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Industry structure and developments

Indias economic growth and its tremendous potential have been making headlines in recent years. Despite significant challenges in the macroeconomic environment, India continues to remain one of the fastest growing economies in the world. Moreover, Indias recent presidency of the G20 Summit in 2023 has significantly boosted its international standing. A recent bulletin by the Reserve Bank of India suggests that India will continue to maintain its position as the fifth largest economy in the world.

While the COVID-19 pandemic stalled economic growth across the world in 2021, creating a temporary dip in Indias growth story as well, Indias economy displayed great resilience and clocked a growth of 9.1% in FY22 and 7.2% in FY23.

However, despite being one of the fastest growing economies, and surpassing China to become the most populous country, the performance of Indias healthcare sector continues to be a cause for concern. Healthcare delivery in India remains largely underdeveloped with shortage of beds, doctors and nurses as well as uneven access to healthcare services.

According to the Global Health Expenditure Database compiled by the World Health Organisation (WHO), Indias current expenditure on healthcare was 3.0% of gross domestic product (GDP) in 2019, while Indias real GDP was INR 139.9 trillion (constant FY12 prices). Accordingly, Indias healthcare expenditure during 2019 was approximately INR 4.2 trillion. India trails behind not just developed countries, such as the United States (the US) and the United Kingdom (the UK), but also developing countries, such as Brazil, Nepal, Vietnam, Singapore, Sri Lanka, Malaysia and Thailand in healthcare spending, as a percentage of GDP.

Structural supply side deficiencies; lags peers in key parameters

The quality of healthcare in a country can be measured based on the adequacy of its healthcare infrastructure and personnel. Similar to most other developing nations, Indias healthcare infrastructure is currently inadequate to serve its growing population base. The country comprises nearly a fifth of the worlds population, but has an overall bed density of merely 15 hospital beds per 10,000 people, with the situation being far worse in rural India. Indias bed density is much lower than the global median of 29 beds, and also lags behind developing nations, such as Malaysia (19 beds), Brazil (21 beds) and Vietnam (26 beds).

Note: India bed density is estimated by CRISIL Research for FY22. CY16 figure for Bangladesh, CY17 figures for Brazil, China, Malaysia and United States, CY18 figures for Russian Federation, CY19 figure for UK

Source: World Health Organisation Database, CRISIL Research

In addition to bed capacity, there is acute shortage of healthcare personnel, which compounds the problem. As per WHOs World Health Statistics 2022, at 7 physicians and 18 nursing personnel per 10,000 population, India trails the global median of 16 physicians and 40 nursing personnel, while also lagging behind Brazil (23 physicians, 74 nurses), Malaysia (23 physicians, 35 nurses) and most other developing countries.

Healthcare delivery industry to grow at 10-12% cagr over next four years to inr 8.6 Trillion by 2027

With renewed government focus on the healthcare sector after the pandemic and impetus from recent government initiatives, such as Pradhan Mantri Jan Arogya Yojana (PMJAY) and National Health Mission, the healthcare delivery market is expected to grow at 10% to 12% compounded annual growth rate (CAGR) and reach INR 8.6 trillion by FY27. As per CRISIL, major hospital chains added a large part of their incremental capacity over the last five years. Further, many large hospitals have been expanding into tier 2 and 3 locations, with ~67% aggregate bed additions in these areas over the past four years. The other contributors to the demand are more structural in nature, such as increase in lifestyle-related ailments, improvement in prospects for medical tourism, rising incomes, increasing penetration of insurance and changing demographics.

In India, both government as well as private healthcare providers offer IPD and OPD services. However, patients generally tend to rely on private players for these services. The lack of healthcare spending by the government adds a heavy burden to the existing healthcare infrastructure and the quality of services offered by the state. As a result, the share of treatment (in value terms) by private players is expected to increase from 62% in FY17 to nearly 73% in FY27. Moreover, the emphasis on delivering quality healthcare services through advanced infrastructure and a special focus on clinical excellence makes private players a preferred choice for most patients. Furthermore, government facilities continue to be over-burdened and the additional demand created by PMJAY and other government initiatives have further strained the system. Therefore, the increased demand can only be met with private participation.

