Critical Study on Health Care

Healthcare Industry in India

Introduction:

Healthcare has become one of India’s largest sectors - both in terms

of revenue and employment. Healthcare comprises hospitals, medical devices,
clinical trials, outsourcing, telemedicine, medical tourism, health insurance and
medical equipment. The Indian healthcare sector is growing at a brisk pace due to
its strengthening coverage, services and increasing expenditure by public as well
private players.

Indian healthcare delivery system is categorised into two major

components - public and private. The Government, i.e. public healthcare system
comprises limited secondary and tertiary care institutions in key cities and focuses
on providing basic healthcare facilities in the form of primary healthcare centres
(PHCs) in rural areas. The private sector provides majority of secondary, tertiary and
quaternary care institutions with a major concentration in metros, tier I and tier II
cities.

India's competitive advantage lies in its large pool of well-trained

medical professionals. India is also cost competitive compared to its peers in Asia
and Western countries. The cost of surgery in India is about one-tenth of that in the
US or Western Europe.

Investment:

The hospital and diagnostic centers attracted Foreign Direct Investment

(FDI) worth US$ 5.25 billion between April 2000 and June 2018, according to data
released by the Department of Industrial Policy and Promotion (DIPP). Some of the
recent investments in the Indian healthcare industry are as follows:
 • Healthcare sector in India witnessed 23 deals worth US$ 679 million in
H12018.

• India and Cuba have signed a Memorandum of Understanding (MoU) to

increase cooperation in the areas of health and medicine, according to
Ministry of Health and Family Welfare, Government of India.

• Fortis Healthcare has approved the demerger of its hospital business with
Manipal Hospital Enterprises. TPG and Dr. Ranjan Pal could invest Rs.3,900
crore (US$ 602.41 million) in Manipal Hospital Enterprise.

Government Initiatives:

Some of the major initiatives taken by the Government of India to promote

Indian healthcare industry are as follows:

• On September 23, 2018, Government of India launched Pradhan Mantri Jan

Arogya Yojana (PMJAY), to provide health insurance worth Rs 500,000 (US$
7,124.54) to over 100 million families every year.

• In August 2018, the Government of India has approved Ayushman Bharat-

National Health Protection Mission as a centrally Sponsored Scheme
contributed by both center and state government at a ratio of 60:40 for all
States, 90:10 for hilly North Eastern States and 60:40 for Union Territories
with legislature. The center will contribute 100 per cent for Union Territories
without legislature.

• The Government of India has launched Mission Indradhanush with the aim of
improving coverage of immunisation in the country. It aims to achieve at least
90 percent immunisation coverage by December 2018 which will cover
unvaccinated and partially vaccinated children in rural and urban areas of
India.

Achievements:

Following are the achievements of the government in the year 2017:

 • In 2017, the Government of India approved National Nutrition Mission
(NNM), a joint effort of Ministry of Health and Family Welfare (MoHFW)
and the Ministry of Women and Child development (WCD) towards a life
cycle approach for interrupting the intergenerational cycle of under nutrition.

• As of September 23, 2018, the world’s largest government funded healthcare

scheme, Ayushman Bharat was launched.

• As of November 15, 2017, 4.45 million patients were benefited from

Affordable Medicines and Reasonable Implants for Treatment (AMRIT)
Pharmacies.

• As of December 15, 2017, the Government of India approved the National

Medical Commission Bill 2017, it aims to promote area of medical education
reform.

Opportunities for Healthcare Industry:

India is a land full of opportunities for players in the medical devices industry.
India’s healthcare industry is one of the fastest growing sectors and it is expected to
reach $280 billion by 2020. The country has also become one of the leading
destinations for high-end diagnostic services with tremendous capital investment for
advanced diagnostic facilities, thus catering to a greater proportion of population.
Besides, Indian medical service consumers have become more conscious towards
their healthcare upkeep.

Indian healthcare sector is much diversified and is full of opportunities in

every segment which includes providers, payers and medical technology. With the
increase in the competition, businesses are looking to explore for the latest dynamics
and trends which will have positive impact on their business. The hospital industry
in India is forecasted to increase to Rs 8.6 trillion (US$ 132.84 billion) by FY22
from Rs 4 trillion (US$ 61.79 billion) in FY17 at a CAGR of 16-17 per cent.

