June 2011 - Fortis Healthcare

June 2011

Disclaimer 

This presentation may not be copied, published, distributed or transmitted. The presentation has been prepared solely by the company. 

Any reference in this presentation to “Fortis Healthcare (India) Limited” shall mean, collectively, the Company and its subsidiaries. This 

presentation has been prepared for informational purposes only. This presentation does not constitute a prospectus, offering circular or 

offering memorandum and is not an offer or invitation to buy or sell any securities, nor shall part, or all, of this presentation form the basis of, 

or be relied on in connection with, any contract or investment decision in relation to any securities. Furthermore, this presentation is not and 

should not be construed as an offer or a solicitation of an offer to buy securities of the company for sale in the United States, India or any 

other jurisdiction. 

Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering in the 

United States may be made only by means of an offering document that may be obtained from the Company and that will contain detailed 

information about the Company and its management, as well as financial statements. Any offer or sale of securities in a given jurisdiction is 

subject to the applicable laws of that jurisdiction. 

This presentation contains forward-looking statements based on the currently held beliefs and assumptions of the management of the 

Company, which are expressed in good faith and, in their opinion, reasonable. Forward-looking statements involve known and unknown risks, 

uncertainties and other factors, which may cause the actual results, financial condition, performance, or achievements of the Company or 

industry results, to differ materially from the results, financial condition, performance or achievements expressed or implied by such forwardlooking 

statements. Given these risks, uncertainties and other factors, recipients of this presentation are cautioned not to place undue 

reliance on these forward-looking statements. 

The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent 

development, information or events, or otherwise. Unless otherwise stated in this presentation, the information contained herein is based on 

management information and estimates. The information contained herein is subject to change without notice and past performance is not 

indicative of future results. The Company may alter, modify or otherwise change in any manner the content of this presentation, without 

obligation to notify any person of such revision or changes. 

By attending this presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market 

position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential 

future performance of the business of the Company. 

Neither the delivery of this presentation nor any further discussions of the Company with any of the recipients shall, under any circumstances, 

create any implication that there has been no change in the affairs of the Company since that date. 

2

Agenda 

A. Healthcare Industry in India 

B. Company Overview 

C. Recent Developments 

D. Financials

Healthcare Sector: Favorable industry dynamics 

Healthcare Services remains attractive to both public and private market investors 

Strong Cash 

Generation 

Characteristics 

Increasing Public 

Outsourcing 

Increasing Private 

Payers 

Healthcare without 

Binary Risk 

Healthcare 

Sector 

Scalable Business 

Models 

Favorable 

Underlying 

Demographics 

Scarcity of Quality 

Assets 

Defensive Growth 

Characteristics 

Considerable 

Consolidation 

Opportunities 

Rise of Independent 

Providers 

4

Hospitals: Proxy for India’s Healthcare Boom 

• The Healthcare delivery market in India pegged at around US$ 45 billion in 2010 

• While globally healthcare is typically provided through a largely government-funded public system, the 

Indian healthcare industry is dominated by the private sector 

• India has ~17% of the world's population, but one of the poorest healthcare infrastructures among growing 

economies and the lowest spend on healthcare (~4.5% of GDP) 

• Demographic changes, improving income levels, changing lifestyles, and rising insurance penetration etc 

will result in a rise in discretionary spending on healthcare 

• Accessible, reliable and affordable healthcare 

continues to be a challenge 

Indian Healthcare Market (US$bn) 

CAGR: 12% 

• Opportunity in healthcare being significantly 

leveraged by private healthcare providers 

• Expected to generate employment opportunities for 

9 million people by 2012 

Source: Analyst Research 

5

Indian Healthcare Delivery 

20% 

80% 

Govt. 

Sector 

70% 

Pvt. 

Sector 

30% 

Population 

Govt. 

22% 

Out of 

Pocket 70% 

Others 

7% 

Insurance 

1% 

Hospitals in the Country 

Healthcare Expenditure 

6

Evolution of Healthcare in India 

Very Low Healthcare Spend as % of GDP 

High Disease Burden & Insufficient Facilities 

20% 

6% 

8% 8% 

9% 

1% 

Disease Beds Doctors Nurses Community & Lab 

burden health workers technicians 

Significantly Low Hospital Beds Per 10,000 Population 

Changing Age Profile of Indian Population 

139 

72 

39 34 32 31 30 

24 22 

9 

Japan France UK CanadaSingapore US China Brazil Thailand India 

Source: WHO, FICCI, Ernst & Young, Analyst Research 

7

Current Status Of Global Healthcare 

 

There is a wide discrepancy in the world with regards to the amount of health expenditures both relative to GDP and in absolute terms 

