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LRA Assigns Initial Entity Rating to Nawaloka Medicare (Pvt) Ltd

Rating Type Entity
(24-Jan-23 )
Action Initial
Long Term BBB
Outlook Stable
Rating Watch -

Nawaloka Medicare (Pvt) Ltd was established in 2013 as a 100% owned subsidiary of Nawaloka Holding PLC which later-on was spun off from the group on 31st Dec 21, with a separate management team. Nawaloka Medicare is no longer associated with Nawaloka Hospital PLC. Post restructuring, Nawaloka Medicare is a 100% owned subsidiary of Nawaloka Care (Pvt) Ltd. It is a family-owned business. Lack of independent oversight at board level and the governance structure needs consideration. At present the Company has wholly owned subsidiary i.e., Nawaloka Care Laboratories (Pvt) Ltd and two branches Nawaloka Premier Centre and Nawaloka Medicare Hospital Gampaha. Nawaloka Medicare has a noticeable presence in the healthcare sector under the brand name Nawaloka offering a range of facilities which is considered a strong element for the company. The business is fueled by a vision to expand and penetrate regionally. The health care sector is dominated by the public sector which accounts for about 95% of medical beds. Private sector health care sector operates consultant driven model and patients follows the consultant. Almost all these consultant practice in the public sector and they operate their consultancy services in the private sector during early morning hours and afternoon onwards. Private sector has been able to obtain a market share by providing value added services. Nawaloka Medicare has a low number of beds in the hospital compared to other hospitals however revenue per bed per day is within industry norm. Nawaloka Medicare benefit from its presence at regional level. At industry segment level, there is low barriers to entry due to high Capex requirement. To expand the capacity, Nawaloka Medicare has already invested in another wing with 35,000 sqft to accommodate more patient rooms as well as channel consultation rooms. Ratings take comfort from Company's sustainable revenue streams over the years and relatively subdued competition at regional level, however, the bottom-line is expected to shrink as benefit of tax exemption expires.
Key rating drivers are based on sustained revenues, Low gearing and strong demand for private sector health care, however the governance and board structure needs improvement.

About the Entity
Nawaloka Medicare (Pvt) Ltd is a limited liability company incorporated under the Companies Act, No. 07 of 2007 of Sri Lanka. The Company was established in 2013 and is currently 100% owned by the Nawaloka Care (Pvt) Ltd. Nawaloka Medicare (Pvt) Ltd is principally involved in providing Radiology & imagining services, Ambulance, Physiotherapy centre, Dialysis, Endoscopy/ Colonoscopy, Fertility Centre as well providing the facilities such as Hospital rooms & services, Maternity wards, Accident & Emergency, Day surgery, Intensive care unit and Operating theatres. The Chairman, Mr. Harshith Dharmadasa has been a director of Nawaloka Hospital PLC since 2000 and has over 25 years of executive Management experience. The board is headed by the owner who is also the chairman and the other two executive directors, Ms. Tracey Dian Dharmadasa and Mr. Harshula Dharmadasa who are close family members.

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