This is an amalgamation of a lot of individual journeys we all have taken together: Abhay Soi, MD & CEO, Max Healthcare Institute

Abhay Soi, MD & CEO, Max Healthcare Institute, talks about the turnaround strategy, recovery, business outlook, debt situation and expansion plans among others during an interview with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: Congratulation for a decent Listing! What is your turnaround strategy and how will you continue the growth momentum?

A: This is not only the amalgamation of two companies but it is the amalgamation of a lot of individual journeys that we all have taken together. It has brought the best in class management together and they in the last one year have worked a lot on margins and the quality of business improvement, which was visible in the last one year. Going forward, you will see more results in the same. We had delayed our long-term strategy in the last three months due to this pandemic but we have seen that our occupancy level, which dropped to 28% in April, has grown to 65-66% by now. So, we are moving towards normalcy and believe that the worst is behind. So, we will move towards normalcy by the end of the year and the next complete year will remain normal for us. Besides, there are many synergies in our business and we have to take advantage of it, like 85% of our business is metro business and we are seeing that the pandemic is more towards non-metros, so the occupancy level is improving in the metros. Going forward you will see that our geographical concentration in the Delhi-NCR region just don’t include the patients of Delhi-NCR but also includes central India, North-East, North India and 40% of the international business. We are the largest player in the region and many of our facilities and our size are three-times of the next largest player and we will be benefitted from it.

Q: How strong recovery was seen in July and August and can you provide a timeline by which the impact of COVID-19 pandemic will be mitigated completely? 

A: There has been an impact of the pandemic on everyone and there has been an impact of the lockdown. Initially, the pandemic had a maximum impact in the metros and our hospitals are largely located in the metros due to which our occupancy level stood above 70% declined to 28% amid the lockdown. So, April was quite bad for us as the occupancy stood at 28%. We were at a loss in April, but it ended in May, June and July and now the occupancy level is above 65%, which is moving towards normalcy. The important thing is that the government has helped a lot in this period by releasing a huge part of tax outstanding and CGHS outstanding. This helped us from protecting our net debt position and cash position from deteriorating during the bad times. We also didn’t face liquidity issues in the period for which we are thankful to the government, which looked forward and ensured that the health sector doesn’t get shut down in this period. Every sector has faced problems but when all the sectors were mothballing their business and shutting them down, we were supposed to increase our efficiency and operations to take care of the patients amid the pandemic. So, the government has helped a lot and the best thing is that the worst is behind by now.

Q: What is the debt situation of the company and what are the plans to reduce it, can you share some timelines about it?

A: We have a very comfortable debt position. We have a net debt of Rs 1,500 crore and it remains below Rs 2,100 crore even after including the put options in it. Of this, the interest of the debt of around Rs 620 crore is accumulative which should be paid after two to two-and-a-half years, however, we have the choice to pay them before as well. The cash flow position is also quite comfortable and we will reduce the debt bit but am sure that it will not be increased from here.

Q: You earlier said that you have more presence in the urban setup but health requirements are spread across India. Do you have any plans to expand in other areas or you will focus only in metros?

A: Our competency and understanding of the business are mainly limited to the metros, so we will keep ourselves limited to the metros. But there are non-metros like Mohali, where we have a hospital and it is doing well, in fact, it is an example of PPE in India, which is the most successful PPE model for hospitals. Our capacity utilisation is very high in the city. So, if there is a need to add more hospitals in such cities than we can do it but if there is a question to enter some new city than we are not looking in that direction at present.

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Q: What is the outlook for FY21 in terms of top-line, bottom-line, margin and growth outlook?

A: Anyone will find it difficult to forecast FY21 now because we do not know whether the normalcy will come in Q3FY21 or Q4FY21 or when it will come. Much of our business is international and you know that the flights are stopped. So, when the flights are opened then we will have to see that is there any latent demand which will have an impact. Thus, there are three-four things, which is not clear today, this is why FY21 is very difficult to forecast but will say that the worst is behind and we are not facing liquidity constraints and the government has also helped us a lot.