kaya ltd Management discussions

1. Global Economy

The global economy demonstrated signs of stabilisation in early CY2022. However, this positive trend was dampened by the Russia-Ukraine conflict that broke out in February CY2022, which further aggravated inflationary pressures and delayed the normalisation of supply chains. To tame high inflation, central banks of major economies aggressively tightened their policy rates. The International Monetary Fund (IMF) predicts that global growth will slow from 3.4% in CY2022 to 2.8% in CY2023, with advanced economies experiencing a significant slowdown in growth from 2.7% in CY2022 to 1.3% in CY2023. Emerging market economies (EMEs), on the other hand, are expected to have an average growth rate of 3.9% in CY2023, with a projected increase to 4.2% in CY2024. However, the US and the Euro area economic growth is likely to remain subdued.

Global Growth Forecast (%)

Particulars	Actual	Projections
	CY2022	CY2023	CY2024
World Output	3.4	2.8	3.0
Advanced Economies	2.7	1.3	1.4
US	2.1	1.6	1.1
UK	4.0	-0.3	1.0
Emerging Market and Developing	4.0	3.9	4.2
Economies
Middle East and Central Asia	5.3	2.9	3.5
UAE	7.4	3.5	3.9
Oman	4.3	1.7	5.2
Saudi Arabia	8.7	3.1	3.1
China	3.0	5.2	4.5
India	6.8	5.9	6.3
Other Advanced Economies	2.6	1.8	2.2

Source: IMF World Economic Outlook April 2023

Global inflation is expected to decrease from 8.7% in CY2022 to 7.0% in CY2023 and 4.9% in CY2024, owing to a combination of factors such as interest rate hikes, falling energy and food prices, and diminishing supply chain pressures. However, core inflation, which excludes volatile items, has proven to be more resilient, indicating that monetary policy is likely to remain restrictive throughout most of CY2023. This could impede economic activity and result in rising unemployment rates in several economies.

1.1 Outlook

The global economy is poised to confront a fresh set of challenges and a downturn in activity due to several factors. These include the sluggish pace of structural reforms, escalating trade tensions, a decline in direct investment, and slower adoption of innovation and technology, especially in fragmented regions. Nevertheless, there is a more sanguine outlook for CY2024, with a projected growth rate of 3.0%. It is widely anticipated that the economic decline will be moderate, providing an opportunity to effectively address global issues and navigate these challenges. This period of moderation presents a chance for concerted collective action and strategic measures to be undertaken to mitigate the impact of these obstacles and promote sustainable growth in the global economy.

2. Indian Economy

India has made impressive strides in its economic growth, becoming the worlds 5^th largest economy. According to Central Statistical Organisation, the Indian economy is estimated to have grown by 6.8% in FY23. The economic growth has been primarily driven by strong private consumption, normalisation of contact-intensive services and the governments thrust on capital expenditure.

2.1 Outlook

Indias economy is gaining remarkable momentum on the global front, propelled by a synergistic blend of demographic advantages, digital transformation and a strong emphasis on innovation. The latest economic survey reveals that the country is well-positioned to achieve sustained growth, with real GDP projected to be around 6% to 6.8% in FY24. This optimistic outlook is underpinned by a favourable regulatory landscape, a robust industrial policy framework through the Production-Linked Incentive (PLI) scheme, and increased investment in large-scale infrastructure projects.

Further, the Indian governments significant increase in capital expenditure has been instrumental in propelling the economy forward. Capital expenditure increased by 63.4% in the first eight months of FY23, leading to crowding in private Capex. The improvement in corporate balance sheets and increased credit financing, have further bolstered a sustained increase in private Capex.

3. Middle East and North Africa (MENA) Economy¹

3.1 United Arab Emirates (UAE)

In the UAE, the economy is expected to experience a slowdown in growth in 2023, driven by a combination of the global economic downturn, stagnant oil production, and tighter financial conditions. Real GDP is projected to grow by 3.6% in 2023, with a slight moderation in growth over the forecast period. Despite this, the non-oil sector is anticipated to grow by 4.2% in 2023, driven by robust domestic demand in key sectors such as tourism, real estate, construction, transportation, and manufacturing. The UAE has seen both fiscal and external surpluses increase in 2022, thanks to higher oil prices and the withdrawal of temporary COVID-19 fiscal support. Moreover, global uncertainty has led to increased financial inflows, resulting in rapid real estate price growth in some segments. Private consumption is also expected to further support non-oil sectors with the introduction of mandatory unemployment benefits for local and foreign workers.

