Chief Strategy Officer / India
Choices that made our plans smaller before they made them work
- Revenue, year to March 2026
- ₹3,140 Cr
- Twelve hospitals and a pathology network across three states
- Average time to EBITDA breakeven
- 21 months
- Three focused hospitals in smaller cities, against 38 months in the original plan
- Hospital beds in the network
- 3,240
- Up from 2,280 when I became chief strategy officer in April 2021
Decisions & consequences
01Walking away from a ₹780 crore hospital in Indore
In 2022 Kesarvan had no hospital in Madhya Pradesh outside Jabalpur, and Indore was the market our executive chairman most wanted. A 340-bed multi-speciality hospital there, Narmadakunj Hospital, was offered to us by its founding family at ₹780 crore, about fifteen times its EBITDA of ₹52 crore on revenue of ₹265 crore. It reported occupancy of 78 per cent and had a strong name in cardiac and neurosciences.
My team's diligence found three problems. Six senior consultants produced 41 per cent of inpatient revenue under fee-for-service arrangements that either side could end on three months' notice, and two of them were related to the sellers. Nine points of the reported occupancy were day-care admissions counted as inpatients. And receivables from government schemes and corporate payers stood at 131 days.
I recommended an offer of ₹560 crore, with ₹120 crore of it deferred and paid only if the six consultants were still practising at the hospital after two years. The chairman disagreed, and so did one independent director: they argued that a deferred structure would insult the sellers, that Indore would not be offered to us again, and that a rival would gain a decade's head start. They were right that we would lose the hospital. The sellers refused our structure, and a larger chain bought it later that year at close to the asking price. Our entry into the state's largest city slipped by at least two years.
Instead we bought Taalnagar Hospital in Bhopal, a 210-bed hospital, in September 2023 for ₹265 crore. Before agreeing the price we agreed employed contracts and a three-year retention plan with its sixteen senior consultants, and we funded a cath lab upgrade the doctors had asked for. Bhopal's EBITDA margin rose from 9 per cent in 2023–24 to 17 per cent in 2025–26, and fourteen of the sixteen consultants are still there.
Every acquisition paper now shows revenue by consultant, the notice terms behind it and payer receivables by age before it shows a valuation. I would do two things differently. I would ask the sellers' permission to meet the six consultants before submitting a price, which would have tested my assumption rather than merely pricing it. And I would have given the chairman's argument about timing a value in rupees in my paper, instead of treating it as sentiment.
Building focused hospitals in smaller cities instead of multi-speciality ones
When I became chief strategy officer in 2021, the expansion plan in our listing documents called for three 250-bed multi-speciality hospitals in smaller cities at about ₹310 crore each. Our Bilaspur hospital, opened in 2019 on the same model, was the warning. It had been built for 24 specialities; fourteen months after opening it had filled 17, occupancy was below 50 per cent, and patients who needed a neurologist on the wrong day were transferred or turned away.
We studied Chandrapur, Yavatmal and Durg by asking where their patients went for care and which specialists we could realistically recruit. About six in ten patients who left those districts did so for cardiac, cancer, kidney, orthopaedic and trauma, or mother-and-newborn care. A focused hospital for those services needed about fourteen full-time specialists; a full multi-speciality hospital needed more than thirty.
I proposed hospitals of 140 to 160 beds organised around those services, with neurosurgery, transplants and complex surgery left to our hubs at Nagpur and Raipur through a stabilise-and-transfer protocol and dedicated critical-care ambulances. Our medical director opposed it. He argued that emergencies would bypass a hospital that could not treat everything, that specialists prefer broad hospitals, and that patients would bear the risk of every transfer. We gave up revenue from the specialities we left out, about ₹55 crore a year per hospital at maturity, and accepted that some emergencies would leave.
We recruited each core team nine months before opening, offered a fee floor for the first eighteen months and linked every intensive care unit to a remote monitoring centre in Nagpur. The three hospitals cost ₹505 crore together instead of ₹930 crore. They reached EBITDA breakeven after 19, 22 and 21 months, against 38 in the original plan, and Chandrapur and Yavatmal ran at 71 per cent occupancy by their second anniversaries. About 6 per cent of emergency arrivals are transferred.
