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Funding the last dose

After being bailed out by equity from ICICI Venture and loans from SBI, Medica has stabilised cash flows but needs to secure a small funding component.

Somnath Dasgupta        Print Edition: July 12, 2009

His is a dissenting voice in a world enamoured of private equity (PE) funds and multinational banks: he would rather swear by the slow but sure processes of government banks. The best decision he has taken in his life? Borrowing from State Bank of India (SBI)! Meet Dr Alok Roy, an MD from All India Institute of Medical Sciences (AIIMS) and a specialist in nuclear cardiology, who decided to begin a second life by doing his own healthcare consultancy, building hospitals and creating a pharma retail chain after building hospitals for others.

Medica Synergie

But his rebirth, as he terms it, was almost aborted by riskaverse PEs, venture capitalists and banks. "We went to banks, we must have visited at least 20 PEs, including the big names," recalls Dr Roy, Chairman and Managing Director of Medica Synergie, which he set up with Aruna Nair and seven others in 2003. "To get venture funding in India is very difficult. They don't want to experiment, they don't have the guts, they don't want to invest in a new business," says the 50-year-old Roy, whose 600-employee company reported a turnover of Rs 40 crore in 2008-09.

The first break came when ICICI Venture pumped in Rs 35 crore. The second came when Dr Roy approached SBI for a loan, and got around Rs 62 crore. "For me, it was a second life. Instead of retiring, I started a new career," recalls Dr Roy, who says he had a hand in building every hospital associated with noted cardiac surgeon Devi Shetty, right from B.M. Birla Heart Research Centre and the Rabindranath Tagore International Institute of Cardiac Sciences (RTIICS) in Kolkata to the Narayana Hrudayalaya in Bangalore.

Doctor, builder, administrator
Dr Roy's career took an unusual turn quite early. After his MBBS from the SCB Medical College in Cuttack, Orissa, he did his MD from AIIMS and then specialised in nuclear cardiology. His first break came when he joined the founding team of the B.M. Birla Heart Research Centre in 1987. There, he got caught up in the excitement of running a superspeciality hospital at a time when hospital administration was yet to emerge as a profession. It was here that Dr Shetty began his journey to fame. In 1995, Dr Roy went to Bangalore to build the Manipal Heart Foundation, where Shetty joined him in 1997. Dr Roy later came back to Kolkata to build the RTIICS for Shetty while handling the Narayana Hrudalaya project in Bangalore. Then Dr Roy and Shetty parted ways, and in 2003 Dr Roy did very brief stints as managing director of Family Health Plan, the insurance third-party administrator of Apollo Hospitals, and as VP and COO of the Fortis group.

Homecoming, and rebirth
It was a meeting with West Bengal's Chief Minister Buddhadeb Bhattacharjee in 2003 that gave Dr Roy his current mission in life. "He said, 'Alok, you left Devi, but why leave Bengal? If you want to build a hospital, I will give you land," recalls Dr Roy. He roped in seven of his former colleagues and formed the company. His partners: Dr Alexander Kuruvilla, Udayan Lahiri, Ayanabh Deb Gupta, Sudhansu Roy, Anupam Shukla, Sanjay Prasad, Aruna Nair, Soma Bhan and Manoj Bathwal. He also has 11 architects working under him. He learnt his first lesson when he went looking for funds: align your needs with that of the PE and you are in the big game. After ICICI's entry, he approached SBI. He contrasts the SBI experience with his fling with GE Capital, which was to co-finance some equipment purchase but backed out citing the recession. "They did not pay! Now they have come back to me," he says.

The SBI funding came in the third quarter of 2008-09, but work on the 500-bed superspeciality hospital had begun in 2006, with his own money, that of his friends and cash flow from pharma retailing, consulting business and running a hospital in north Bengal.

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