Jupiter Life Line Hospitals Ltd Management Discussions

Global Economy

The global economy showcased steady growth in CY 2023, despite prevailing stagflation and global recession concerns. The growth in economic activity was characterised by stable employment and income levels, reflecting supportive demand developments and a supply-side expansion. This economic resilience can be attributed to two significant factors. First of all, it may be due to robust private consumption contributing to their outperformance. The other noteworthy determinant was the change in mortgage and housing markets over the pre-pandemic decade of low interest rates. Additionally, the unexpected boost in labour force participation has also improved economic resilience.

Global growth for CY 2023 was estimated at 3.20% and is projected to continue at the same pace in CY 2024 and CY 2025. Notably, the forecast for CY 2024 has been revised by 0.10% point, as per the World Economic Outlook (WEO) update for January 2024. Economic expansion is at a low, compared to historical standards, which is owing to both near-term and long-term factors. Risks to the global outlook are now broadly balanced. On the downside, new price spikes stemming from geopolitical tensions, including those from the war in Ukraine and the conflict in Gaza and Israel, could raise interest rate expectations and reduce asset prices. Additionally, persistent core inflation, where labor markets are still tight, could further contribute to these adverse effects.

As for advanced economies, they are poised to witness substantial growth. In these countries, growth is forecasted to increase from 1.60% in CY 2023 to 1.70% in CY 2024 and further to 1.80% in CY 2025, with the impact of policy tightening becoming more evident. Meanwhile, emerging markets and developing economies are projected to experience a modest dip in growth from 4.30% in CY 2023 to 4.20% in both CY 2023 and CY 2024.

(Source: International Monetary Fund (IMF),

World Economic Outlook (WEO) Projections, April 2024)

Global Economic Growth (in %)

	Year-on-Year
	Estimates	Projections
	CY 2023	CY 2024	CY 2025
World Output	3.20	3.20	3.20
Advanced Economies	1.60	1.70	1.80
Emerging Markets and Developing Economies	4.30	4.20	4.20

(Source: International Monetary Fund (IMF),

World Economic Outlook (WEO) Projections, April 2024)

Indian Economy

In the fiscal year 2023-24, the Indian economy is estimated to grow by 7.60%, a slight improvement from the 7.00% growth recorded in FY 2022-23. This growth is likely to be driven majorly by better performance in sectors such as mining and quarrying, manufacturing, and certain segments of the services sector.

I ndias GDP has consistently experienced commendable growth, solidifying its position as the fifth-largest economy globally. The country now trails behind Japan and has surpassed the United Kingdom. Despite several prevailing economic challenges, the Indian Rupee demonstrated an enduring performance in FY 2023-24, compared to the previous year when it hit a nine-year low. It began the year at Rs. 82.66 against the US dollar and closed at f 83.35 as of December 2023, experiencing a slight depreciation of 0.80%.

The Governments effective capital expenditure is expected to reach 4.60% of the GDP during the year, as per the Interim Union Budget for FY 2024-25, marking a significant increase from 2.60% in FY 2019-20. This substantial rise reflects a continued emphasis on capital expenditure in recent years. Additionally, the increasing investment rate of the private corporate sector indicates a crowding-in effect, suggesting a positive trend in overall investment in the Indian economy.

Notably, Indias foreign exchange reserves increased by USD 4.47 Billion to USD 620.44 Billion as of December 2023, hitting a 21 -month high. Despite challenges such as low monsoon rainfall affecting rice production, strong growth in the mining, manufacturing, construction, and services sectors contributes to the overall economic growth in the current year. Manufacturing output is projected to grow at a robust 8.50% in FY 2024-25.

(Source: Press Information Bureau, https://www.livemint.com/economy/ indias-fy25-outlook-looks-bright-core-inflation-on-downtrend-says- finmin-5-key-highlights-11711107775547.html)

Global Healthcare Market

The global private hospital market was expected to reach USD 3,158.06 Billion in CY 2023, expanding at a compound annual growth rate (CAGR) of 15.16%. The market growth is experiencing a noteworthy upsurge, primarily driven by the increasing prevalence of chronic diseases and the expanding population of geriatrics. Heightened chronic health conditions such as cardiovascular diseases, diabetes, cancer and respiratory ailments have created an increased demand for specialised and personalised healthcare services. This escalating health burden among populations worldwide has steered individuals towards seeking private healthcare solutions. They can get tailored treatments, advanced technologies and personalised care approaches through such facilities.

