HCG Medi-Surge Hospitals Private Limited

HCG Medi-Surge Hospitals Private Limited
Instruments
Amounts
*
(Rs. Crore )
Term Loan Limits
Long-term Fund Based Limits
Short-term Non Fund Based Limits
Ratings
February 2014
28.20 (revised from
Rs. 23.40 crore)
2.50
[ICRA]BBB (stable) / re-affirmed
1.54
[ICRA]A2 / re-affirmed
[ICRA]BBB (stable) / re-affirmed
ICRA has re-affirmed the long-term rating outstanding on the Rs.28.20 crore (revised from Rs.23.40
crore) term loan limits and the Rs. 2.50 crore long-term fund based limits of HCG Medi-Surge
Hospitals Private Limited (“HMSHPL”/” the Company”) at [ICRA]BBB (pronounced ICRA triple B)†. The
outlook on the long term rating is stable. ICRA has also re-affirmed the short-term rating outstanding of
[ICRA]A2 on the Rs. 1.54 crore short-term non-fund based limits of the Company.
In arriving at the ratings, ICRA has taken a consolidated view of the HealthCare Global Group (“HCG”/
“the Group”) considering the common management team and the presence of strong operational and
financial linkages among the entities.
The rating continues to favorably consider HCG’s long standing presence and extensive experience of
the promoters’ in the field of oncology, significant funding support enjoyed by the Group from reputed
private equity investors and its strengthening brand presence. The Group continues to improve its
reach through expansion to newer geographies through various brown field and green field projects.
The Group’s niche focus on oncology and presence across the entire value chain of cancer treatment
coupled with its high quality infrastructure equipped with advanced medical equipments (like Cyber
Knife and TruBeam) and clinical research facilities continue to aid in attracting reputed consultants as
well as support its occupancy and realizations. Further, cancer being a lifestyle disease, the treatment
is spread over a longer durations with relatively higher realizations in turn supporting its revenues.
The rating however remains constrained on account of continued weak operating performance of the
Group during 2012-13 and its moderate financial profile marked by modest profitability and debt
protection metrics. During last few years, the Group has made large capital investments on various
green-field projects and brown-field projects wherein the healthy mix of debt and equity funding has
aided the Group in protecting its capital structure. However, the relatively slower ramp up and lower
asset utilizations at the newly started centers have adversely impacted the Groups’ profitability and
margins resulting in net losses during 2012-13. Moreover, the capital-intensive nature of operations
and relatively longer gestation periods for its new units is likely to maintain pressure on its accruals in
the near to medium term given the significant capex outlined by the Group over the medium term.
ICRA, however, takes note of the rationalization measures adopted by the Group in pruning down its
loss making operations to stem further deterioration in its profitability.
The Group remains vulnerable to re-financing risk over the medium term in the event of exit by some
of the private equity investors. Further, ICRA notes that the private equity investors enjoy fixed
promised returns as part of their shareholding agreement thereby straining the cash flows of the
Company. However, regular support extended by the private equity investors provides comfort to an
extent.
Going forward, the Group’s ability to improve its operating performance, ease the pressure on
profitability as well as coverage metrics and support its capital structure given in its future investment
plans will remain key rating sensitivities in the near term. Over medium term, the Groups’ ability to
provide exit to the investors without impacting its capital structure will remain a key rating sensitive
factor.
* 100 lakhs = 1 crore = 10 millions
† For complete rating scale and definitions, please refer to ICRA’s website www.icra.in or other ICRA Rating
Publications
Company Profile
HCG Medi-Surge Hospitals Private Limited, a subsidiary of Healthcare Global Enterprises Limited
(HCGEL), owns a 160-bed multi-speciality hospital in Ahmedabad. While 74.0% stake (as on 31 st Dec,
2013) in the company is held by HCGEL, the remaining 26.0% stake is owned by Astha Oncology
Private Limited. The hospital offers treatments across a several specialities including medical and
surgical oncology, cardiology, neurology, nephrology, urology, orthopaedics, paediatrics and
gynaecology among others. During 2011-12, the company also added a full-fledged oncology hospital
at Ahmedabad equipped with radiation, medical oncology and surgical facilities
Group Profile
Established in 1989, HCG Group is present primarily in the oncology field with largest cancer care
network in South Asia spanning 24 centres across India and outside. The Group has been promoted
by Dr. B.S. Ajai Kumar, a practicing radiation and medical oncologist with over 30 years of experience.
