August 08, 2007

Fortis to float company for medical education

Medicities are set to get a shot in the arm with Fortis Healthcare planning to float a new company which will focus on medical education in its upcoming 10 medicities spread across the country. The new company plans to invest around Rs 5,000-6,000 crore in these medicities.

“Medical education requires separate regulations and therefore there will be a separate new company of the group which will manage the medicities. Each of these medicities will require an investment of around Rs 500-600 crore,“ Fortis Healthcare MD Shivinder Singh told ET.

A blueprint of the proposed company is being prepared and therefore, details have not been finalised, he added. Fortis Healthcare plans to set up 10 medicities over the next 10 years. The company is setting up a medicity in Gurgaon and has also announced that it will set up another 52-acre medicity in Ansal’s upcoming township in Lucknow.

The company is also in talks with several state governments to set up medicities. The final structure of the medicities has also not been finalised as it is awaiting clear guidelines from the Medical Council of India. Sources say that in addition to regulatory adherence, a separate company which focuses on medical education will be more attractive to niche group of long-term investors who would like to invest in medical education.

Fortis Healthcare is aggressively pursuing its growth plan through both organic and inorganic routes. The company has signed a memorandum of understanding to set up around 30 hospitals in DLF’s townships across the country. In addition, the company is also evaluating various proposals from hospitals across the country for management control or acquisition.

During the financial year, the company plans to ramp up some of its existing hospitals also. “Fortis Healthcare will invest around Rs100-Rs150 crore, excluding acquisitions, during the financial year in our new hospitals and also revamping some of the existing hospitals,“ he added.

Fortis Group, which has a laboratory and pharmacy retail chain, does not have immediate plans to foray into the clinics division. Fortis’ expansion plans come even as it says a breakeven is not expected this fiscal. The company registered a loss of Rs 24 crore for the quarter ended June 2007 but operating margin improved to 12%, at the end of the quarter, from 10% in the corresponding quarter last year.

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