Appoints McKinsey & Co, Ernst & Young to rationalise material cost
KOCHI: The decades-old leading global healthcare providers, Aster DM Healthcare, aims to complete the ownership conversion of its UAE operations during the current financial year itself, cashing in on the country’s new foreign investment law that now allows up to 100 per cent foreign ownership within selected businesses.
In the meantime, as part of cost saving measures, Aster Group has engaged global management consultants and advisors, McKinsey & Company and Ernst & Young to look into material cost management in its GCC and India operations respectively.
The company top official also said in order to rein in the fast rising human resources (HR) cost of the company, Aster has started introducing ‘shared services’ concept – a trend that is fast gaining currency in the services industry world over.
UAE had approved last year the new foreign investment law that allows foreigners to own more than 49 per cent and up to 100 per cent in selected categories of UAE businesses.
According to an earlier WAM report, the UAE cabinet had approved 122 economic activities across 13 sectors eligible for up to 100 per cent foreign ownership, and healthcare is one among them, though retail pharmacy has been excluded from the list.
Talking to analysts following the publishing of its second quarter (and first half) financials of the company, Dr Azad Moopen (seen in the picture), chairman and managing director of the group that is spread over the Middle East, India and Philippines, said the work has commenced on the ownership conversion for the UAE operations, and the group hopes to complete substantial part of the exercise during the current financial year itself.
“On the macro level, this is a very positive development that helps establish UAE’s reputation as a business-friendly nation and the move is expected to contribute significantly to the economic growth of the country going forward,” said Dr Moopen who laid the foundation of his vast business empire in the UAE as early as 1987.
In UAE, Aster DM Healthcare Group operates under three brands – Medcare that caters to high income population, Aster to mid-income population and Access serving the low income population of the UAE, which accounts for 80 per cent of the GCC operations and a big chunk of the group’s global operations.
While launching the IPO early last year, many financial analysts had viewed the ownership structure of the group in the GCC as one of the major risk factors of Aster’s business model in the Gulf region, where the promoters under Dr Azad Moopen owned only minority stake on ‘paper’, thanks to the UAE foreign investment law that disallows majority ownership for foreigners except in the scores of free zone areas.
“Our ownership structure in most of the GCC States is subject to risks associated with foreign ownership restrictions and the shareholder arrangements with local shareholders are violative of the local laws of the jurisdiction,” the company had noted under its Risk Factors as part of the IPO prospectus.
In India, Aster Group is planning to add over 2,000 beds at an investment of over Rs1,000 crore in the next two to three years in five new properties outside Kerala.
The group has started work on setting up two asset-light hospitals in Bangalore – Whitefield and Yeshwantpura, at a combined investment of Rs440 crore.