1 thedocs.worldbank.org

3.2 Saudi Arabia

The Saudi Arabian economy is heavily reliant on its oil sector, but its long-term diversification plan, Vision 2030, aims to achieve sustained, inclusive, and greener growth by promoting structural reforms. Despite a robust GDP growth of 8.7% in 2022, the economy is expected to experience a slowdown with an estimated growth rate of 3.1% in 2023. This deceleration is due to stagnant oil production, as Saudi Arabia abides by the agreed production quota set by OPEC+. This constraint will result in oil sector growth of only 0.8%. However, governments will have ample fiscal policy flexibility with high oil prices, which will also support credit growth and consumption. The non-oil sectors are expected to grow by 4.1% and cushion the impact of the oil sectors softening.

3.4 Oman

Omans economy is poised to maintain its growth momentum, propelled by amplified hydrocarbon production and the continued rollout of reforms under Vision 2040. However, due to the weakening global demand for oil, growth is expected to moderate to 1.7% in 2023. The hydrocarbon sector is still expected to be the primary driver of the economy, expanding by over 9% in 2023, with support from the development of new natural gas fields. The non-oil sector is expected to maintain its recovery momentum, with a projected growth of approximately 3% in 2023. This growth will be driven by the expansion of renewable energy industries, increased tourism activities, and ongoing infrastructure projects. Inflation is anticipated to slow down averaging around 2% during the period of 2023-2025. This deceleration can be attributed to the impact of higher interest rates, government subsidies, and a decline in commodity prices.

3.5 Outlook

Economists from the World Bank anticipate a growth slowdown in the Middle East, and North Africa (MENA) region, with a projected rate of 3% in 2023. This follows a robust growth of 5.8% in 2022, driven by oil windfalls in the Gulf Cooperation Countries (GCC). However, it is important to note that growth rates vary across different country groups within the region.

The UAEs real GDP is projected to grow by 3.5% in 2023, indicating a slight moderation in growth over the forecast period. Conversely, in Saudi Arabia, after a robust GDP growth of 8.7% in 2022, the economy is expected to experience a slowdown with an estimated growth rate of 3.1% in 2023. This deceleration is due to stagnant oil production as Saudi Arabia abides by the agreed production quota set by OPEC+. In Oman, the non-oil sector is also anticipated to keep its recovery trajectory, rising by almost 3% in 2023, backed by increased renewable energy industrial capacity, tourism, and infrastructure projects.

4. Industry Overview

4.1 Market size of aesthetic dermatology industry in India

The total aesthetic dermatology market, comprising both services and products, is estimated to be USD 3,440 million in 2021, with an expected compound annual growth rate (CAGR) of 15.9% over the next 5 years. The increasing awareness, improved safety measures, technological advancements, and growing household incomes are key factors driving the rising consumer demand for aesthetic dermatology products and services in the country. While the market has primarily been dominated by unorganised participants, the emergence of organised players like Kaya is expected to accelerate the markets growth. These organised participants are focusing on expanding their reach to various regions of the country while maintaining high-quality standards.

4.2 Aesthetic dermatology industry trends in India

The aesthetic dermatology services market in India is experiencing robust growth, with the total revenue projected to reach US$ 3,224.1 million by 2026, compared to US$ 1,473.1 million in 2021. This represents a compound annual growth rate (CAGR) of 17.0% during the given time period.

The growth of the medico-aesthetic industry in the country is primarily fuelled by a sizable consumer base in metropolitan and tier 1 cities. However, given the increasing prevalence of lifestyle diseases and evolving consumer preferences, providers of aesthetic dermatology services are actively expanding their presence in metropolitan and tier 1 cities. They are also placing greater emphasis on tapping into the untapped customer base in tier 2 and tier 3 cities.

Within the aesthetic dermatology services market, skin care and weight management hold the largest market share. This is largely attributed to the prolonged pandemic lockdowns, a renewed focus on health, and the growing significance of these services among both female and male consumers.

Aesthetic Dermatology Service Market in India (in US$ Millions), 2021-2026 (f)

(in US$ Millions)

FY26F	3,224.1
FY25F	2,660.7
FY24F	2,244.7
FY23F	1,914.0
FY22F	1,657.2
FY21	1,473.1

Projected CAGR (2022-26) : 17.0%

Source: Frost & Sullivan Analysis

Aesthetic dermatology products market in India is also on a strong growth trajectory with total revenue expected to touch US$ 3,989 million in 2026 from US$ 1.970.9 million in 2021, growing at a CAGR of 15.1% over the next five years.

Aesthetic Dermatology Product Market in India (in US$ Millions), 2021-2026(f)

(in US$ Millions)

FY26F	3,989.0
FY25F	3,429.4
FY24F	2,969.8
FY23F	2,565.3
FY22F	2,255.9
FY21	1,970.9

Projected CAGR (2022-26) : 15.1%

Source: Frost & Sullivan Analysis

Growth drivers for aesthetic dermatology industry in India

Rising prevalence of lifestyle diseases

The higher prevalence of lifestyle diseases, such as obesity, prolonged stress, and allergies, has become a significant contributing factor to various health issues, including hair loss, acne, and premature aging. In India, the overall prevalence of obesity stands at 40.3%, with a higher prevalence observed among the urban population compared to the rural population (44.1% versus 36.0%). Allergies are another major lifestyle disease negatively impacting over 20% of the total population in the country.