The aging demographic, characterised by a growing population of geriatrics globally, has largely contributed to expanding the private healthcare market. With elderly citizens showing a higher susceptibility to chronic illnesses and complex healthcare needs, there is an amplified demand for comprehensive and specialised medical services. As such, private healthcare providers are increasingly focussing on catering to this demographic. They are offering services specifically designed to address age-related health concerns and chronic conditions. Moreover, tailored care plans consider the range of unique requirements of the elderly population.

The early adoption of technology has also been a landmark trend observed across industries. Notably, healthcare is

among the earliest and leading sectors to have witnessed this trend. The ongoing evolution of technology has prompted the increase in demand for technological advancement. In fact, the steady growth in the adoption of health-tech is likely to deliver greater speed and precision to help address key problems and challenges in the medical sphere and in public health. The global health-tech ecosystem is expected to reach USD 504 Billion by CY 2025. Health care providers are partnering with tech companies to develop artificial intelligence tools that can better predict clinical outcomes, enhance radiological imaging and optimise sleep monitoring.

(Source: lntrospectivemarketresearch.com, pharmi web.com https://www. globenewswire.com/news-release/2023/04/24/2652889/0/en/Private- Hospital- Global-Market-Report-2023.html)

Indian Healthcare Market

The Indian Healthcare industry continued its healthy growth and reached a value of USD 372 Billion driven by both private sector and government as of December 2023. This growth observed in the Indian healthcare segment is likely to result from several key trends. These include the rising consumerisation of health, reconfigurations to the global healthcare value chain, and a deepening of Indias expertise in science and technology with regulatory tailwinds. The healthcare market consists of hospitals, diagnostic centres, domestic pharmaceuticals and medical devices. CRISIL MI&A Research estimates show hospitals account for a major share with 62%, followed by domestic pharmaceuticals (20%) the medical devices market (9%) and diagnostics (9%) as of FY 2022-23. The hospital industry in India is witnessing a huge demand from both global and domestic investors.

and a deepening scientific talent pool have catalysed this sectorial growth. Moreover, the market is brimming with potential in nascent fields such as Biotech and MedTech. Healthcare innovation remains one of the fastest growing segments, expected to double from USD 30 Billion in FY 2023-24 to USD 60 Billion by FY 2027-28. The segment is also influenced by pharmaceutical and health-tech, with vaccines, biotech, and med-tech emerging as green shoots.

Notably, individuals are also becoming increasingly proactive in managing their health, which is driving the demand for personalised and accessible solutions. The growing interest in tele-health, wearable devices and home- based diagnostics are some significant instances of this trend. Indias potential as a manufacturing hub is attracting global players, who are seeking cost-effective solutions and a large talent pool. This reconfiguration is poised to foster international collaborations and accelerate innovation within the Indian healthcare ecosystem. Universities, research institutions and start-ups are partnering to develop a robust innovation ecosystem, fostering groundbreaking discoveries and solutions. Government initiatives, such as reforms towards enhancing the ease of doing business and open innovating platforms, have gradually removed barriers and streamlined processes.

(Source: https://health.econorrictimes.indiatimes.com/news/mdustry/an-

overview-of-indian-healthcare-industry-in-2023/106118311, https://www. fortuneindia.com/enterprise/innovation-led-indian-heaithcare-market-to- hit-320-bn-by-fy28-bain/lndias%20richest#:~:text=The%20lndian%20 healthcare%20market%20is,and%20global%20consultancy%20Bain%20 %26%20Co)

Sectoral Demand Drivers

Population Growth: Indias population surpassed China in CY 2023 and is expected to reach USD 1.51 Billion by CY 2030. This exceedingly high population growth is forecasted to drive the demand of the Indian healthcare segment.

Growing Elderly Population: As per the United Nations Population Funds (UNFP) India Ageing Report 2023, the population above 60 years is expected to double in 2050 to 20.80% or ^ 34.70 Crore. As on 1 st July 2022, the population of the age group was 10.50% or ^ 14.90 Crore.

