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KMC Speciality Hospitals (India) Ltd Management Discussions

82.49
(0.04%)
Oct 4, 2024|03:30:00 PM

KMC Speciality Hospitals (India) Ltd Share Price Management Discussions

This Management Discussion and Analysis Report is a "forward looking statement" and forms part of the Annual Report of the Company. It Indicates the Companys movement in the external environment vis-a-vis its own strengths and resources detailing the Companys objectives and expectations.

1. INDUSTRY STRUCTURE:

Healthcare has become one of Indias largest sectors, both in terms of revenue and employment. Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment. The Indian healthcare sector is growing at a brisk pace due to its strengthening coverage, services, and increasing expenditure by public as well private players.

Indias healthcare delivery system is categorized into two major components - public and private. The government, i.e. public healthcare system, comprises limited secondary and tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form of primary healthcare centres (PHCs) in rural areas. The private sector provides a majority of secondary, tertiary, and quaternary care institutions with a major concentration in metros, tier-I and tier-II cities.

Indias competitive advantage lies in its large pool of well-trained medical professionals. India is also cost-competitive compared to its peers in Asia and western countries. The cost of surgery in India is about one-tenth of that in the US or Western Europe. The low cost of medical services has resulted in a rise in the countrys medical tourism, attracting patients from across the world. Moreover, India has emerged as a hub for R&D activities for international players due to its relatively low cost of clinical research.

Government Initiatives

Some of the major initiatives taken by the Government of India to promote Indian healthcare industry are as follows:

• In the Union Budget 2023-24:

? Under the Union Budget 2023-24, the Ministry of Health and Family Welfare has beenallocated Rs. 89,155 crore (US$ 10.76 billion), an increase of 3.43% compared to Rs. 86,200.65crore (US$ 10.4 billion) in 2021-22.

? Pradhan Mantri Swasthya Suraksha Yojana (PMSSY) was allocated Rs. 3,365 crore (US$ 0.41 billion)

? Human Resources for Health and Medical Education was allotted Rs. 6,500 crore (US$ 780 million).

? National Health Mission was allotted Rs. 29,085 crore (US$ 3.51 billion).

? Ayushman Bharat - Pradhan Mantri Jan ArogyaYojana (AB-PMJAY) was allotted Rs. 7,200 crore (US$ 870 million).

? Rs. 5,156 crore (US$ 675.72 million) was allocated to the newly announced PM-ABHIM to strengthen Indias health infrastructure and improve the countrys primary, secondary andtertiary care services.

• In July 2022, the World Bank approved a US$ 1 billion loan towards Indias Pradhan Mantri-Ayushman Bharat Health Infrastructure Mission.

• In order to promote medical tourism in the country, the government of India is extending the e-medical visa facility to the citizens of 156 countries.

Significant Industry highlights:

The Indian healthcare sector is expected to record a three-fold rise, growing at a CAGR of 22% between 2016-22 to reach US$ 372 billion in 2022 from US$ 110 billion in 2016. By FY22, Indian healthcare infrastructure is expected to reach US$ 349.1 billion.

In the Economic Survey of 2022, Indias public expenditure on healthcare stood at 2.1% of GDP in 2021-22 against 1.8% in 2020-21 and 1.3% in 2019-20.

In FY22, premiums underwritten by health insurance companies grew to Rs. 73,582.13 crore (US$ 9.21 billion). The health segment has a 33.33% share in the total gross written premiums earned in the country.

The Indian medical tourism market was valued at US$ 2.89 billion in 2020 and is expected to reach US$ 13.42 billion by 2026. According to India Tourism Statistics at a Glance 2020 report, close to 697,300 foreign tourists came for medical treatment in India in FY19. India has been ranked 10th in the Medical Tourism Index (MTI) for 2020-21 out of 46 destinations by the Medical Tourism Association.

The e-health market size is estimated to reach US$ 10.6 billion by 2025.

Road Ahead

• Indias healthcare sector is extremely diversified and is full of opportunities in every segment,which includes providers, payers, and medical technology. With the increase in the competition,businesses are looking to explore the latest dynamics and trends which will have a positive impact on their business.

• India is a land full of opportunities for players in the medical devices industry. The country has also become one of the leading destinations for high-end diagnostic services with tremendous capital investment for advanced diagnostic facilities, thus catering to a greater proportion of the population. Besides, Indian medical service consumers have become more conscious towards their healthcare upkeep. Rising income levels, an ageing population, growing health awareness and a changing attitude towards preventive healthcare is expected to boost healthcare services demand in the future. Greater penetration of health insurance aided the rise in healthcare spending, a trend likely to intensify in the coming decade.

• The Government aims to develop India as a global healthcare hub, and is planning to increase public health spending to 2.5% of the countrys GDP by 2025.

Source: IBEF Healthcare update April, 2023

2. OPPORTUNITIES AND THREATS

Opportunities:

• Rising income level

• Greater health awareness,

• Increased precedence of lifestyle diseases

• Improved access to health insurance coverage

• Opportunity for horizontal and vertical growth.