Health Expenditure (% of GDP) 

Developed Countries 

Developing Countries 

Health Expenditure Per Capita (US$) 

Developed Countries 

Developing Countries 

Source: The World Pharmaceutical Markets Fact Book 2009 from Espicom Business Intelligence; CIA World Factbook

Lifestyle Changes Driving Diseases Which Require 

Hospitalisation 

Changing Disease Profile 

Expected No. of Cardiac Patients in India 

Lifestyle 

Diseases 

Number of people (in million) 

45.0 

72.1 

Acute 

Diseases 

2008 2018E 

Estimated No. of Diabetes Patients 

Cancer and Cardiac – 

Grows widely in the 

lifestyle segment 

• Lifestyle diseases are set to assume a greater share of the healthcare 

market 

• Lifestyle diseases such as cardiac diseases require hospitalization and 

are more expensive to treat hence increasing the in-patient revenues 

Number of people (in million) 

39.0 

49.4 

2008 2018E 

Source: CII-McKinsey, CRISIL Research 

9

India: Potential to Become the Global Healthcare 

Destination 

Overview Cost of Important Procedures (US $) 

• Medical value travel is one of the most lucrative segments of 

the healthcare sector and is expected to grow into a US$ 1.5 

billion industry by 2012 

Heart Surgery 

US UK Thailand Singapore India 

100,000 41,726 14,250 15,312 6,000 

• Potential to contribute US$ 1.2 – 2.4 billion additional 

Heart Valve Replacement 

1,60,000 

30,000 

10,500 

13,000 

6,000 

revenue for up-market tertiary care hospitals by 2012, and 

Bone Marrow Transplant 

250,000 

292,470 

62,500 

150,000 

30,000 

will account for 3 – 5% of total healthcare market 

Liver Transplant 

300,000 

200,000 

75,000 

140,000 

45,000 

Knee Replacement 

48,000 

50,109 

8,000 

25,000 

6,000 

Hip Replacement 

38,000 

18,000 

10,000 

12,000 

6,000 

Key Drivers For The Growth 

• Quality healthcare at fraction of the cost 

• Availability of skilled doctors & hospitals 

• Good reputation of Indian doctors 

• Upsurge of lifestyle diseases 

Issues 

• Inadequate healthcare infrastructure 

• Unstructured medico legal jurisdiction 

• Indians hospitals’ standards below par against the global 

benchmarks of care 

• Lack of accredited hospitals and follow up care 

10

Health Insurance 

Growing Share Of Urban Middle Class Households 

Health Insurance Market Size (US$ mn) 

100% 

80% 

60% 

3.3% 5.2% 7.0% 

44.2% 

52.5% 

58.6% 

7,000 

6,000 

5,000 

4,000 

CAGR: 32% 

6,207 

40% 

3,000 

20% 

52.5% 

42.3% 

34.5% 

2,000 

1,000 

494 

713 

1,127 

1,472 

0% 

2001-02 2006-07E 2010-11E 

0 

2006 2007 2008 2009 2015E 

US$ 12,800 

Health insurance market in India is expected to grow at a CAGR of 32% to reach 

a market size of US$ 6.21bn by FY15 

• One of the fastest growing free economy 

• Ranked 4th largest economy in the world in terms of 

purchasing power parity 

• Higher service mix, increasing urbanization 

• Overall penetration at 2%. 

• Growth driven by: 

a) increasing awareness, 

b) soaring healthcare costs and 

c) demographic profile of the people 

Source: CRISIL Research 

11

Agenda 




D. Financials

The Fortis Edifice….. 

“Vision” 

“To create a world-class integrated healthcare delivery system in India, entailing the 

finest medical skills combined with compassionate patient care” 

Globally respected 

healthcare organization known for 

Clinical excellence and Distinctive Patient care 

“Achieved by” 

Talented 

people 

Strong value 

system 

Efficient 

systems 

Responsibility 

towards 

stakeholders 

“Foundation” of 

Trust 

13

Fortis Healthcare: The first decade of growth 

• Incorporated in 1996, Fortis is second largest healthcare chain in India built on a focused organic and inorganic strategy 

• 56* healthcare delivery facilities 

• 31 operating hospitals, 

• 17 satellite and heart command centers and 

• 8 hospitals under development 

• Listed on Indian stock exchanges with a market capitalization of c.USD1.5bn (May 2011) 

• International and Nationally accredited facilities by JCI, NABH, NABL along with quality certifications by ISO Standards 9001 / 14001 

• Acquired 10 hospitals from Wockhardt Hospitals in 2009 and gained pan India presence and had recently acquired a ~25.3% stake in 

