Noida Medicare Centre Ltd

BSE: 523670 | NSE:  | ISIN: INE740C01019 
Market Cap: [Rs.Cr.] 14.26 | Face Value: [Rs.] 10
Industry: Healthcare

Management Discussions
MANAGEMENT DISCUSSION AND ANALYSIS REPORT

INDUSTRY STRUCTURE & DEVELOPMENT

Indian healthcare industry is on a robust growth curve with enormous scope forinvesting in new specialty / multispecialty hospitals with installation of advancedequipments / technology upgradation. Increase in patient population, increasing lifestylerelated health issues, affordable treatment costs, thrust in medical tourism, improvinghealth insurance penetration, increasing disposable income, government initiatives andfocus on Public Private Partnership (PPP) models are some of the driving factors for thegrowth of healthcare sector in India. The Indian healthcare sector is predicted to reachUS$ 280 billion by 2020.

The Indian healthcare industry has witnessed a massive spurt in healthcare spend and isexpected to reach US$100 billion by 2015 from the current US$65 billion in 2012-13 growingat CAGR of 20% a year according to a report by PWC.

India currently faces a chronic shortage of healthcare infrastructure, especially inrural areas and Tier II and Tier III cities, and it is expected that India will havepotential requirement of 1.75 million new beds by the end of 2025.

KEY OPPORTUNITIES

• Population growth coupled with longer life expectancy has led to an increase inthe elderly population. As a result, India has the second largest geriatric population inthe world leading to a huge requirement for greater healthcare infrastructure catering tothe disease profile of this age group. The changing dietary pattern will lead to increasein life related diseases which in turn will increase the demand for quality healthcare.Rapid change in lifestyle pattern and poor diet habits and the growing consumption oftobacco and alcohol, coupled with factors such as physical inactivity; non–communicable diseases such as cancer, stroke, diabetes and others which requirehospitalisation, are on the rise in India.

• India is amongst the nations that are experiencing the fastest economic growthand prosperity, globally. With higher disposable incomes and increasing awareness onhealth related issues, patients are likely to increase their discretionary spend onhealthcare, especially on preventive healthcare. Further, India's growing population andincreasing preference for private health services over public services is augmenting thegrowth of the healthcare delivery market.

• With growing literacy rate in India and availability of information on theInternet, journals and other media avenues, there is a rapid increase in awareness onhealthcare issues and diagnosis, which is expected to lead to a rise in patient volumesfrom primary to secondary or tertiary healthcare services.

• Indian health insurance market represents one of the fastest growing and secondlargest non-life insurance segment in the country, according to a report by research firmRNCOS. The health insurance premium is expected to grow at a Compound Annual Growth Rate(CAGR) of over 25 per cent for the period spanning from 2009-10 to 2013-14. Givenincreasing awareness, higher disposable incomes and the government efforts in the form ofhealth insurance schemes and tax benefits, the increasing penetration of health insuranceis expected to strengthen the growth in the healthcare delivery market.

• Medical tourism is also increasingly becoming a popular option for electivetreatments by patients across the globe, constituting a key factor leading to the rapidgrowth in Indian healthcare sector. The availability of quality healthcare services at afraction of the cost when compared to developed nations provides patients with a valueproposition which blends leisure with medical care in an attractive manner. The AssociatedChambers of Commerce and Industry of India (ASSOCHAM) estimates India's medical tourismmarket to grow at an annual rate of more than 30% in the next 3 years to reachapproximately USD 2.1 billion by 2015.

• As per the report, "Healthcare Information Technology Market in India"released by Frost & Sullivan Electronic Medical Record (EMR) services have a highgrowth potential at an estimated CompoundAnnual Growth Rate (CAGR) of 13.5 per cent from2009 to 2016. With many new private hospitals opening in the next few years, investment inEMR is expected to become a necessity for these hospitals.

• The Government is pushing forward a number of initiatives to promote privatehealthcare in the country by providing various subsidies and incentives to motivateplayers to invest in the healthcare market. These include tax benefits, lower importtariffs for life saving and medical equipment, accounting benefits in the form of higherdepreciation and subsidised land. The government has also identified certain healthcareschemes such as the National

Rural Health Mission (NHRM) and schemes like the Rashtriya Swasthya Bima Yojna (RSBY)to facilitate healthcare growth.

• The Government of India have taken major initiatives both in public and privatehealthcare sector to facilitate healthcare growth viz

• Benefit of section 80-IB (11B) extended to new hospitals situated in non-metrosfor a tax holiday for five consecutive assessment years, beginning from the initial yearof assessment.

• Custom duty on life-saving equipment reduced to 5 percent from 25 percent andimport duty on medical equipment reduced to 7.5 percent.

• The government is providing incentives under section 35D of the Income Tax Actwhere the entire capital expenditure would be allowed as deductible expenditure in theyear the hospital commences operations.

• GOI has increased the depreciation rate of essential equipment and consumablesfrom 25 percent to 40 percent, which makes for considerable tax savings.

• Total exemption of duty on certain specified life-saving drugs.

• 100 percent FDI is permitted for health and medical services under the automaticroute.

• Moreover, in order to meet revised cost of construction, in March 2010 theGovernment allocated an additional US$ 1.23 billion for six upcoming AIIMS-like institutesand upgradation of 13 existing Government Medical Colleges.

• Introduction of healthcare schemes such as National Rural Health Mission (NRHM)and schemes like Rastriya Swasthya Bima Yojana (RSBY) to facilitate healthcare growth.

