What is the international norm for debt-equity ratio in healthcare?
It’s a function of profitability. Worldwide, most aggressive groups would have 2:1 in a highly profitable context. If it is a starting hospital and is growing, conservative debt equity approach is what is done internationally. Once we reach a consolidation stage, then we can have ratio that reflects current risk, perhaps 1.25: 1. But beyond 1.5:1, it isn’t advisable for any hospital. A lot of Apollo’s borrowing came at high interest rates… We have borrowed at exorbitant rates, even 22 per cent at times when the interest rate was high, and inflation too. Today, we our marginal rate of borrowing is 7.5 per cent, and our weighted average cost is below 10 per cent. It is in line with trends in interest rates. You introduced bad debts norms recently. We provide for bad debts. Our Audit Committee said we should have a policy in place. Over the last two years, the figure was high because of the cumulative extent of debts. Going forward, it should be manageable. Those debts come from patient