Parkway Holdings (Southeast Asia’s leading healthcare service provider with a network of 20** hospitals with more than 3,400 beds 

throughout Asia) and has chosen to exit considering higher valuations 

Started first hospital at 

Mohali 

Acquired Escorts chain of hospitals 

Acquired Malar Hospitals, 

Chennai 

Took a significant step in establishing Fortis 

as a Global Healthcare Brand by its attempt 

to acquire Parkway Holdings Ltd – Asia’s 

finest healthcare provider, but exited 

considering high valuations of the asset 

Acquired Strategic stake in 

Super Religare 

Laboratories (SRL) 

Enters Delhi 

Commences operations at 

Noida 

Revenues grow 

4x with strong 

presence in NCR 

Listed on BSE and NSE 

with a market cap of 

USD543mn 

Starts hospital at Jaipur 

Company achieves 

profitability on 

consolidated basis 

Rights Issue 

Acquired 10 hospitals from Wockhardt 

Have signed 5 O&M contracts till 

date and progressing towards 

ongoing projects in tier II cities 

Commenced two Greenfield facilities at 

Shalimar Bagh, Delhi and Anandpur, 

Kolkata; Launched an Oncology block at 

Mulund, Mumbai 

14 

* Includes projects under development

Key Differentiators – Success Drivers 

Brand 

Strong IT system 

Differentiated Model – 

Doctor engagement, Deep 

penetration Strategy, Pan 

India presence 

Execution capabilities – 

M&A deals, Integration and 

turnaround 

Key 

Differentiators 

People focus 

Stress on Quality, Patient 

Centricity 

Operational Synergies – 

FOS, TRM, PSM 

15

Organisational Chart 

Managing Director 

Chief Financial 

Officer 

President – Strategy, 

Organisational 

Development & 

Projects 

Chief Executive Officer 

Vice President – Corporate 

Affairs 

Head – Growth & 

Business Planning 

Chief People 

Officer 

Head- 

Information 

Technology 

Chief Financial 

Controller 

Chief Sales 

Director- 

Marketing & 

Corporate 

Communications 

Director-Medical 

Operations 

Group 

Regional / Zonal 

Directors* 

Head – Internal 

Audit 

* The business is bifurcated into three regions headed by Regional Directors (RDs) for respective regions. 

16

Driving Efficiencies 

Branding & Marketing 

• Conveying Value Proposition 

Operating Efficiency 

• ARPOB, ALOS, Occupancy 

• Gross Margins, EBIDTA 

• Bed to Nurse ratio 

• Supply Chain Management 

• Best practice benchmarking 

• DSO/ Inventory Days 

• Surgical : Non Surgical 

• Shared Service Centres 

• FOS, MOS, Patient Satisfaction Index 

Maximizing Return 

on Invested 

Capital 

Capital Efficiency 

• Optimize Capex 

• Cheap Finance 

• Model of Growth 

• Outsourcing 

• Off Balance Sheet 

• Turn key/ PPP/ Leased Premises 

• Technology Management : COE 

Processes 

• IT system, Protocols, SOP’s, Governance, 

• Trust and Transparency , Integration 

Capability, Project Execution 

People 

• Motivated, Trained and Engaged Staff: 

Service Excellence, Academics & 

Research, HR Processes 

17

Deep Pan India Presence 

18 

Presence across 

- 15 States 

- 30 Cities 

Focus 

Areas 

Owned Facility 

Managed Facility 

Heart Command 

Centers (HCCs) 

Projects 

Category wise 

Total Capacity 

Operational Beds No. of Hospitals 

Owned 4,716 2,941 22 

Managed 1,576 800 26 

Projects 1,945 - 8 

Grand Total 8,237 3,741 56 

Region wise 

North 4,538 1,977 29 

South 1,469 663 10 

West 1,270 685 6 

East 840 306 8 

International 120 110 3 

Grand Total 8,237 3,741 56 

Maturity wise 

More than 5 years 766 542 45 

3 to 5 years 2,806 1,908 27 

1 to 3 years 851 616 8 

Less than 1 year 1,919 675 9 

Projects 1,945 - 8 

Grand Total 8,237 3,741 56 

Not included in above map are international hospitals, and projects 

* Expansion of beds at Mulund hospital is a project, but does not add a new hospital to the total number of hospitals. Although, the beds considered as part of capacity in Project stage

Growth strategy 

Focused and 

Aggressive 

Growth Strategy 

Improving 

Operational 

Performance 

Leveraging 

People and 

Technology 

Reinforce presence in already present 

regions 

Flexible approach to expansion through 

Green Field, Brown Field, O&M 

agreements, Asset Light model and Public 

Private Partnerships (PPP) 

