Anubha Shrivastava quits as CDC Group’s Asia MD

Anubha Shrivastava, managing director, Asia has quit CDC Group Plc after almost six years of association with the UK government’s development finance institution. Information about who will replace her is not known at this stage as the investment firm replacement is working with search firms to find a new MD.

Confirming the development, Miriam de Lacy, director – corporate communications, CDC Group Plc, said that Shrivastava has decided to move on to pursue other opportunities. “A replacement is being sought but the Asia funds team has been strengthened by the appointment of Hiti Singh and the promotion of Clarisa De Franco, who will both take the role of portfolio director,” she said in an email response.

An active investor in several venture capital (VC) and private equity (PE) funds in India, CDC has invested in entities like Lok Capital, India Inclusion Fund, New Silk Route, Aavishkaar and Baring India Private Equity.
In 2011 CDC came out with a high-level new business plan, with a geographic remit focused on Africa and South Asia. Hence, in addition to acting as a fund-of-funds investor, the investment firm decided to also provide debt and direct investment to businesses in these regions. As part of this change in its strategy, CDC is building a direct equity investment team that will focus on providing equity capital directly to support the growth of businesses, especially in the more challenging regions of Africa and South Asia.

Led by Mark Pay, three new appointments have been made in this team viz. Ross Coul who is joining as investment manager, from Sovereign Capital in London; Rohit Anand joining as investment executive, from IDFC Private Equity in Mumbai and Maheep Jain, also joining as investment executive, who comes with a background in corporate finance from Clean World Capital.

CDC is the UK government-owned development finance institution that uses its own balance sheet to invest in the developing countries of south Asia and Africa. It has net assets of £2.6bn.

Operators, broadcasters miss TRAI’s RIO deadline

This story first appeared in DNA Money edition on Friday, August 24, 2012.

Multi-system operators (MSOs) and television broadcasters have missed the August 21 deadline set by the Telecom Regulatory Authority of India (TRAI) for concluding reference interconnection offers (RIOs).

RIOs refer to the commercial agreements between the broadcasters and MSOs, which beam the channels to local cable operators.

The deals has to happen soon in order to meet the October 31 schedule for a shift from analog to digital cable system in the four metros.

With only a couple of operators making any headway in signing the RIOs, Trai may now have to set a new deadline.

Last week, Wire and Wireless (WWIL) said it has signed digital addressable system interconnect arrangements with Mediapro Enterprises for about 70 channels.

Anil Malhotra, chief operating officer, WWIL, said, “We are in continuous discussions with other broadcasters to finalise the commercial arrangements. In fact, I am sitting with a major broadcaster and working out the structure as we speak,” he said.

Hathway Cable & Datacom Ltd said majority of its reference interconnection offer (RIOs) with broadcasters have been completed a few days ago. “A few still remain to be sealed. We have broadly thought about what will be the packaging like and have come up with three pay tier categories — basic, middle and premium,” said a senior company official.

Uday Shankar, president, Indian Broadcasting Federation, was not available for comments as calls made on his cell phone remained unanswered.

With the digitisation deadline looming, MSOs said they are keen on closing the deals with broadcasters and moving on with the packaging of their various plans to be offered to the subscribers.

A related part of the RIO is carriage fees that the cable TV operators will charge the broadcasters to distribute their channels on their networks. This would eventually determine the retail price consumers would pay for watching these channels.

Rahul Kundnani, research analyst-institutional equities - media & retail, Sbicap Securities Ltd, said, “Both the parties are engaged in long-drawn bargaining as the settled pricing terms will largely determine the content cost of MSOs and the subscription revenue of broadcasters in digitised India.”

Ashok Mansukhani, president - MSO Alliance (a representative body of the Indian cable industry) and whole-time director of Hinduja Ventures, said the timeline set by the regulator should be viewed as an indicative date and not as writing on the stone.

“Some operators have already signed RIOs while others are in advanced stages of discussion. The committee has been updated with the progress in this regard as of August 21, and I am sure things will fall in place shortly,” said Mansukhani, stressing that the timeline was communicated by Trai on August 9.