The medical director was also partly right. In 2023 a head-injury patient at Chandrapur waited three hours and forty minutes for transfer. We added a neurosurgeon and a stabilisation protocol there in 2024, at about ₹9 crore a year. What I would do differently is to write the format with the medical director rather than send it to him for review, and to build emergency neurosurgical stabilisation into every focused hospital from its first day.
Declining a ₹1,050 crore offer for our diagnostics business
In March 2023 a private-equity fund offered ₹1,050 crore for Kesarvan Diagnostics, the pathology subsidiary created from our 2018 acquisition of Prabhavali Pathology Laboratories. Pandemic testing had fallen away; revenue was ₹410 crore and EBITDA margin 14 per cent, so the price was about eighteen times earnings. Group net debt was ₹1,150 crore, 2.4 times EBITDA, and our CFO wanted the sale to repay it. It was a good offer, and he made a strong case.
My analysis looked at what a sale would separate. About a third of diagnostics revenue came from our own hospitals' patients. The collection network covered nineteen towns where we ran or planned hospitals, and its test volumes were the best evidence we had of where patients lived. The buyer wanted an exclusive ten-year contract for our hospitals' outsourced testing at prices 9 per cent above our own cost, which would have moved part of the price back to us as higher costs.
I recommended keeping the business, with conditions: separate hospital laboratories into the hospital business at transparent internal prices, close the collection centres that lost money, end wellness packages discounted below cost, bring every hospital laboratory under NABL accreditation, and return to the board in 2026 with the business's value set against the offer we declined. The CFO's alternative appeared beside my recommendation in the board paper. The board chose to keep the business after two meetings.
The trade-off was real. Debt reduction was slower, a second Raipur hospital was deferred by eighteen months, and we raised ₹350 crore through a qualified institutional placement in 2024, diluting shareholders by about 4 per cent. Seventy-four collection centres closed, and around 160 people left the business.
By 2025–26 diagnostics revenue reached ₹580 crore at a 21 per cent EBITDA margin. Net debt fell to ₹690 crore, 1.1 times EBITDA, by March 2026, and the network's volume data now shape our search for sites, putting Gondia at the top of the list. In the 2026 review I told the board that, on today's margin, the business would probably fetch more than the 2023 offer, but less than that offer compounded at our cost of capital would be worth. I would have agreed internal testing prices years before any buyer arrived, and I would have put the dilution into the first paper rather than the second.
Operating a charitable trust's hospital in Sagar instead of buying one
Gyanvati Sewa Sadan Hospital in Sagar has served its district since 1968. By 2023 its 300 beds were 48 per cent occupied, its cath lab had closed, its operating theatres needed replacement and the trust behind it, Gyanvati Sewa Sadan Trust, was losing about ₹14 crore a year. The trustees approached us. They wanted a partner, but the trust deed and its charitable objects did not allow a sale, and they were not willing to give up the free care the hospital had always provided.
Two alternatives competed for the same capital. Our CFO preferred buying a 180-bed private hospital in Satna that we could own outright, with clean consolidated earnings. Our medical director doubted that we could govern clinical quality among doctors and nurses we did not employ, and our investor relations team worried about our name on a hospital whose history we did not control.
I recommended a fifteen-year operation and management agreement. We would invest ₹85 crore in a cath lab, intensive care beds, theatres and hospital systems, earn a fee of 6 per cent of revenue and 30 per cent of any surplus above an agreed level, and appoint the medical leadership jointly with the trust. The trust would keep its property and reserve a fifth of the beds for free or concessional care for patients it identified. We gave up ownership economics: an owned hospital of that size might have earned us more than ₹40 crore of EBITDA, against an expected ₹18 crore under the agreement.
A joint clinical governance committee meets monthly and reports serious adverse events to both boards. By 2025–26 occupancy reached 73 per cent, the concessional beds were fully used, the trust recorded a small surplus, and our fee and surplus share came to ₹18 crore, putting payback on the ₹85 crore at about five years.
One problem we created ourselves. The agreement left trust employees on their old pay scale and new recruits on ours, side by side on the same wards. In January 2025 the nurses worked to rule for nine days. We harmonised pay over two years at a cost of ₹6 crore a year, shared with the trust. I would settle staff terms before signing any such agreement, and I would write the step-in and exit clauses in language the trustees could read without their lawyers.