(Source: https://www.thehindu.com/opinion/editorial/caring-for-the-

old-the-hindu-editorial-on-the-united-nations-population-funds-india- ageing-report-2023/article67357816.ece#:~:text=The%20reality%2C%20 according%20to%20the,or%2034.7%20crore%20by%202050.)

Increasing Disposable Income: Indias per capita disposal income was estimated to reach ^ 2.14 Lakhs in FY 2023-24. Growth in disposable income is expected to convince the customers to attain advanced healthcare facilities.

(Source: https://economictimes.indiatimes.com/news/economy/indicators/ data correction indias per capita-disposable income put-at-2-14-1/ articleshow/108147382.cmsRs.from=mdr)

Healthcare Insurance: The market size for Indian health insurance reached USD 132.90 Billion in FY 2022-23,

Indias health-tech industry is expected to be worth USD 25 Billion by FY 2024-25. The countrys healthcare innovation framework is witnessing a remarkable transformation. This can be owed to a number of trends, ranging from the dissemination of cutting-edge pharmaceutical services to disruptive health-tech and med-tech advancements. With its focus on innovation, quality and cost-effectiveness, Indias market for healthcare innovation is addressing domestic needs and making its mark on the global stage. Growing investments, supportive Government policies,

exhibiting a CAGRof 9.10% during 2024-2032. Some of the key factors driving the market include the growing geriatric population across the country, rising occurrence of various chronic diseases, and the growing number of hospitals, clinics and nursing homes.

(Source: https://www.imarcgroup.com/india-health-insurance-

market#:~:text=Market%200verview%3A,9.1%25%20during%20

2024%2D2032.)

Growing Medical Colleges: India reported an 82% rise in medical colleges from 387 before FY 2013-14 to 704 as of February 2024. Furthermore, there was an increase of 112% in MBBS seats to 1,08,940 as of February 2024 and a 127% increase in PG seats to 70,674. This is expected to contribute towards an enhanced workforce for the healthcare segment. (Source: https://pib.gov.in/PressReleaselframePage.aspxRs.PRID=2001819)

• The Government plans to set up more medical colleges by utilising the existing medical infrastructure under various departments. Furthermore, the interim budget for 2024-25 has addressed the importance of research and development (R&D) in the healthcare sector. Through these efforts, the Governments aim is to increase the supply of medical professionals in the country.

(Source: https://pib.gov.in/PressReleaselframePage.aspxRs.PRID=2001172)

Company Overview

Jupiter Life Line Hospitals (also referred to as JLHL or The Company) stands as a leading multi-specialty tertiary and quaternary healthcare provider in Western India. With

a commitment to a patient-first ideology since its establishment in 2007, the Company strives to deliver cutting-edge healthcare services to its customers. As of 31st March, 2024, the Companys network comprised 3 hospitals, with a collective capacity of 1,194 beds. With an aim to provide world class medical services to underserved and densely populated regions in western India, JLHL is building a 500-bed hospital in Dombivli, Maharashtra. It has also recently acquired land in Bibvewadi, Pune, Maharashtra, for another hospital with a capacity of 500 beds.

The Company boasts a wide range of specialised services available across its hospitals, including organ transplant, oncology, orthopaedics, cardiology, paediatrics, neurology, and neurosurgery. Additionally, it offers specialised quaternary services and precision-based treatments such as brachytherapy, radiotherapy, robotic knee replacement, and robotic neuro rehabilitation.

CRISIL has recognised our Thane and Indore hospitals for providing top-notch neuro rehabilitation services. Notably, the services are provided through dedicated robotic and computer-assisted neuro rehabilitation centres. This facility sets a benchmark for quality care in the western region of India.

Specialties

Organ Transplant

Jupiter Life Line Hospitals provides comprehensive multiorgan transplant services, supported by multi-disciplinary teams of qualified professionals. JLHL specialises in kidney, liver, heart, and stem cell transplants, and corneal transplants. Additionally, the Company has successfully conducted multi-organ abdominal transplants. These include kidney and pancreas transplants, and small bowel intestine transplants.