Meanwhile the inconclusive commercial agreements between MSOs and broadcasters has resulted into slow off-take of set-top boxes (STBs) as cable operators have not been able to create channel packages and pricing structures. Ironically, it was the low STB penetration that had led the government to extend the digitisation deadline by four months.

The Information & Broadcasting ministry had earlier said that Mumbai looked the most prepared with 50% of cable TV homes already having digital STB installations. However, Delhi and Kolkata were struggling with the rate of STB installations around 25% while Chennai was way behind.

A study by research firm TAM in May 2012 to capture the changing digitisation scenario in four metros found that Mumbai was leading in terms digital penetration at 33% followed by Kolkata, Delhi and Chennai at 25%, 24% and 20%, respectively.

Zapping stains et al, premium dhobis are raking it in

An edited version of this story first appeared in DNA Money edition on Wednesady, August 22, 2012.

Every inch of 5aSec, an 800-square-feet fabric care store — or the so-called “super premium laundry” — at upmarket Pali Naka, a busy junction in Mumbai’s posh suburb Bandra, buzzes with action. In a section just behind the apparel ironing area, a female employee is seen treating a garment with some nifty hand-held equipment.

“It’s a laser gun. We use it to remove stubborn stains. Hi-tech processes like this mark our entire fabric-care approach. They make the garment look brand new,” says Suresh D Bhatia, MD of SB FabCare which operates 5aSec, the French textile care brand.

Bhatia is the Indian master franchisee of 5aSec which has three stores in India. Launched 18 months ago in Mumbai, 5aSec is among the new breed of fabric care stores like Pressto, Fabric Spa and Wardrobe that cater to the emerging affluent and aspirational Indian households. Dubbed as textile experts, these players offer consistent quality and service through clearly defined processes and systems supported by latest proprietary technology, state-of-the-art machinery, world class cleaning products and, highly skilled / trained manpower.

But, why do we really need such specialised laundry service providers charging a huge premium over the 25,000-odd small laundries and dry cleaners in India? The answer is very simple. A highly expensive garment / designer wear needs special attention when cleaning to ensure its characteristics remain intact and there is no damage to the fabric or other special material being used to make it.

A Jyothy Labs’ consumer research on the kind of laundry services availed by Indian households clearly brings out three key aspects. Firstly, easy wash items that can be washed at home. Second, items that were difficult to wash at home like bed covers, pillow covers, quilts, blankets, curtains etc; and finally premium garments like expensive sarees, suits, embroidered / designer apparels, leather garments and accessories like handbags, soft toys, shoes etc which cannot be washed at home at all and had to be given to dry cleaner / specialist laundry operator.

“The second and third categories are where households expressed concerns on the quality of the service provider and whether their garments, home linen would be safe if given to them for washing / cleaning / treating etc. We asked the consumer, what kind of a laundry they’d expect and everyone said they would prefer an expert for such set of apparels,” said Ullas Kamath, joint managing director, Jyothy Laboratories Ltd (operators of the Fabric Spa chain).

As experts always come at a price, these stores had to be positioned at the premium price bracket. For instance, if the dhobi / dry cleaner would charge anywhere between Rs 15-40 for a shirt, the specialised fabric care operators would charge a little over Rs 100 for the same shirt mainly because of the processes they employ.

“The pricing (wash cost) mechanism followed worldwide is cost of the garment divided by 10 or 15 but in India it is cost divided by 40. So if you have a saree costing Rs 40,000 the wash cost would be anything in the range Rs 1,000 to Rs 1,500 but if the saree is priced at Rs 1,000 the wash cost will be Rs 150-odd,” said Kamath.

While the fabric care industry started taking shape in 2008, industry experts believe it will eventually become the next coffee chain story of India. And with more and more Indians taking fancy to global premium and luxury brands like Louis Vuitton, Gucci, Armani, Jimmy Choo, Canali, Burberry etc, the demand for such service providers is expected to increase significantly.

“Spending power, emergence of an affluent middle class with 10-100 million households, increasing presence / penetration of premium and luxury apparel brands are fuelling this growth,” said Esther Lennaerts, executive chairperson, Pressto Dry Cleaning & Laundry Pvt ltd, which operates a chain fabric care stores under the Pressto banner.