Advancements in treatment technologies

Non-invasive aesthetic treatments have gained considerable popularity in recent years, emerging as a preferred approach for addressing anti-aging and various skin-related problems. The rapid transition towards non-invasive procedures can be attributed to several advantages, such as reduced pain for patients, quicker recovery times, and a lower risk of complications. This trend has attracted more customers to the aesthetic dermatology segment seeking effective and safer solutions.

Rapid urbanisation

By 2025, approximately 37.4% of Indias population is expected to be urbanised, with this figure projected to rise to 46.4% by 2040. The countrys fast-paced economic development is leading to the creation of more urban centres, with a significant share of the working population residing in these areas. Families in urban centres, particularly in metros and tier 1 cities, tend to have higher household incomes and greater spending power, driving the demand for aesthetic dermatology services.

Rise of organised aesthetic dermatology service providers

The Indian aesthetic dermatology market has been predominantly captured by unorganised service providers, holding a market share of around 90%. However, the increasing presence of organised aesthetic dermatology service providers is expected to drive quality, operational efficiencies, and the adoption of modern treatment techniques facilitated by skilled medical professionals.

Growing investment

The rapid growth of the aesthetic dermatology segment is attracting investment from domestic and global service providers who aim to tap into the large customer base in India. In order to strengthen their market position in both the services and product segments, domestic aesthetic dermatology providers are focused on expanding their clinic networks across various geographical areas in India as well as exploring opportunities in foreign markets.

Changing customer needs

India has a significant proportion of the younger population who are highly aware of the beauty and wellness segment. This awareness has further increased post-COVID-19 pandemic, with easy access to information, the growing impact of social media, and a strong desire to look good. The aesthetic dermatology market in India is also witnessing a growing share of male customers, as men are increasingly educating themselves about suitable treatment options, costs, and expected outcomes.

Growth in cosmetic tourism

India is emerging as a major global destination for aesthetic surgeries. The primary reason behind this transition is the significant cost difference of cosmetic treatments in India compared to other parts of the world. The affordability factor has attracted a growing number of individuals seeking aesthetic procedures to consider India as a favourable option.

4.3 Aesthetic dermatology industry trends in Gulf Cooperation Council (GCC)

The aesthetic dermatology market in the Gulf Cooperation Council (GCC) region is projected to grow at a CAGR of 29.7% from 2021 to 2026. Factors such as high household income, medical advancements, strong media influence, greater awareness, rapid growth in medical tourism, and the lifting of cultural stigma regarding aesthetic procedures contribute to this market growth.

Aesthetic dermatology market in GCC (in US$ millions), 2021-2026f

(in US$ Millions)

FY26F	26,860.1
FY25F	20,703.0
FY24F	15,957.3
FY23F	12,299.4
FY22F	9,480.1
FY21	7,307.0

Projected CAGR (2022-26) : 29.7%

Source: Frost & Sullivan Analysis

Growth drivers for the aesthetic dermatology industry in GCC

Increasing prevalence of lifestyle diseases

The GCC countries have a high percentage of the population affected by lifestyle diseases, with approximately 30% being obese and over 60% having a weight range above normal. This is primarily due to factors such as increasing economic development, improper diets, and sedentary lifestyles. The high prevalence of obesity and overweight directly contributes to higher incidence rates of diabetes, cardiovascular disease, and other lifestyle-related ailments.

High GDP per capita

The GCC countries, except Oman, have a very high GDP per capita, thanks to their vast oil reserves and growing economies. Qatar and UAE have the highest GDP per capita in the region, exceeding US$ 20,000 in 2021. This high GDP per capita translates into better wages and increased spending power among citizens.

Harsh weather conditions

The regions harsh weather conditions drive the demand for various aesthetic dermatology services. The younger generation, in particular, is aware of the negative effects of the hot, dry, and humid climate on their bodies. They take necessary precautions to mitigate these factors and explore different treatment options that can provide sustained quality results in a shorter timeframe.

Growing awareness among customers

Customers in GCC nations have been increasingly exposed to information from various sources, leading to greater awareness of different aesthetic dermatology procedures and services. The COVID-19 pandemic has further fuelled this awareness, as there is a renewed focus on health and wellness.

Cultural shift

While there have been discussions regarding whether cosmetic surgeries violate Islamic religious beliefs, several dermatologists have observed a changing attitude among customers. The stigma associated with undergoing cosmetic procedures has diminished over time. Additionally, governments in the GCC region have undertaken cultural liberalisation efforts to boost their economies. Symposia on aesthetic dermatology procedures have been hosted in countries like the UAE and the Kingdom of Saudi Arabia (KSA).