Replicate its North India model to 

establish a network of super-specialty 

“Centers of Excellence” and multispecialty 

hospitals delivering quality 

healthcare, to all regions 

19 

Execution capabilities – 

Greenfield projects, M&A deals, 

Integration and turnaround 

Maximize efficiency through strategies 

such as common procurement unit for 

medical equipments and supplies 

Improve occupancy rates by 

expanding its reach and increasing 

community outreach programs to gain 

market share 

Increase its average income per bed 

in use by focusing on high-end 

healthcare services, reducing the 

average length of stay of in-patients 

Supply Chain Management, 

Shared Service Centers 

FOS, MOS, 

Attract and retain clinical staff with 

reputations for clinical excellence in their 

communities 

Training and skill enhancement 

programs 

Adopting latest medical equipment and 

technology 

Focusing on evolving a robust IT 

platform for seamless integration of 

information 

Motivated, Trained and Engaged 

Staff: Service Excellence, 

Academics & Research, HR 

Processes

Typical Tertiary Care Model (200 Beds - Owned facility) 

500 

400 

Indicative Hospital Operating Model 

Book Breakeven 

[1.3x – 1.5x of CAPEX] 

4x 

Land 

Other Equip 

Medical 

Equip 

Building & 

Utilities 

13% 

12% 

25% 

50% 

Revenues 

CAPEX 

Cost of set up is 

` 60 – 90 lacs/ bed 

Debt: Equity – 1:1 

ROCE = 26% 

ROE = 20% 

300 

200 

100 

0 

(100) 

x 

38% 

38% 

Cash Breakeven 

EBITDA 

Breakeven 

40% 36% 

(16%) 

31% 

33% 

16% 

23% 

30% 

30% Occupancy 

85% 

Year 1 Year 2 Year 3 Year 4 Year 5 

23% 

20% 

28% 

31% 29% 

Variable Personnel SG&A Cost EBIDTA 

28% 

17% 

28% 

27% 

20

Asset Light Model (200 Beds) 

Land 13% 

Other 

Equip 

12% 

Medical 

Equip 

Building & 

Utilities 

25% 

50% 

CAPEX 

Revenues 

500 

400 

300 

200 

100 

0 

38% 

40% 

Cash Breakeven 

EBITDAR 

Breakeven 

Indicative Hospital Operating Model 

Book Breakeven 

31% 

33% 

36% 

[1.3x – 1.5x of CAPEX] 

Besides 

elongated book 

28% 

breakeven 

period, Fortis’ to 

6% 

witness higher 

17% 

23% 

returns on its 

8% 

investment 

16% 20% 

ROCE = 51% 

28% 

ROE = 39% 

Cost of set up is 

` 60-90 lacs/ bed 30% 

Occupancy 85% 

(100) 

Debt: Equity – 1:1 

x 

18% 

38% 

(16%) 

11% 

23% 

30% 

31% 

Year 1 Year 2 Year 3 Year 4 Year 5 

28% 

29% 

Variable Personnel SG&A Cost EBIDTAR* Rent 

4x 

5% 

27% 

Fortis to invest 

only on Medical 

and Other 

equipment (~37% 

of project cost). 

21 

*EBITDAR is Earnings before Interest, Tax, Depreciation, Amortisation and Rent/lease

Focus on ARPOB 

Surgical vs. Non Surgical 

Medical Program 

Critical Care Beds vs. 

General Care Beds 

Total Revenue 

Pricing 

Specialties Chosen 

Average 

Revenue Per 

Occupied Bed 

(ARPOB) 

= 

÷ 

Average Length of 

Stay (ALOS) 

Patient Turnover 

Occupied Beds 

Volumes 

Bed Utilization 

No. of Procedures 

A Hospital must grow its ARPOB, as when the occupancies go up it ensures that incremental beds are filled with high value added business 

22

Fortis has Achieved Growth Both through Successful 

Acquisitions and Value Added Services 

Ramp up at an acquired facility – Fortis Malar, Chennai 

Extracting value from M&A: Escorts Delhi 

90.0 

80.0 

70.0 

60.0 

50.0 

` Cr. 

40.0 

30.0 

20.0 

10.0 

0.0 

Acquired 

Fortis Malar in 

February 2008 

14.0 

17.9 

4.1 4.2 

67% CAGR 

33.2 

1.1 

64.1 

9.4 

83.3 

FY07 FY08 FY09 FY10 FY11 

Operating Revenue 

EBITDA 

14.2 

` Cr. 