• Growing elderly population, changing disease patterns

• Encouraging avenues for attracting prospective investments.

• Great potential for medical tourism.

Threats:

• Increased Competition

• Increase in Cost of operation

• Technological Advancements

• Man Power Attrition

3. RISKS AND CONCERNS

• Increasing competitive intensity in the healthcare sector

• Increasing cost / scarcity of resources in the Industry

• Constant change in technology and revamping of existing systems.

• Government regulations and restrictions.

4. FINANCIAL AND OPERATIONAL PERFORMANCE

The financial statements have been prepared in compliance with the requirements of the Companies Act, 2013, and Indian Accounting Standards (Ind AS) in India. The management accepts responsibility for the integrity and objectivity of these financial statements, as well as for various estimates and judgments used therein. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, in order that the financial statements reflect the state of affairs of the Companyin a true and fair manner.

Particulars 2022-23 (Rs In Lakhs) 2021-22 (Rs In Lakhs)
Operating Income 15,575.64 13,607.28
Other Income 312.86 214.69
Total Income 15,888.50 13,821.97
Operating Expenses 11,444.15 9,889.88
EBIDTA 4444.35 3,932.09
Finance Cost 81.10 69.58
Depreciation 764.22 652.70
Profit/(Loss) before Tax 3599.03 3,209.81
Tax expense 1003.14 880.46
Provision for Deferred Tax (72.95) (43.23)
Profit/(Loss) after Tax (PAT) 2668.84 2,372.58

Total Operating income increased by 14.5% to Rs. 15,575.64 lakhs during the financial year 2022-23 from Rs. 13,607.28 lakhs in the previous year.

Your Company has earned Profit after tax of Rs. 2668.84 lakhs for the financial year 2022-23 significantly higher than Rs. 2,372.58 lakhs achieved during the previous year.

Improvement in Bed occupancy with better revenue mix coupled with operational efficiency and cost control measures contributed to better profitability.

5. OUTLOOK

Indian healthcare sector, being one of the fastest growing industries, there is immense scope for enhancing healthcare services penetration in India, thereby presenting ample opportunity for development of the healthcare industry. Indias private healthcare sector has contributed significantly and accounts for about 60 per cent of inpatient care. Most private facilities initiated their plans in response to the COVID-19 pandemic, which involved significant investments to prepare facilities for controlling and preventing the infection, building infrastructure for quarantine and treatment, and equipping the facility with suitable medical supplies and additional workforce.

The biggest health emergencies of our times have not just laid bare the myriad challenges and gaps in our health system but also highlighted the importance of investing in well-being at both personal and system level.

6. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The company has a proper and adequate system of internal controls to ensure that all the assets are safeguarded, protected from unauthorized use and the transactions are authorized, recorded and reported correctly. The company conducts audit of various departments with an audit plan through an independent Internal Auditor and reports to the Audit Committee on significant issues with Action Taken Report. Wherever necessary the inputs of the Statutory Auditors are also obtained to ensure efficiency of the operations and accounting.

7. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT, INCLUDING NO OF PEOPLE EMPLOYED

The Company recognizes importance of leadership, technical and behavioral development for employees across the Company. The Company has launched continuous improvement & training programs aimed for increasing knowledge level of employees and offer rewards to those employees who performed well in such programs. Staff levels have been maintained adequately as per requirements.

8. DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFORE

S. No Ratios Basis 31-Mar-23 31-Mar-22 Variance (in %) Reasons
1. Current ratio Current Assets/Current Liabilities 2.30 2.18 6% -
2. Debt Equity ratio Total Liabilities/ Shareholder funds 0.39 0.31 27% The Company has availed loan from State Bank of India towards the Mother & Child care Project thereby increasing the borrowings in the current year as compared to previous year.
3. Debt service coverage ratio Net Operating revenue / Total Debt 13.48 16.33 -17% -
4 Return on equity ratio Net profit after taxes/ Average shareholders equity 1.64 1.45 12% -
5 Inventory Turnover ratio Sales/ Average Inventory 37.32 36.70 2% -
6 Trade receivable turnover ratio Net Credit Sales/ Average Accounts Receivable 9.14 13.78 -34% During the year, the credit revenue has reduced by 14% with a corresponding increase in receivables by 30% inspite of improvement in collections has led to the reduction in turnover ratio.
7 Net Profit ratio Net Profit/ Net Sales 17 17 0% -
8 Operating Margin Operating Income/Revenue 98% 98% NIL -
9 Interest Coverage Ratio EBITDA/Interest Expense 53 times 54 times 2% -

9. DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY

The return on net worth for the company improved and stood at 27.05% during FY23, from 23.52% during FY22. The return on net worth measures the ability of a Company to generate profits.

10. CAUTIONARY STATEMENT

The information and opinion expressed in this Report may contain certain forward-looking statements, which the management believe are true to the best of its knowledge at the time of its preparation. Actual results may differ materially from those either expressed or implied in this report.

sd/- sd/-
Place: Chennai Dr S Manivannan K Anandababu
Date: May 29, 2023 Managing Director Chief Financial Officer
DIN: 00910804

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