Our expansion will be in four retail healthcare formats: Neeraj Garg

Neeraj Garg, CEO, AHLL
Apollo Health and Lifestyle Ltd (AHLL), a subsidiary of Apollo Hospitals Enterprise Ltd (AHEL), has raised around Rs 450 crore from the International Finance Corporation (IFC) and IFC Asset Management Company by divesting a 29 per cent stake recently. AHEL has brought its primary, secondary and specialty care business under AHLL in the recent past. Chief executive officer, AHLL, Neeraj Garg tells Gireesh Babu how it is planning to achieve a revenue of Rs 2,000 crore in five years from Rs 450 crore now.

How do you see the investment from IFC going to help you in future growth?

The money will be utilised to scale up AHLL’s six core businesses, including four primary care formats - multi-speciality clinics, diabetes clinics, pathology centres, dental clinics, hospitals for women and children, and day surgery centres. The expansion will happen in four formats — Apollo Clinics, Apollo Diagnostics, Apollo Cradle and Apollo Sugar.

What does this expansion means to top-line?

The market we operate in is Rs 3,30,000 crore. Our revenue in 2016-17 will be more than Rs 450 crore. For the past five years, our compound annual growth rate (CAGR) has been 165 per cent and we are expecting a 134 per cent CAGR in the next five years. In the next five years, we would like to be a Rs 2,000 crore company and serve 20 million patients a year. Availability of manpower, and our ability to put systems and processes in place are important.

How will you achieve this target?

The plan is to focus on a few formats for expansion. We are planning to double the number of Apollo Clinics in three to five years (from the current 77) and also will introduce a smaller format. We have 35 labs and 200 collection points in the diagnostics business, which we plan to expand to 150 labs and more than 1,000 collection centres. The Apollo Cradle, the women and children hospitals, will also be doubled to 20 clinics in three to five years (from the current 10).

We are currently operational in 18 states across different formats. In some formats, we will focus on expanding into new geographies while in others we will be strengthening our operations.

For instance, Apollo Diagnostics is present in the four southern states and our expansion in the diagnostics business in the next two years will be to eastern parts of the country including Odisha, West Bengal and the North-East, and we will expand in Maharashtra, Madhya Pradesh and Chhattisgarh also.

Apollo Clinics is present in 26 locations and we will bump up our presence in the same city. In the case of Cradles, we are in six cities, and will expand in this sphere too. In the South, we are present in Chennai, Bengaluru and Hyderabad and hope to be in Vijayawada and Vizag. In the North we are present in Delhi and Gurgaon and we are launching our service in Amritsar in two months. Apart from this, we will be in Ludhiana, Chandigarh, Jaipur and Lucknow.

Would you be looking for further fund raising?

The funds we have raised will be sufficient for 24-30 months. We will then decide whether we go externally to raise additional funds or whether we generate money through debt or other sources.

Do you look at inorganic growth to achieve the target?

The current projection is based on growth without acquisition. But we shall continue to seek targets for acquisition. There are not many players in these formats, but there are a few small regional units and we are looking at them. If the price is right, we will acquire. We will do small and mid-size transactions of up to Rs 50-100 croretions of up to Rs 50-100 crore.

What are the new activities in AHLL?

An average clinic has 25-30 doctors and a wide range of diagnostics. As we increase the number of clinics and get closer to the customer, we will look at a smaller format that will have fewer doctors and a smaller set of diagnostics.

We are also trying to develop a model of a digital clinic that will enable a patient to access healthcare through on-demand, either through technology or even a standardised healthcare delivery of the local doctor. We will be able to showcase that in a few months. What we are trying to do is a 'brick and click' model in which you have your doctor in person, but we will make him closer to you through technology. The idea is not to replace the doctor as many are doing.

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