Oncology

With the continued rise in the number of cancer patients, there has been substantial progress in cancer treatment methodologies. In this regard, JLHL provides extensive cancer care services to address this pressing health concern. The Company also includes a range of other healthcare services in its offerings, such as in-house nuclear medicine services, that encompass PET/CT and Gamma Camera technologies. All such services are targeted towards facilitating accurate diagnosis and ensuring proper planning of treatments.

Orthopaedics

JLHL covers a wide range of sub-specialties in the orthopaedics department, all with the help of dedicated surgeons. The specialties include trauma, spine, shoulder, hand, joint replacement, foot and ankle, and paediatrics. In addition, the Company provides arthroscopic procedures and sports medicine services, along with a state-of-the-art facility for robotic knee replacement.

Paediatrics

In all its hospitals, the Company prioritises paediatric care, offering dedicated critical care units for neonatology, paediatric heart diseases and general paediatric critical care. JLHLs comprehensive paediatric services encompass various sub-specialties, including neurology and neurosurgery, cardiology and cardiac surgery, orthopaedics, birth defects, urology, gastroenterology, hepatology, endocrinology, nephrology, rheumatology, haematology, paediatric surgery, ophthalmology, ear-nose-throat (ENT) and developmental paediatrics.

Cardiology

JLHL has a wide range of facilities in our Cardiology unit such as a Cardiac Cath Lab, Comprehensive Non-lnvasive Cardiology, EP and Arrhythmia Clinic and a Heart Failure Clinic. The company takes pride in its comprehensive coverage of procedures within Interventional Cardiology. This includes critical interventions like Primary Angioplasty in Myocardial Infarction (PAMI), as well as Coronary Bypass Surgery, Total Arterial Grafting, Complex Congenital Cardiac Surgery, Surgery for Aneurysms, ECMO, and Ventricular Assist Devices. In addition to adult cardiology, the Company also provides compassionate care for congenital heart diseases, ensuring comprehensive treatment for patients of all ages.

Neurology

The Neurology department at Jupiter Hospital offers a wide range of specialised services, including clinical and interventional neurology, a movement disorder clinic, a vertigo clinic, and complete neurosurgery support for both adult and paediatric patients. The lines of treatment provided include Epilepsy Management, Interventional Neurology, Neurodegenerative diseases. Neuromuscular Disorder, Parkinsons Disease and Movement disorders, Sleep Disorders, Speech therapy and Stroke Management.

Urology

JLHL offers a wide array of advanced treatment options designed to effectively tackle urinary system diseases, ranging from non-invasive to minimally invasive procedures. The services cater to both adult and paediatric urology patients, providing round-the-clock inpatient and outpatient care. Supported by a dedicated Intensive Care Unit (ICU) and state-of-the-art operating theatres, the Companys facilities are equipped with ultra-modern comprehensive biochemistry and immune system laboratories, which enable real-time monitoring of drug and marker levels, while also facilitating immunohistochemistry and HLA typing for personalised treatment plans. The departments diagnostic capabilities include Ultrasound KUB, Uroflowmetry, Lithotripsy, MRI- KUB, MR-Urography, C0₂ Renal Angiogram, X-Ray, Cystometry and Urine Flow Tests.

State-of-the-Art Facilities

Advanced Diagnostics Technology

JLHLs hospitals are outfitted with state-of-the-art technology to ensure the highest standard of care for all its patients. The imaging departments feature a range of advanced equipment, including 3T MRI, 128-slice CT scanners, digital X-rays, top-of-the-line ultrasonography machines, digital mammography with tomosynthesis, bone marrow densitometry, and orthopantomogram (OPG) scanners. Additionally, the Company houses a nuclear medicine department equipped with PET/CT scanners and Gamma Camera technology.

Critical Care and Operation Theatres

The Companys hospitals prioritise patient safety and comfort, especially in the Intensive Care Units (ICUs). Each ICU is designed with individual cubicles and a dedicated 1:1 nursing station for every patient. Every ICU bed is equipped with medical gas lines and services, ensuring reliable backup support. Apart from this, the ICUs feature comprehensive facilities, including dialysis, sustained low-efficiency dialysis (SLED), and continuous renal replacement therapy (CRRT). Additionally, JLHL provides advanced respiratory support options such as bilevel positive airway pressure (BiPap), high-frequency nasal cannula, non-invasive ventilation, mechanical ventilation, high-frequency oscillatory ventilation, nitric oxide ventilation, and extracorporeal membrane oxygenation (ECMO).