90.0 

80.0 

70.0 

60.0 

50.0 

40.0 

30.0 

20.0 

10.0 

- 

Grown twice on quarterly basis since 2008 

78.0 

69.9 

54.5 

41.4 

10.9 13.6 13.4 

4.3 

Q3FY08 Q3FY09 Q3FY10 Q3FY11 

Operating Revenue EBITDA 

Extracting value from M&A: Escorts Amritsar 

Performance of a Greenfield facility: Jaipur 

70.0 

60.0 

50.0 

40.0 

` Cr. 

30.0 

20.0 

10.0 

0.0 

61.6 

33% CAGR 

50.1 

41.2 

25.9 

14.6 15.4 

9.7 

2.9 

FY08 FY09 FY10 FY11 


` Cr. 

25.0 

20.0 

15.0 

10.0 

5.0 

- 

(5.0) 

6x growth on quarterly numbers 

4x on annual basis since inception 

20.7 

16.7 

9.0 

3.6 

5.9 

3.4 

4.5 

(1.7) (2.2) (0.5) 

Q2FY08 Q3FY08 Q3FY09 Q3FY10 Q3FY11 


23

Fortis Approach to Industry Challenges 

Key Challenges 

Fortis Approach 

Shortage of 

skilled medical 

professionals 

High start up 

costs and capex 

requirements 

Lack of 

standardization / 

quality 

Technological 

obsolescence 

Maintaining 

medical ethics 

• Focus on CME, research and accolades 

• Aligned compensation structure, ESOPs 

• Foothold in more than one hospital 

• Nursing school and DNB programs 

• Competence to strike deals, invest in green field hospitals, acquire hospitals, and O&Ms 

• Partnership with government for PPP projects 

• Centralising of common services to achieve economies of scale 

• Concept and designed to reduce capex per bed 

• Innovative models to finance medical equipments 

• Accreditation of hospitals, laboratories, and blood banks by national and international authorities 

• Focus on best practices and continuous review by a strong team 

• Innovative tie ups 

• “Center of Excellence” Approach helps recycle technology around the network 

• Centralized Specialist group owning technologies across network 

• Medical Advisory Board; Accreditation committee at each hospital 

• Executive counsel taking call on key hospital discussions 

• Code of Ethics; Whistle blower policy 

24

Agenda 




D. Financials

SRL Acquisition & Rationale 

 

Acquisition of strategic stake in SRL – India’s leading diagnostic company 

Acquired 42.7 million equity shares representing 82.2% of the paid up capital as on April 14, 2011 

 

Post PE investment (AVIGO and Sabre), it would represent 71.5% of expanded capital 

 

 

 

 

 

Total purchase price of ~Rs 803.7 Crore on cash basis; valuation based on arm length price paid by AVIGO 

for minority stake of 8.9% and lower than 4.2% by Sabre capital 

Fortis-SRL deal valued at 2.2x Sales and 12x EBITDA (FY12E); compares favourably to SRL - PDSPL deal 

and Dr Lal Pathlab – TA Associate deal 

To become an integrated healthcare player with presence in all major verticals 

To participate in high growth segment of healthcare industry with huge potential 

SRL offers a strong fit due to: 

 

 

 

 

 

Geographical Complementarities 

Pan India presence 

Strong talent pool 

Well established brand and strong logistics network 

Synergistic with the hospital business 

26

Two-way Synergy – Many New Upsides 

Patient footfalls in Unified Fortis 

Network 

Geographical Complementarities 

• Increased opportunity from repeat customers of Fortis and SRL 

• 25 % of the Path and Radiology testing is followed by hospital 

accessions – OPD/IPD conversions 

• Favorable demographic and macroeconomic trend 

• Fortis to leverage on SRL’s presence and leadership in 400 cities 

for its tier II and tier III expansion plan 

Quality Improvement 

In-house Radiology & Pathology 

Large Database for CRM, Research 

and Reach 

• Highly skilled talent pool to help take the hospital diagnostic 

excellence to the next level 

• To result in enhanced Patient safety and better Clinical outcome 

• Fortis and SRL to cross leverage on SRL’s comprehensive 

offering of ~3,300 tests and its strong all-modaility experience 

and expertise in radiology for better managing in-hospital 

diagnostics. 

• Combined entities will access the large unified 

customer/patient/doctor database and significantly increase their 

ability serve the nationwide patient population. 

