Kovai Medical Center to Divest Allied Health Sciences Division in Strategic Slump Sale

Kovai Medical Center and Hospital Limited (KMCH) has announced a significant restructuring of its educational services segment. Following a Board of Directors meeting held on May 11, 2026, the company has approved the transfer of its Allied Health Sciences (AHS) courses division to Dr. NGP Research and Educational Trust.

The decision to divest the AHS division stems from recent legislative changes under the National Commission for Allied and Healthcare Professions Act, 2021. These new regulations have introduced stringent requirements and conditions for healthcare courses, necessitating substantial additional investment in infrastructure and resources.

By transferring this division, KMCH intends to sharpen its strategic focus on core medical education programs and primary healthcare activities, aiming for higher resource efficiency and improved long-term returns.

Transaction Architecture

The divestment is structured as a "slump sale" on a going concern and "as is where is" basis. The transfer includes all permissions to conduct AHS courses, identified assets, liabilities, students, employees, and existing contracts.

The buyer, Dr. NGP Research and Educational Trust, is a public charitable trust established in 1990. The Trust already manages a wide array of institutions spanning Health Sciences, Engineering, Arts, and basic education, making it well-positioned to absorb and continue the AHS programs.

Financial Terms and Impact

KMCH will receive a total cash consideration of Rs. 84.54 lakhs for the sale. A Business Transfer Agreement (BTA) is expected to be finalized by May 31, 2026, with the entire transaction projected to conclude by November 30, 2026, pending requisite approvals.

The AHS division currently represents a minor portion of KMCH's overall financial profile. For the financial year ended March 31, 2025, the division contributed:

Revenue: Rs. 396.37 lakhs (approximately 0.29% of the company's total turnover).

Net Worth: A negative contribution of Rs. 339.13 lakhs (representing -0.31% of the company's total net worth).

The transaction is classified as a related party transaction, as several members of the KMCH Promoter and Promoter Group-including Managing Director Dr. Nalla G. Palaniswami and Joint Managing Director Dr. Thavamani Devi Palaniswami-serve as trustees for Dr. NGP Research and Educational Trust.

The company has confirmed that the sale is being conducted on an "arm's length" basis, supported by an independent valuation report. Furthermore, the transaction will not result in any changes to the shareholding pattern of the listed entity.

This strategic move is viewed by the Board as a protective measure for both the company's resource management and the academic interests of the students currently enrolled in the Allied Health Sciences courses.

Shares of KOVAI MEDICAL CENTER & HOSPITAL LTD. was last trading in BSE at Rs. 5575.05 as compared to the previous close of Rs. 5674.75. The total number of shares traded during the day was 603 in over 262 trades.

The stock hit an intraday high of Rs. 5748.00 and intraday low of 5551.05. The net turnover during the day was Rs. 3383499.00.

Source : Equity Bulls

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