Up-Graded Medical Technology

As a leading comprehensive cancer centre, each hospital of JLHL is equipped with state-of-the-art radiation facilities dedicated to cancer treatment. The Company utilises LINAC machines alongside a brachytherapy machine, specifically designed for the treatment of oral and cervical cancer. Furthermore, its hospitals feature advanced catheterisation

labs for a wide range of heart interventions. These labs I include adult and paediatric procedures, peripheral interventions, and neuro interventions.

Financial Review

For FY 2023-24, Jupiter Hospitals reported a total income of ^ 1,073.40 Crore, reflecting a growth of 19.94% compared to ^ 894.90 Crore registered in FY 2022-23. The Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) for the year was ^ 242.10 Crore compared to ^ 203.70 Crore in FY 2022-23. This level marked a increase in EBITDA margin to 18.60% compared to 18.50% for FY 2022-23. The Profit after Tax (PAT) for the year stood at ^ 176.60 Crore, as of f 72.90 Crore recorded for FY 2022-23.

Following a successful IPO launch, weve cleared all our debts, generating yearly savings of about f 40 Crore. Through renegotiated contracts at our Pune hospital, our ARP OB rose to f 54,871 in FY 2023-24 from f 51,310 in FY 2022-23. Additionally, partnering with insurance firms for our Indore hospital has driven our occupancy rates up from 62.60% in FY 2022-23 to 63.80% in FY 2023-24. The Average Length of Stay (ALOS) for the year was 3.93 days. These figures indicate the hospitals strong financial performance and operational efficiency in delivering quality healthcare services.

(In f Crore)

Particulars	FY 2023-24	FY 2022-23	Variance
Total Income	1,073.40	894.90	19.94
EBITDA	242.10	203.70	18.85
PBT	195.40	128.70	51.82
PAT	176.60	72.90	142.24

Key Financial Ratios

Particulars	FY 2023-24	FY 2022-23	Particulars	FY 2023-24	FY 2022-23
EBITDA/Turnover (%)	22.55	22.76	Interest Coverage Ratio (x)	7.58	3.91
EBITDA/Net interest Ratio (x)	9.19	4.82	Current Ratio (x)	3.87	1.58
Debt-Equity Ratio (x)	-	1.29	Operating Profit Margin (%)	18.60	18.45
Return on Equity (%)	2.69	1.29	Net Profit Margin (%)	16.12	8.07
Book Value per Share (^)	178.25	64.39
Earnings per Share (f)	28.65	13.95
Debtors Turnover (days)	14.55	13.09

