Jubilant will add 1,000 hospital beds in West Bengal

In a bid to further diversify its business, specialty chemicals firm Jubilant Organosys is looking to set up hospitals in West Bengal as it looks to enter into the lucrative hospital business. The company would invest a total of Rs200 crore for this venture.

These hospitals are in secondary care and in semi-urban areas and would be structured using a hub-and-spoke model.  The initial 2 hospitals set up in West Bengal have seen capacity utilisation at 65-70%.

“We are building hospitals with a total of 1000 beds in West Bengal. Its hub would be in Howrah with a 400-bed hospital and other spoke hospitals would have around 150 beds each.

As of today, we have 190 beds, which are functional, so the total investment for this foray is about Rs200 crore in the next 2-2.5 years. We have already spent Rs50 crore on it and sales would start kicking in significantly from 2013 onwards … it would be about Rs20 lakh per bed,” R Sankaraiah, executive director finance at Jubilant told DNA in a conference call.

In May, the drug maker said it is looking at an order book of $1 billion in the current fiscal as it sees huge growth in the custom research and manufacturing services business.

The company continues to expect sales of $250 million from that order book to be recognised in the current fiscal and the balance would be carried forward in the next 3-4 years.

Capacity expansion in pyridine and its derivatives, commissioning of additional capacity in Niacinamide and multipurpose API facility for Sartans are as per schedule, according to the company official.

“The total investment in expanding the capacity would be Rs300 crore and capital expenditure to debottleneck etc would be another Rs100 crore, these initiatives are expected to commence revenue during the fourth quarter,” Sankaraiah added.

The company’s Spokane, Washington site for CMO business has been approved for production of adjuvant for vaccines by a large pharma customer.

Meanwhile, Jubilant reported 50.14 % decline in consolidated net profit at Rs62.73 crore for the quarter ended June 30, as compared with the same period a year ago. The company had posted a net profit of Rs125.82 crore in the first quarter last fiscal.

Net sales during the quarter stood at Rs981.51 crore as against Rs896.36 crore in the comparable period last fiscal, up 9.49%.