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The man who wants to pull Fortis out of ICU

World’s largest healthcare chain by market cap IHH acquired Fortis after a tenuous bidding war that lasted almost 18 months. As IHH readies its 100-day plan to integrate India’s second-largest hospital chain with its global footprint, its chief executive Tan See Leng spoke to ET how he remains bullish on the sector despite price and regulatory controls. Edited excerpts.What are your key areas of focus?Fortis is currently facing significant challenges on multiple fronts. The first and immediate task for us is to secure and stabilise ship.We are operational people, not investors. Our biggest value add is our proven track record of turning around assets and improving operational performance. Our priority is to provide full support to resolve all ongoing litigation and investigation concerns. We will continue enforcing processes started by the current Fortis board.We will also bring in our global corporate governance practice standards.This is to ensure a robust and secure operating environment for all our hospital assets. Of the Rs 4,000 crore, Rs 2,700 crore will be set aside for the RHT Health Trust asset buyout. Another Rs 1,000 crore will be set aside for debt and capex optimisation.In the medium term, we will decide to also buy out the private equity minorities of SRL Diagnostics. We will implement and institute a core team from strategy, legal, finance and operations to hand-hold the company.Where do you foresee the lion’s share of expenses in the short term?We shall be setting aside money for upgrading capex for some facilities, repairs and maintenance of some critical equipment. Immediately we will be leveraging on IHH’s superior credit profile and global banking relationships to optimise the debt funding cost. We are confident we can save 2-4% in terms of current financing cost of Fortis after the transaction is completed. If you look at the organisational parameters and profitability, in the past year, Fortis has been trailing its competitors by 500-600 basis points. We believe that by our operational improvement, we should be able to quickly bring it back up to what it was before.The quality of assets under Fortis has rased serious doubts. Aren’t your investors concerned?Through the past 16-18 months, we constantly sought feedback – from our investors and analysts who cover our stock. We believe the current asset – given the future strategic value it would offer for both IHH and Fortis — represents the best shot for us. We acknowledge that the road ahead can be long, but given the discipline and prudence we exercised in evaluating this asset and simultaneous effort in strengthening our brand in India, we have learnt from the mistakes of other groups. We believe this is the most optimal time to secure this asset.Of course, we could be proven wrong but we have been very, very careful. Given the Luthra & Luthra reports, due diligence findings and final audited statement that has come up with qualifications and disclaimer, I think we are quite comfortable with what we have found so far.

Source: ET

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