Advancement in aesthetic dermatology treatments

Non-invasive aesthetic treatments have gained popularity in the GCC region due to their advantages, such as minimal scarring, lower costs, minimal downtime after treatment, and fewer complications. Government initiatives have been launched to create awareness around non-surgical aesthetic procedures. For example, Dubai health authorities have issued detailed guidelines for service providers on the standards to be followed for non-surgical aesthetic dermatology treatments in the region.

Growing investment in the aesthetic dermatology segment

International and domestic players, such as Kaya, are focused on increasing their market presence in the GCC region. Governments in GCC countries are also promoting the growth of the aesthetic dermatology segment through initiatives to boost medical tourism. The UAE government, in particular, has taken the lead by launching Abu Dhabi Medical Tourism and Dubai Health Experience web portals, which enable medical tourists to book procedures and access a wide range of medical tourism services.

High penetration of social media

The number of active social media users in the GCC countries has rapidly increased over the past few years. In KSA, 82% of the population uses social media, while in UAE and Qatar, approximately 99% of the total population uses one or more social media platforms. Aesthetic dermatology service providers have capitalised on this high social media penetration by creating dedicated pages on various platforms. The popularity of social media influencers sharing their aesthetic dermatology treatment experiences has also gained traction among users. Both domestic and international service providers are collaborating with these influencers to raise brand awareness and reach new customers.

4.4 Role of Kaya India in the overall aesthetic dermatology services industry

The aesthetic dermatology market in India is experiencing rapid growth, driven by factors such as increasing disposable income per capita, heightened self-awareness of appearance, advancing technologies, and favourable policies and regulations. To capture a significant portion of this rapidly expanding market, Kaya should focus on the following strategies:

Network expansion across untapped regions for better accessibility

Currently, aesthetic dermatology services are primarily concentrated in metro and tier 1 cities. However, tier 2 and tier 3 cities are emerging as lucrative markets with high demand due to economic development, growing population, and rising household incomes. Kaya can bridge the demand-supply gap by expanding its nationwide network and opening clinics in untapped regions.

Setting high-quality standards:

The Indian aesthetic dermatology market is largely dominated by unorganised participants with non-standardised approaches to quality.

Kaya, as an organised player, can differentiate itself by maintaining standardised procedures and implementing stringent quality control measures. By establishing standards and specifications covering various aspects of running an aesthetic dermatology clinic, Kaya can serve as a benchmark for both organised and unorganised service providers in the Indian market.

Digitising the aesthetic dermatology ecosystem:

Kaya has demonstrated the effective use of digital capabilities to strengthen its market position. The company has established a direct-to-customer platform, collaborated with leading e-marketplaces, enhanced its social media influence, and revamped its customer relationship management, finance and operations. By further leveraging digital technologies, Kaya can enhance its reach and efficiency in the market.

Tackling the challenge of skilled workforce shortage:

Kaya has developed comprehensive standard operating procedures and training programs over the years. The company employs a team of technical and soft skills trainers to cater to the learning and development needs of its employees. Dermatologists and therapists undergo mandatory training on advanced aesthetic dermatology machines and procedures. By continuing to invest in training and skill development, Kaya can address the shortage of skilled professionals in the industry.

Strengthening services and product offerings

To stay ahead of the competition, aesthetic dermatology service providers must invest in research and development to enhance their service and product portfolios. Kaya utilises its in-house R&D team and dermatology experts to consistently develop and introduce new products and services in the market, following regulatory approvals. The company is also upgrading its equipment with advanced machines from reputable manufacturers.

Proactive marketing and branding efforts to spread awareness:

Aesthetic dermatology treatments still face some stigmas in Indian society. To expand their patient base, market participants need to focus on spreading awareness about health issues, treatments, and service offerings to remove misconceptions. Kaya employs various mediums for intuitive communication to establish a deeper connection with customers. The company is also building a network of influencers to popularise its services, products, and new brand identity.

Opening channels for better customer acquisition and retention:

In todays competitive business environment, aesthetic dermatology service providers must go the extra mile to attract and retain customers. Kaya has launched the Kaya Smiles loyalty program, offering various offers and benefits to enhance customer engagement and retention. This program has accounted for a significant portion of Kayas business and has a large customer base.

4.5 Dermatological Products

Dermatological products are experiencing rapid growth as they align with several prominent trends. These trends include the rising demand for health-promoting and self-care products, an increased interest in the value of skincare regimens and routines, and the transformative potential of social media in empowering and informing customers more efficiently.