India's competitive advantage also lies in the increased success rate of Indian
companies in getting Abbreviated New Drug Application (ANDA) approvals. India
also offers vast opportunities in R&D as well as medical tourism. To sum up, there
are vast opportunities for investment in healthcare infrastructure in both urban and
rural India.

(Exchange Rate Used: INR 1 = US$ 0.0142 as on Q2 FY19)

Porter’s Five forces Model

1. Potential Entrants:
Threat of new entrants depends on entry and exit barriers. Since
the healthcare industry requires huge investments and core competencies are
hard to acquire, therefore threat of new entrant is low hence the industry
attractiveness is high.

2. Industry Rivalry:
 Industry rivalry denotes the intensity of competition among the
existing players in the market. Rivalry in private healthcare industry is low as
there is no cut throat price competition amongst competitors hence the
industry attractiveness is high.

3. Bargaining Power of Buyers:

Bargaining power of the buyer means the amount of control
buyer has over the products price. In this industry there are lots of options
available to the customers and the switching cost is almost negligible. Hence
the bargaining power of the Customer is high. This creates a focus area for the
companies operating in this industry.

4. Bargaining Power of Suppliers:

It signifies how strong the position of the seller is. In this sector
the bargaining power of the suppliers is low as there are lots of available
options for the customers. Also the cost of switching between the suppliers is
low thereby increasing the industry attractiveness.

5. Threat of Substitutes:
If the customers can easily switch between the competitors
product, then the threat of substitutes is high. This threat is low as there is a
low probability of an alternative medicine procedure being acceptable for
super specialty healthcare. This will make the industry attractive.

Fortis Healthcare Limited

History
Fortis Healthcare Limited is a leading integrated healthcare delivery service
provider in India. The healthcare verticals of the company primarily comprise
hospitals, diagnostics and day care speciality facilities. Currently, the company
operates its healthcare delivery services in India, Dubai, Mauritius and Sri Lanka
with 43 healthcare facilities (including projects under development), approximately
9,000 potential beds and 392 diagnostic centres. These hospitals include multi-
speciality hospitals as well as super-speciality centers providing tertiary and
quaternary healthcare to patients in areas such as cardiac care, orthopedics,
neurosciences, oncology, rental care, gastroenterology and mother and child care.
They are delivering quality healthcare services to patients in modern facilities using
advanced technology.

In a global study of 30 most technologically advanced hospitals in the world,

its flagship, the Fortis Memorial Research Institute (FMRI), was ranked No.2, by
"topmastersinhealthcare.com", and placed ahead of many other outstanding medical
institutions in the world.

To provide quality service, FHL differentiated itself with its contemporaries in

India by adopting unique hospital design, services, and programmes that comply
with international standards. The demographic shift and higher longevity of Indian
population offered tremendous opportunities to many private corporate hospitals. To
tap such lucrative opportunities, FHL followed hub-and-spoke model. To counter
competition, FHL, going a step further, started acquiring other hospitals. Also, it
planned to integrate backward and set up medical and nursing college in addition to
research labs.

MAJOR EVENTS
2001- First Hospital at Mohali

2004-Fortis inks deal with Jessa Ram Hospital to takeover the management of the
hospital

-Commences operations at Noida

2005- Fortis acquired Escorts Heart

-Fortis Hospital rolls out Golden Age Club

2006- Fortis Healthcare to buy majority stake in Trehan's Medicity

2007- Fortis Healthcare acquired Hiranandani Hospital

-Listed on BSE and NSE

-New hospital at Jaipur

-Fortis HealthWorld has joined hands with US hearing aid maker Starkey for
its Audible range and is looking to soon offer dental services at its Health stores too

2008- Fortis acquired MAlar hospitals, Chennai

2009- Fortis acquired Wockhardt Hospitals

2010- Fortis acquired 25% in Parkway Holdings

-Fortis Healthcare has entered into a pact with two hospitals in Dubai and
Tanzania to set up specialised medical facilities

2011- Fortis Healthcare ties up with TotipotentRX to set up Stem Cell Therapy
Centres

