Wockhardt Hospitals has restarted talks with the Maharashtra government for the joint venture between the two to convert the state owned GT Hospital in Mumbai into a super specialty hospital, it is learnt.

The state government had earlier communicated to the company officials about its disinterest in the proposed the joint venture, as it could not totally agree with the terms of the agreement. "Wockhardt has come forward with a proposal to renegotiate the tie up. It seems that the company is willing to make changes in the MoU," said the government sources.

A few months ago, the Maharashtra government had informed Wockhardt regarding its plans to withdraw from the 49:51 joint venture with Wockhardt Hospitals in the GT Hospital project.

The erstwhile JV agreement to set up a 250-bed super specialty hospital and research centre was signed in May 2001 between the Wockhardt management and the state government. As per the agreement, government would hold 49 per cent equity in the JV, while Wockhardt would hold the balance.

The total project cost was to the tune of Rs 64.85 crore. The company was supposed to invest about Rs 33 crore for its 51 per cent stake in the joint venture, the balance Rs 31.78 crore by the government. In addition to the above amount, Rs 13.22 crore was further to be provided by the government for modernisation and refurbishment of the GT Hospital building.

Lesser returns were the reason cited for the withdrawal of the government from the JV, said officials. "As per our estimation, government had to invest about 92 crore in the JV (Rs 47 crore as land & building valuation, Rs. 31.78 crore in equity and Rs. 13.22 crore in refurbishment). If we were to invest this amount in bank, we would be realizing Rs. 9-10 crore annually at today's interest rate. Out of JV, we would have realized only Rs. 4 crore (Rs. 1 crore by way of rent and Rs. 3 crore by revenue)," said sources.

Sources maintain that the government can agree to the JV only if its annual return is increased to about Rs. 9 crore (like Rs. 4 crore in rent and Rs. 5 crore as revenue to the government). "GT Hospital property is located at a posh south Mumbai suburb, which really deserves a rent of Rs. 4 crore," they said.

There was also disagreement over 10 per cent reservation for poor patients. "The government would like the reservation to be increased to about 25 per cent for the poor," said sources.

After the government exit from the JV, another party Netvista ITL, a Mumbai-based IT-cum-infrastructure company had expressed interest in developing the project. However they did not come forward with a well-structured plan, said officials.