Consumer expectations have evolved over time and are now influenced by various factors such as gender, skin type, life stage, and time. Gen Z and millennials, in particular, exhibit a growing inclination towards self-love, empowerment, and having a range of choices. This shift is reflected in how skincare brands shape their narratives and communicate with their target audience.

The significant growth observed through digital platforms, coupled with an influx of new clients, bodes well for the industry. As emerging markets gain purchasing power and become more globalised, multinational corporations are striving to provide higher-quality skincare products compared to what is available domestically.

Millennials and Gen-Z consumers have become the primary catalysts for new business growth. As this new generation of consumers matures, their preferences lean towards "quick-to-market" products that they discover through social media channels. The rise of social shopping and the expanding availability of consumer-packaged goods online present direct-to-consumer (D2C) companies with promising opportunities to penetrate the e-commerce market even further. These trends indicate that targeting and engaging with Millennials and Gen-Z consumers, leveraging the power of social media and online platforms, is crucial for the success of businesses in todays market.

Growth Drivers

Increased spending on personal care

More companies entering the industry

Advancements in technical procedures

Personal care products becoming a means of self-expression

Online marketplaces, social media networks, and brand website

Priorities on the radar

Striving for perfection in all aspects, from product creation to distribution and marketing

Developing an omnichannel, product-centric culture focused on winning

Enhancing product salience through a comprehensive selling and engagement ecosystem

Increasing attention on product development and innovation

Creating a distinctive brand with the right tiering, backed by dermatologists, and featuring a blend of art-meets-science products.

4.6 Dermatological Services

Initially, the industry faced challenges during the pandemic due to lockdowns and social distancing measures, which led to a decline in demand and limited access to dermatological services. However, as people spent more time at home and increased their online presence, the importance of self-care gained traction. The growing demand for aesthetic interventions was fuelled by the availability of safer, more effective, and affordable solutions, as well as technology-driven non-invasive treatments. Additionally, the adoption of telehealth services increased as individuals opted for online consultations from the safety and convenience of their own homes. (Source: Allied Market Research)

4.6.1 Hair Care

The market for Haircare products has matured and grown in India over many years with Indian and Global brands penetrating the market at the premium and mass segment. However the services segment has largely remained untapped despite having some chains dedicated to Hair Care services. The main issue is the focus on segments such as Hair Transplant which have become commodatised. The market for Hair Care (Preventive and Early Stage) is a large segment. There are many preventive care services that are possible to help clients at an early stage hair loss including Platelet Rich Plasma, GFC PRP, Nutri Infusion with Derma Rollers, Hair threads coupled with Nutraceuticals and Prescription medication. Kaya has a strong portfolio of services and we have a large base of quality clients who come to us for several treatments and can be evaluated for Hair Loss concerns or preventive hair care treatments. While women have hair concerns, we can also expand our portfolio to address male hair loss concerns. We aim to increase our penetration in this segment and fortify our positioning as a Skin, Body, Hair Clinic. We will keep pursuing more innovations in this segment and also add a range of Nutraceuticals and products to address Hair Loss issues. We believe this segment can be a strategic lever for Kaya going forward.

HAIR CARe - CONTRIbuTION TO ClINIC COlleCTION

4.9%

India

5.6%

Middle East

4.6.2 Body Contouring

The market for advanced, non-invasive body sculpting services is witnessing a significant rise in demand and availability. There is a growing movement to embrace cosmetic needs without judgment or shame, leading to a boost in the body sculpting services segment, particularly in the GCC region. At our company, we have successfully leveraged these trends by offering cutting-edge, AI-based skin assessment technology and a range of body sculpting solutions, currently in the pilot stage. With a focused approach to the Middle East market, we have implemented engaging campaigns to promote our body sculpting facilities, resulting in the acquisition of new clients. Our Cool Sculpting facilities provide easy and non-invasive options for body toning, catering to the evolving preferences of our customers. In India, we have seen strong success with the introduction of ‘CoolSculpting and have expanded the services in all major cities where Kaya is operational. The focus is on inch loss and a better shape rather than on weight loss. Body contouring services include fat freezing, skin tightening and muscle toning. We intend to introduce all these services gradually.

bODy CONTOuRING - CONTRIbuTION TO ClINICCO lleCTION

2.4%

India

7.6%

Middle East

4.6.3 Laser Hair Reduction

Laser hair reduction has become a popular choice for hair removal, surpassing traditional methods like waxing and shaving. This shift is primarily due to the sustainable nature of the solution and advancements in technology, which have made the process less painful. As a result, laser hair removal is now seen as a practical necessity in todays world of instant gratification, shedding its luxury status and becoming more accessible. At Kaya, we proactively respond to industry trends by utilising advanced laser hair reduction technology and employing experienced dermatologists. By placing dermatologists and satisfied customers at the forefront of promoting our services, we enhance our authenticity and appeal. Our commitment to making laser hair reduction more accessible to younger individuals at affordable rates is reflected in our efforts, highlighting the effectiveness of our latest and advanced technology. Laser Hair reduction has seen a boom in India post covid, with clients understanding the benefits of a machine-based service backed by dermatologist expertise. We are in the process of upgrading our clinics in India with the next generation Laser Machines to ensure higher efficacy and increased productivity. We promote this service heavily on social media platforms such as Instagram and Facebook as laser Hair Removal is a lifestyle need and statement of the present-day client as she has limited time and wants long-lasting benefits. Kaya has a large presence in this segment in India with its pan-India.