Initial indicators, by existing operators, peg the growth at 20-30% annually. While setting up a store would cost upwards of a couple of crore the breakeven happens within 12-16 months and in some cases even sooner depending on the locality and the volumes being handled. The usage pattern differs from one household to another wherein some may use the services just 2-3 times in a quarter while a lot of others would avail the services 2-3 times in a week. As for margins are concerned, this business offers gross margins of 50% while net margin is around 20%.

Catering to the increasing demand, Pressto has in the last three years, grown from 5 to 21 stores and is targeting to reach over 100 stores within a couple of years from now. SB FabCare (5aSec) on its part is gradually increasing its presence and will be looking at the franchise route for further store additions going forward. The market leader with 132 fabric-care outlets, Jyothy Fabricare has set a goal of reaching 500 stores by 2015.

Centuryply targets Rs 500 crore turnover from retail foray

Plywood and decorative veneers maker, Century Plyboards is targeting a turnover of Rs 500 crore in the next five years from its retail foray under the banner Nesta Furniture. The Bombay Stock Exchange (BSE) listed company launched its first home lifestyle solutions store in Bangalore with a target to reach 111 outlets. The company will invest to the tune of Rs 100 crore in the retail business.

According to Sajjan Bhajanka, chairman, Century Plyboards (I) Ltd, the company is envisaging the retail chain to occupy approximately 3.5 million square feet of retail space in the coming years. “Retail business in India is at an interesting stage. Our latest venture in the readymade furniture retail business is a move up the value chain and a natural progression in the wood products category. We are keen to leverage our experience and strengths in retailing the finished end product. We will have flagship stores in key markets and also adopt franchise model to tap other markets,” said Bhajanka. 

The company management however, did not share any information about how will it fund the retail business.

A market leader in wood and wood products in India for three decades, Centuryply has been a trendsetter and pioneer with many firsts to its credit. Leveraging on the company’s in-depth knowledge of wood and design elements, Nesta will offer stylish, authentic and exclusive wooden furniture and home decor accessories to Indian households.

Abhra Banerjee, executive business head, Centuryply, said, “There has been a sharp increase in the popularity of genuine designer furniture over the last few years and Nesta will serve to be a retail hub for quality products. We will offer the latest designs and introduce a new collection every 3 months.”

The home lifestyle solutions store will be designed in a manner that customers will be able to experience and visualise the furniture in a room. An exclusive zone created in the store would allow customers to choose colours, different options for each room to get the perfect look, furnish the room dimensions and visualize how the furniture will look in their apartment on a giant LED wall. The store will also have a mock up of an apartment with approximately the same dimensions as a typical 1BHK flat. The furniture retail chain will also put a lot of emphasis on prompt after sales and maintenance to the customers.

Alok Industries to shut 45 retail stores

An edited version of this story first appeared in DNA Money edition on Thursday, August 16, 2012.

Integrated textiles company Alok Industries Ltd is planning to cut down its retail store footprint in India as part of its business rationalisation exercise. According to company top management, the plan is to shut down some of its non-profitable stores and review profitability of the retail division for the balance part of the financial year. The company’s retail operations carried out under its wholly owned subsidiary Alok H&A Ltd, currently operates 290-odd stores (as of June 30, 2012) across the country under the H&A brand.

“We will shut down 45-odd stores that are not generating profits by September this year. If this rationalisation exercise doesn’t work out well, as in make the retail vertical profitable, we will start folding the retail division,” said Dilip Jiwrajka, managing director, Alok Industries during an analyst call discussing the company’s first quarter performance for the fiscal 2012-13.

According to Crisil Research, Alok’s domestic retail business contributes less than 1% to the company’s consolidated top line and hence no major impact is expected in the company’s operations due to rationalisation of the retail division.

 

“The retail business was less than 10% of Alok’s revenues in FY 2012. At the profit after tax (PAT) level, it incurred losses. In such a scenario, shutting down the business would reduce the top-line but would improve the bottom-line,” said Crisil Research.

