2. 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
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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
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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 forward-
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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
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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
3. Agenda
A. Healthcare Industry in India
B. Company Overview
C. Recent Developments
D. Financials
4. Healthcare Sector: Favorable industry dynamics
Healthcare Services remains attractive to both public and private market investors
Strong Cash
Generation
Characteristics
Increasing Public Scalable Business
Outsourcing Models
Favorable
Increasing Private Underlying
Payers Demographics
Healthcare
Sector
Healthcare without Scarcity of Quality
Binary Risk Assets
Defensive Growth
Characteristics Rise of Independent
Providers
Considerable
Consolidation
Opportunities
4
5. 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
Indian Healthcare Market (US$bn)
• Accessible, reliable and affordable healthcare
continues to be a challenge CAGR: 12%
• Opportunity in healthcare being significantly
leveraged by private healthcare providers
• Expected to generate employment opportunities for
9 million people by 2012
Source: Analyst Research
5
6. Indian Healthcare Delivery
20%
80%
Others
7%
Population Insurance
Pvt. Govt. 1%
Sector 22%
30%
Govt.
Sector
70% Out of
Pocket 70%
Hospitals in the Country Healthcare Expenditure
6
7. Evolution of Healthcare in India
Very Low Healthcare Spend as % of GDP High Disease Burden & Insufficient Facilities
20%
9%
8% 8%
6%
1%
Disease Beds Doctors Nurses Community & Lab
burden health workers technicians
Significantly Low Hospital Beds Per 10,000 Population Changing Age Profile of Indian Population
139
72
39 34 32 31 30 24 22
9
Japan France UK CanadaSingapore US China Brazil Thailand India
Source: WHO, FICCI, Ernst & Young, Analyst Research
7
8. Current Status Of Global Healthcare
There is a wide discrepancy in the world with regards to the amount of health expenditures both relative to GDP and in absolute terms
Health Expenditure (% of GDP)
Developed Countries Developing Countries
Health Expenditure Per Capita (US$)
Developed Countries Developing Countries
Source: The World Pharmaceutical Markets Fact Book 2009 from Espicom Business Intelligence; CIA World Factbook
9. Lifestyle Changes Driving Diseases Which Require
Hospitalisation
Changing Disease Profile Expected No. of Cardiac Patients in India
72.1
Number of people (in million)
Lifestyle
Diseases 45.0
Acute 2008 2018E
Diseases
Estimated No. of Diabetes Patients
Cancer and Cardiac –
Grows widely in the
Number of people (in million)
lifestyle segment
49.4
39.0
• 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 2008 2018E
Source: CII-McKinsey, CRISIL Research
9
10. India: Potential to Become the Global Healthcare
Destination
Overview Cost of Important Procedures (US $)
• Medical value travel is one of the most lucrative segments of US UK Thailand Singapore India
the healthcare sector and is expected to grow into a US$ 1.5
billion industry by 2012
Heart Surgery 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 Issues
• Quality healthcare at fraction of the cost • Inadequate healthcare infrastructure
• Availability of skilled doctors & hospitals • Unstructured medico legal jurisdiction
• Good reputation of Indian doctors • Indians hospitals’ standards below par against the global
• Upsurge of lifestyle diseases benchmarks of care
• Lack of accredited hospitals and follow up care
10
11. Health Insurance
Growing Share Of Urban Middle Class Households Health Insurance Market Size (US$ mn)
100% 3.3% 5.2% 7.0% 7,000
6,207
80% 6,000
44.2% CAGR: 32%
52.5% 5,000
58.6%
60%
4,000
40% 3,000
52.5% 2,000 1,472
20% 42.3% 1,127
34.5% 713
1,000 494
0% 0
2001-02 2006-07E 2010-11E 2006 2007 2008 2009 2015E
<US$ 2,100 US$ 2,100 - 12,800 >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 • Overall penetration at 2%.