lASeR HAIR ReDuCTION - CONTRIbuTIONTO ClINIC COlleCTION

29.9%

India

22.3%

Middle East

4.6.4 Brightening and Pigmentation

Pigmentation concerns remain a significant issue for many individuals and are an integral part of modern skincare routines. With ongoing climate and lifestyle changes impacting our skin in various ways, the demand for brightening and pigmentation services is expected to increase. At our clinic, we provide effective and consecutive treatment sessions, aiming to reduce the frequency of clinic visits. Understanding that each case of pigmentation is unique, we offer customised solutions that enhance the effectiveness and overall experience for diverse customer segments. Our services are age-agnostic, attracting a wide range of customers between the ages of 18 and 45 who choose to benefit from our offerings. Kaya offers a holistic Brightening and Pigmentation service including machine-based services such as ‘Qswitch, a large variety of facial and body peels and also a wide range of products that can be part of the daily regime of clients.

bRIGHTeNINGAND PIGmeNTATION - CONTRIbuTION TO ClINIC COlleCTION

16.0%

India

7.0%

Middle East

4.6.5 Anti-ageing

The demand for anti-ageing services and products is exceptionally high in the beauty and personal care industry, particularly in India and the Middle East. These markets are experiencing a steady increase in demand for anti-ageing solutions due to advanced cosmetic procedures, a growing elderly population, and rapid lifestyle changes that prompt individuals to combat the early effects of aging. Factors such as higher disposable incomes, a focus on self-care, and significant advancements in skincare technology contribute to the strong growth potential in this segment. At Kaya, we have always been at the forefront of providing exceptional anti-ageing services to our diverse range of customers. Our highly experienced team of dermatologists leads our expertise in this field, playing a vital role in customising the best procedures for each individual case. We offer a variety of anti-ageing treatments including injectables from global leading brands, gold-standard technology such as thermage, high-frequency ultrasound and a range of peels and medi-facials. Our dermatologists are trained by global trainers and we have a large pool of doctors who are skilled in injectables and machine-based services in India and the middle east.

ANTI-AGeING - CONTRIbuTION TO COlleCTION

19.4%

India

28.3%

Middle East

Category snapshot - India

The key driver in the Indian market will be innovation in technology and machine-led services.

Our strategy will focus on expert doctor consultation using AI and upgrading dermatology technology in our clinics.

There is a higher awareness of dermatology-based procedures and products due to the widespread use of the internet and digital content.

The market is seeing an influx of private equity-funded dermatology brands and skincare brands, primarily direct-to-consumer (D2C) brands.

Dermatologists are being projected as ‘skinfluencers who are relatable to Instagram audiences aged 18 to 35.

E-commerce and D2C channels will drive growth in the product business.

Category snapshot - Middle East

The GCC region is known for its avid consumers of beauty, fashion, and lifestyle products, making it an exciting market in the category.

The per capita spending on beauty and skincare is among the highest in the world, driven by high disposable income, evolved habits, and abundant choices.

The skin clinic market in the GCC is highly fragmented, with doctor entrepreneurs dominating the industry and delivering high-quality services using the latest technology.

Dermatological expertise and innovations are crucial factors driving the categorys growth. The penetration of the category in the GCC is comparable to highly developed markets like the US, according to our internal estimates.

5. E-commerce

According to Redseer, Indian e-commerce is expected to grow at a compound annual growth rate (CAGR) of 27% to reach US$ 163 billion by 2026, almost three times the growth of the overall retail market. As a result, brands are actively seeking to capitalise on this trend by expanding their market presence and enhancing brand relevance among existing users while attracting new customers.

Kaya recognised the potential of this digital shift early on and swiftly embraced the opportunities presented by the tech-backed ecosystem. We have taken a proactive approach to adapt to the rapidly changing online landscape, employing various modes of engagement and leveraging different stakeholders to ensure a successful and profitable transition into the digital realm. By embracing this digital transformation, we aim to further enhance our market position and meet the evolving needs of our customers in an increasingly connected world.

Kaya products are available through a host of e-commerce sites such as Amazon, Nykaa, Tata Cliq, Tira in India. We have a D2C website www.kaya.in which enables our clients to buy Kaya products 24/7.