2012- Fortis to get Rs.3700 Mn Equity infusion in Super Religare Laboratories Ltd
(SRL) through IFC and NYLIM Jacob Ballas India

2013- Fortis launches its Flagship Hospital, One of the First of its Kind in Asia
Bridges the gap for expert talent, trans-disciplinary, quaternary care

2014- Fortis launches state of the art, multi super-specialty hospital in Ludhiana

2016- Fortis Healthcare has fully acquired Religare Health Trust Trustee Manager
for USD 14.9 million (about Rs 100 crore)

-Fortis Healthcare First in India to Monitor and Publish Clinical Outcomes for
Cardiology

2017- Fortis Healthcare Acquisition of Hiranandani Healthcare Private

Limited,Fortis Healthcare Holdings Private Limited and RHC Holding Private
Limited
 Visión
"To create a world class integrated healthcare delivery system in India, entailing the
finest medical skills combined with compassionate patient care"- By Late Dr.
Parvinder Singh, Founder Chairman, Fortis Healthcare Ltd.

Mission
“To be a globally respected healthcare organisation known for Clinical Excellence
and Distinctive Patient Care”

Values
• Patient Centricity

a. Commit to "best outcomes and experience" for our patients

b. Treat patients and their caregivers with compassion, care and understanding

c. Our patient's needs will come first

• Integrity

a. Be principled,open and honest

b. Model and live our "Values"

c. Demonstrate moral courage to speak up and do the right things

• Teamwork

a. Proactively support each other and operate as one team

 b. Respect and value people at all levels with different opinions, experiences and
backgrounds

c. Put organisation needs before department/ self interest

• Ownership

a. Be responsible and take pride in our actions

b. Take initiative and go beyond the call of duty

c. Deliver commitment and agreement made

• Innovation

a. Continuously improve and innovate to exceed expectations

b. Adopt a "can-do" attitude

c. Challenge ourselves to do things differently

THE BRAND
Fortis Journey
Brand Fortis was established in 1996 with the vision, "to create a world class
integrated healthcare delivery system in India, entailing the finest medical skills
combined with compassionate patient care".

Fortis Healthcare is the country's "fastest" growing healthcare group. It has grown
from first hospital at Mohali (Chandigarh) which opened in 2001 with over 45
healthcare facilities as of today. These include the world famous Escorts Heart
Institute and the erstwhile Wockhardt facilities. From North to South, East to West,
Fortis truly has India covered -the frontier city of Amritsar to Ludhiana, Mohali, the
National Capital region, Mumbai, Bangalore, Mysore, Chennai, Kolkata and many
more destinations are all home to Fortis facilities.

Fortis occupies a place of pride in India's healthcare delivery system.

Fortis Brand and the Logo

The Fortis brand with its distinctive logo is a synthesis of human values of trust,
ethics and service and quality healthcare. Fortis project clinical excellence,
distinctive patient care, transparency in actions & high level of integrity and
excellence.

Fortis logo projects these very values. The integration of the hands (in a
distinctive "green" with a "red dot") and the human figure is completely seamless
and is representative of "Fortis" responsive approach to healthcare. The green colour
of hands is representative of health, wellbeing, compassion, nurturing and generosity
while the red dot gives an immediate association to our Indian roots, while it is also
represents energy, spirituality, courage and symbol of good luck.

At Fortis they intrinsically believe that excellence is not a destination -but a

journey.

Board of Directors

Director’s Name Designation

Ravi Rajagopal Chairman

 Shirish Moreshwar Apte Vice-Chairman
Indrajit Banerjee Independent Director
Suvalaxmi Chakraborty Independent Director
Tan See Leng Non-Executive Director
Low Soon Teck Non-Executive Director
Chan Boon Kheng Non-Executive Director
Chintamani Aniruddha Bhagat Non-Executive Director

Key Management Personnel

Director’s Name Designation

Bhavdeep Singh CEO

Sumit Goel Company Secretary (Interim)
Girish Kumar Gupta Chief Financial Officer (Interim)

CSR

Over the years, Fortis Healthcare Ltd. and its subsidiaries through its hospitals
and Foundation across India, is committed towards providing healthcare for the
socially marginalized and deprived sections of the society. We not only make sure
that our programs are efficient, but also ensure that they are sustainable and relevant
to those meant to benefit from them.

