Antara is planning to create 35-40 Care Homes in the next few years: Rajit Mehta, MD & CEO

Rajit Mehta, MD & CEO, Antara Senior Living, talks about the capital reduction plan and plans of the company during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts: 

Q: You have announced Capital Reduction plans. What does it mean and does the company doesn’t need any more money? How it is different from a buyback and why promoters are not tendering for shares for capital reduction?

A: You have asked many questions and I would like to reply to them slowly. First of all, we have enough capital for our growth. We have around Rs 400 crore in Max India of which Rs 300 crore is needed for the growth of Antara and remaining Rs 100 crore has been kept for capital reduction. Last year during the divestment of Max Bupa, we had discussions with our shareholders and said to them that we will adopt some mechanism to thank them for lending their support. Normally, if we had pre-reserves in Max India then we would have thought about buyback or dividend but we don’t have it and that is why we are thinking about capital reduction. 

As far as promoters are concerned and why they are not tendering their shares in it then they are quite confident on the sector and the management that we will create a lot of value in this in the next few years. The senior care sector has a market size of around 10-12 billion dollars and it comes with many type value pools like assisted living, care at home, residences for seniors and online finances services. And, Antara has the vision to create an integrated system for our seniors in the next few years. If you are healthy but need care, comfort and companionship then you can choose our residences in Dehradun, and Noida, as well as few others that will be developed. If you need assistance in your daily living like feeding, bedding, monitoring and medication or if you have been through any intense medical episode like by-pass surgery, transplant or you have come to India from some other country and need rehabilitation of 3-4 weeks after the surgery then we are creating care homes. If you are suffering from some mental disorders, like Alzheimer and Dementia or something else, then we have memory care homes. If you want that all these facilities are provided to you in your home environment, like critical care, diagnostics, physiotherapy and pharmacy among others then such things can also be provided to you. If you want some aids for mobility like walking sticks, wheelchair, diapers and respiratory aids like oximeter then such things can be provided to you. So, we want to create a complete integrated system for every need of the seniors, therefore the promoters have faith that significant value will be created in the next few years and this is a reason that they are not tendering their shares in this offer. 

Q: During the recent listing of Max India, you said, the Senior Care is a sunrise sector, where you will invest in its growth. Then what led to a capital reduction in it? Also, there was a pressure on the share prices after the listing but the capital reduction news gave a bounce back to it. Explain the thought behind this plan?

A: As earlier said, we have enough capital for the growth of Antara because we discussed with the shareholders that we will find some way/s to thank them for their support. So, the capital reduction is a way to thank them. As far as future valuation is concerned then you can see it in two ways. (i) If you look at it today then the investment or the corpus or the capital cash in Max India and Antara is Rs 900 crore. And if you do a simple Math then the share value stands at around Rs 160-165. If you have a look at our new businesses, which I talked about the assisted care, then the valuation of the assisted care business in the US is about 30-35 times of the earnings. Similarly, if you have a look at the care home business in India then the deals made by the unlisted companies in the last few years have 5-7 times contribution in the top-line revenue. If you have a look at the residencies for seniors, then their valuation has been 10-15% of the earnings. So, we want to create 35-40 care homes and memory care homes in the next few years. We are also talking about medical equipment and want to create three-four communities outside Dehradun and Noida. If you add all these, then a significant value will be created in the future.