6. Kaya Limited Overview

As frontrunners in the realm of dermatology and beauty services, we take pride in offering all-encompassing solutions, delivered by skilled clinic professionals, and bolstered by a network of adept dermatologists. Our innovative offerings boast cutting-edge medical technology, encompassing an array of skin, body and hair care services, along with a vast retail range. We are tirelessly striving to expand our horizons and carve out a niche for ourselves as a premier player in the niche skincare domain across India and GCC region.

7. Human Resource

Kayas workforce boasts a robust and dynamic team of 1,058 professionals stationed across India and the Middle East. We are committed to fostering an environment that prioritises

STRENGTHS		CHALLENGES
20 years of experience in the skincare industry		High fixed costs associated with operating clinics.
Wide network of 100+ dermatologists and 90+ clinics		Dependence on key personnel in the clinic model
Embracing innovative technology and customisation		Limited pool of high-quality doctors available for hiring
Strong digital presence in multiple markets		Lower footfall in Clinic impacting growth
	SCOT
	Analysis
THREATS		OPPORTUNITIES
Competition from new digital-first product brands with heavy social media and digital investment		Growing demand for effective skincare services among the millennial consumer segments
Independent dermatologists who offer lower prices and have lower overhead costs		Potential for growth through digital and e-commerce channels
New service models such as laser treatment at home and digital consultations that may disrupt the traditional clinic model		Emerging trend towards self-care and wellness
		Potential for expansion into new verticals such as hair care, body care, and plastic surgery

safety, motivation, and growth, where our people collaborate to drive organisational objectives, embody the Kaya ethos, and exhibit exceptional customer service and engagement. Our workplace policies are tailored to ensure a safe, inspiring, and nurturing environment that focuses on the holistic development of our employees, which includes regular training and mentorship programs. Our people are also consistently sensitised to our refreshed culture and brand values, which drive our collective pursuit of excellence.

8. Risk Management

Our organisation has implemented a comprehensive risk management framework that serves as the cornerstone of our business operations. This framework facilitates the identification, evaluation, and mitigation of risks that may impact our Company, thereby enhancing transparency and future readiness. Through a proactive approach to risk management, we can minimise the adverse effects on our long-term business objectives, streamline our operations, and optimise our overall efficiency.

9. Financial Overview

Particulars	Standalone			Consolidated
(in Rs Lakh)	FY23	FY22	Gr %	FY23	FY22	Gr %
Collection	22,144	16,130	37%	44,243	35,585	24%
Net Revenue	17,831	14,091	27%	37,673	32,397	16%
EBITDA*	1,550	1,810		1517	3,538
% to NR	9%	13%		4%	11%
PAT bei**	(8,549)	(2,548)		(11,626)	(6,796)
% to NR	-48%	-18%		-31%	-21%
PAT aei***	(8,550)	(2,580)		(11,415)	(7,001)
% to NR	-48%	-18%		-30%	-22%

*EBITDA – Earning before Interest Tax Depreciation and Amortisation **PAT bei – Profit After Tax and before exceptional item ***PAT aei – Profit After Tax and after exceptional item

Net Revenues

Consolidated Financials

Net Revenue at Rs 37,673 Lakh, grew by 16% over FY22.

India Business

Our India business grew by 27% over FY22. During FY23, 75 clinics were in operation as compared to 71 clinics during FY22.

Middle East Business

Kaya Middle East (KME) business grew by 9% over FY22.

Cost of Goods Sold (COGS)

COGS includes cost of materials consumed, purchases of stock-in-trade, changes in inventories of finished goods, work-in-process and stock-in-trade, consumption of consumables and stores and spare parts as well as contract manufacturing expenses.

Consolidated Financials

COGS on consolidated basis grew by 20% over FY22. The absolute cost has been Rs 7,508 Lakh (20% of Net Revenue) in FY23 as against Rs 6,276 Lakh (19% of Net Revenue) in FY22.

India Business

Kaya Indias COGS is 21% of Net Revenue in FY23 as compared to 22% of Net Revenue in FY22. COGS on absolute cost has grown by 23% in Kaya India due to an increase in Revenue.

Middle East Business

Kaya Middle Easts COGS is 18% of Net Revenue in FY23 as compared to 17% of Net Revenue in FY22. COGS on absolute cost has grown by 17% in Kaya Middle East due to an increase in Revenue.

Employee Cost

Employee cost includes cost of personnel at the clinic staff servicing the customers and also staff at the corporate office.

Consolidated Financials

This cost of Rs 17,354 Lakh (46% of Net Revenue) at the Group level has grown by 25% as compared to Rs 13,874 Lakh (43% of Net Revenue) in FY22.

India Business

Kaya Indias Employee costs at Rs 6,183 Lakh have grown by 43% over FY22, one-time impact of Rs 880 lakh towards PF liability is included in FY23 Employee Cost.