CSR at Fortis Healthcare Limited

 The CSR initiatives are driven by our vision, philosophy and the need of the
community, with health remaining our main focus. The CSR initiatives of Fortis
Healthcare are executed through Fortis CSR Foundation.

Fortis CSR Foundation a philanthropic arm of Fortis Healthcare focuses on

four programs namely AANCHAL, CHHAYA, SAVERA and SEWA.

AANCHAL

AANCHAL is a child well-being program, which strives to ensure a

healthier start to a child’s life. To drive a deeper impact, Aanchal has target
intervention area under its “Umeed- Dhadkan” Initiative which supports the
treatment of children suffering from congenital heart defects.
SAVERA

SAVERA with its focus on “Health Education and Preventive Healthcare”

creates awareness on health issues by leveraging on different channels of
communication. The purpose of the program is to design models on health
information dissemination to reach to vulnerable sections of the community.

CHHAYA

CHHAYA is designed to provide primary and basic healthcare services to

people in need. The treatment is provided through charitable Clinics and outreach
clinics set up across different regions. Currently Fortis run seven charitable
dispensaries and 3 outreach clinics.

SEWA

SEWA is a program that aims to provide emergency medical relief services

in an organized and time sensitive manner to people affected by disasters. SEWA’s
core commitment is to support the government’s efforts in providing medical relief
during a calamity.
 SERVICES
Various kinds of services provided in Fortis Hospitals are

ICU Management

ER Management

OPD Management

Cardiology

Neurology

Orthopedics/ Bone & Joint Surgery

Urology/ Andrology

Dental

Dermatology/ Cosmetology

Diabetes and Endocrinology

ENT/ Otorhinolaryngology

Foetal Medicine

Gynaecology Oncology

Intensive Care/ Critical Care Medicine

Liver Transplant/ Hepatobiliary Surgery

 Nephrology

Physiotherapy and Rehabilitation

Radiology

Pathology

Audiometry and Speech Therapy etc

COMPETITORS
Competitors of Fortis Healthcare Ltd
Apollo Hospitals Enterprise Ltd

Aster DM Healthcare Ltd

Narayana Hruda

Thyrocare

Poly Medicure

Healthcare Glob

SWOT ANALYSIS
Strengths
Strengths are defined as what each business does best in its gamut of operations
which can give it an upper hand over its competitors. The following are the strengths
of Fortis Healthcare Limited

• Focus on Continuous Improvement:

The Fortis Hospitals Group looks at services across various
speciality areas in medicine and the healthcare provider focuses on continuous
improvement in all aspects of its services giving paramount importance to research
and development.

• Well Trained and Qualified Professionals:

Fortis has a very good system for recruitment and selection and it takes
all possible steps to ensure that doctors who work with them are the best in their
disciplines. Their support staff like the nurses, pharmacists, lab staff and others are
also highly qualified. The hospital gives importance to training and offers regular
training sessions to all its employees.

• Patient Care:

Fortis understands the importance of patient care and right from the
design of its facilities such as emergency, trauma care and even entry and exit to,
doctors and support staff and specialised and advanced services the need of the
patient is considered and given maximum attention. Patients are made comfortable
at every instant and all staff is asked to display high levels of sensitivity.

• Quality Accreditations:
The hospital ensures that all its systems and facilities are in tune with
industry benchmarks and the state of the art. In order to ensure this, the hospital has
taken certifications like NABH and JCI. This ensures standardization in the delivery
of services by qualified professionals.

• A Wide Network of Hospitals:

The Fortis Group has a wide network of hospitals across most leading
cities of India. The hospital chain has also has plans to expand into Tier 2 and Tier
3 cities.

Weaknesses
Weaknesses are used to refer to areas where the business or the brand needs
improvement. Some of the key weaknesses of Fortis are

• The Decision to Focus on India:

 From being an international brand the company has decided to focus
completely on India since the country shows a lot of promise in healthcare and is
likely to figure big on the global healthcare landscape. However there is a strong
likelihood that conditions may change in the future.

• Expensive Services:

Fortis Hospitals are perceived as a very expensive player in the market

and many customers feel that they charge higher than the market average for many
of their services. For this reason many looks at Fortis as suitable for foreign
customers.