This apart, intensified competition in the domestic retail industry in recent years has resulted in major retail players booking thin margins. “PAT margin for typical value retailers ranges between 1% and 3%. Taking the competitive scenario and thin margins into consideration, we do not see material impact of closing 45 stores on its overall bottom-line,” said the research firm.

Alok H&A launched retail operations in FY’07 to push the sale of its own products in the domestic market and to take advantage of the growing organised retail sector. Of the 290-odd stores the company operates 137 stores as exclusive branded outlets (EBOs) and the balance (154) are in the form of shop-in-shops (SISs) on a franchise basis.

On the performance of the retail division, the company management is of the opinion that while SIS stores breakeven faster and are profitable, it is the EBOs that are under significant pressure. “The rental component associated with EBOs is making a big dent in its profitability,” said Jiwrajka.

 

As a result, all stores that will down shutters in the next 45 days will be the EBOs. As for SISs are concerned, the company is likely to continue with that model as those are profitable. According to Crisil Research, after the non-profitable EBOs are closed, the management will not make any further investments in retail.

Spread across 800 square feet area, the H&A exclusive branded outlets sell products in home textiles, men's wear, women's wear, kids wear and accessories like ties, handkerchiefs, cuff lings etc. The company’s overall retail operations currently occupy approximately 230,000 square feet of space across the country.

The company had earlier planned to reach 500 stores by FY’14. However, the expansion plans had to be put on hold on account of a challenging macro-economic situation in the domestic market and the company will focus on its core manufacturing business going forward.

Focusing primarily on return on capital employed (ROCE) the company management had earlier initiated exiting its non-core business, primarily real estate assets. With a debt of Rs 12,900 crore sitting on the company’s books, the management is planning to raise Rs 2,500 crore over two year horizon of which a significant portion will be raised through real estate divestment in this financial year.

“Approximately Rs 1,500 crore will be raised in this fiscal. We have negotiated transactions worth Rs 600 core and received Rs 150 crore in advance payments. The balance money will be paid soon. The funds thus raised will be used to reduce the debt burden on the company,” said Jiwrajka.

During 2012, Alok Industries sold eight floors (out of 20 floors) from its largest real estate venture, Peninsula Business Park project (estimated deal size of Rs 400-450 crore and three floors (out of the eight floors) of the Ashford Centre and received a token sum of approximately Rs 50 crore.

The company is keen on selling the remaining nine floors of the PBP project (three floors will be used for own use) during FY’13 and appears positive about the same. Also, it intends to sell other real estate properties and land by FY’14. One of these is Ashford center in Lower Parel, where three out of eight floors have been sold.

FHRAI Annual Convention to chalk out roadmap for hospitality and tourism growth

Kamlesh Barot, president, FHRAI

Achieving a cumulative annual growth rate (CAGR) of 12% in the next five years, the Indian hospitality will require setting up of 23.4 lakh hotel rooms of which at least 188,000 will be required in the organised sector and the balance in the unorganised sector. According to hospitality industry's apex body, the Federation of Hotel & Restaurant Associations of India (FHRAI), building these many hotels will require an overall investment of Rs 150,000 crore in the next five years.

Kamlesh Barot, president, FHRAI, said that the Indian tourism ministry has a great vision for increasing India’s share in foreign tourist arrivals (FTA) and has all the support from the hospitality association. "The ministry wants to see foreign tourist arrivals in India reach at least 1% by end of the XII Five-Year Plan (2016) from 0.6% at present. We completely support ministry’s target to increase FTAs in 2016 by 11.37 million, domestic tourist visits by 1,496 million and create 44 million new employment opportunities," said Barot.

A discussion to this effect and an effort to create a roadmap will take place at the upcoming 47th Annual Convention of FHRAI to be held in Goa from September 6 to 8. The theme for this year's convention will revolve around employment generation in addition to various aspects of hospitality that will need huge attention in the coming years.

Currently, the size of industry is pegged at $11.2 billion with 6.29 million Foreign Tourist Arrivals (FTA) with foreign exchange earnings of $11.394 billion. The industry’s contribution in India’s GDP was 5.92% (in 2011) which is expected to reach 7.3% in 2012. The industry also contributes 9.24% employment in the country with 53 million direct and indirect employemnt opportunities.