Middle East Business

Kaya Middle Easts employee costs at Rs 11,170 Lakh have grown by 17% as compared to FY22.

Rentals

Rental cost primarily includes rental places occupied to operate the clinics. The rental cost has now become a part of Ind AS 116 Leases accounting and only short-term leases and low-value leases are now part of other expenses in the Statement of Profit and Loss.

Advertisement Sales and Promotion Consolidated Financials

Cost of advertisement at Group level grew by 23% to Rs 1,859 Lakh (5% of Net Revenue) in FY23 as compared to Rs 1,515 Lakh (5% of Net Revenue) in FY22.

India Business

Kaya India advertisement costs at Rs 1,139 Lakh (6% of Net Revenue) grew by 28% in FY22.

Middle East Business

Kaya Middle East Advertisement costs at Rs 719 Lakh (4% of Net Revenue) grew by 15% in FY22.

Other Operative Expenses

Other expenses majorly include overheads such as professional charges paid to doctors, electricity, repairs and maintenance, insurance, travel, rates and taxes, etc.

Consolidated Financials

Operative expenses at consolidated level increased by 20% to Rs 9,894 Lakh (26% of Net Revenue) in FY23 as compared to Rs 8,280 Lakh (26% of Net Revenue) in FY22.

India Business

Kaya Indias other operative expense costs increased by 22% to Rs 5,385 Lakh (30% of Net Revenue) in FY23.

Middle East Business

KMEs other operative expense costs at Rs 4,509 Lakh (22% of Net Revenue) increased by 17% in FY23.

Earnings Before Interest, Tax and Depreciation (EBITDA)During FY23, Kaya Group registered an operating EBITDA of Rs 1,517 Lakh as compared to Rs 3,538 Lakh in FY22.

Kaya India recorded EBITDA of Rs 1,550 Lakh (9% of Net Revenue) compared to Rs 1,810 Lakh (13% of Net Revenue) of FY22.

Kaya Middle East registered EBITDA of Rs (33) Lakh (0% of Net Revenue) as compared to Rs 1,729 Lakh (9% of Net Revenue) in FY22.

Depreciation, Impairment and Amortisation Consolidated Financials

Depreciation and amortisation expense at the consolidated level increased to Rs 6,013 Lakh (16% of Net Revenue) during FY23 as compared to Rs 6,247 Lakh (19% of Net Revenue) during FY22, which declined by 4% over FY22.

Impairment expense at the consolidated level increased to Rs 3,317 Lakh (9% of Net Revenue) during FY23 as compared to Rs 2,345 Lakh (7% of Net Revenue) during FY22. The increase is due to impairment taken on Property, plant and Equipment & Goodwill.

Other Income

Other income in FY23 is at Rs 451 Lakh as compared to Rs 1,178 Lakh in FY22. The decrease is mainly on account of the decrease in lease rent concessions.

Profit After Taxes (PAT)

Kaya Groups earnings after taxes and exceptions (post minority interest share) is Rs (11,626) Lakh (-31% of Net Revenue) includes a one-time impact of Rs 5,311 lakh towards impairment of Goodwill (Rs 3,275 lakh) and towards PF liability (Rs 2036 lakh including Interest Rs 1156 lakh) as compared to Rs (6,796) Lakh (-21% of Net Revenue) in FY22.

Property, Plant and Equipment, Intangible Assets, Capital Work-In-Progress and Intangible Assets Under Development

Assets (net of depreciation) increased by Rs 1,115 Lakh during FY23 from Rs 4,235 Lakh in FY22 to Rs 5,351 Lakh in FY23.

10. Internal Financial Controls

The Company places great emphasis on ensuring robust internal financial control systems to safeguard its financial assets and maintain transparency in its operations. The Corporate Governance Policies, roles, responsibilities and authorities, standard operating procedures and ERP are regularly reviewed by the Management to ensure they remain up-to-date and effective.

Periodic testing and certification of internal controls over financial reporting are carried out by statutory auditors, covering all offices, factories, and key business areas. The Company engages external firms to perform internal audit reviews based on a risk-based internal audit plan approved by the Audit and Risk Management Committee. These firms report on significant audit observations and recommend follow-up actions, which are closely monitored by the Committee.

The Audit and Risk Management Committee regularly reviews the adequacy and effectiveness of the Companys internal control environment and closely monitors the implementation of audit recommendations, particularly those relating to strengthening the Companys risk management policies and systems. These measures ensure that the Companys risk management framework is robust and effective in mitigating risks to its operations and financial performance.

Cautionary Statement

This Report contains forward-looking statements about the Companys objectives, projections, estimates, expectations, and predictions, which are subject to applicable securities laws and regulations. While these statements are based on reasonable assumptions, there is a possibility that actual results may materially differ from the expressed or implied expectations.