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MPW 2015: How Suneeta Reddy ensures Apollo Hospitals stays ahead of competition

MPW 2015: How Suneeta Reddy ensures Apollo Hospitals stays ahead of competition

Apollo Hospitals has not only grown organically, but under Managing Director Sunita Reddy, it has also made three significant acquisitions.

Figure this: Apollo has made three acquisitions since Suneeta Reddy took over (Photo: Nilotpal Baruah) Figure this: Apollo has made three acquisitions since Suneeta Reddy took over (Photo: Nilotpal Baruah)

Suneeta Reddy has always been the bean counter in the family that runs India's biggest health-care service provider. The Managing Director of Apollo Hospitals Enterprise Ltd (AHEL) has solid numbers to back her credentials. In the little over a year under her leadership, AHEL's shares have surged 47 per cent. The broader BSE Sensex rose 9 per cent during the period. The reason for the outperformance is simple. Not only has Apollo grown organically, but under Suneeta's leadership it has also made three significant acquisitions.

Immediately after Suneeta took over in June 2014 from her elder sister Preetha Reddy, Apollo acquired a majority stake in Rajashree Hospitals of Indore, for a deal estimated at Rs 57-70 crore. This was seen as a move to strengthen its presence in central India. In January 2015, it bought Bangalore-based Nova Specialities Hospitals for Rs 145 crore. In June, it purchased a majority stake in Guwahati-based Assam Hospitals Ltd for Rs 57.25 crore. In 2014/15, its revenues grew 18 per cent over the previous year to Rs 5,178 crore. The company has 64 hospitals with around 8,950 beds.

ICICI Direct, in a recent report on the company, says rapid expansion and maturity of older hospitals have kept growth above 15 per cent a year. "The next phase of expansion includes addition of 1,350 beds to the existing network of 40 hospitals and 7,123 beds (own hospitals) by FY19 with an additional capex of Rs 1,477 crore. This is likely to put some pressure on EBITDA margins in the short to medium term. However, in the past, the company has demonstrated its ability to balance between expansion and margins."

Apollo's growth is due largely to its visionary founder and Chairman, Prathap C. Reddy. Suneeta and her three sisters - Preetha, Shobhana and Sangita - have carved out complementary roles in the group. "All decisions are taken by the family collectively. I have been involved in the business even before Apollo was formally established. We had no designations or salary. While I worked on numbers, Shobhana built on the vision, while Sangita staffed it," says Suneeta.

That family support has been key to her success is evident. Her father helped in grooming her by entrusting responsibilities. "The family had a large stake in Sindhoori hotels, I helped my father run it. From there I moved to Indian Hospital Corporation, which was privately held and which ran Apollo. There were subsequently PE investors in IHC, with whom I worked. It was a huge learning for me and that is where I got my fascination for numbers and strategy as I led the negotiations on behalf of the family."

While Suneeta admits that being the founder's daughter did help, she says it was not a cakewalk. Respect and trust had to be earned. "I remember when I first took an agreement to my father, he threw it back at my face as he doesn't like to be bound and wants freedom to execute his vision. I managed to convince him that some of the onerous clauses in the contract would never come to pass."

Being the numbers person in the family also means Suneeta sometimes had to make tough choices, though she is quick to add "in consultation with the family". For instance, when Apollo was looking to enter Pune, she pulled back as she felt the competition was too intense and the return on investment might not justify entry into that market.

A fitness enthusiast, Suneeta says her greatest relaxation comes from playing with her grandchild. She rarely misses her evening ritual - a visit to the Krishna temple located adjacent to their flagship hospital in Chennai - to pray "not for individual well-being but for the welfare of everybody".

Prathap Reddy, who at 81 still puts in a full day at the office, says: "I am particularly proud of what Suneeta has achieved." He points out that two-thirds of Apollo's 40,000 employees are women and that the group provides them ample growth opportunities. "You might say I have a vested interest. After all, my girls are in Apollo," he smiles.

Published on: Sep 17, 2015, 7:29 AM IST
Posted by: Gaytri Madhura, Sep 17, 2015, 7:29 AM IST