FHRAI estimates that the government shall increase the industry’s contribution to GDP at 7.8% by 2022. Moreover, the enhanced GDP shall be creating approximately 37 million direct & indirect new jobs.

However, there are many impending issues proving to be roadblocks in the growth of the Indian hospitality industry which will be part of the various discussions during the annual convention. "Issues like high taxes on tourism and moral policing due to archaic laws are primary issues. Moreover, high interest rates, inflation, lack of provisions for hospitality under infrastructure policies, sanitation, airport and tourist services, licensing, lack of trained manpower, exporter status, visa issues and the laws pertaining to the land acquisition for projects are other areas of concern," said Barot.

Hyatt on course to take reins of Ista properties

This story first appeared in DNA Money edition on Monday, August 13, 2012.

Hyatt Hotels Corporation has emerged as a frontrunner for management takeover of Ista Hotels, promoted by IHHR Hospitality that runs the award-winning spa property Ananda in the Himalayas.

The international hotel chain is likely to rebrand Ista Hotels as simply ‘Hyatt’ with no prefix or suffix, sources said.

A Hyatt spokesperson, in an email response, said, “Currently no confirmed deal has been signed between Ista and Hyatt.”

With this development, Ista, a homegrown brand that IHHR created six years ago to enter the hospitality market, may cease to exist.

Sources said IHHR was looking for a tie-up with a foreign brand as global slowdown and increased competition from global chains were hurting business.

IHHR entered the luxury business hotels segment by opening its first Ista hotel in 2006 in Bangalore with 143 guestrooms and suites, followed by Hyderabad (165 guestrooms), Amristar (248), Pune (221) and Ahmedabad (169).

The portfolio currently comprises five hotels with a total of 946 guestrooms and suites.

Ashok Khanna, managing director, IHHR, said, “We have been exploring alliances for a while to help us compete with international chains that have the advantage of a global presence. However, nothing has been decided yet. We will make an announcement when the decision is made.”

The development could pave the way for similar deals as local brands are finding it difficult to fight global brands in a depressed economic scenario.

“The approach would largely be adopted by home-grown brands with sought-after hotels in prominent cities to take advantage of the global footprint and loyal customer base enjoyed by the international hospitality chains,” said a top official from a leading international hospitality chain.

The international hotels approached by the IHHR management include Marriott International and Starwood Hotels & Resorts.

'Global Hospitals is a large player in the niche area of organ transplant'

Dr K Ravindranath

An edited version of this Q&A first appeared in DNA Money edition on Wednesday, August 08, 2012.

Starting operations over a decade ago from Hyderabad, Global Hospitals Group is currently among the fastest growing multi super-specialty tertiary care hospital brands with state-of-the-art healthcare centres in Bangalore, Chennai and soon to open in Mumbai. Dr K Ravindranath, chairman and managing director, Global Hospitals Group, in conversation with Ashish K Tiwari, shares his views about the current scenario in the super-specialty healthcare space and their company’s plans in this direction. Edited excerpts...

 

Could you briefly take us through the journey of Global Hospitals Group? How did it really come into being? 

Global Hospitals was started way back in the year 1999. Basically, I am a gastrointestinal surgeon specialising in laparoscopic, liver and pancreas surgery. My heart lies in liver transplantation. I was in Kings College Hospital, London, UK, where several Indian patients used to come for treatments spending huge money (over Rs 70 lakh). Majority of them would die because of non-availability of organs would be first given to local patients and outside patients would always get second priority.

Over a period of time I realised that something needs to be done back in India to facilitate organ transplant. I decided to come back and since the Transplant Act took really long time to get approved in India I did not do transplant surgeries for several years. But when the Act finally came by, we decided to set up a hospital and that is how Global Hospitals was instituted.

Transplant as an area of specialisation requires dealing with a lot of complexities... 

In fact, transplant is the most complex procedure and requires significant back up from other specialties in addition to lot of cutting-edge technology. And when you put all those things, it has to be utilised properly hence we conceptualised a multi-super speciality tertiary care and multi-organ transplant healthcare services facility. We are a very comprehensive centre of excellence offering everything from routine operations, tests, to complex operations like transplants. 

