Family Care Hospitals Ltd Management Discussions

OVERVIEW OF INDIA?S MACROECONOMIC ENVIRONMENT AND HEALTHCARE LANDSCAPE

1.1 India?s GDP Performance and Outlook India?s GDP has continued to expand steadily under the revised base year methodology (2011-12), as published by the Ministry of Statistics and Programme Implementation (MoSPI). Over the twelve-year period from FY13 to FY25, real GDP at constant prices grew from 92.1 trillion to a projected 187.9 trillion, reecting a compound annual growth rate (CAGR) of 5.9%. The economy demonstrated resilience post the pandemic-induced contraction of 5.8% in 2020-21, with real GDP bouncing back to 150.2 trillion in FY22 and further accelerating in subsequent years. Growth in 2023-24 (First Revised Estimates) stood at 8.2%, aided by strong investment momentum and resilient private consumption. For FY25, the Second Advance Estimates peg GDP growth at 6.5%, with real GDP expected to reach 187.9 trillion

While India?s growth outlook remains strong, the broader global environment presents headwinds. According to the IMF, global GDP is forecast to grow by 3.3% in 2025 - below the pre-pandemic average with uneven momentum across regions. Advanced economies are expected to grow modestly, while major emerging markets such as China face persistent structural challenges.

For India, the IMF maintains a robust 6.5% GDP growth projection for both 2025 and 2026, driven by domestic demand and improving industrial activity. However, factors such as tighter global -nancial conditions, elevated policy uncertainty, and volatile commodity markets, especially crude oil, may pose risks to external trade and imported ination. A strong US dollar and highinterest rate differentials have also led to capital outows from several emerging markets, including India, further underlining the need for prudent macroeconomic management amid global divergences.

Source: Global outlook and risk commentary referenced from IMF World Economic Outlook Update, January 2025

1.2 India emerges as the World?s Most Populous Country

India?s population grew at a CAGR of 1.9% from 2001 to 2011, reaching approximately 1.2 billion as per Census 2011. By 2010, the country had about 246 million households. As per the United Nations? World Urbanisation Prospects, 2022 revision, India and China collectively accounted for nearly 36% of the global population in 2021.

India surpassed China to become the world?s most populous country in April 2023, with an estimated population of 1.425 billion.

1.3 India?s urbanization expected to increase steadily

According to the United Nations World Urbanisation Prospects: The 2018 Revision, China had the world?s largest urban population in 2018, with 837 million urban dwellers, constituting around 20% of the global total. India followed with 461 million urban dwellers, and the US with 269 million. The share of India?s urban population has been steadily increasing, reaching approximately 31% in 2010. This upward trend is expected to continue, with the UN projecting that nearly 40% of Indias population will live in urban areas by 2030.

Migration from rural to urban areas is largely driven by better job opportunities, access to education, and improved quality of life. In many cases, entire families or select members - typically primary earners or students - migrate while others remain in their rural homes.

1.4 Consumer demand and rising per capita to drive long-term consumption growth

Indias per capita income, a key measure of living standards, increased from 63,462 in -scal 2012 to 98,374 in - scal 2023, achieving a CAGR of 4.1%. This growth was driven by rising job opportunities, supported by overall GDP growth. Despite stable population growth at around 1% CAGR, the indicator witnessed an 8.7% decline in -scal 2021 due to the impact of the Covid-19 pandemic.

Note: RE: Revised Estimates, PE: Provisional Estimates, AE: Advance Estimates;

Source: Provisional Estimates of Annual National Income, 2022-23, CSO, MoSPI, CRISIL MI&A Research

1.5 Healthcare expenditure low vs Global averages - offers opportunities for growth

Global healthcare spending has risen in tandem with economic growth. As economies expand, both public and private healthcare expenditures typically rise. Additionally, the growing prevalence of sedentary lifestyles has led to an increase in chronic diseases, further escalating healthcare costs. Fast-growing economies with historically lower healthcare spending are witnessing a notable rise in chronic illnesses as their populations move up the income ladder. In contrast, developed nations such as the United States, Germany, France, Japan, and the United Kingdom allocate a signi-cantly higher share of their GDP to healthcare compared to developing countries like India, Vietnam, and Indonesia.

2. INDUSTRY STRUCTURE & DEVELOPMENTS

2.1. Overview of India?s Healthcare Service Delivery Ecosystem

The Healthcare Sector In India Broadly Includes Hospitals, Pharmaceutical Companies & Standalone Pharmacies, Diagnostic Services, Medical Equipment And Supplies, Medical Insurance, Telemedicine Companies, Medical Tourism And Retail Healthcare.

2.2 Assesment of India?s hospital Limited

According to CRISIL MI&A Research, the Indian healthcare delivery industry is projected to grow at a robust compound annual growth rate of 9-11% between FY25 and FY27. This growth is supported by several long-term structural drivers, including rising healthcare needs due to demographic shifts and increasing prevalence of chronic diseases. Factors such as higher incomes, changing demographics, and the growth of medical tourism are also expected to fuel demand. In addition, the sector?s strong fundamentals, coupled with improving affordability among the population, are expected to drive demand for healthcare services. The anticipated impact of government initiatives like the Ayushman Bharat scheme, which aims to provide universal health coverage, is expected to be another key catalyst for growth during this period.

