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HSCC India does what very few expect from a government company - it operates in the niche segment of hospital consultancy. The company, under the Ministry of Health & Family Welfare, provides consultancy and procurement management services to the health-care sector.
HSCC's growth is an example of how a mix of right policies and decisions can make even state-run companies do well. Established in 1983, HSCC, in its initial years, used to conduct feasibility studies and prepare project reports. Gradually, it also started providing design and engineering consultancy. After that, it started offering procurement services as well. It is now into turnkey hospital projects.
"In the last three years, HSCC has emerged from nowhere. Very few people know that there is a (government) company that specialises in building hospitals," says Gyanesh Pandey, Chairman and Managing Director, HSCC India.
HSCC's achievements look even more admirable if we consider that the work involved is really challenging. "The architecture of a hospital is critical. It is different from the architecture of other buildings. Hospitals have to be designed after analysing patient flow, plumbing layouts are complicated, and a lot depends on where medical equipment are placed. Even air-conditioning is customised. For instance, air change requirement for a neurology operation theatre (OT) is different from that of an orthopaedic OT. A neurology OT requires more frequent air changes. A lot of things have to be taken care of while designing hospitals," says Pandey.
HSCC has recorded a sharp rise in its numbers in the past three years. Its turnover rose from Rs 33.5 crore in 2010/11 to Rs 65.3 in 2013/14. Net profit trebled to Rs 24 crore during this period. The order book expanded exponentially from Rs 22 crore to Rs 301 crore.
The companys ongoing projects include development of National Cancer Centre at AIIMS (Jhajjar), re-development of Safdarjung Hospital in New Delhi and building of a super-specialty block at Dr. Ram Manohar Lohia Hospital, New Delhi. Apart from these, HSCC is also executing one project each in Sri Lanka, Nepal and Myanmar.Though the going is good for HSCC with an expanding order book and growing turnover and profits, things were very different till 2010/11, when it had very few projects. That was the time when costs were high and operating margins negative. Then, Pandey stepped in and rationalised manpower and other costs. He also took several steps to increase operational efficiencies. HSCC also completed a lot of critical and time-sensitive projects. For instance, it got the project for renovation of AIIMS OPD, which was in very bad shape. The major challenge was to work without disturbing the day-to-day operations of the OPD, which had an average daily footfall of 1,200-1,500 patients. HSCC also built a highly-critical BSL-IV virus testing laboratory at National Institute of Virology, Pune, in 2011. Finishing a few such critical projects on time earned it a lot of goodwill. As a result, a lot of new projects started flowing in.
Rising costs has been the companys biggest challenge. Manpower and other expenses have been rising drastically at a time when consultation fee margins are falling. The consultation fee used to be 8-9 per cent of the project cost. It has now come down to 4-5 per cent. The company has been on a cost-cutting drive for the past few years to maintain operating margins.
"HSCC used to have a top heavy hierarchy when I took charge in 2012. I changed it to a pyramid structure, which improved operational efficiencies, and inducted young energy in the organisation," says Pandey.
Another challenge has been retaining talent. "The attrition rate at HSCC is very high. Many employees leave after getting an experience of four-five years for lucrative offers in the private sector. We try our best to keep our employees motivated," he says.
HSCC plans to diversify its services. It has already started offering hospital operation and maintenance and waste management services. It is also exploring the possibility of setting up diagnostics centres in India and other South Asian countries.
"Health care is a priority for the government. Its expenditure on health is expected to increase from 1.2 per cent of gross domestic product at present to 2.5 per cent by 2017 and above 3 per cent by 2022. The government is upgrading the existing infrastructure. New hospitals and medical institutions are being announced. All this will bring in a lot of opportunities for HSCC in the future. However, there are challenges related to retaining talent and skill enhancement, which are high on our agenda," says Pandey.