27

Established and Wide Geographical Presence 

Geographical Presence 

Present in ~400 cities in India 

Has won FICCI’s award for Operational 

Excellence (2010), Frost & Sullivan Award for 

Excellence in Diagnostics (2008 , 2009) and 

rated the most innovative diagnostic company 

by Business Today 

North India 

Reference Labs 1 

Pathology Labs 27 

Radiology Labs 1 

Wellness Centers 4 

Collection Centers 339 

East India 



Radiology Labs - 



India 

Internation 

al 

Total 

Reference Labs 6 2 (1) 8 

Pathology Labs 164 - 164 (2) 

Radiology Labs 17 - 17 

Wellness Centers 15 (3) - 15 

Collection Centers 865 23 888 (2) 

Source: Company 

1 – Includes 1 reference lab in Nepal and a service agreement for a reference lab in Dubai Healthcare City. 

2 – Includes 25 pathology labs run through franchisees and 875 collection centers run through franchisee. 

3 – 12 Wellness Centers are in existing labs. 

28 

West India 






South India 





Collection Centers 114

Financials: 2010-11 (Scenario)* 

Fortis +SRL 

Revenue 

Rs 1483 Cr 

EBITDA 

Rs 209 Cr 

Rs 507 Cr 

Rs 88 Cr 

Increases revenue by 

32% while impacting 

profitability marginally 

Revenue*** 

Rs 1960 Cr 

EBITDA 

Rs 297 Cr 

PAT 

Rs 124 Cr 

Rs 4 Cr** 

PAT 

Rs 128 Cr 

*Financials have been annualized based on Q4FY11 for SRL and include FY11 for Fortis 

**PAT for SRL is after Interest costs of ~ Rs 45 Cr , which will substantially go down post IPO 

***Net of inter-company revenue 

29 

29

Recent Deals 

1. O&M agreement with O.P. Jindal Hospital, Raigarh, Chhattisgarh 

100 bed multi-speciality secondary care hospital 

Located within the campus of Jindal Steel & Power Limited 

2. Reverse O&M agreement with Vivekanand Hospital Moradabad, Uttar Pradesh 

150 bed multi-speciality secondary care hospital ; Premises also house a Nursing College and a Nursing School 

Located in Moradabad, North Eastern UP, the hospital was set up under a Trust in 1985. 

Constructed over a 6.3 acre land with a built up area of 198,000 sq ft 

3. O&M agreement with East Coast Hospital in Pondicherry 

100 bedded facility with a plan to expand it to a 250 bed facility 

To be operational by Q1FY12 

4. Reverse O&M agreement with Lifeline Hospital, Alwar, Rajasthan 

100 bedded facility with a plan to expand it to a 150 bed facility 

Constructed over a 3 acre plot with a built up area of 100,000 sq ft 

5. Public Private Partnership with State of Uttarakhand 

To set up a 50 bed Cardiac Centre at Deen Dayal Upadhyaya (Coronation) Hospital at Dehradun 

To be operational by Q2FY12 

30

Upcoming Greenfield Hospitals 

No. Location Beds Area & Land 

Ownership 

Date of Commencement 

Estimated 

Capex (INR 

Cr) 

Status 

1. Kangra 100 37,000 sq. ft., B. Lease Q2 FY12 24 

• Civil and interior work completed 

• Medical equipment have been ordered 

• Facility being handed over to operations 

2. Dehradun 50 

27,000 sq.ft, Public Private 

Partnership 

Q3FY12 15 

• Civil construction work of the hospital 

building is complete 

• Some delays in handing over premises 

• Equipment ordered 

• Work on interiors is on 

3. Gurgaon 450** 11 Acres, Owned Q4 FY12 325 • Medical equipment ordered 

• Rs 235 Cr has been spent till March’11. 

4. Ludhiana – 1 200 1,55,000 sq. ft., B. Lease Q2 FY13 50 

5. Peenya, Bangalore 120 ~70,000 Sq ft; B. Lease FY13 18 

6. Ludhiana – 2 75 60,000 sq ft. B. Lease FY 13 20 

• Construction in full swing. Casting of 

columns in progress 

• Project on schedule 

• Building construction work is delayed by 

landlord 

• Approval from govt. authorities received; 

design work underway 

7. Gwalior 200 2.5 Acres, L. Lease FY14 72 • CLU permission awaited from authorities 

8. Ahmedabad 200 1,55,000 sq. ft., B. Lease FY14 50 • Approval from govt. authorities awaited 

Total 1,395 574 

** Only for Phase – 1, total size of the project is 1000 beds 

31

Agenda 




D. Financials

Operating Revenue and PAT 

450.0 

415.6 

INR Cr. 

