In its website Narayana Health (NH) states it is ‘Amongst
top 50 local dynamos of the world’ (http://www.narayanahealth.org/)
NH’s growth is phenomenal from 225 beds in 2000 in Bangalore to 7500 beds in
2014 in 29 hospitals across 17 cities. NH wants to grow to 30000 beds by 2018.
NH has a project stated to be worth $2billion over 15 years in the Cayman Islands in association with an American non-profit
partner for the purposes of medical tourism style of healthcare services. (Cayman
Island has a population
of approximately 57000 with the financial services industry seemingly as its
main economic activity and the world’s second most significant tax haven as per
Wikipedia)
In percentage terms for the number of beds is 3333% growth
in 14 years which is 238% growth each year.
With that kind of growth no wonder JP Morgan and Pinebridge
invested $100million for a 25% stake in the company ( http://articles.economictimes.indiatimes.com/2013-05-24/news/39476325_1_heart-surgeon-elderly-patient-dr-devi-shetty ). There are news reports that they are now
looking to exit.
Narayana Hrudayalaya Private Limited (NHPL) is a company
with a subscribed capital of Rs 3,000,000,000.00 ($48million) and a paid up
capital of Rs 3,457,530.00 ($55000) according to their last balance sheet of
31/03/2014 filed with the Indian government. NHPL has ‘charge amount secured’ as
charges registered in the MCA government of India website Rs 2,005,500,000.00 ($31million) to
Indian financial companies. In other words it seems like NHPL has Rs 200crores
of secured loans for Rs 34 lakhs worth of paid up capital. This company has
many of its stakeholders’ representatives as directors.
There is
also another private limited company called Narayana Hrudayalaya Surgical
Hospital Private Limited (NHSHPL) with authorised capital 50,000,000.00; paid up capital
of Rs 27,027,040.00; charge amount secured Rs 541,238,215.00 In other words Rs
54crores of secured loans for a paid up capital of Rs2.7crores.
Narayana
Hrudayala’s quoted profit is about 8% which is decent but not probably good
enough for some. At a capex of Rs
17.5lakhs per bed their 7500 beds would result in assets of Rs 13,125,000,000
(about $211million). However, they have already stated they are trying an asset
light model, where the asset belongs to someone else and Narayana Health
provides operations.
The $100million private equity investment for the 25% stake
of the company would put NHPL’s value at $400million. Perhaps there are other
constructs/structures/vehicles that relates to these numbers quoted in the
press. However, the subscribed capital
of the company is $48million. Narayana Health website in its disclaimer, terms
and conditions and copyright all refers to Narayana Hrudayalaya Private
Limited, so for the purposes of this write up I am assuming that they are
indeed referring to NHPL. NHPL has a variety of stakeholders including private equity representatives on its board; NHSHPL has only Dr Shetty and a couple of others on the board. As an industry watcher, I am not interested in the
nitty gritty of their financial architecture. I am interested in how successful
they will be in the medium and longer term.
NH and Dr Devi Shetty are known for their low cost model of
private healthcare, their large scale operations and mega ambition. They have
not accessed the public with a share offering yet. Their models have also been
criticised (http://blog.drmalpani.com/2012/06/how-sustainable-is-narayana-hrudayalaya.html
) There is definitely something exciting happening with NH, time will tell us
whether that excitement is positive. Time will tell us whether their debt will
negatively affect them, or if their assets will sustain them, or a share
offering will boost them. Time will also tell if their model of innovation
would be successful.
Irrespective of whether one is interested in finance,
healthcare, innovation, politics, off-shore investments, medical tourism or any combination of these, Narayana Health is a
company to watch.
©M HEMADRI
Follow me on twitter @HemadriTweets
PS: Narayana Health and its growth fascinates me and reminds me of Apollo Hospitals in its rapid growth phase. The above information is gleaned and presented from internet searches. I will be happy to correct, amend or post additional information if that was necessary.
1 comment:
If N.H succeeds as a business model which is sustainable.It will be a rare combination of social service and financial viability in a short period of time. One has to address succession issues.Dev shelty is an extra ordinary person.His energy level, capacity to work long hours and passion are rare and very few human beings measure up to his standards.
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