Kovai Medical Center & Hospital Ltd Management Discussions

INDIAN HEALTHCARE - OVERVIEW

The Indian healthcare system is a diverse and complex network of public and private sectors that provide a wide range of medical services to Indias 1.4 billion inhabitants. Despite undergoing significant changes over the years, the system continues to face multiple challenges. These challenges include inadequate infrastructure, a shortage of healthcare professionals, urban-rural disparities, limitedhealthinsurancecoverage,insufficient public healthcare funding, and a fragmented healthcare system. India is grappling with a growing burden of non-communicable diseases, which poses a significant challenge to its healthcare system.

Several factors are driving the growth of the Indian healthcare sector including an aging population, a growing middle class, the rising proportion of lifestyle diseases, an increased emphasis on public-private partnerships as well as accelerated adoption of digital technologies, including telemedicine, besides heightened interest from investors and increased FDI inflows over the last two decades. The Indian Government has undertaken deep structural and sustained reforms to strengthen the Healthcare sector and has also announced conducive policies for encouraging FDI. The Aatmanirbhar Bharat Abhiyaan packages include several short and long term measures for the health system, including Production-Linked Incentive (PLI) schemes for pharmaceutic medical devices.boostingdomestic manufacturingof becoming a hub for spiritual and wellness tourism, as the country has much to offer in Ayurveda and Yoga. The Indian healthcare system has made significant progress in recent years. The positive transformation of the Indian healthcare system involves a range of changes and initiatives. Despite challenges, the continued investment in healthcare and innovation provides reasons to be optimistic about the future of healthcare in India. https://www.niti.gov.in/sites/default/files/202302/InvestmentOpportunities

Key developments and advancements in Healthcare Sector: 1. Artificial Intelligence (AI)

The healthcare industry is undergoingrapidtransformation,withartificialintelligence (AI) playing a central role in improving diagnostics, treatment planning, and hospital operations. AI-assisted diagnostic tools enhance accuracy in radiology and pathology. Predictive analytics helps healthcare providers anticipate patient deterioration, while AI-driven the development of new treatments. These advancements drugdiscoveryusedby contribute to faster diagnoses, more personalized therapies, and improved efficiency in healthcare systems.

2. Wearable Health Technology:

Smart devices are enabling continuous monitoring of vital signs (heart rate, ECG, oxygen levels), facilitating preventive care and real-time management of chronic conditions.

3. Genomics and Precision Medicine:

Genomics and precision medicine utilize an individuals genetic profile fits-all treatments. By analyzing DNA, doctors can predict disease risk, provide early diagnoses, and match cancer patients or individuals with rare diseases to molecular profiling and bioinformatics to customize medical care.

4. Robotic-

Robotic equipment in the hospital industry has revolutionized patient care by improving surgical precision, automating logistics, and enabling faster recovery times.Keycontributionsincludeminimallyinvasiverobotic-assisted surgery (e.g., da Vinci, Mako), automated logistics, and enhanced disinfection, leading to fewer infections, reduced staff fatigue, and improved operational efficiency.

5. mRNA and Biotech Innovation: mRNA technology is a revolutionary biotechnology platform that usessyntheticmessenger RNA to instruct human cells to produce specific proteins, activating an immune response or treating diseases. By delivering genetic instructions rather than the virus itself, this technology allows for rapid design and scalable manufacturing, most notably used in COVID-19 vaccines.

6. Digital Infrastructure and Security:

The adoption of Electronic Health Records (EHRs) and blockchain technology is improving data interoperability, while cybersecurity is becoming critical for safeguarding patient information.

7. Nanotechnology and Drug Delivery:

Researchers are using technologies like red blood cell-derived vesicles (RBCVs) to improve targeted drug delivery for diseases such as vascular thrombosis. These innovations are collectively driving the healthcare sector towards more proactive, precise, and accessible care. While commendable achievements have been made, challenges persist, including fragmentation across various dimensions of healthcare delivery. A comprehensive approach cantered on accessibility, affordability, and sustainability will be vital to ensure equitable healthcare access across both urban and rural regions.

SWOT ANALYSIS STRENGTHS

1. High-Quality Clinical Expertise: Our specialized medical professionals and state-of-the-art infrastructure remains a core competitive advantage.

2. Technological Integration: technology for diagnostics Widespreadadoption of AI-native tools and robotic surgery has improved clinical accuracy.