• Ranked 4th largest economy in the world in terms of • Growth driven by:
purchasing power parity a) increasing awareness,
• Higher service mix, increasing urbanization b) soaring healthcare costs and
c) demographic profile of the people
Source: CRISIL Research
11
12. Agenda
A. Healthcare Industry in India
B. Company Overview
C. Recent Developments
D. Financials
13. 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
Talented Strong value Efficient Responsibility
“Achieved by” towards
people system systems
stakeholders
“Foundation” of
Trust
13
14. 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
Took a significant step in establishing Fortis
as a Global Healthcare Brand by its attempt Acquired Strategic stake in
Started first hospital at Acquired Escorts chain of hospitals Acquired Malar Hospitals, to acquire Parkway Holdings Ltd – Asia’s Super Religare
Mohali Chennai finest healthcare provider, but exited Laboratories (SRL)
considering high valuations of the asset
Have signed 5 O&M contracts till
Enters Delhi Listed on BSE and NSE Rights Issue date and progressing towards
Commences operations at with a market cap of Acquired 10 hospitals from Wockhardt ongoing projects in tier II cities
Noida USD543mn
Starts hospital at Jaipur
Commenced two Greenfield facilities at
Revenues grow Company achieves Shalimar Bagh, Delhi and Anandpur,
4x with strong profitability on Kolkata; Launched an Oncology block at
presence in NCR consolidated basis Mulund, Mumbai
* Includes projects under development
14
15. Key Differentiators – Success Drivers
Strong IT system
Differentiated Model –
Doctor engagement, Deep
Brand penetration Strategy, Pan
India presence
Key
Execution capabilities – Differentiators People focus
M&A deals, Integration and
turnaround
Stress on Quality, Patient Operational Synergies –
Centricity FOS, TRM, PSM
15
16. Organisational Chart
Managing Director
President – Strategy,
Chief Financial Organisational Vice President – Corporate
Chief Executive Officer Affairs
Officer Development &
Projects
Head – Growth &
Business Planning
Director-
Head- Director-Medical
Chief People Chief Financial Marketing & Regional / Zonal Head – Internal
Information Chief Sales Operations
Officer Controller Corporate Directors* Audit
Technology Group
Communications
* The business is bifurcated into three regions headed by Regional Directors (RDs) for respective regions.
16
17. Driving Efficiencies
Branding & Marketing
• Conveying Value Proposition
Operating Efficiency
• ARPOB, ALOS, Occupancy Capital Efficiency
• Gross Margins, EBIDTA
• Optimize Capex
• Bed to Nurse ratio
• Cheap Finance
• Supply Chain Management
• Model of Growth
• Best practice benchmarking
• Outsourcing
• DSO/ Inventory Days
Maximizing Return • Off Balance Sheet
• Surgical : Non Surgical
on Invested • Turn key/ PPP/ Leased Premises
• Shared Service Centres
Capital • Technology Management : COE
• FOS, MOS, Patient Satisfaction Index
Processes People
• IT system, Protocols, SOP’s, Governance, • Motivated, Trained and Engaged Staff:
• Trust and Transparency , Integration Service Excellence, Academics &
Capability, Project Execution Research, HR Processes
17
18. Deep Pan India Presence
Total Capacity Operational Beds No. of Hospitals
Category wise
Owned 4,716 2,941 22
Presence across
- 15 States Managed 1,576 800 26
- 30 Cities 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
Focus
Areas Maturity wise
More than 5 years 766 542 45
Owned Facility 3 to 5 years 2,806 1,908 27
Managed Facility
1 to 3 years 851 616 8
Heart Command
Centers (HCCs) Less than 1 year 1,919 675 9
Projects
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