2.3 Technology as a Key Driver in Modern Healthcare Delivery

The healthcare industry has undergone significant transformations in recent years, driven by both medical advancements and technological progress. These developments have led to breakthroughs in treatments, data collection, and disease research, offering patients more personalized options. Hospitals in India are increasingly investing in technology to enhance clinical outcomes, resulting in progress across areas such as robotic surgeries, radiation therapy, and transplant support systems.

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2.4 Growing Momentum in Medical Value Travel (MVT)

The Indian healthcare industry has experienced significant growth in medical tourism. India has emerged as one of the most preferred destinations for global patients seeking medical treatment, driven by its affordability, clinical expertise, and cultural appeal. Patients travel to India for treatment and also explore tourist attractions across the country. Healthcare costs in India are competitive, especially for complex surgeries like cardiac bypass and organ transplants. Additionally, travel and accommodation expenses are lower compared to developed countries. India attracts medical tourists from developing nations due to the lack of advanced medical facilities in their home countries.

A significant portion of this inflow has historically come from Bangladesh, given its geographical proximity and limited healthcare infrastructure. However, ongoing economic challenges and political instability in Bangladesh have led to a decline in medical tourists from the country, particularly during periods of heightened unrest. This downturn has impacted revenues for Indian hospitals that traditionally cater to Bangladeshi patients. Despite this, India continues to attract medical tourists from other Asian and African nations, helping mitigate the risks associated with reliance on a single country. The Indian Government has implemented policies to facilitate the entry of international patients, including e-Medical visas and longer stays for treatment. Accreditation requirements for wellness centers and Medical Value Travel (MVT) facilitators have enhanced Indias reputation as a preferred medical tourism destination.

Medical tourism in India is primarily driven by the private sector, supported by the presence of technologically advanced hospitals, specialized doctors, and facilities like e-medical visas. India offers a unique blend of traditional therapies such as Ayurveda and Yoga alongside allopathic treatments, providing holistic wellness experiences for patients. Treatments mostly sought after in India include heart surgeries, knee implants, cosmetic surgeries, and dental care, owing to their significant lower costs compared to developed countries.

According to the Ministry of Tourism, medical tourism in India showed a promising trend: in 2019, medical tourist accounted for 6.38% of total foreign tourist arrivals. Although numbers declined to 1.83 lacs in 2020 due to COVID-19, the sector rebounded with 66% growth in 2021. Looking ahead, medical tourism is expected to grow by about 15% in CY24, with an estimated 7.3 lacs medical tourists visiting India. To further boost the sector, the Government has established a National Medical and Wellness Tourism Board and offers -financial assistance to players in the industry.

2.5 Rising investments in the India Healthcare space

The Indian healthcare sector is rapidly expanding, driven by factors such as demand growth, cost advantages, and policy support. The COVID-19 pandemic has underscored the importance of healthcare, leading to increased attention and investment in the sector. Global private equity firms and venture capitalists have shown keen interest in the Indian healthcare industry, fueling the growth of hospitals, both multi-specialty. The government of India?s decision to allow 100% FDI in hospitals has further boosted investments from overseas funds, reflecting growing investor confidence in India?s healthcare sector.

During FY25, the healthcare sector witnessed a continued flow of private equity investments and consolidation, reflecting sustained investor interest in Indian healthcare. Notably, Singapore?s sovereign wealth fund GIC invested an additional $150 million in Asia Healthcare Holdings in December 2024, following its initial $170 million investment in February 2022, reinforcing con-dence in India?s single-specialty healthcare sector. Some key announcements include KKR?s planned acquisition of Healthium MedTech for $839 million in April 2024, marking a major investment in India?s medical device industry. Additionally, Sweden?s EQT has announced its agreement to

acquire a controlling stake in GeBBS Healthcare Solutions for over $850 million, further contributing to sectoral consolidation. These are just a few examples of the many deals announced in the healthcare sector, reflecting the growing demand for healthcare services and a favorable investment climate, supporting long-term growth in the industry.

2.6 Expanding Health Insurance Coverage to Drive Healthcare Demand

Low health insurance penetration remains a significant barrier to the growth of the healthcare delivery sector in India, as affordability of quality healthcare services continues to be a challenge for lower-income groups. As per the Insurance Regulatory and Development Authority (IRDA) Annual Report 2023-24, 573 million people had health insurance coverage in India in FY24, up from 288 million in FY15. Despite this growth, overall penetration remained modest at 41%, indicating substantial room for expansion.