Key drivers of healthcare delivery industry

The healthcare delivery industry in India is witnessing significant opportunities due to a combination of economic and demographic structural factors, such as increasing burden of lifestyle diseases, rising insurance penetration, growing affordability and awareness, improvement in prospects for medical tourism and inadequate infrastructure. These demand factors are augmented by conducive government policies and healthcare schemes.

1. Rising income levels and urbanisation enhancing healthcare affordability

India has witnessed increase in per capita income levels and a rising middle class over the last few decades. Though healthcare is considered a non-discretionary expense, considering that ~65% of households in India still had an annual income of less than INR 0.2 million in 2022 as per estimates by CRISIL, affordability of quality healthcare facilities continues to be a major constraint. Therefore, growth in household income and, consequently, disposable income is critical to the overall demand growth for healthcare delivery services in India. Households with an income of more than INR 0.2 million were estimated to be 35% in 2022, up from 23% in 2017. It indicates a growing propensity for availing affordable, yet superior quality healthcare services from private healthcare players.

Income Demographics

Over the years, Indias urban population has been rising and it is projected to increase to 40% by 2030, from ~35% in 2020. This, coupled with increasing literacy rates and awareness among the general populace regarding importance of both preventive and curative care is expected to increase the demand for quality healthcare services.

2. Improving life expectancy and changing demographics

In the last few years, healthcare services have significantly improved in India, which has resulted in better clinical outcomes. During the last two decades, India has added more than five years to the average life expectancy at birth of its population, from 63.4 years in 1999-2003 to 69.4 years in 2014-18. In addition, the Indian population in the age bracket of 60 years or more is expected to surge to ~13% by 2026, from ~9% in 2016. Even a gradual increase in the age bracket of 60 years or more, on such a large population base, would require a considerable improvement in the existing healthcare infrastructure.

However, the availability of a documented knowledge base concerning the healthcare needs of the elderly (aged 60 years or more) remains a challenge. Nevertheless, the higher vulnerability of this age group to health-related issues is an accepted fact. According to the Report on Status of Elderly in Select States of India, 2011, published by the United Nations Population Fund (UNFPA), chronic ailments, such as arthritis, hypertension, diabetes, asthma, and heart diseases, were commonplace among the elderly, with ~66% of the respective population reporting at least one of these. In terms of gender- based tendencies, while men are more likely to suffer from heart, renal and skin diseases, women are more prone to contract arthritis, hypertension, and osteoporosis.

With Indias population expected to grow to ~1.5 billion by 2030 and considering the above-mentioned factors, the need to ensure provision of healthcare services to this vast populace is imperative. This further provides an opportunity to expand into emerging medical specialities, driven by changing demographics such as geriatric-based care and orthopaedics.

3. Rising incidence of Non-Communicable Diseases (NCDs)

While the rate of communicable diseases has been declining, lifestyle-related illnesses or non-communicable diseases (NCDs), on the other hand, have increased dramatically in India in the last decade. There has been a 12-percentage point increase in the share of Disability

Adjusted Life Years (DALY), from 46% in 2010 to 58% in 2019. The contribution of NCDs to the disease profile has risen from 30% in 1990 to 46% in 2019, and their incidence could increase further since India trails the world average of 64% on the DALY metric. As per WHO Global Health Observatory estimates, these chronic illnesses accounted for nearly 65% of all deaths in India in 2019.

As per CRISIL, NCDs exhibit a tendency to increase in tandem with rising income levels. WHO projects an upward trend in NCDs by 2030, following which demand for healthcare services associated with lifestyle-related diseases such as cardiac ailments, cancer and diabetes, is forecasted to rise. As per the World Economic Forum, the world needs to expend nearly USD 30 trillion by 2030 for NCD treatments and Indias burden from this will be USD 5.4 trillion.