18
19. Growth strategy
Focused and Improving Leveraging
Aggressive Operational People and
Growth Strategy Performance Technology
Reinforce presence in already present Maximize efficiency through strategies Attract and retain clinical staff with
regions such as common procurement unit for reputations for clinical excellence in their
medical equipments and supplies communities
Flexible approach to expansion through
Green Field, Brown Field, O&M Improve occupancy rates by Training and skill enhancement
agreements, Asset Light model and Public expanding its reach and increasing programs
Private Partnerships (PPP) community outreach programs to gain
Adopting latest medical equipment and
market share
Replicate its North India model to technology
establish a network of super-specialty Increase its average income per bed
Focusing on evolving a robust IT
“Centers of Excellence” and multi- in use by focusing on high-end
platform for seamless integration of
specialty hospitals delivering quality healthcare services, reducing the
information
healthcare, to all regions average length of stay of in-patients
Motivated, Trained and Engaged
Execution capabilities – Supply Chain Management,
Staff: Service Excellence,
Greenfield projects, M&A deals, Shared Service Centers
Academics & Research, HR
Integration and turnaround FOS, MOS,
Processes
19
20. Typical Tertiary Care Model (200 Beds - Owned facility)
Indicative Hospital Operating Model
500
[1.3x – 1.5x of CAPEX]
Book Breakeven 4x
400
Cash Breakeven
28%
300
Revenues
Land 13%
EBITDA 23%
Other Equip 12% Breakeven 17%
Medical
200 16%
25% 20%
Equip
23% 28%
x 31%
28%
100 38% 30%
Building & 33%
50%
Utilities 38% 27%
31% 29%
40% 36%
0
CAPEX (16%)
Cost of set up is 30% Occupancy 85%
` 60 – 90 lacs/ bed
(100)
Debt: Equity – 1:1
Year 1 Year 2 Year 3 Year 4 Year 5
ROCE = 26%
ROE = 20% Variable Personnel SG&A Cost EBIDTA
20
21. Asset Light Model (200 Beds)
Indicative Hospital Operating Model
500
[1.3x – 1.5x of CAPEX]
4x
Book Breakeven
400 5%
Besides
elongated book
Cash Breakeven 28% breakeven
300 period, Fortis’ to
Revenues
6%
13%
witness higher
Land 17%
Other
EBITDAR 23% returns on its
12% Breakeven
Equip 8% investment
Medical
200 16% 20% ROCE = 51%
25% 28%
Equip 11% 23%
ROE = 39%
x
18% 31% 28%
100 38% 30%
Building & 33%
50% 38% 27% Fortis to invest
Utilities
36% 29% only on Medical
40% 31%
and Other
0 (16%) equipment (~37%
CAPEX
Cost of set up is of project cost).
` 60-90 lacs/ bed 30% Occupancy 85%
(100)
Debt: Equity – 1:1 Year 1 Year 2 Year 3 Year 4 Year 5
Variable Personnel SG&A Cost EBIDTAR* Rent
*EBITDAR is Earnings before Interest, Tax, Depreciation, Amortisation and Rent/lease
21
22. Focus on ARPOB
Surgical vs. Non Surgical
Critical Care Beds vs.
Medical Program
General Care Beds
Total Revenue Pricing Specialties Chosen
Average
Revenue Per Average Length of
Occupied Bed
= ÷ Stay (ALOS)
Patient Turnover
(ARPOB)
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
23. 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 83.3 ` Cr. Grown twice on quarterly basis since 2008
Acquired
80.0 67% CAGR
Fortis Malar in 90.0
78.0
70.0 64.1 80.0
February 2008 69.9
60.0 70.0
60.0 54.5
50.0
` Cr. 50.0 41.4
40.0 33.2
40.0
30.0 30.0
17.9
20.0 14.0 14.2 20.0 10.9 13.6 13.4
9.4
10.0 4.1 4.2 10.0 4.3
1.1
0.0
-
Q3FY08 Q3FY09 Q3FY10 Q3FY11
FY07 FY08 FY09 FY10 FY11
Operating Revenue EBITDA
Operating Revenue EBITDA
Extracting value from M&A: Escorts Amritsar Performance of a Greenfield facility: Jaipur
70.0 ` Cr.
61.6 6x growth on quarterly numbers
60.0 33% CAGR 25.0
50.1 4x on annual basis since inception 20.7
50.0 20.0
41.2 16.7
40.0 15.0
` Cr.