• Increase in the number of beds:

The latest strategy of Fortis Healthcare is to exploit the available

space to the maximum extent possible and they are trying to increase the number of
bed size without increasing the size of the hospital. This may prove to be a
disastrous move for the company in the long run.

Opportunities
Opportunities refer to those avenues in the environment that surrounds the
business on which it can capitalize to increase its returns. Some of the opportunities
include

• Growing Health Concerns:

With more and more information available over the Internet,

people are highly conscious of their health today. They are also aware that after 40
they need to keep track of the signals that their body gives them. This is making
people approach specialists even for small ailments providing a plethora of
opportunities for hospitals.

• Corporate Tie-ups:

Business houses and corporates are concerned today about the health
and well being of their employees. This makes them enter into tie-ups with
hospitals for regular health check-ups for employees. This is an opportunity for
healthcare service providers to capitalize on.

• Medical Tourism:

India is popular globally not just for the quality of its healthcare but
also for the quality of the professionals who provide them. The nurses of India are
wanted globally for the prowess. The healthcare facilities in India are also relatively
cheaper. All this makes India a prime target for medical tourism.

Threats
Threats are those factors in the environment which can be detrimental to the
growth of the business. Some of the threats include

• Competition:

Fortis Healthcare faces a lot of competition from Apollo Hospitals and

other leading local players like Hinduja, Narayana Healthcare etc.

• Prohibitive Healthcare Costs:

The cost of healthcare is growing and this means that people may find
it difficult to afford quality healthcare. However, healthcare professionals may find
it difficult to bring down the expenses and thus may suffer losses if they have to
reduce the prices
 Market Share
The current market capitalisation stands at Rs. 10,120.13 crore.

Capital Structure
Authorized Share Capital:

60,00,00,000(60,00,00,000 as at March 31, 2017)

Equity shares of 10 each - Rs.600,00,00,000

200 Class ‘A’ (200 as at March 31, 2017)

Non-Cumulative Redeemable Preference Shares of 1,00,000 each -

Rs.200,00,000

11,498,846 Class ‘B’ (11,498,846 as at March 31, 2017)

Non- Cumulative Redeemable Preference Shares of 10 each -

Rs.11,49,88,460

64,501,154 Class ‘C’ (64,501,154 as at March 31, 2017)

Cumulative Redeemable Preference Shares of 10 each -

Rs.64,50,11,540

Total Authorized Share Capital Rs.678,00,00,000

Issued, Subscribed and fully paid up Share Capital:

518,657,231 (517,727,631 as at March 31, 2017)

Equity shares of 10 each Rs.518,65,72,310

Total Issued, Subscribed and fully paid up Share Capital

Rs.518,65,72,310s
 Share Holding Pattern

Category No.of Shares Percentage

Promoters 12,21,481 0.16
Foreign Institutions 29,13,10,473 38.59
Foreign Promoters 23,52,94,117 31.17
General Public 8,25,92,233 10.94
Financial Institutions 7,36,14,628 9.75
Others 5,31,87,458 7.05
NBFC and Mutual Funds 1,77,31,558 2.35

RATIO ANALYSIS
I)LIQUIDITY RATIOS/ SHORT-TERM SOLVENCY RATIOS

Liquidity ratios measure the company's ability to meet the short-term obligations.
1. Current Ratio:

Current ratio measures the safety margin available for short-term creditors.

A generally acceptable current ratio is 2 to 1.

Current Ratio = Current Assets

Current Liabilities

Current Assets = Inventories + Trade Receivables + Cash and bank balances +

Short-term borrowings + any other current assets

Current Liabilities = Trade Payables+Short-term loans and advances +Bank

overdraft + Short-term provisions + any other current liabilities

Particulars FY 2017-18 FY 2016-17

Current Ratio 0.60 1.10

The company's current ratio decreases from 1.10 to 0.60 in the current financial year.
The company may not have the enough current assets to meet the payment schedule
of its current debts with a margin of safety for possible losses in current assets.

2. Quick Ratio:

Quick ratio measures the company's ability to meet its short-term obligations as
and when due without relying upon realisation of stock.
A satisfactory quick ratio is 1 to 1.