3. Brand Reputation & Loyalty: We build brand loyalty through trust, innovation and unwavering patient care. Withstate of the art technology and dedicated service, we have earned a premier reputation. By guaranteeing authentic communication and positive experiences at every touchpoint, KMCH translates patient satisfaction into long term loyalty and competitive advantage and also maintaining its leadership position in multi-speciality

4. Financial Stability: Robust balance sheet, conservative leverage (very low debt-to-equity), strong liquidity, and

expansion.

WEAKNESSES

1. High Capital Intensity: In order to provide the best outcome to our patients, we are required to continuously in technology, infrastructure and talent, stressing cash flows and capital budgets.

2. Rising Cost: Rising cost of consumables, employee expenditure and financingcost shrinks our margin.

3. Shortage of Manpower: An inherent weakness in our operations is the limited availability of skilled workforce and medical professionals.

4. Risk Factors: Financial and Expansion risk can affect the profit of the

OPPORTUNITIES

1. AI and Automation: AI and automation in the hospital operational efficiency, reduce administrative burdens, and improve patient care outcomes. Key applications include AI-powered medical imaging analysis, automated administrative tasks (such as scheduling and billing), and robotic assistance in logistics and surgery. Modern AI, including generative AI, is being adopted at scale to streamline clinical productivity.

2. Shift to Ambulatory Care: High growth is expected in outpatient and post-acute settings. Hospitals can maximize margins by moving procedures like cardiovascular and musculoskeletal surgeries into Ambulatory Surgery Centers (ASCs).

3. AI as an Administrative Time-Saver: Implementing AI for revenue cycle management and clinical documentation can reduce the administrative burden that currently drives clinician burnout.

4. Retail & Community Partnerships: Collaborating with retailers allows our hospital to expand the reach and improve outcomes for underserved populations without massive capital investment.

THREATS

1. Competion: Competition in the hospital industry acts as a reducing profitability, and elevating the risk of service fragmentation. High rivalry drives up marketing costs to attract patients, strains resources, and demands constant improvements in quality, often forcing hospitals to cut costs elsewhere.

2. The Cost-Reimbursement Gap: Operational costs are currently climbing faster than the long-term solvency of many regional and community hospitals.

3. Cybersecurity Vulnerability: The average cost of a healthcare data breach has reached nearly $10 million. Cybercriminals are increasingly using AI to launch sophisticated ransomware attacks that can halt hospital operations entirely.

4. Workforce Exodus: Resignations among healthcare professionals grew by 50% between 2020 and 2024. An aging and nurses is hitting a critical low. populationis

ABOUT KMCH

Kovai Medical Center and Hospital Limited (KMCH) was incorporated under The Companies Act, 1956 and started its commercial operation in June 1990, with a capacity of 200 Bed Hospital in the outskirts of Coimbatore. Nurtured with Indian hospitality and a western mind set, KMCH has grown into a 2,250 bed multi-locational, multi-disciplinary Super specialty hospital, the best and most trusted in Southern India.

Over its more than three-decade journey, the hospital has serviced urban and rural patients from Western Tamil Nadu and parts of Kerala. The Main Center and the Medical College General Hospital is located very proximate to the city airport. The cornerstones of KMCH legacy are its unstinting focus on clinical excellence, affordable costs, adoption of technology and academics.

TECHNOLOGY, INNOVATION AND FACILITIES

KMCH has introduced Ethos- Hypersight, Tamilnadus 1 st Linear Accelerator to perform Online Adaptive Radiotherapy with high precision. It uses deep learning to automatically contour anatomy and targets on daily high quality iCBCT scans.It generates a new Adaptive Plan in minutes while the patient is on the couch to account for daily organ motion and tumor changes. The entire process- from imaging to treatment is completed in a standard clinical slot time slot, making daily adaptive therapy a practical reality.

KMCH has installed ultrafast 3T MRI system is truly one-of-a-kind. It marks the first installation outside of China and the third installation worldwide.This MRI provides images of the highest resolution and it is the first MRI system globally to conduct live studies capturing motion that was deemed impossible.Additionally excels in advanced brain imaging show casing detail brain function in different regions through FMRI when combined with the artificial intelligence server, the images produced can accurately quantify volume loss in various brain segments for dementia.As a result, the neurosciences department will be able to perform procedure with a significantly higher level of safety when integrating these images into navigation systems.