Originally established with a single cancer care centre named Bangalore Institute of Oncology (BIO) at
Bangalore by Dr. Kumar and four other oncologists, the Group has rapidly expanded its presence to
Delhi, Ahmedabad, Chennai, Nasik, Ranchi, Cuttack, Hubli, Shimoga and Vijayawada among others.
The Group is currently present across the oncology value chain, offering services from prevention,
screening, diagnosis and treatment to rehabilitation, supportive care and palliative care. The Group
also has India’s largest network of cancer care facilities with over 30,000 patients visiting the Group’s
hospitals every year.
Recent Results (Standalone)
For 2012-13, the company’s operating income stood at Rs. 62.3 crore with a net loss of Rs. 2.2 crore
as against an operating income of Rs. 40.5 crore and PAT of Rs. 0.2 crore for 2011-12.
February 2014
For further details, please contact:
Analyst Contact:
Mr. Subrata Ray, (Tel. No. +91-22-6179 6386)
[email protected]
Relationship Contact:
Mr. Jayanta Chatterjee, (Tel. No. +91-9845022459)
[email protected]
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ratings are subject to a process of surveillance which may lead to a revision in ratings. Please visit our website
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Corporate Office
Mr. Vivek Mathur
Mobile: 9871221122
Email: [email protected]
Building No. 8, 2nd Floor, Tower A, DLF Cyber City, Phase II, Gurgaon 122002
Ph: +91-124-4545310 (D), 4545300 / 4545800 (B) Fax; +91- 124-4050424
Mumbai
Mr. L. Shivakumar
Mobile: 9821086490
Email: [email protected]
Kolkata
Mr. Jayanta Roy
Mobile: +91 9903394664
Email: [email protected]
1802, 18th Floor, Tower 3,
Indiabulls Finance Centre,
Senapati Bapat Marg,
Elphinstone, Mumbai 400013,
Board : +91-22-61796300; Fax: +91-22-24331390
Chennai
Mr. Jayanta Chatterjee
Mobile: 9845022459
Email: [email protected]
A-10 & 11, 3rd Floor, FMC Fortuna
234/3A, A.J.C. Bose Road
Kolkata—700020
Tel +91-33-22876617/8839 22800008/22831411,
Fax +91-33-22870728
5th Floor, Karumuttu Centre
634 Anna Salai, Nandanam
Chennai—600035
Tel: +91-44-45964300; Fax: +91-44 24343663
Ahmedabad
Mr. L. Shivakumar
Mobile: 989986490
Email: [email protected]
907 & 908 Sakar -II, Ellisbridge,
Ahmedabad- 380006
Tel: +91-79-26585049, 26585494, 26584924; Fax: +9179-25569231
Hyderabad
Mr. Jayanta Chatterjee
Mobile: 9845022459
Email: [email protected]
4th Floor, Shobhan, 6-3-927/A&B. Somajiguda, Raj
Bhavan Road, Hyderabad—500083
Tel:- +91-40-40676500
Bangalore
Bangalore
Mr. Jayanta Chatterjee
Mobile: 9845022459
Email: [email protected]
'The Millenia'
Tower B, Unit No. 1004,10th Floor, Level 2 12-14, 1 & 2,
Murphy Road, Bangalore 560 008
Tel: +91-80-43326400; Fax: +91-80-43326409
Pune
Mr. L. Shivakumar
Mobile: 989986490
Email: [email protected]
5A, 5th Floor, Symphony, S.No. 99, CTS 3909, Range Hills
Road, Shivajinagar,Pune-411 020
Tel: + 91-20-25561194-25560196; Fax: +91-20-25561231