39.0 

400.0 

350.0 

329.5 

337.9 

357.8 

371.4 

34.5 

29.4 

34.0 

29.0 

Revenues 

124% 

300.0 

27.2 

24.0 

250.0 

232.5 

21.7 

21.6 

20.8 

19.0 

PAT 

3.9x 

200.0 

150.0 

100.0 

185.4 190.5 

13.0 

7.6 

Q1FY10 Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 

Operating Revenues 

PAT 

14.0 

9.0 

4.0 

33 

3

Revenue breakup 

Speciality wise 

Category wise 

Gastro, 2% 

Onco, 5% 

Neuro, 6% 

Ortho, 8% 

MSH, 

8% OPD, 19% 

Cardiac, 35% 

Other, 16% 

Renal, 4% 

Pulmo, 2% 

Gynae, 2% 

Others, 10% 

PSU's, 10% 

TPA, 14% 

CGHS, 3% 

ECHS, 7% 

International 

, 5% 

Corprates 

and Others, 

4% 

Cash, 58% 

Others, 

Focus on key specialties 

11% 

SAARC, 

Cardiac, Neuro, Ortho, 

USA, 7% 

15% 

Renal & Onco to 

continue… 

Middle 

Africa, 40% 

East, 27% 

34 

34 

International revenue 

Cash business is ~63% of 

overall business 

International patients 

contributes 5% to Fortis’ 

network revenue

Growth Driven by Steadily Increasing Occupancy Rates 

Leading to Improving Operating Parameters… 

Occupancy 

80% 

70% 

63% 

68% 

74% 

72% 

60% 

50% 

40% 


Average Revenue Per Operating Bed (Rs. Million) 

Average Length of Stay (days) 

8.10 

8.30 

8.10 

7.65 

4.30 4.20 4.10 

3.70 



35

Significant Increase in No. of Procedures with a Focus on 

Key Specialty Areas (Cardiac, Neuro, etc.) 

Cardiac 

Ortho 

55,000 

45,000 

35,000 

25,000 

39,651 

3,662 

20,851 

51,866 10.767 

8,000 

4,482 +31% 7,083 

7,013 

+52% 

6,000 

26,830 

4,553 

4,000 

15,000 

5,000 

-5,000 

10,777 

8,214 

6,924 

9,777 

FY10 

FY11 

CTVS & Pediatrics PTCA CAG Others 

2,000 

0 

2,530 

FY10 

Knee Replacements 

3,754 

FY11 

THR & Others 

Neuro 

Dialysis 

5,000 

4,000 

4,928 

+62% 

60,000 

50,000 

44,096 

62,315 

+41% 

3,000 

2,000 

2,709 

40,000 

30,000 

20,000 

1,000 

10,000 

0 

FY10 

FY11 

0 

FY10 

FY11 

36

Summary : Consolidated Profit and Loss – FY 2010-11 

FY11 

Particulars 

Base operations 

(Rs Cr.) 

% 

Parkway 

(Rs Cr.) 

Total 

(Rs Cr.) 

Operating Revenue 1,482.8 94.1% - 1,482.8 

Other Income * 92.3 5.9% 366.6 458.9 

Total Income 1,575.1 100.0% 366.6 1,941.7 

Direct Costs 393.0 24.9% - 393.0 

Employee Costs 273.1 17.3% - 273.1 

Other Costs 607.6 38.5% 161.0 768.6 

EBITDA 301.4 19.1% 205.6 507.0 

Finance Costs 69.6 4.4% 180.4 250.0 

Depreciation & Amortization 104.5 6.6% - 104.5 

PAT after minority interest and share in 

associates 

Operating EBITDA 209.1 14.1% 

106.4 6.8% 18.0 124.4 

• Rs 85 Cr of the Other Income constitutes interest & such income from deployment of surplus funds 

Note : The nos. have been restated and realigned to reflect profit from base operations separately 

37 

3

FY11 Comparative Financials – Base Operations 

Particulars 

FY11 

(Rs Cr.) 

% 

FY10 

(Rs Cr.) 

% Growth (%) 

Operating Revenue 1,482.8 100.0% 937.9 100.0% 58.1% 

Direct Costs 393.0 26.5% 262.7 28.0% 49.6% 

Employee Costs 273.1 18.4% 195.0 20.8% 40.1% 

Other Costs * 607.6 41.0% 339.8 36.2% 78.8% 

Operating EBITDA 209.1 14.1% 140.4 15.0% 48.9% 

Other Income 92.3 6.2% 50.1 5.3% 84.2% 

Finance Costs 69.6 4.7% 57.3 6.1% 21.4% 

Depreciation & Amortization 104.5 7.0% 59.9 6.4% 74.4% 

PAT after minority interest and share 

in associates 

106.4 7.0% 69.5 7.4% 53.1% 

EPS for the period** (Rs) 3.23 2.61 

*Increase in other costs is primarily due to doctor engagement model at newly acquired hospitals. 