KMCH has also introduced Symbia Pro.specta, Coimbatores first SPECT CT designed to perform general nuclear medicine and these exams are performed with the highest level of Image quality and lowest radiation dose. When more specialized studies are needed, it has the flexibility to automatically optimize image quality and workflow exclusive for cardiology, neurology, oncology and theranostic work.

KMCH proudly announced the transition of our ICUs to a fully paperless and digitally integrated Critical Care continuous expert supervision and remote monitoring of environment. critically ill patients ensuring uninterrupted specialist support. This milestone in our commitment to delivering smarter, safer, more efficient, and patient centered critical care aligned with the future of modern Healthcare.

Social Responsibility and Affordable Health Care:

1. Paed Ward: As a responsible corporate citizen, KMCHs passion for a healthy India has enabled it to extend its healthcare services far beyond pure business. KMCH opened a free Paediatric Oncology Ward in KMCH Medical College General Hospital, to cater to the needs of children with cancer, who cannot afford appropriate therapy.

2. Palliative Care Ward: KMCH has opened up an affordable Palliative Care Ward, fulfilling a vitally important but unserved need in community.

3. Low Cost Care: KMCH Medical College General Hospital provides outpatient and inpatient services in all multiple specialities providing affordable Healthcare done in a low cost but high volumes.

OPERATIONAL EXCELLENCE Healthcare

KMCH Achieves Landmark 1,000 Robotic Knee Replacement Surgeries, Revolutionizing Orthopedic Care

Our Company is a leading healthcare institution dedicated to advanced patient care. We proudly announce a significant ted knee replacement surgeries.assis milestone:thesuccessfulcompletion of 1,000robotic-The state-of-the-art robotic technology utilized at KMCH allows orthopedic surgeons to perform knee replacement procedures with unparalleled accuracy and personalization. This advanced approach translates to numerous benefits for patients, including more preciseimplantplacement,reducedsofttissuedamage, potentially shorter hospital stays, faster recovery times, and improved long-term functional outcomes.

Reaching1,000robotic it represents 1,000 lives transformed, 1,000 individuals regaining their mobility and freedom from pain, said Dr. Nalla G Palaniswami, Chairman and Managing Director, KMCH. We are incredibly proud of our orthopedic team and their relentless pursuit of excellence, which has made this achievement possible. surgeons with The CORIAdvancedRobotic a highly detailed 3D model of the patients anatomy, enabling them to create a customized surgical plan pre-operatively.

Ourachievementinrobotic-assistedsurgeryreflectsour commitment to staying at the forefront of medical innovation, stated Dr. Arun Palaniswami, Executive Director, KMCH. we are glad to be leading the way in providing such advanced care to our community.

KMCH Pioneers Life-Saving ECMO Care in Tamil Nadu

Kovai Medical Center and Hospital (KMCH) continues to lead the way in advanced critical care, establishing itself as a premier center for ECMO (Extracorporeal Membrane Oxygenation) in India. This life-support technology provides a critical chance for patients when every breath and heartbeat matters.

ECMO is a specialized life-support treatment utilized when a patients heart and lungs are too weak to function independently. While the technology does not cure the underlying disease itself, it performs the vital work of the organs, buying time for the patients body to heal.

The process works by: Extraction: Gently drawing blood from the body through tubes; Oxygenation: Passing the blood through a specialized machine that adds oxygen and removes carbon dioxide, and Recirculation: Returning the revitalized blood back to the patients body.

KMCH has pioneered successful ECMO outcomes through a combination of advanced consoles, specialized ICUs, and a highly trained medical team. Over the past five years, the hospital has completed more than 200 ECMO runs. Notably, in 2025, KMCH performed 75 ECMO runs the highest number in Tamil Nadu securing its position as a top-tier ECMO-capable center in the country.

KMCH is proud to announce that it offers a specialized ECMO Ambulance Service, making it only the second hospital in Tamil Nadu to provide this advanced facility. This mobile life-support unit allows the KMCH expert team to reach critically ill patients and transport them safely while maintained on ECMO support.

ECMO is intended for patients with reversible and potentially treatable conditions who are not responding to standard medical treatments, such as ventilators or medicine. Medical experts emphasize that early referral is key to improving patient outcomes. If a patient is critically ill and showing no signs of improvement, KMCH urges families to consult with their treating physicians regarding an early ECMO evaluation.