30.0 25.9 9.0
10.0
5.9
20.0 14.6 15.4 3.6 4.5
5.0 3.4
9.7
10.0 2.9 (1.7) (2.2) (0.5)
-
0.0 Q2FY08 Q3FY08 Q3FY09 Q3FY10 Q3FY11
(5.0)
FY08 FY09 FY10 FY11
Operating Revenue EBITDA
Operating Revenue EBITDA
23
24. Fortis Approach to Industry Challenges
Key Challenges Fortis Approach
• Focus on CME, research and accolades
Shortage of
• Aligned compensation structure, ESOPs
skilled medical
• Foothold in more than one hospital
professionals
• Nursing school and DNB programs
• Competence to strike deals, invest in green field hospitals, acquire hospitals, and O&Ms
High start up • Partnership with government for PPP projects
costs and capex • Centralising of common services to achieve economies of scale
requirements • Concept and designed to reduce capex per bed
• Innovative models to finance medical equipments
Lack of • Accreditation of hospitals, laboratories, and blood banks by national and international authorities
standardization /
quality • Focus on best practices and continuous review by a strong team
• Innovative tie ups
Technological
• “Center of Excellence” Approach helps recycle technology around the network
obsolescence
• Centralized Specialist group owning technologies across network
• Medical Advisory Board; Accreditation committee at each hospital
Maintaining
• Executive counsel taking call on key hospital discussions
medical ethics
• Code of Ethics; Whistle blower policy
24
25. Agenda
A. Healthcare Industry in India
B. Company Overview
C. Recent Developments
D. Financials
26. 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
27. Two-way Synergy – Many New Upsides
• Increased opportunity from repeat customers of Fortis and SRL
Patient footfalls in Unified Fortis
Network • 25 % of the Path and Radiology testing is followed by hospital
accessions – OPD/IPD conversions
• Favorable demographic and macroeconomic trend
Geographical Complementarities • Fortis to leverage on SRL’s presence and leadership in 400 cities
for its tier II and tier III expansion plan
• Highly skilled talent pool to help take the hospital diagnostic
Quality Improvement 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
In-house Radiology & Pathology
and expertise in radiology for better managing in-hospital
diagnostics.
• Combined entities will access the large unified
Large Database for CRM, Research
customer/patient/doctor database and significantly increase their
and Reach
ability serve the nationwide patient population.
27
28. Established and Wide Geographical Presence
Geographical Presence
North India East India
Present in ~400 cities in India
Reference Labs 1 Reference Labs 1
Pathology Labs 27 Pathology Labs 18
Has won FICCI’s award for Operational
Radiology Labs 1 Radiology Labs -
Excellence (2010), Frost & Sullivan Award for
Wellness Centers 4 Wellness Centers 1
Excellence in Diagnostics (2008 , 2009) and Collection Centers 339 Collection Centers 218
rated the most innovative diagnostic company
by Business Today
Internation
India Total
al
Reference Labs 6 2 (1) 8
Pathology Labs 164 - 164 (2) West India
South India
Reference Labs 3
Radiology Labs 17 - 17 Reference Labs 1
Pathology Labs 50
Pathology Labs 69
Wellness Centers 15 (3) - 15 Radiology Labs 13
Radiology Labs 3
Wellness Centers 5
Wellness Centers 5
Collection Centers 865 23 888 (2) Collection Centers 194
Collection Centers 114
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
29. Financials: 2010-11 (Scenario)*
Fortis +SRL
Revenue Revenue***
Rs 1483 Cr Rs 507 Cr
Rs 1960 Cr
Increases revenue by
EBITDA 32% while impacting EBITDA
profitability marginally
Rs 209 Cr Rs 88 Cr
Rs 297 Cr
PAT PAT
Rs 124 Cr Rs 4 Cr**
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 29
***Net of inter-company revenue
29
30. 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
31. Upcoming Greenfield Hospitals
No. Location Beds Area & Land Date of Commencement Estimated Status
Ownership Capex (INR
Cr)
• Civil and interior work completed
1. Kangra 100 37,000 sq. ft., B. Lease Q2 FY12 24 • Medical equipment have been ordered
• Facility being handed over to operations
• Civil construction work of the hospital
27,000 sq.ft, Public Private building is complete
2. Dehradun 50 Q3FY12 15
Partnership • 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.
