Clinching a deal which is believed to have been in the works for nearly three years now, the Emami Group announced its divestment of 84 per cent stake in AMRI Hospitals Ltd underlining the group’s intention to exit the private healthcare service sector for good in the near future and concentrate on its core businesses of FMCG and real estate.

The stake, essentially in the three AMRI Hospitals in Calcutta and one in Bhubaneswar, were picked up by Manipal Hospitals making the entity the largest multi-specialty hospital chain in eastern India with around 1,300 beds spread over five hospitals.

In April 2021, Manipal Hospitals had acquired 100 per cent stake in Columbia Asia Hospitals, including the group’s 90-bed unit in Salt Lake, reportedly at an acquisition value of about Rs 2,100 crore.

The deal with Emami was sealed at an investment of somewhere between Rs 2,600 crore-Rs 2,700 crore, company sources confirmed, only 84 per cent of which would be paid upfront. Following the acquisition, the Emami Group would retain some 15 per cent of equity in the hospitals while the Bengal government would continue to hold around one per cent of shares, a press statement from Emami read.

Company sources confirmed that Emami plans to divest fully its health care businesses, like it has already done with its investments in cement manufacturing and paper mills, in the near future and focus on FMCG, edible oil and real estate businesses. The group also plans to hold on to its presence in the world of contemporary art, a source said.

The acquisition of AMRI Hospitals would also elevate Manipal Hospitals to become the country’s second largest private healthcare service provider, after Apollo Hospitals, with 33 tertiary care hospitals under its management which are spread across 17 cities having a combined strength of some 9,500 beds and over 5,000 doctors in the hospital chain’s pool, the communication added.

“The culture, capabilities and ethos which have been core to the success of both institutions over the last several decades will continue to guide the integrated organization in its growth path,” an internal communication circulated among employees by the MD and CEO of Manipal Hospitals, Dilip Jose, read. Jose also divulged that the execution of the integration process of the two companies would take place over the next few months.

The fate of Emami’s Frank Ross pharmacy retail chain remained unclear, although sources in the company confirmed that the group is actively looking for buyers and the pharmacy business too is likely to go the hospital way, sooner rather than later.

Founded jointly by RS Agarwal and RS Goenka, the management mantle of the Emami Group currently rests in the hands of the next generation of the two families, Aditya Agarwal, Mohan Goenka and Manish Goenka. The company’s acquisitions, divestments and mergers are handled by Manish, the younger of the Agarwal brothers.

“The new generation wasn’t very keen on the healthcare sector because running hospitals, more often than not, attracts negative publicity which has an adverse impact on the other businesses. That’s why the process of divestment in AMRI Hospitals began a long time back but got stalled in between by the Covid Pandemic,” a senior official of the company said.

The fire incident at AMRI’s Dhakuria unit in December 2011, which claimed the lives of 89 patients, had nearly dealt a body blow to the group after several members of the hospital management, including members of the board, stood accused on grounds of negligence. Besides spending substantial time behind bars by members of the top management, the hospital had to pay substantial monetary compensation to victims on court directives. It took over three-and-a-half years for the hospital, which shut down post the tragedy, to resume full-fledged operations.

“The founders, though, still retain a strong emotional connection with the hospitals,” the source revealed. “AMRI has been very close to our heart, and we feel privileged to have served the people with one of the best healthcare services in India. We have never viewed it as a business entity but a way of giving back to the society… As we handover the charge to Manipal Hospitals, we feel confident that AMRI and its people are in good hands and that the Manipal Group will continue to provide the best of healthcare services to the people of Eastern part of India and neighboring countries and also accelerate AMRI’s growth trajectory in the future,” the company statement read.