Dr Naresh Trehan's vision for his latest venture is to emulate the best-in-class health care facilities in the world
As one of India’s leading cardiovascular surgeons, Dr Naresh Trehan is always pressed for time. When Forbes India went to interview him, he had just stepped out of the operating theatre. Patients were streaming in and out of his chambers. It was only after an hour of consultations that Trehan found time to discuss his dream project: Medanta-The Medicity, a multi-specialty medical institute in Gurgaon, modelled along the lines of integrated medical institutes such as Mayo Clinic and Stanford University Medical Center in the US.
Since its inception in 2009, the hospital has rapidly grown and notched revenues of Rs 1,100 crore in FY2014. Its early success caught the eye of the Carlyle Group which, in December 2013, bought a 27 percent stake in it for Rs 960 crore from Avenue Capital. The deal values the company at Rs 3,550 crore, and puts Medanta’s enterprise value per bed at Rs 2.8 crore compared to Rs 1.4 crore for Apollo Hospitals and Fortis Healthcare.
The man behind it
Trehan (68) is hardly an unknown entity in the medical world. As the recipient of the Padma Bhushan and the Padma Shri, he has long been in the public eye. Also because of the prominence of his first business initiative, the Escorts Heart Institute (later acquired by Fortis) in New Delhi, which he helped establish in 1988. He left the hospital after two decades to set up Medanta with co-founder Sunil Sachdeva.
The initial investment of Rs 1,000 crore was raised through a mix of equity and debt: A Rs 500-crore loan from Yes Bank and six public sector banks, and the rest from Trehan, engineering and construction group Punj Lloyd and Avenue Capital. Medanta has paid off most of the loan, with Rs 126 crore remaining.
Trehan’s mantra is “business with a soul”. He wants it to be known that he isn’t interested in maximising returns for the hospital at the cost of his patients. “Hospitals should be happy making a return of 10 to 12 percent instead of 25 to 30 percent. Otherwise, we can’t make health care affordable,” he says. Medanta’s net profit for FY2014 was Rs 187 crore.
(This story appears in the 25 July, 2014 issue of Forbes India. To visit our Archives, click here.)