Fortis Malar Hospitals Ltd Management Discussions

SECTION I

Indian Healthcare Sector

A. Overview

Indias healthcare industry has emerged as a key contributor to the countrys economic development. The industry spans a wide range of sectors, including hospitals, medical devices, clinical trials, telemedicine, medical tourism, health insurance, and medical equipment, reflecting its broad economic footprint.

The sectors expansion is underpinned by strong economic and demographic fundamentals, including population growth, a rising middle class, ageing demographics, increasing prevalence of lifestyle diseases, and greater adoption of technology. Growing participation from both public and private stakeholders has further strengthened its role within the broader economic framework.

Healthcare has emerged as one of Indias largest sectors, contributing significantly to revenue generation, employment, and the countrys overall growth. The industry is expanding at a strong pace, driven by improving coverage and services, along with rising expenditure from both public and private participants. The increase in healthcare demand is fueled by a combination of economic and demographic factors.

Indias healthcare industry encompasses a wide range of segments, including hospitals, medical devices and equipment, pharmaceuticals, health insurance, clinical trials, telemedicine, and medical tourism. The sector has maintained strong growth momentum and is projected to reach US$ 638 billion by 2025, growing at a CAGR of ~22% during 2016-2025. This growth is being driven by ongoing innovation across as hospitals, pharmaceuticals, and diagnostics.

Strengthening Indias healthcare ecosystem remains a key priority for the Government of India, as reflected in the Union Budget 2026-27 through increased allocations and policy support. The Budget allocates ~INR 1,06,530 Crore to the Ministry of Health and Family Welfare, reflecting a ~10% YoY increase and reaffirming the Governments continued focus on healthcare.

Key focus areas include expanding healthcare infrastructure, particularly in underserved regions, enhancing workforce capacity, and improving access to diagnostics. In addition, continued emphasis on research and innovation, along with support under national programs such as the National Health Mission and the Ayushman Bharat Digital Mission, is driving improvements in healthcare delivery and accessibility. These initiatives collectively aim to address evolving healthcare needs and support the sectors long-term growth, efficiency, and resilience.

Key growth drivers of the Indian healthcare industry include infrastructure and workforce gaps, demographic shifts, and rising income levels. Expanding insurance penetration and medical tourism continue to strengthen sectoral growth.

a. Inadequate Healthcare Infrastructure: India has 16 hospital beds per 10,000 people which is substantially below the global average of 33 hospital beds per 10,000 people. Urban centres continue to account for a disproportionately high concentration of healthcare infrastructure, resulting in an uneven distribution across the country. This skewed distribution leads to significant disparities in access to healthcare services, particularly in non- metropolitan regions. (Source: Crisil, Praxis Global Alliance)

b. Limited Availability of Quality Healthcare Services: India continues to face a shortage of skilled healthcare professionals, with approximately 10 physicians and 26 nursing personnel per 10,000 population, compared to the global median of around 17 physicians and 37 nursing personnel per 10,000 population. This indicates a significant gap in the availability of qualified medical workforce to meet healthcare demand. (Source: Crisil, IBEF)

c. Demographics: With approximately 13% of the population projected to be above 60 years of age by 2030, the need for long-term care and chronic disease management is expected to emerge as a key growth driver. (Source: Crisil)

Insurance coverage has risen from 35% in FY2019 to 41% in FY2024, supported by the expansion of the middle-income population and increased adoption of employer-sponsored health plans. This gradual transition from out-of-pocket expenditure to insurance-driven payment mechanisms is supporting hospital sector growth by easing financial constraints and stimulating demand for elective procedures. (Source: Crisil, IRDA)

Indias healthcare sector continues to exhibit strong growth momentum, supported by favourable demographics, rising incomes, increasing insurance penetration, and sustained public and private investments. Structural gaps in infrastructure and workforce, along with the rising burden of non-communicable diseases, are driving capacity expansion, improved access, and better quality of care, supported by policy initiatives that strengthen infrastructure, affordability, and innovation. The sector is also witnessing rapid digitalisation, with increasing adoption of technologies such as AI, telemedicine, electronic health records, and advanced diagnostics, improving efficiency and patient outcomes.

As declared in the previously published annual report of FY 2024, FY 2025 and notes to accounts pertaining to the audited results of the Company dated 18th May 2026, the Company had divested its business operations to MGM Healthcare Private Limited on February 1,2024 via a Business Transfer Agreement (BTA).

Post the slump sale transaction, the Company ceases to have any business operations. Currently, the management of the Company has no visibility of commencing any new business operations in the future and the Companys management and Board of Directors, in consultation with its legal advisors/ merchant bankers, is evaluating various corporate restructuring options for the future possible course of actions for the Company and is progressing with the finalisation of plan.

From a financial perspective, post declaration of dividends totalling INR 42.5 per share, comprising INR 40 per share declared on April 12, 2024 and INR 2.5 per share declared on 17th May 2024, the Companys cash and cash equivalent and other bank balances are sufficient to settle its obligations as and when they fall due. Based on the current cash position and projected cash flows, the Company believes that it would be able to meet its financial obligations for the foreseeable future such as ongoing expenses for running the Company, resolving medico legal cases, VAT appeals, GST appeal and Income tax appeal which are being contested. The key financial ratios and their variance thereof have been tabled in the note 30 forming part of financial statements for the year ended March 31, 2026. The aforesaid details should not be construed in any manner as admission of any liability or breach as any such financial exposure in respect of the above aspects are currently estimated and assessed by management as remote.

The Company divested its business operations on 1st February 2024, and as such the employees were also transferred to MGM Healthcare. There was no employee on the payroll of the Company as on March 31,2026.

The Company has maintained internal controls framework comprising a set of procedures and systems and instrumental in reducing risks and costs. The financial controls are evaluated for operating effectiveness through managements ongoing monitoring and review process. The internal audit program is managed by an Internal Audit function directly reporting to the Audit & Risk Management Committee of the Board.

Except for the historical information contained herein, statements in this discussion which contain words or phrases such as will, would, indicating, expected to etc., and similar expressions or variations of such expressions may constitute forward-looking statements. These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. The Company undertakes no obligation to update forward looking statements to reflect events or circumstances after the date thereof.

IBEF report on Healthcare Sector, November 2025

IRDA Annual Report - 2024-25

Ministry of Health and Family Welfare

CRISIL Report, March 2026

Praxis Global Alliance - Report

Press Information Bureau

Market Research, Equity and Other Reports, Web

Articles, Press & Media Reports and Others