Medical education

KMCH Institute of Health Sciences and Research (KMCH IHSR), established in 2019 under the aegis of Kovai Medical Center and Hospital Limited (KMCH), has rapidly emerged as a leading medical college in Tamil Nadu. KMCH is the first off services to the public at a low cost. corporatehospitalinIndiatostartamedicalcollege.Italso Our KMCH has launched the KMCH Medical College Post Graduate Institute on the Financial year 2025-26 at KMCH

Medical College Campus which offers postgraduate programmes in areas like neurology, paediatrics, psychiatry, orthopedics, and cardiopulmonary care.

AWARDS, ACHIEVEMENTS

KMCH Hospital continues to receive numerous accolades, reinforcing its commitment to exemplary patient care and its role as an industry leader. Among its many awards and achievements are:

Best Managed Companies - Jury Special Recognition Award by Deloitte Private. Excellence in Research & Innovation Award at AHPI Global Conclave 2026.

The hospital clinched a record-breaking nine (9) awards at the FE Healthcare Summit & Awards 2025. In addition to that, Dr. Nalla G Palaniswami has been honoured with Lifetime Achievement Awards from Nanayam Vikatan and the Coimbatore Kongu Friends Association.

DISCUSSION ON FINANCIAL AND OPERATIONAL PERFORMANCE

Below detailed table presents summaries of Financial Results of Operations for the Year ended 31 st March, 2026 and 2025. The Company operates on two segments - Healthcare Services and Education Services.

(Rs in Lakhs)

	2025-26	2024-25
Operating Income	1,58,563.68	1,37,111.30
Other Income	2,824.73	2,210.42
Total Income	1,61,388.41	1,39,321.72
Cost of Medicines, Hospital Consumables	44,807.90	39,601.11
and dietary consumed
Consultant charges to Doctors	22,111.11	19,136.55
Employee benefits expense	30,648.45	25,118.15
Finance costs	3,201.69	3,267.67
Depreciation and	10,939.40	9,758.66
Other expenses	17,110.72	14,684.22
Total Expenses	1,28,819.27	1,11,566.36
Profit Before Tax (PBT)	32,569.14	27,755.36
Provision for Tax	8,123.14	6,860.74
Profit After Tax	24,446.00	20,894.62
Add: Other Comprehensive Income	(41.48)	(38.01)
Total Comprehensive Income for the year	24,404.52	20,856.61

REVENUE

Total Operating Revenue grew by 15.65% from 1,37,111.30 Lakhs in FY 25 to 1,58,563.68 Lakhs in FY 26.

i. Healthcare Services:

Inpatient Revenues grew by 15.02% from 92,002.25 Lakhs in FY25 to 1,05,824.86 Lakhs in FY26 and Outpatient Revenue grew by 14.94% from 35,716.53 Lakhs in FY 25 to 41,051.23 Lakhs in FY 26. Increase in Revenues primarily Outpatien attributabletoincreaseinSurgeries,Inpatientand ii. Education Services:

This is the seventh year of reporting on EducationServices consequent to the commencement of KMCH Health Sciences & Research (KMCH Medical College). Revenues under this segment increased from 9,254.95 Lakhs in FY 25 to 11,539.07 Lakhs in FY 26, which also includes income from Allied Health Sciences and Diplomate of National Board courses.

Below Table shows the key drivers of revenue for the periods presented year ended 31 st March, 2026.

Particulars 2025-26 2024-25

			Increase/ (Decrease)	% Increase/ (Decrease)
Inpatients (Nos.)	1,20,897	1,05,269	15,628	14.85%
Inpatients Revenue (Rs in Lakhs)	1,05,824.86	92,002.25	13,822.61	15.02%
Outpatients (Nos.)	13,95,050	12,40,046	1,55,004	12.50%
Outpatients Revenue (Rs in Lakhs)	41,051.23	35,716.53	5,334.70	14.94%
KMCH IHSR (No. of Students)	955	897	58	6.47%
AHS Courses (No. of Students)	808	770	38	4.94%
Income from Educational Institutions ( Rs in Lakhs)	11,539.07	9,254.95	2,284.12	24.68%
Other Operating Income( Rs in Lakhs)	148.52	137.57	10.95	7.96%
Total	1,58,563.68	1,37,111.30	21,452.38	15.65%

KMCH IHSR - KMCH Institute of Health Sciences and Research

AHS - Allied Health Sciences Courses

Particulars	2025-26	2024-25
Bed Capacity at the end of the Period (In Nos.)	2,035	2,032
Operating Beds at the end of the Period (In Nos.)	1,850	1,847
Inpatient (In Nos.)	1,20,897	1,05,269
Outpatient - New & Review (In Nos.)	13,95,050	12,40,046
Bed Occupancy Rate	63.41%	60.44%
Average Length of Stay (In Days)	3.54	3.87
Average Revenue per occupied bed (in RS)	24,714	22,581

EXPENSES

I.MEDICINES, HOSPITAL CONSUMABLES AND DIETARY CONSUMED

During the year ended FY 2025-26, Cost of Medicines, Hospital Consumables and Dietary consumption increased from 39,601.11 Lakhs in FY 2024-25 to 44,807.90 Lakhs. Increase of 13.15% is in line with the growth in operating revenues.