What are your views on organ donations in India? 

It is a huge challenge. Organ donation has to happen and promoted in India in a big way. It is a regular practice in some of the smaller countries like Spain but there is a huge shortage in our country. Awareness about the need for organ donation has to be created with the people in India. Karnataka is the first Indian state where a declaration is made in the driving license itself that the person has agreed to donate organs post his / her death. This approach is very prominent in foreign countries and I’m told the Tamil Nadu government will follow suit soon. Organ transplant has to be done within 4-48 hours of the death of the donor depending on which organ is being transplanted. Each organ has a limitation on how long can it be kept. 

What factors differentiate the various healthcare services offered by your hospital chain? 

We started the hospital focusing on multi-organ transplant because there was no point in doing just standalone transplants. When doing a liver transplant, one should have a high-end facility with complete gastroenterology, liver, pancreas diseases centre. Same is the case with kidney and bladder diseases and transplants. We do heart and lung transplants along with bypass surgery, valve replacement, angioplasty etc. We had recently done one small intestines transplant in our Chennai hospital and that’s something we will start doing across our existing and new hospitals now. Neuroscience is another area that we specialise in and have done a lot of work on brain and spine. We have expertise in stem cell transplantation which is a huge speciality area coming up and we are a major player doing a lot of work in Bangalore and Hyderabad with plans to start soon in Chennai.

Is bone and joint replacement also part of your services offerings? 

Yes it is. In fact, we are now planning to start bone banking in Chennai. Once that happens, the patient will not have to undergo the whole joint replacement if the cartilage is gone as only the cartilage will get replaced. Tissue banking is going to be the future. It’s like a spare part to the body that is why we are creating a bone, cartilage bio, tissue, skin, blood and blood products bank. This apart, stem cell therapy is coming in a big way in the bone and joint replacement area and we will be starting that as well. Out next focus area is Cancer wherein we have started the most advanced centre in Bangalore. We are in the process of starting it in Chennai in the next couple of months and Mumbai will follow soon. In cancer, we do bone marrow transplantation and other things. 

Will it be correct to say that a niche play is what you are really banking on? 

A niche but a larger niche is what we are positioned in the market. We are a very big player in the niche area and that’s the only reason why we are not going beyond the tier I cities in India. We get lot of doctors relocated from other countries like UK, USA, Australia etc. They prefer to come to the metros as compared to small towns and cities. We are already present in three key metros of Bangalore, Hyderabad and Chennai in South India. Adding the fourth Indian metro to our network, we will soon open in Mumbai. Thereafter, New Delhi and Kolkata will happen in the next 3-5 years from now. We will be in all the six metros where we have easy access to human resources. High quality and well-trained human resources is very important for any healthcare services provider like us because only then can we deliver the best. 

What is the mix of domestic and international patients at your facilities in the country? 

The technical expertise and cutting edge work that we do is something which is not only in huge demand in India but also with a host of international countries where advanced procedures and quality healthcare services is still a distant dream. There are many countries like the Middle-East, Africa , Sri Lanka, Pakistan, Bangladesh, Malaysia and so on that lack the quality of medical services like what is offered in India that too at a fraction of the cost they would have to pay in any of the developed economies. Approximately 25% of patients visiting our healthcare facilities are foreign nationals and we see the number growing in the coming years. 

What are the most common transplants and how much do they generally cost? 

Today the number of liver transplants is high mainly because liver disease is becoming very common. Kidney is the next organ that sees large volumes followed by heart and lung. There are just 5-6 centres in the country doing such surgeries of which 3 are from the Global Hospitals’ chain as a result majority of the transplants are done by our centres in Hyderabad, Bangalore and Chennai and Mumbai will get added to this network once it gets operational. A liver transplant would cost around Rs 20 lakh, while it will be 8-10 lakh for heart and lung transplant. The cost involved in a kidney transplant is Rs 4-5 lakh. 

By when do you intend to make the Mumbai hospital completely operational? 

