Good move, but late: Health care industry
The Indian health care industry welcomed the RBI’S move to open an on-tap liquidity window of ~50,000 crore, but some felt it may not make much difference now. While some firms said they were open to borrowing, others felt their working capital cycle was comfortable. The biggest shot in the arm could come to the vaccine industry here, which is struggling to ramp up capacities to churn out adequate supplies of vaccines.
The Indian health care industry welcomed the Reserve Bank of India’s move to open an on-tap liquidity window of ~50,000 crore, but some felt it may not make much difference now. While some companies said they were open to borrowing, others felt their working capital cycle was comfortable.
The RBI on Wednesday opened up a liquidity window of ~50,000 crore with tenors of up to three years to boost the provision of immediate liquidity for ramping up Covidrelated health care infrastructure and services.
The biggest shot in the arm could come to the vaccine industry here, which is struggling to ramp up capacities to churn out adequate supplies of vaccines needed to inoculate India’s 1.4 billion people.
Serum Institute of India (SII) Chief Executive Officer Adar Poonawalla had recently said that they borrowed ~1,500 crore in April to manage “additional opex requirements of these large volumes”. SII had also sought a grant of ~3,000
crore from the government to start a new facility to make Covishield vaccines. The Centre approved a supplier credit of ~3,000 crore to SII for vaccine supplies.
Poonwalla did not comment on the RBI move on Wednesday. Queries sent to Bharat Biotech, Gennova Biopharmaceuticals, and Dr Reddy’s
Laboratories remained unanswered.
Pune-based Gennova, which is making an MRNA Covid vaccine, plans to fund a capex of ~250 crore for facility expansion by ~70 crore government grants, ~135 crore debts, and remaining from internal accrual, CRISIL had said in a statement.
Rahul Prithiani, director of CRISIL Research, said the major beneficiaries would be the pharmaceutical manufacturers, vaccine makers, health care equipment manufacturers, hospitals, and diagnostic players.
“Penetration of hospitals/dispensaries may increase as players can now opt for funding towards capex in the view of the pandemic. Also, diagnostic chains can take up this opportunity to penetrate in tier-ii and beyond cities,” he said.
CRISIL felt the scheme was a good boost to the stalled capex plans by players, thus encouraging adequate health care delivery in the country.
Hospital players such as Manipal Group said the move was an “encouraging step for organisations to embark on a rapid scale-up programme”. “Since the capabilities created would be versatile, it would contribute beyond the pandemic to improving the overall ability to raise the standards of health care delivery,” said Dilip Jose, MD and CEO of Manipal Hospitals.
“We have invested already, but may need to do more to scale up ICUS and higher-end infrastructure,” he said.
Some medical devices players, however, felt the move may not mean much now. Invasive ventilator manufacturers like Skanray and Max say it will not benefit the greenfield capex requirement of the industry as much as working capital.