In an interview with ET Now, Dabur India Director Mohit Burman looked to set the record straight. Absence of expertise in running a pan-India hospital chain, he asserted, will not come in the way of Hero-Dabur consortium.
Edited excerpts:
Ashwin Mohan: What do you think worked in your favour in getting the majority backing of the board? Many believe the simple, quicker route of higher upfront equity infusion of Rs 1,050 crore without due diligence was the deal clincher. Do you also think that this is the main factor?
Mohit Burman: This is not the only factor. Our bid was clear and concise and could be worked upon straightaway. We believed that this business needs money as soon as possible. Therefore, to allow due diligence for a company that is already being examined by many other companies before us would not have something which is not already in public domain.
We gave a clear and concise bid that we will put the money straightaway into the business as soon as we get shareholder approval. We have committed Rs 800 crore and suggested a structure of another Rs 1,000 crore, 25 per cent of which will go straight into the business. A total capital of Rs 1,050 crore will be infused in the business as soon as we get shareholder approval.
Ashwin Mohan: Your consortium is already a minority shareholder in Fortis Healthcare. The idea to enter the race was purely in capacity of a shareholder who wishes to pump in the much needed funds into an embattled firm. Or, do you have a larger fleshed out strategy?
Mohit Burman: If you look at what has happened over the last few days, there is no way that the board and the committee would have voted in our favour if it was just a financial investment. Not only do we have a long-term plan, we have a short-term plan as well. We actually made a presentation to the parties concerned on what will happen with the company over the next 100 days and one year. Some of the plans involve looking at the opportunities that arise out of SRL. There will be a commitment to buy RHT assets and all this has been covered in our presentations to the existing board, new members and the advisory committee.
Ashwin Mohan: So different timeframes have been taken care of including your long-term vision for the company?
Mohit Burman: Absolutely. What is needed straightaway to rescue business operations is money. Creditors are at the door, doctors are leaving; we want to stabilise the business in short term.
Ashwin Mohan: As part of your enhanced revised proposal, you have sought board seats and at the end of the day, you need board representation if you have put in money. You have also sought a strategic sale of SRL. What is the reason behind this? Why was that specific aspect highlighted in your bid?
Mohit Burman: First on board representation, you have got it right. If you are putting in Rs 1,800 crore, you would want to know where the money is going. We want to bring more independence on the board.
We have been looking at SRL business from the outside in. We have committed so much money without actually doing due diligence. So, when we were asked to give a long-term plan for SRL, we looked at two options.
The first option was sale of SRL because there is already a demerger planned for it. To concentrate on the business, we took this plan one step further and said that in case the business is demerged and sale happens, money could be used to buy RHT assets.
However, once we are in a position to determine whether this business should be kept and what its long-term goals are, we may not sell it.
In our presentation, we gave two options – one of sale and what amount of money would be needed and second, without a sale. We are looking to address both the options as soon as we have the insights to do so.
Ashwin Mohan: Post conversion of warrants, would your combined stake represent about 16-17 per cent in the company, thereby making you perhaps the largest minority shareholder?
Mohit Burman: Yes, that is what the calculations are. We already own 3 per cent; our combined stake would be close to 18-20 per cent.
Ashwin Mohan: Would that make you the largest shareholder?
Mohit Burman: I think so, yes.
Ashwin Mohan: Both the Munjals and the Burmans have dabbled in healthcare. But at the end of the day, your consortium does not have hardcore operational expertise in running a pan-India hospital chain. Would not you say this is a serious drawback?
Mohit Burman: Look at the background of both the promoters – Munjal runs one of the most diversified and largest hospitals in Ludhiana. It is not only a hospital, but also a teaching facility. So, there is existing knowledge of running successful hospitals. We dont have the pan-India expertise, yet there is knowledge of hospitals.
Our familys focus has been on FMCG and pharmaceutical for the last 100 years. Our company Dabur Pharma specialised in oncology. We were not running service businesses at that time, which we are now. But we were manufacturing in the space. If you look at our investments in healthcare space, we have Healthcare at Home which is a joint venture with a UK-based company where we provide specialised health services. Then there is Quest, which is a diagnostics company and a committed healthcare fund that only looks at healthcare opportunities.
Between the two of us, we have enough expertise to be running a pan-India business. We have been running many businesses in India for the past generations. The other people might have knowledge of running hospitals, but do they have knowledge of India, or of running hospitals in India? Maybe some do, but not all of them.
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