It will be a stage-wise launch. We will start with the out-patients-services followed by day care surgeries post which the hospital will get fully operational. All this will be done in the next 6-8 weeks. The Mumbai centre will have 450-beds taking the total number of beds in the Global Hospitals chain to 2,100.

The doctors, are they on consulting basis or full-time? 

We have partners. In the Mumbai facility, we have 7-8 top-notch doctors who are equity stakeholders-cum-partners and will be working full-time in the hospital. This apart, there will be some doctors on part-time consulting basis. Our model is such that a large number of full-timers provide continuity of care and some exclusive doctors associate with us on a case to case basis. The ratio between full-time and part-time doctors is 70:30 and that is how we drive the organisation. The advantage of full-timers is that they are here for most of the day and night. The patient gets full care and attention. Besides, transplants are such complex procedures we will require full-time doctors to do justice to the patient’s treatment. 

Are your other hospitals based on a similar (equity stake) arrangement with doctors? 

No. Mumbai is the first hospital we have experimented with this model and I am quite happy to have excellent partners. We will be exploring the same model for our Delhi and Kolkata centres when they happen in the coming years. I think this will be a model that many other hospital groups will replicate because the partnership approach gives doctors a sense of ownership. Besides, in the coming years, top-notch doctors would like to have a say in the hospitals they associate with and the partnership model works really well. 

The Mumbai hospital must have called for significant investments. What was the overall cost like? 

Putting up a hospital is capital intensive in general and the Mumbai hospital is no different. Fortunately, land for this hospital was given to us by a family trust (M/s Verma Medicine Research Trust) at a very low cost. So our land cost is very negligible allowing us to build a very high quality state-of-the-art hospital with an overall investment of Rs 350 crore. Given the fact that doctors are also stakeholders in the Mumbai hospital, the project has a debt equity ratio of 65:35.

So if you take off the land cost, Rs 70-80 lakh would be the per bed cost. I try to pursue the asset light model because the brick and mortar approach puts a lot of stress on the hospital and the doctors (management) thereby making it difficult to pass on the benefits to the patients. My view in the long-term is that hospitals should be developed through either asset light (management contract) or public private partnership (PPP) wherein land is leased to the hospital chain. 

In terms of the audience you will be catering to, will it be largely those in the upper middle-class and above? 

We will be available for all the three sections of the society as routine healthcare services will also be offered in the hospital. Our positioning in the market will be among the best in the super-specialty segment however approximately 10% of our beds will be allocated for the weaker section of the society and this is a standard practice with all our hospitals. All services to these patients will be offered at a subsidised cost though medicines and materials will have to be bought by them. In fact, this is part of our arrangement with the Verma Medicine and Research Trust. 

What is the staff strength like in your hospital chain? 

Healthcare industry offers great employment opportunities right from housekeeping boys, nurses and doctors. In fact, every bed created generates employment opportunities for 7 people. While we currently have over 5,000 employees in the hospital chain, we will very easily cross 10,000 employees in the coming 2-3 years.

Jyothy aims to treble laundry biz in two years, targets 500 garment care stores by 2015

This story first appeared in DNA Money edition on Wednesday August 1, 2012.

Jyothy Fabricare Services Ltd, India’s biggest laundry chain operator that runs 132 garment-care outlets, has set a goal of reaching Rs 300 crore in turnover by 2015 from the Rs 100 crore expected this fiscal. The subsidiary of FMCG firm Jyothy Laboratories Ltd said it currently services over 150,000 households and is looking to increase it to 1 million households by 2015.

Ullas Kamath, joint managing director, Jyothy Labs, said the turnover target will be achieved on the back of an aggressive retail expansion plan and high volume institutional business.

“We will have at least 200 outlets on our own. New stores beyond that will be franchisees. The target is to have 500 stores by 2015 under Fabric Spa (for premium catchments) and Wardrobe (for sub-premium -- SEC B and C) brands,” he said.

The company will start appointing franchisees from the next fiscal from Mumbai and Pune, which it believes hold good potential.

Laundry business in India is predominantly an unorganised sector, providing huge opportunity to organised players. According to an Insead and KPMG report, the laundry services market in India is expected to grow manifold from current size of over Rs 5,200 crore.

