Healthcare major Apollo Hospitals Enterprise has earmarked a total of ₹1,700 crore towards its on-going capex and expansion plans in Gurugram and Chennai, according to top management officials of the company. The company has already spent a portion of this on acquisitions.
Earlier this month, Apollo Hospitals announced the acquisition of a hospital asset in Gurugram with a potential of 650 beds over 7 lakh square feet from Nayati Healthcare and Research NCR Private Limited, for a consideration of around ₹450 crore. Spread across 5.63 acres of land, the acquisition marked the entry of the group in Haryana.
“We paid ₹450 crore for 5.67 acres. We think there is a building that is existing there, so maximum, we will invest another ₹350 crore..,” Suneeta Reddy, Managing Director, Apollo Hospitals, said while addressing June 2022 quarterly earnings call.
Funding through cash flows
Elaborating on the capex plans, A Krishnan, Group CFO, Apollo Hospitals Enterprise, said, the routine capex, which is part of the cash flows every year, is approximately around ₹300 crore. Besides that, the free cash flows would be around ₹800 crore.
“This free cash flow is what we are going to be using for deployment in new projects. We already have free cash in our hand. The Gurgaon asset acquisition happened in Q2, which is ₹450 crore. So clearly, the free cash flow plus, the cash that we have in our hands of almost ₹900 crore, is something that we can use towards some of our expansions,” he added.
He said, the company also expects ₹1,200 crore from Apollo 24/7 vertical over the next one year or so. “Over the next three years, the free cash flow will be used, plus this Apollo 24/7 can help us in our expansions,” Krishnan said.
At the end of fourth quarter of FY22, Apollo Hospitals had a cash surplus of ₹600 crore and ₹800 crore in mutual fund investments. In the Q4 earnings call, Reddy said, ₹350 crore of it will be used for normalised expense and capex, while the balance will be used towards the brownfield hospital acquired in Old Mahabalipuram Road (OMR), Chennai. She also added that ₹500 crore will be spent over the next two years to create a world class tertiary care hospital in OMR and another ₹300 crore will be deployed towards a brownfield expansion in Bengaluru.
In the latest earnings call, Krishnan said, a total of ₹900 crore has been earmarked for the ongoing expansion in Gurgaon and ₹800 crore for the Chennai expansion. “These two together itself are 1,000 beds now between Chennai and Gurgaon. We are looking at the North, and Bengaluru for expansion. So all of this will come between the next 2-3 years once we start.” The Hindu BusinessLine