Quick ratio = Quick assets

Current Liabilities

Quick Assets = Current assets - Inventory

Particulars FY 2017-18 FY 2016-17

Quick Ratio 0.57 0.9

The company's quick ratio decreases from 0.9 to 0.57 in the FY 2017-18. If all the
sales revenues are disappear , the company may not be able to meet its current
obligations with the readily convertible quick assets on hand.

3. Cash Ratio/ Absolute Liquid Ratio:

Cash ratio measures the company's ability to meet its short-term obligations as
and when due without relying upon realisation of stock & debtors.

A satisfactory absolute liquid ratio is 1 to 1.

Cash Ratio = Cash and Marketable Securities

Current Liabilities

Particulars FY 2017-18 FY 2016-17

Absolute Liquid Ratio 0.32 0.52

The company's absolute liquid ratio decreases from 0.52 to 0.32 in the FY 2017-18.
II)LEVERAGE/ LONG-TERM SOLVENCY RATIOS

1) Debt-Equity Ratio:

Debt- Equity ratio measures the relative proposition of debt & equity in financing
the assets of the company. Debt equity ratio is the indicator of firm’s financial
leverage.

Debt- Equity Ratio = Debt

Equity

Traditionally, a Debt-Equity ratio of 2:1 is considered to be satisfactory which means

debt could be twice the equity.

Particulars FY 2017-18 FY 2016-17

Debt-Equity Ratio 0.2 0.2

A high debt to equities ratio here means less protection for creditors, a low ratio, on
the other hand, indicates a wider safety cushion (i.e., creditors feel the owner’s funds
can help absorb possible losses of income and capital).

Debt-Equity ratio remains constant in the two years.

2) Interest Coverage Ratio:

This ratio also known as “times interest earned ratio". It indicates the firm’s
ability to meet interest (and other fixed-charges) obligations.

Interest Coverage Ratio = Earnings Before Interest and Taxes (EBIT)

Interest
 Particulars FY 2017-18 FY 2016-17
Interest Coverage Ratio 0.7 1.3

Earnings before interest and taxes are used in the numerator of this ratio
because the ability to pay interest is not affected by tax burden as interest on debt
funds is deductible expense. This ratio indicates the extent to which earnings may
fall without causing any embarrassment to the firm regarding the payment of interest
charges. A high interest coverage ratio means that an enterprise can easily meet its
interest obligations even if earnings before interest and taxes suffer a considerable
decline. A lower ratio indicates excessive use of debt or inefficient operations.

III) ACTIVITY/ EFFICIENCY/ PERFORMANCE/ TURNOVER RATIOS

1) Inventory/ Stock Turnover Ratio:

It measures the efficiency with which a firm utilizes or manages its inventory.

Inventory.Turnover Ratio = Cost of Goods Sold

Average Inventory

Average Inventory = Opening stock + Closing stock

Particulars FY 2017-18 FY 2016-17

Inventory Turnover Ratio 1.56 14.2

This ratio indicates that how fast inventory is used or sold. A high
ratio is good from the viewpoint of liquidity and vice versa. A low ratio would
indicate that inventory is not used/ sold/ lost and stays in a shelf or in the warehouse
for a long time.
III) PROFITABILITY RATIOS

Profitability Ratios based on Sales

1) Gross Profit (G.P) Ratio/ Gross Profit Margin:

It measures the percentage of each sale in rupees remaining after payment for
the goods sold.

Gross Profit Ratio = Gross Profit * 100

. Sales

Particulars FY 2017-18 FY 2016-17

Gross Profit Ratio 5.99 7.72

The Gross Profit Ratio of the company decreased from 7.72 to 5.99 in the
FY 201-18.

Gross profit margin depends on the relationship between price/ sales, volume
and costs. A high Gross Profit Margin is a favourable sign of good management.

2) Net Profit Ratio/ Net Profit Margin:

It measures the relationship between net profit and sales of the business.

Net Profit Ratio = Net Profit * 100

. Sales

OR

= Earnings after taxes (EAT) * 100

. Sales
 Particulars FY 2017-18 FY 2016-17
Net Profit Ratio -20.45% 10.46%
The Net Profit Ratio of the company decreases from 10.46% to -20.45% in the
FY 2017-18.