The majority of health insurance coverage in India is provided through Government-sponsored schemes rather than individual policies. Key active schemes include the Central Government Health Scheme (CGHS), Employees State Insurance Scheme (ESIS), Rajiv Aarogyasri in Telangana, and the Chief Ministers Comprehensive Health Insurance Scheme in Tamil Nadu. These programs collectively account for a signi-cant portion of health insurance coverage in the country. Its important to note that the Rashtriya Swasthya Bima Yojana (RSBY) has been replaced by the Ayushman Bharat - Pradhan Mantri Jan Arogya Yojana (PM-JAY), which now serves as the primary national health insurance scheme. The remaining coverage is provided by commercial insurance providers, including both public and private entities.

CRISIL Research believes that although low penetration poses a significant challenge, it also offers a substantial opportunity for the expansion of the healthcare delivery sector in India. Additionally, the Pradhan Mantri Jan Arogya Yojana (PMJAY) scheme is anticipated to significant enhance insurance coverage across the nation.

SECTION III - OVERVIEW OF THE COMPANY

3.1 Brief Profile

The Company was originally incorporated as "Pharma Offset Limited", a public limited company under the provision of the Companies Act, 1956 vide certificate of incorporation dated September 5, 1994. Subsequently, the name of the Company was changed to "Pharma Com (India) Limited". The name of the Company was further changed to "Count N Denier (India) Limited" on March 27, 2012 vide a fresh certificate of incorporation pursuant upon change of name issued by the Register of Companies, Mumbai. Pursuant to acquisition of the majority equity shares and control by the existing promoter, the name of the Company was changed to "Scandent Imaging Limited" on March 17, 2015. Further the name of the Company was changed to its present name "Family Care Hospitals Limited" vide a fresh certificate of incorporation dated September 5, 2022, issued by the Register of Companies, Mumbai.

3.2 Operations of the Company

The company had to close the operations of its hospital at Mira road and is actively looking for a new premises to restart the same. Meanwhile the company continues to focus on the healthcare products, a business which is highly scalable. The company continues to build on its strength of doctor network developed by it over the years and is providing healthcare services though its applications developed by it. The company is actively providing value services to gain new customers and to retain old customers. The company is actively integrating AI into its apps and working on providing cutting edge user experience to its patients with the seamless integration of technology and traditional healthcare delivery systems

3.3 Financial Performance

The Company?s revenue from operations during the Financial Year 2024-25 was Rs. 790.46 lakhs. Expenditures were increases leading to loss to Rs. 4414.53 lakhs compared to profit Rs. 1254.76 lakhs in the FY 2023-24.The loss is due to the closure of the hospital.

1) Revenue

Revenue from main operations during the Financial Year 2024-25 was Rs. 790.46 lakhs and the other income was Rs. 315.22 lakhs.

2) Expenses

Employee Benefit Expenses during the Financial Year 2024-25 was Rs. 217.76 lakhs compared to Rs. 392.02 lakhs in the FY 2023-24. Finance Costs decreased from Rs. 38.36 lakhs in the FY 2023- to 24 Rs. 28.54 lakhs in FY 2024-25. Total expenditure for the FY 2024-25 was Rs, (1909.66) lakhs as compared to Rs. 3,506.35 lakhs in 2023-24.

3) Key Financial Ratios

3.4 Outlook

The company intends to build technology to service patients at the grass root level. The said products are aimed to make healthcare affordable, accessible and give better quality alternative to the existing healthcare practices available in the marketplace. The company is working closely with Ready Technologies a unit of Onelife Capital Advisors Ltd ( a promoter group company) to develop user friendly software/ applications which we plan to market aggressively in India and abroad. The same can be accessed at www.familycarehospitals.com/. Our focus is to build capital, build on our network, expand our brand and to attract n service new and existing customers. We are also trying to find ways to resolve our legal and regulatory challenges. 3.5 Internal control systems and their adequacy.

Systems of internal control and their sufficiency The business has put in place a thorough internal controls structure that consists of documented guidelines and practices covering financial as well as practical elements. This structure ensures the maintenance of accurate accounting records and provides acceptable degree of assurance on the dependability of financial reporting. Furthermore, it makes effective monitoring of safeguards resources against loss or unauthorized use and guarantees adherence to pertinent rules.

3.6 Environmental, Social and Corporate Governance (ESG)

The business has made considerable reduced plastic usage and improved garbage disposal and a decrease in CO2 emissions. Furthermore, the Company seeks to address the difficult problems related to the nations progress. The business is convinced that development of value for its stakeholders, supporting establishing resources and capabilities for the underprivileged groups in society.

Cautionary Statement

The statement provided in this Management Discussion and Analysis acknowledges that the Company?s objectives, projections, estimates, expectations, or predictions may be considered as ‘forward-looking statements? under applicable securities laws and regulations. It cautions that actual results may differ significantly from those expressed or implied. Various important factors, such as global and Indian demand and supply conditions, prices of finished goods, availability and prices of input materials, cyclical demand and pricing in the Company?s main markets, changes in government regulations and tax regimes, economic developments in India and other relevant countries, as well as factors like litigation and labour negotiations, can impact the Company?s operations. The Company does not assume any responsibility to publicly amend, modify, or revise the forward-looking statements based on subsequent developments, information, events, or any other circumstances.