II.CONSULTANT CHARGES

During the year ended FY 2025-26, Consultant charges increased from 19,136.55 Lakhs in FY 2024-25 to 22,111.11 Lakhs. Increase of 15.54% is in line with the growth in operating revenues.

III.EMPLOYEE BENEFITS EXPENSE

Employee Benefit Expenses increased from 25,118.15 Lakhs in FY 2024-25 to 30,648.45 lakhs. Increase is in line with salary increase and increase in head count.

IV.FINANCE COSTS

Finance Costs reduced from 3,267.67 Lakhs in FY 2024-25 to 3201.69 Lakhs, a reduction of 65.98 Lakhs. This decrease in Finance Costs is due to Capitalisation of interest as per IND AS 23.

V.DEPRECIATION AND AMORTIZATION EXPENSE

Amortization Expenses has increased from 9,758.66 Lakhs in FY 2024-25 to 10,939.40 Lakhs, an Depreciation increase of 1180.74 Lakhs. Increase is mainly due to addition of capitalassetsamountingto 293.73 crore during the year.

OTHER EXPENSES

Table below summarizes the operating and other Administrative Expenses for the year ended 31 st March, 2026

	Year ended 31.03.2026		Year ended 31.03.2025
Particulars	Rs in Lakhs	% of Revenue	Rs in Lakhs	% of Revenue	Increase/ (Decrease)	% Increase/ (Decrease)
Stores, Power & Fuel	2,371.64	1.50	2154.80	1.57	216.84	10.06
Hospital Upkeep Expenses	3,919.57	2.47	3,330.23	2.43	589.34	17.70
Marketing & Advertising	1,511.12	0.95	931.15	0.68	579.97	62.29
Repairs & Maintenance	2,934.21	1.85	2,690.00	1.96	244.21	9.08
Rent	50.66	0.03	40.08	0.03	10.58	26.40
Other Administrative Expenses	6,323.52	3.99	5,537.96	4.04	785.56	14.19
Total	17,110.72	10.79	14,684.22	10.71	2,426.50	16.52

KEY FINANCIAL RATIOS

Key Financial Ratios are detailed in Note 55 of Notes to Financial Statements.

LIQUIDITY

Primary Sources of Funds are Cash Flows generated from Operations as well as Long Term Borrowings, if required. It is expected that internally generated Cash Flows and our proposed drawdown from sanctioned debt will be adequate to service existing debt, fund internal growth and deploy funds for all Capital Expenditure.

RISK MANAGEMENT

In a rapidly changing business environment with dynamic customer requirements, business risks are constantly evolving. As a result, there is significant variation in the emerging risks landscape across businesses. On account of multi-fold increase in scale and the expanded area of operations, your Company gets exposed to a wide range of both internal and external risks and uncertainties.

These internal and external factors may affect achievement of the Companys objectives whether they are strategic, operational or financial. Risk managements objective is to assure that uncertainty does not deflect the Companys progress from its envisioned business goals.

The Company Risk Management approach is towards striking a balance between managing risks and capitalising opportunities. Its response to identified risks includes acceptance, avoidance, transfer and mitigation. Greater focus is given towards ring-fencing the organisation from major risks that are likely to have a lasting impact on the Company profitability and sustainability.

RETURNON NET WORTH

S.No	2025-26	2024-25
1	19.24%	18.53 %

Reason

The expansion of the equity base marginally outpaced the steady growth of Net Profit After Tax (PAT) for the current period, resulting in a minor fractional dilution of the overall ratio.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

KMCH had an adequate internal control system, commensurate with the size, scale, and complexity of its operations, is discussed under an identical head in the Directors report.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the health care sectors objectives, projections, estimates, expectations and predictions contain forward looking statements within the meaning of applicable laws and regulations. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that may or may not occur in the future. Actual results might differ materially from those either expressed or implied.