• Construction in full swing. Casting of
4. Ludhiana – 1 200 1,55,000 sq. ft., B. Lease Q2 FY13 50 columns in progress
• Project on schedule
• Building construction work is delayed by
5. Peenya, Bangalore 120 ~70,000 Sq ft; B. Lease FY13 18
landlord
• Approval from govt. authorities received;
6. Ludhiana – 2 75 60,000 sq ft. B. Lease FY 13 20
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
32. Agenda
A. Healthcare Industry in India
B. Company Overview
C. Recent Developments
D. Financials
37. Summary : Consolidated Profit and Loss – FY 2010-11
FY11
Base operations Parkway Total
Particulars %
(Rs Cr.)
(Rs Cr.) (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
106.4 6.8% 18.0 124.4
associates
Operating EBITDA 209.1 14.1%
• 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
38. FY11 Comparative Financials – Base Operations
FY11 FY10
Particulars % % Growth (%)
(Rs Cr.) (Rs Cr.)
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
106.4 7.0% 69.5 7.4% 53.1%
in associates
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
39. Maturity-wise Performance – FY 11: Main Hospitals
Average Average
Revenue EBITDA Average
Maturity EBITDA ARPOB (Rs
Contribution Contribution Occupancy
margin * Cr)
14% of operating beds aged 5 years
5 Years and and above contributes 24% to
Above 24% 34% 26.0% 80% 1.00 revenue
(Four hospitals)
3 years to 5
51% of operating beds are 3 to 5
Years (Nine 58% 62% 20.0% 78% 0.83
years of age and contributes 58% to
Hospitals)
revenue
One to three
Years (Eight 13% 9% 13.9% 57% 0.63
Hospitals) 16% of operating beds are 1 to 3
years of age and contributes 13% to
revenue
Upto one year
(Three Hospitals)
5% (5)% (18.4)% 37% 0.34
18% of operating beds are up to 1
year of age and contributes just 5% to
Average - - 18.8% 72% 0.81 revenue
* Average EBITDA margin has been calculated on Unit basis
39
40. 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
- 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
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
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41. Summing Up
• Healthcare Sector poised to grow
Healthcare • Growth led by Lifestyle Diseases and Insurance Penetration
Sector • 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
• Aggressively grown from 1 hospital in 2001 to a network of 56* hospitals in 2011 with ~ 8,000*
beds
Fortis • Leadership in Cardiac Sciences, Neuro Sciences and Orthopedics
Healthcare
• 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
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42. Analyst Coverage
Broker* Analyst name Comments
B&K maintains its positive outlook on Fortis due to
its focus on profitable growth, improvement in
B&K Vikash Singh
realization and operational efficiency across its
facilities
Expects strong growth in earnings as majority beds
Bank of America Prasad Deshmukh
will turn profitable going ahead
Centrum Rahul Gaggar Positive on the company’s growth prospects
Over the longer term, CITI forecasts sustained
CITI Prashant Nair / Anshuman Gupta growth & improvement in profitability as the new
hospitals scale up
Goldman Sachs Balaji V Prasad / Rishi Jhunjhunwala -
Fortis’ constant growth focus and
ICICI Direct Rashesh Shah strong management team supports our positive
outlook on the company
FHL continues to pursue its strategy to grow
IDFC Nitin Agarwal / Ritesh Shah aggressively with sustained focus on operational
parameters
Asset light strategy to help Fortis scale up at a
JP Morgan Princy Singh / Dinesh S. Harchandani, CFA
faster pace and improve its capital return profile.
Bullish on Fortis’ ability to execute aggressive
Morgan Stanley Saniel Chandrawat / Sameer Baisiwala, CFA
expansion plans
Optimistic about Fortis’ opportunities ahead, its
UBS Ajay Nandanwar ability to improve the operating performance of its
acquired hospitals
* In Alphabetical order
