31 March 2013

Hemas Plans to Build 4th Hopital in Ratmalana Taking into Account Area’s Growing Middle Class

20th March 2013, www.dailymirror.lk

Hemas Hospitals Private Limited, the fully owned subsidiary of Hemas Holding PLC sending a strong signal to sector rivals yesterday revealed plans to construct its next hospital in Ratmalana, taking into account the area’s growing middle class. This will take the total number of Hemas hospitals to four.

Responding to a question by Mirror Business on future plans, Chairman Murtaza Esufally said they had recently purchased one acre of land to the value of Rs.250 million in an area between Ratmalana and Moratuwa for this purpose.

“In fact we see a vast potential in this particular area and a survey carried out prior to the decision too showed the growing middle income earning population which warrants quality healthcare facilities in Ratmalana,” he said.

Speaking on the investment of the project he noted that it will be around US $ 10 million (Rs. 1.3 billion) for a typical 60-bed hospital similar to the one being constructed at Thalawatugoda.

In another interesting revelation, it was indicated that it takes at least 7-8 years to recover the initial investment which is usually referred to as the payback period in Finance. Esufally who was tight lipped on the financial performance (as it is unlisted) however said that Earnings Before Interest, Tax, Depreciation & Amortization (EBITDA), a financial performance yardstick in the hospital sector had been positive throughout.

Hemas Hospitals spent US $ 1.6 million for the 100-bed facility located at Wattala four years ago, followed by another US $ 500 million for the 50-bed Galle hospital and another US $ 1.4 billion for Thalawatugoda facility. Mirror Business exclusive reported on Hemas’ plans to put up hospitals in Thalawatugoda and Ratmalana back in January 2011 even before the start of the two projects.

Ambitious Esufally confided that the company’s plans were afoot to add another 600 beds (about 10 hospitals) touching at least one quarter of the populations’ lives within the next eight years. Esufally who did not rule out the possible expansion in the heart of Colombo said the company’s main strategy was to target the middle income earning category particularly in the suburbs. “Leveraging the four year experience in hospital business, 65 years heritage & the market leadership in the pharmaceutical industry (with a market share of 17-18 percent), we are quite confident that we could in the long run become the market leader in the healthcare sector,” he remarked. Nine months results to December 31 showed the healthcare sector contributing to the group with the highest revenue of Rs. 6.7 billion demonstrating a Year-on-Year growth of 22 percent. The sector bottom line too grew by 33 percent over the same period last year to Rs. 360 million.

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