Risk Management

Type of Risk	Risk Description	Risk Mitigation
Human Resource Risk	JLHL is highly dependent on its healthcare professionals including doctors and nurses. The inability to attract or retain such professionals in the future is likely to adversely affect its business, financial condition and results of operations	• The Company implements effective recruitment strategies to induct qualified candidates and retain talented staff members. These include offering competitive salaries, benefits, professional development opportunities and a positive work environment.
Geographic Risk	JLHLs hospitals are in the western part of India. As such, any impact on the revenues of Thane hospital or any change in the economic or political situation in western India or particularly in or around Thane might affect the Companys business, its financial condition, and the results of its operations.	• JLHL plans to diversify its revenue streams by expanding its services considerably. It also plans to introduce new healthcare offerings that are less susceptible to economic fluctuations.
		• The Company establishes long-term contracts with healthcare providers, insurers and other stakeholders. These contracts can provide a stable revenue stream even during periods of economic uncertainty.
		• The Company builds strong relationships with key partners and stakeholders to mitigate the impact of any adverse economic or political developments.
Regulatory Risk	JLHLs operations may be adversely affected by any changes in or violations of the rules and regulations applicable for the healthcare sector. The sector is highly regulated and requires obtaining, renewing and maintaining statutory and regulatory. permits, accreditations, and licenses.	• JLHL stays updated on relevant healthcare regulations at the local, State and National levels. The Company regularly monitors changes in laws, policies and guidelines issued by regulatory bodies.
		• The Company implements robust compliance programmes that outline policies, procedures, and protocols for adherence to regulatory requirements. The Company has an established Compliance Team responsible for monitoring regulatory changes, conducting audits and providing staff training on compliance issues.
		• JLHL conducts regular internal audits and assessments to identify and address potential compliance gaps.
Technology Risk	The Company faces the risk due to its potential inability to keep pace with technological changes, the replacement of obsolete equipment with new ones, and service introductions. Similar risks may also be posed due to changes in JLHLs patients needs and evolving industry standards, besides the failure or malfunction of medical or other equipment.		• JLHL conducts regular risk assessments of its hospitals technology systems and infrastructure to identify vulnerabilities, weaknesses, and potential threats.
			• The Company implements comprehensive data backup and recovery procedures to ensure the availability and integrity of electronic health records (EHRs). Besides, it also ensures the medical imaging of data and other critical information in the event of system failures, cyber attacks, or natural disasters.
Reputation Risk	JLHL faces the risk of an inability to maintain and enhance its brand and reputation. This can be coupled with any negative publicity, and allegations in the media. Together, these adverse incidents might affect its potential patients trust in its services and market recognition.		• JLHL priorities patient safety and the quality of healthcare initiatives to ensure positive outcomes for patients. The Company implements evidence-based practices, quality improvement programs and patient safety protocols to reduce the risk of adverse events and medical errors.
			• The Company establishes channels for patients, families, and staff to provide feedback, raise concerns and voice complaints. It listens to feedback and takes appropriate action to address issues or grievances promptly.
Competition Risk	JLHLs operations might be affected due to the potential incapacity to adapt to the competition from other healthcare service providers		• The Company differentiates its services by offering specialised medical facilities, advanced technologies, innovative treatment options or unique patient experiences.
			• The Company invests in brand building and marketing efforts to raise awareness of the hospitals services, expertise and reputation in the community.

Internal Control Systems and Their Adequacy

Jupiter Life Line Hospitals prioritises maintaining robust internal control systems to ensure operational efficiency and integrity. To that end, JLHL emphasises the principles of integrity, accountability, and ethical behaviour, with the Management setting the tone for this approach. The Companys regular risk assessments help identify and address potential risks to its overall operations. On the other hand, its comprehensive control activities tailored to healthcare operations segregation of duties and IT controls. Clear communication, training programs, and continuous monitoring ensure the effectiveness of internal controls. JLHL maintains a culture of compliance and accountability, empowering employees to uphold controls and report any concerns. The Company enhances its internal control framework on a regular basis to adapt to evolving risks and industry-best practices, ultimately aiming to deliver quality healthcare services.

Human Resources

As a leading healthcare provider, Jupiter Life Line Hospitals recognises its people as its most valuable asset. JLHL remains committed to fostering an inclusive and engaging work environment, attracting, and retaining top talent through innovative recruitment strategies. It emphasises hiring individuals who are passionate about exceptional patient care and providing comprehensive training programs for professional growth. The Company promotes diversity and inclusion initiatives, ensuring equal opportunities for all. Furthermore, it prioritises employee

well-being and satisfaction through wellness initiatives, employee assistance programs, and open communication channels. It follows a policy of regular feedback, coaching, and performance evaluation procedures to ensure its employees effective contribution towards the organisational mission. With an employee strength of 4,230 as on 31st March, 2024, the Companys human resources practices are centred around developing and retaining top talent. In the process, it aims to foster engagement, and drive organisational success through effective workforce management.

Cautionary Statement

The statement provided in this section outlines the Companys objectives, projections, expectations, and estimations, which may be deemed as forward-looking statements as per applicable securities laws and regulations. These forward-looking statements are based on certain assumptions and anticipations of future events. However, its important to note that the Company cannot guarantee the accuracy or realisations of these assumptions and expectations. Actual results may significantly differ from those expressed in the statement or implied due to various external factors beyond the Companys control. The Company assumes no responsibility to publicly amend, modify, or revise any forward-looking statements based on subsequent developments. Its essential for stakeholders to exercise caution and consider the inherent uncertainties associated with forward-looking statements when making decisions based on such information.