**EPS calculated on reported consolidate net profits for the relevant year 

38 

3

Maturity-wise Performance – FY 11: Main Hospitals 

Maturity 

5 Years and 

Above 

(Four hospitals) 

Revenue 

Contribution 

EBITDA 

Contribution 

Average 

EBITDA 

margin * 

Average 

Occupancy 

Average 

ARPOB (Rs 

Cr) 

24% 34% 26.0% 80% 1.00 

14% of operating beds aged 5 years 

and above contributes 24% to 

revenue 

3 years to 5 

Years (Nine 58% 62% 20.0% 78% 0.83 

Hospitals) 

One to three 

Years (Eight 

Hospitals) 

Upto one year 

(Three Hospitals) 

13% 9% 13.9% 57% 0.63 

5% (5)% (18.4)% 37% 0.34 

Average - - 18.8% 72% 0.81 

51% of operating beds are 3 to 5 

years of age and contributes 58% to 

revenue 

16% of operating beds are 1 to 3 

years of age and contributes 13% to 

revenue 

18% of operating beds are up to 1 

year of age and contributes just 5% to 

revenue 

* Average EBITDA margin has been calculated on Unit basis 

39

Balance Sheet as at March 31, 2011 

Balance Sheet 

Rs Crore 

Shareholder’s Equity* 3,313 

Foreign Currency Convertible Bonds (FCCB’s)# 446 

Debt 642 

Total Capital Employed 4,401 

Goodwill 885 

Net Fixed Assets (including CWIP of Rs 270 Crore) 1,910 

Investments 

Net Cash Surplus*** 854 

* Shareholder’s Equity is inclusive of Revaluation Reserve and Minority Interest 

** Net Current Assets includes Deferred Tax Assets 

*** Net Cash Surplus excludes FCCB’s 

#Fortis issued US$ 100 million,5% convertible bonds due in May 2015 convertible at Rs 167 per equity share; redeemable on or after May 2013 

40 

- in Associates 28 

- Deposits (including Inter-Corporate Deposits) 1,348 

- Liquid and Mutual Funds 62 

Cash and Bank Balances 86 

Net Current Assets** 82 

Total Fixed Assets 4,401

Summing Up 

• Healthcare Sector poised to grow 


Sector 

• Growth led by Lifestyle Diseases and Insurance Penetration 

• Government recognizes the need to partner with Private Sector 

• Healthcare expenditure estimated to be 6% of GDP by 2012 & employ around 9 million people 

• One of the largest private healthcare delivery player in India 

Fortis 


• Aggressively grown from 1 hospital in 2001 to a network of 56* hospitals in 2011 with ~ 8,000* 

beds 

• Leadership in Cardiac Sciences, Neuro Sciences and Orthopedics 

• Evolved the Business Model and high level of Brand Equity 

• Proven ability to acquire, integrate and turn around 

• Providing attractive value propositions to various segments of market 

* Estimated number of hospitals and beds is including hospitals under projects stage 

41

Analyst Coverage 

Broker* Analyst name Comments 

B&K 

Bank of America 

Vikash Singh 

Prasad Deshmukh 

B&K maintains its positive outlook on Fortis due to 

its focus on profitable growth, improvement in 

realization and operational efficiency across its 

facilities 

Expects strong growth in earnings as majority beds 

will turn profitable going ahead 

Centrum Rahul Gaggar Positive on the company’s growth prospects 

CITI 

Prashant Nair / Anshuman Gupta 

Goldman Sachs Balaji V Prasad / Rishi Jhunjhunwala - 

ICICI Direct 

IDFC 

Rashesh Shah 

Nitin Agarwal / Ritesh Shah 

Over the longer term, CITI forecasts sustained 

growth & improvement in profitability as the new 

hospitals scale up 

Fortis’ constant growth focus and 

strong management team supports our positive 

outlook on the company 

FHL continues to pursue its strategy to grow 

aggressively with sustained focus on operational 

parameters 

JP Morgan 

Morgan Stanley 

UBS 

Princy Singh / Dinesh S. Harchandani, CFA 

Saniel Chandrawat / Sameer Baisiwala, CFA 

Ajay Nandanwar 

Asset light strategy to help Fortis scale up at a 

faster pace and improve its capital return profile. 

Bullish on Fortis’ ability to execute aggressive 

expansion plans 

Optimistic about Fortis’ opportunities ahead, its 

ability to improve the operating performance of its 

acquired hospitals 

* In Alphabetical order

THANK YOU… 

Fortis Healthcare (India) Limited

June 2011 - Fortis Healthcare

Create successful ePaper yourself

Delete template?

Save as template?