ET Now: The reality is, offline health care PB Fintech has been contemplating this new endeavor for a number of years, what do you suppose this backward integration with hospitals would possibly imply?
Manas Agrawal: The media broke the information and the corporate didn’t deny it. Yashish additionally touched on this in earlier calls. So, it appears like they need to try this. Now, how they do it is a query, is it capital intensive or some form of partnership, that appears to be a giant query affecting the inventory as a result of individuals consider within the PB story of fintech due to its robust progress , capital-light enterprise mannequin. I believe investor communication on this entrance will assist calm hypothesis. I believe the inventory has stabilized now. However the previous three days have been very unstable. Subsequently, clarification on this side can be useful. We wrote a notice at this time that touches on key points for administration. Basically, what’s a marketing strategy? It is good for shoppers, it is most likely good for hospitals and insurance coverage corporations, and subsequently it is good for Policybazaar, however what’s the price of all this, that is my key query at this second.ET Now: They talked about being much less capital intensive and also you additionally pointed that out within the notice. Do you suppose they may search to construct their very own hospital? Will there be partnerships with present hospitals? Extra importantly, what strategy ought to they pursue that might be extra worthwhile?
Manas Agrawal: That is precisely our downside. One strategy to obtain capital lightness is to type partnerships with present hospitals. One other strategy to be the sunshine of capital is to work with investor And then you definately go and purchase or construct hospitals, no matter. So, choice A versus choice B, that is the important thing query. One other query to reply is who spends the administration crew’s time on the hospital enterprise and what impression does which have on the administration bandwidth of the insurance coverage distribution phase, which is a query I get from buyers. One other factor is, does this imply that Policybazaar in its present type goes to be a capital intensive enterprise or will it stay capital mild and what does that imply free of charge money stream technology?
So there are a whole lot of questions and few solutions, however buyers can be happier if it was much less capital intensive quite than extra capital intensive, and I believe buyers can be happier if there was extra readability on all of those questions.
ET Now: What this implies for really assist medical insurance corporations. In your opinion, as soon as we have now a clearer understanding of the way it will work and the way a lot of a profit will probably be to shoppers?
Manas Agrawal: In fact, it appears like Yashish has a viewpoint, and I perceive what he is making an attempt to say. The issue now could be that hospitals view mattress stock as a driver of income and subsequently worth every mattress very excessive, which is sensible for his or her enterprise mannequin. However which means shoppers find yourself paying extra, and insurance coverage corporations could find yourself paying greater than they need to, or no less than making affordability higher for each shoppers and insurance coverage corporations.
So it is a good factor for shoppers if they will get remedy at a decrease value and have a greater claims expertise. If prices do should be lowered, it means fewer claims for medical insurance corporations, which is best for the insurance coverage corporations. Then if Policybazaar can deliver a greater claims expertise to insurance coverage corporations, they might most likely construct a enterprise mannequin round that and take a fee on the insurance coverage distribution facet of issues, so that is what it will appear to be.
ET Now: Is there any such case of backward integration globally? Do you suppose we are able to count on the identical from PB Fintech? How efficient is it?
Manas Agrawal: There is not a lot precedent to comply with. We’re additionally actively searching for precedents, however we have now already seen examples of this in america or Australia, the place insurance coverage corporations work not directly or instantly with hospitals or healthcare establishments. There are examples in america of well being care individuals ultimately changing into insurance coverage individuals. However no less than for now, it is arduous to level to an instance of an insurance coverage distributor working backwards and integrating with a hospital or healthcare sector to drive higher buyer outcomes. In India, insurance coverage corporations aren’t that large in medical insurance but, or no less than they don’t have any intention of doing so.
Regulatory capital necessities are additionally capped, so Yashish might be able to take over and do exactly that.
ET Now: Coming to financials, how do you suppose this would possibly enhance profitability in the event that they resolve to maneuver in direction of heavy funding and enhance margins on the expense of abandoning the asset-light mannequin?
Manas Agrawal: The very first thing that occurs is the money on the steadiness sheet that contributes meaningfully to income by curiosity revenue goes to be deployed and your curiosity revenue ought to contract, no less than within the brief time period. If deployed appropriately, it might generate capital returns in the long term. However within the brief time period, your profitability or money stream technology goes to take a backseat, and actually, that is what’s weighing on the inventory.
