?We expect to generate operating profits by FY08?
Max India chairman tells Prerna K Mishra about the business of life.india Updated: May 01, 2006 12:31 IST
Some years ago, Max Group chairman Analjit Singh made the first big ticket exit from telecom, cashing out with a stupendous Rs 562 crore. Earlier this year, he bounced back into the telecom sweepstakes by picking up a sizeable stake in Hutch Essar for a tad over Rs 750 crore. The entrepreneur who mirrors the spiritual strengths of his late father Bhai Mohan Singh is now focused on the business of life. "The value created in the past five years in saving and protecting lives through the healthcare and insurance business is more gratifying than the valuations created in telecom," Max India chairman told Prerna K Mishra. Excerpts:
You took the plunge into healthcare and insurance five years ago, ending a major restructuring drive. How far has the re-engineering gone?
In the past five years, we have invested nearly Rs 700 crore into the new lines of business that include the healthcare, insurance, clinical research and health staffing businesses. In total, Max has invested a huge amount of money into Max Healthcare, Max New York Life Insurance and Max India put together. All the businesses have stabilised and the restructuring is over and done with.
What does the Max Healthcare progress card look like?
We already have 850 beds, treating 1,300 patients a month. We expect the number of beds to go to 1,500 by 2008. Last financial year, the business clocked a turnover of Rs145 crore and it is likely to go up to Rs260-270 crore by March 2007. Presently, we have eight hospitals. Six hospitals are already operational in the NCR, while the next two, in Patparganj and Gurgaon, will come up in the next two years. We have treated over 88,000 patients till March this year. Though still in the red, we expect to generate operating profits by FY08.
What gives you the confidence that the group has been able to make a dent in the highly competitive insurance market?
We have sold 800,000 policies under Max New York Life Insurance (MNYL) and this is expected to go up to 1.2 million by December this year.
MYNL has an equity capital of Rs530 crore, which is expected to go up to Rs800 crore in 2007. The sum assured under the company is $5.5 billion. We have 14,000 agents and this is likely to go to 20,000 by December 2006.
The Indian healthcare sector has taken a few toddler steps towards institutionalisation? Has Max been accepted as a credible healthcare brand and what is the way forward?
Healthcare is slowly learning to be organised and coming to become a sector in its own right. But the truth of the matter is that in a country that has accepted private participation in telecom, banking, insurance, execution and gaining credibility in healthcare is the most challenging task. But we are serious players and have gained our share of credibility that gives us the confidence to move forward. By 2008, our investment in healthcare in NCR alone will be Rs 750 crore.
Are you going to extend the healthcare services beyond the NCR and beyond hospitals?
After 2008, we plan to take the hospital chain beyond NCR - in all probability, up North. In that phase, we will also be open to acquiring properties or managing hospitals for people who are ready to give us total control over operation and quality. Under the long-term plan, we will start a medical school with a foreign partner (if per mitted by the regulatory environment) in the next four to five years and a 100-seat nursing college in the NCR in the next 18 months.
Will MYNL sustain the growth even in the absence of regulatory reforms?
The insurance sector in Indian has not lost its steam yet. There is still room for more players. The Indian rural and agri sector has huge potential. Having said that, regulatory reforms in certain areas would give an extra breather to the sector - say, for instance, in areas like dividend payout for shareholder Vs policy holder, bank assurance model, where more flexibility is required to allow a bank to work with different companies, even if for a different set of products. Similarly, restricting carry forward losses to just eight years is not enough for sectors with long gestation. Similarly, in pension, it is to be seen what would be part of insurance and what not. Also, we see only one regulator, but there does not seem to be a consensus on that.