THREATS & CHALLENGES

The major challenge today for Indian Healthcare Sector is that on one hand it is poisedfor growth and better standards of medical care and on the other hand there exist poorinfrastructure, demand – supply gap in healthcare, geographical accessibility etc.

The Indian healthcare sector employs over four million people, making it one of thelargest service industries in the economy. Despite this, the industry is experiencingshortage of skilled manpower both in terms of doctors and paramedical staff. Currently,bottlenecks in teaching and medical infrastructure restrict the number of graduatingdoctors to just 31,000 each year against the requirement of 1,50,000 doctors that Indianeeds to cater to requirement. The nursing situation in the country is equally grim with0.8 nurses for every 1000 people. Besides doctors and nurses, the industry also suffers ashortage of paramedical and administrative staff. A major challenge for our nation and thehealthcare industry would be not only to retain the healthcare workforce but also todevelop an environment which would attract those abroad to return (reverse brain drain)

Establishing a health care facility involves investing substantial amounts of capitaltowards acquiring land especially in the metros and Tier I cities apart from investmentsin medical equipment and other costs. Further, ongoing investments are required to upgrademedical equipments and introduce new treatment technologies. Healthcare investments alsoinvolve a significant gestation period.

OUTLOOK

The healthcare sector in India is undergoing a phase of reformed propelled by rapideconomic growth. The future looks bright and promising keeping in view the initiativestaken by both private players and government sector.

NMC is committed to deliver quality healthcare services through the use of cutting edgetechnology to the utmost satisfaction and well being of the patients. The company had aneventful year during which it made big strides in positioning itself as one of the leadingImaging & Diagnostic Centre & Superspeciality Centre in the entire NCR region.

The thrust has always been to make the hospital and its Imaging & Diagnostic Centreas place of excellence with a most comfortable experience for patients. For this purposeNMC has been renovating it entire infrastructure and introducing modern trends ofHealthcare delivery systems.

Segment-wise Performance:

The company is engaged in the healthcare business, which in context of AccountingStandard 17 issued by the Institute of Chartered Accountants of India is considered theonly business segment.

Risks & Concerns:

NMC believes and recognizes risk as an intrinsic part of the business which can be wellmanaged with planned strategy. Technological obsolescence in medical equipments is anongoing risk that hospitals have to contend with. The same is being taken care of byentering into buy back arrangements with suppliers of the equipments. Risk posed by theentry of large multinational hospitals in the region and the competition to a great extentis being taken care of by providing quality and affordable healthcare services in a mosthumane environment. The internal risk management issues viz. infection control, wastemanagement and emergencies are dealt with utmost care. The hospital has been takingadequate measures for maintaining safe-working conditions for employees, equipments andproperty related risks are handled through appropriate insurance.

Quality Assurance :

NMC has always been in the forefront of providing quality healthcare, continualimprovement and technological upgradation, ensuring maximum satisfaction and health of thepatients. NMC is also fully committed to provide eco-friendly environment therebycomplying with all applicable environmental legislations and regulations.

Internal Control Systems & Their Adequacy:

To ensure internal controls, the company has appointed independent firm of charteredaccountants for reviewing the effectiveness of operations, systems and procedures. Inaddition the audit committee of the Board of Directors reviews, advises and suggestsinternal auditors to continuously improve upon on their reporting process to ensureinter-alia compliance of various rules and regulations.

Financial Operations versus Operational Performance:

During the year under report, the company has recorded turnover of Rs. 6181.51 Lacs ascompared to turnover of Rs. 5849.19 Lacs for the previous year ended 31st March 2012.During the year under review, profit before interest, depreciation and taxation was Rs.1647.76 Lacs as compared to Rs. 1595.73 Lacs in the previous year ended 31st March 2012.The company earned net profit of Rs. 288.25 Lacs in the current year as compared to thenet profit of Rs. 333.82 Lacs in the previous year ended 31st March 2012. The diagnosticbusiness of the company has substantially increased during the year under report.

Human Resource :

Human Resource Management is an important and focused area for the company. The successof the organization depends on the satisfaction of human needs, aspirations consistentwith company's objectives. The company also lays emphasis on identifying and developingtalent in the organization with a view to retain them and imparting further training tothose capable of handling additional responsibilities recruits and train talented manpowerenabling it to achieve its goals in effective and efficient manner.

CAUTIONARY NOTE

The Management Discussion and Analysis Report contain forward looking statements basedon data and information available with the company. These statements are subject tocertain risks and uncertainties. Actual results may differ materially from those expressedin the statements as important factors could influence the company's operations such asgovernment policies, global/local, political and economic development, risk inherent tothe company's growth and such other factors.

For and on behalf of the Board
Date: May 30, 2013 DR. NAVEEN CHAUDHRI
Place: New Delhi CHAIRMAN & MANAGING DIRECTOR
   
Futures & Options Quote
Future Data Not present
Key Information

Key Executives:

Ravi Mathur , Director

Naveen Chaudhri , Chairman & Managing Director

Vikram Prakash , Director

R K Gupta , Company Secretary


Company Head Office / Quarters:

VIMHANS 1 Institutional Area,
Nehru Nagar,
New Delhi,
New Delhi-110065
Phone : New Delhi- / New Delhi-
Fax : New Delhi- / New Delhi-
E-mail : nmc@nmc.co.in
Web : http://www.nmc.co.in

Registrars:

MCS Ltd
F-65 1st Floor,Okhla Industrial Are,Phase-I,New Delhi-110020

 
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