“We will incur a capital expenditure of around Rs 40 crore this fiscal and are targeting a turnover Rs 100 crore. Over the next two years, we will take the turnover to Rs 300 crore by 2015. It is a doable figure because the market is very big and there is enough space for players to build their business,” said Kamath, adding the business has been planned based on the private equity investment received in 2010 and any future requirements will be met through internal funds.

Jyothy Labs holds 75% stake in the Jyothy Fabricare with the balance 25% being acquired by IL&FS Private Equity for Rs 100 crore in 2010.

The laundry firm, which was started in 2009, is looking to target the entire garment care market from retail, premium, sub-premium, institutional and Railways.

Despite significant presence in the country, the laundry firm has chosen not appoint franchisees as yet. Kamath said it can be done after credibility is established and the brand is in the market for 3-4 years. “That’s when we will get a clear picture of how much money can be made. Thereafter, franchising mode will be adopted because we will be then in a position to demonstrate the business opportunity to potential franchisees,” he said.

The company is also expecting a good inflow of institutional business from various markets in the country. It caters to the institutional market selectively, focusing on good pay masters such as five-star hotels and airlines.

“A decent volume of business is coming from the 27-odd trains out of Bangalore that are being serviced by us. Another build-own-operate-transfer contract has been received from Railways in Ahmedabad for about 15 tonne capacity for 10 years. We have bagged a similar contract from Delhi International Airport Ltd for 15 years,” said Kamath.

As malls near completion, PVR lines up a big expansion

This story first appeared in DNA Money edition on Saturday August 4, 2012.

Film exhibitor PVR has earmarked Rs160 crore this fiscal to increase number of screens and open new entertainment centres this year.

Sanjeev Bijli, joint managing director, PVR Ltd, said, “Around Rs120 crore will be invested for adding 82 screens while another Rs40 crore will go in launching four PVR bluO centres. Funding will be done through a mix of internal accruals and debt as well as money recently raised from private equity firm L Capital Eco,” said Bijli. The company had added 50 screens last year.

Earlier on Wednesday, L Capital Eco signed a deal to invest Rs108 crore in PVR’s cinema exhibition and in-mall entertainment businesses. Under the agreement, L Capital will take a 10% fully diluted stake in PVR for Rs57.7 crore in PVR Ltd, launch a joint venture with PVR bluO Entertainment Ltd and invest Rs50.1 crore in various in-mall entertainment, gaming, food and leisure formats.

The PVR management said that with mall developments finally getting completed and delivered during this fiscal the targeted new screen additions will be easily met.

The company has already opened 13 screens so far and the balance 70 screens will open in the next 6-7 months. The new facilities will open in metros and larger cities like Pune (2), Bangalore (3), one each in Kochi, Chandigarh, Nagpur among others. The company also plans to add 70 screens each in fiscals 2014 and 2015, doubling the overall screen count in three years.

Bijli said while inflation in the last few years has led to 10% cost escalations, the company has done certain value engineering to ensure the incremental costs do not impact operating margins. “Our costs per screen currently is Rs1.2 to 1.5 crore for a standard facility, while a top-end screen would cost Rs1.8 to 2 crore,” he said.

With two centres and 50 bowling lanes already operational under the PVR bluO brand, Bijili said new centres would come up in cities like Bangalore, Pune, Ludhiana and Chandigarh in the current fiscal. “Being on a larger scale with over 24 lanes, these are not plain bowling centres. Being reasonably priced at Rs150 per game, the approach works well for the business as patrons do not have to queue up for their turn and the churn is much quicker,”

The bluO centres are typically spread across 30,000 square feet on an average including the F&B area. The per-lane cost (for bowling centres) ranges Rs50 – 80 lakh depending on the location and number of lanes. “Smaller the centre, higher the cost,” said Bijli.

To diversify its entertainment offerings, the company is evaluating a host of out-of-the-home entertainment options, including in the food and beverages area.

These in-mall entertainment concepts are expected to incorporate some international formats.

“These are currently in the evaluation stage and we are expecting to introduce them before the end of this fiscal,” said Bijli.