a successful legacy and I want to create good will.  Secondly, writing was on the wall because we got a hit in Delhi. I have been there and seen it and done it all and I have exhausted my aspirations in doing these kind of business. When I look at succession, my kids are not interested in this line of work.  Though we have institutionalised the healthcare business, it needs shoulder-to-shoulder support of the sponsor because it faces issues with government, patients, and doctors. I am past the stage of finding a professional team who I can trust and build the business further. So I needed to find a new natural owner. That's is what I have done.  

You could have followed the operation and management model to expand your chain?
I don't want to be an operational person. I don't want that life anymore, it is a personal choice. I could work with KKR to support us to expand the business, but that would take 10 years of my life and I don't want to do that. I don't want to restart my life for the next hump of growth of the healthcare business. I don't want to do what Sunil Mittal has done in Bharti, I don't want the risks or the accountability to investors. Also, my other businesses will require capital as well as my time.

Does this mean that you will also exit the insurance business? 
The insurance business is very different from healthcare. Insurance business is well template, it has attracted and retained professional management at a much higher level than in healthcare. Insurance fit in my kind of life where you do not have to be too involved requires to put in some capital, and KKR has helped us in that already.

You also were pretty close to selling off your insurance business. Has that changed? 
I am not selling the business at large. I have  40 per cent in insurance and can still sell 5 per cent and get as much money as I have from selling most of the healthcare stake. My rights don’t change till I have 10 per cent in the business.

What do you think is the key to sustain the healthcare business? 
Any business for social good needs scale. And that is what we will have with the deal the merged entity has plans to move from 3,400 rooms to 5,000 rooms, which will also reduce overhead costs.  

So what are the businesses do you plan to concentrate on now?
Our focus will be life insurance, real estate, senior living, investing business, and hospitality overseas. In hospitality, the reason for concentrating overseas is that it diversifies the portfolio and I also spend personal time there. There could be synergies between healthcare and hospitality, and healthcare and senior living later on.

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