Net Profit ratio finds the proportion of revenue that finds its way into profits. A
high net profit ratio will ensure positive returns of the business.

3) Operating Profit Ratio:

Operating Profit Ratio = Operating Profit * 100

Sales

OR

= Earnings before interest and taxes (EBIT) * 100

Sales

Particulars FY 2017-18 FY 2016-17

Operating Profit Ratio -14.34% 17.08%

The OPerating Profit Ratio of the company decreases from 17.08% to -

14.34% in the FY 2017-18.

Operating profit ratio measures the percentage of each sale in rupees that
remains after the payment of all costs and expenses except for interest and taxes.
This ratio is followed closely by analysts because it focuses on operating results.
Operating profit is often referred to as earnings before interest and taxes or EBIT.

Profitability Ratios related to Overall Return on Assets/ Investments

1) Return on Assets (ROA):

The profitability ratio is measured in terms of relationship between net profits

and assets employed to earn that profit. This ratio measures the profitability of the
firm in terms of assets employed in the firm.

ROA = Net Profit after taxes

Average Total Assets

OR

= Net Profit after taxes

Average Tangible Assets

OR

= Net Profit after taxes

Average Fixed Assets

Here net profit is exclusive of interest.

Particulars FY 2017-18 FY 2016-17

Return on Assets -7.8 7.3

The return on assets for the FY 2017-18 is decreased from 7.3 in FY 2016-17 to -
7.8.

2) Return on Capital Employed (ROCE):

ROCE (Pre-tax) = Earnings before interest and taxes(EBIT) * 100

Capital Employed

ROCE (Post-tax) = EBIT(1-t) * 100

Capital Employed
Where,

Capital Employed = Total Assets – Current Liabilities

or

= Fixed Assets + Working Capital

ROCE should always be higher than the rate at which the company borrows.
Intangible assets (assets which have no physical existence like goodwill, patents and
trade-marks) should be included in the capital employed. But no fictitious asset
should be included within capital employed. If information is available then average
capital employed shall be taken.

Particulars FY 2017-18 FY 2016-17

Return on Capital Employed -13.1% 12.2%
The Return on Capital Employed of the company decreased from 12.2% to -13.1%
in the financial year 2017-18.

3) Return on Equity (ROE):

Return on Equity measures the profitability of equity funds invested in the

firm. This ratio reveals how profitably of the owners’ funds have been utilised by
the firm. It also measures the percentage return generated to equity shareholders.

ROE = Net Profit after taxes-Preference dividend (if any) * 100

Networth

equity shareholders' fund

Companies that boast a high return on equity with little or no debt are able to
grow without large capital expenditures, allowing the owners of the business to
withdraw cash and reinvest it elsewhere. Many investors fail to realize, however,
that two companies can have the same return on equity, yet one can be a much
better business.
 Particulars FY 2017-18 FY 2016-17
Return on Equity -23% 9.3%

The Return on Equity of the company is declined from 9.3 % to -23 % in the
FY 2017-18.

Strategy of Fortis Healthcare Ltd

● Operating multi specialty hospitals providing healthcare in key specialty

areas.
● Initiating boutique style hospitals, Fortis La Femme, focusing exclusively on
the women’s health and maternity care.
● Differentiation strategy by adopting unique hospital design, services and
programs that comply with international standards.
● To tap the opportunity provided by the demographic shift and higher longevity
of Indian population the company has adopted a hub and spoke model.
● To blunt competition the company has adopted a strategy to acquire other
hospitals.
● It also has a strategy to integrate backwards and set up medical colleges,
nursing colleges and research labs.
 CONCLUSION
Within a decade of its inception Fortis has made huge strides in terms of
providing services with low cost hospitals, affordable services by healthcare clinics,
health packages it gained the trust of the people within a very limited time competing
with old trustworthy service players like Apollo, Wockhardt etc. It has created an
image for itself as a healthcare unit which provides high quality services at an
affordable price. Fortis healthcare limited in years to come, with stake in Parkway
healthcare would be high quality and trustworthy healthcare service provider not
only in India but all over the world.

REFERENCES

www.fortishealthcare.com

www.equitymaster.com

www.ibef.org

www.icai.org

www.moneycontrol.com

https://economictimes.indiatimes.com