Talking about the impact of the Budget announcement on the healthcare sector, Viren Shetty, executive director and group COO of Narayana Health, said that cess on imported medical equipment is bad news for the industry as it will eventually lead to costs rising for the patients.
Finance Minister Nirmala Sitaraman, in the Union Budget 2020, announced health cess of 5 percent on import of medical equipment.
“The cess on imported medical equipment is not great news for us because it means our input cost starts to go up and these are costs that ultimately will be borne by the patients. So this would not be great news for the industry,” said Shetty.
On CDC selling stake in the company, Shetty said, “CDC was one of our private equity investors that came in 2013. This was the part monetisation of their stake that they have held on for seven years. They have indicated that they don’t want to sell the remaining half anytime soon.”
The Q3 earnings of Narayana Health showed that the growth and margins have slowed as compared to H1FY20.
“The slowdown in revenue growth is because of two things. One is seasonality — Q3 and Q1 are historically very lower-performing quarters because of the festive seasons. Second is the impact of the closure of one of our hospitals, Whitefield. We managed to complete the closure in Q3 and the revenues have been declining there,” said Shetty.
In terms of new hospitals, he added, “There are three new hospitals, two in Delhi and one in Mumbai. The one in east Delhi that we have called Dharamshila Narayana Superspeciality Hospital is nearly at the breakeven level. We had indicated that it should breakeven by the end of this financial year and we are confident that it will be maintained. The other two hospitals in SRCC in South Mumbai as well as our hospital in Gurugram should take about another year to reach breakeven.”