4. Increasing Health Insurance penetration

Increasing incidence of NCDs and need for superior healthcare services, healthcare costs have surged over the years. In India, low health-insurance penetration is one of the major impediments to the growth of the healthcare delivery industry, as affordability of quality healthcare facilities by the lower-income groups remains an area of concern. In 2020, out-of-pocket (OOP) expenditure on health accounted for nearly 51% of total health expenditure. As per the Insurance Regulatory and Development Authority of India (IRDAI), more than 520 million people have health insurance coverage in India as of FY22 as against 288 million in FY15. Despite this robust growth, the penetration in FY22 stood at only 38%. This presents a huge opportunity for the growth of healthcare delivery industry in India. The recent pandemic has acted as a catalyst to expedite the uptake of health insurance policies, with the private health insurance segment reporting a robust 20% CAGR in premiums over the last two years. With the PMJAY scheme and other growth drivers, insurance coverage in the country is expected to increase to nearly 47-50% by FY27.

With health insurance coverage in India on an upward trajectory, hospitalisation rates are likely to go up. In addition, health check-ups, which form a mandatory part of health insurance coverage, are also expected to increase. This is set to boost the demand for a robust healthcare delivery platform.

5. Medical tourism presents a big opportunity

Higher complexity procedures at relatively lower treatment costs, coupled with clinical outcomes comparable to the best in the world, have resulted in medical value travel gaining a lot of momentum in recent years, and the country is now fast emerging as a major medical tourist destination. Some of the factors that make India an attractive destination for quality treatments are the presence of technologically advanced hospitals with highly experienced and specialised doctors, ease of travel and other facilities such as e-medical visa.

The most sought-after treatments in India are heart surgery, knee implant, cosmetic surgery and dental care, due to their relatively low costs. Medical tourism is primarily driven by the private sector, with Delhi-NCR being one of the major hubs, due to its connectivity by air with all major international destinations, complemented with the presence of modern medical facilities and technologies in the region.

Compared to countries such as Singapore, Malaysia and Thailand, who offer medical care facilities to foreigners, India, besides the state-of-the-art infrastructure and the expertise of reputed healthcare professionals, also offers traditional healthcare therapies such as Ayurveda and Yoga, complemented with allopathic treatments. More than 94% of the medical tourists are from countries in Africa, West and South Asia. Medical tourists from countries like United Kingdom and Canada are also increasing, especially given the long waiting periods for availing treatments in their homelands.

According to the Ministry of Tourism, of the total foreign tourist arrivals in India, the proportion of medical tourists has grown from 2.2% (0.11 million tourists) in 2009 to 6.4% (0.70 million tourists) in 2019. Due to the pandemic, the number of medical tourists fell sharply in 2020 to 0.18 million tourists because of travel restrictions. However, the number of medical tourists has considerably recovered since, with arrivals in 2022 (~0.65 million tourists) estimated to be almost back to pre-COVID levels.

The Indian government is targeting USD 12 billion of medical tourism revenues by 2026 and has launched many initiatives under the ‘Heal in India programme to position India as a global hub for medical tourism. These initiatives include constitution of National Medical and Wellness Tourism Board, coupled with introduction of a new category of medical visa (made available in 165 countries) and provision of financial assistance to the tune of INR 0.6 million to medical tourism service providers under market development assistance (MDA).

6. Better Healthcare accessibility – geographically and digitally

With 65% of Indias population living in rural areas, the government is incentivising private investments in these regions. However, private players find it difficult to replicate the tier 1 model due to the relatively lower revenue per bed and inability to attract highly skilled clinical talent in these regions. Despite these challenges, major hospital chains have started to expand into tier 2 and 3 cities, with close to 67% aggregate bed additions in these cities contributed by at least 10 large hospitals in the past 4 years.

The general lack of quality clinicians for high-end procedures and specialities outside of the metros or tier 1 cities deprives patients in tier 2 and 3 cities of quality medical care. However, a marked increase in internet penetration and digitalisation of service offerings have helped healthcare become accessible in the otherwise remote corners of the country. With the advent of video consultations and telemedicine, doctor consultations can be availed irrespective of patients physical location. Similarly, the provision of electronic health records (EHRs) assists both clinicians and patients to readily access their medical records virtually. Further, many e-healthcare players offer doorstep diagnostic services and delivery of pharmacy products, thereby improving accessibility.

7. Government policies to improve healthcare coverage and creation of capacity

Under the Union Budget 2023-24, the Ministry of Health and Family Welfare (MoHFW) has been allocated INR 89,155 crore, an increase of 3.4% compared to Rs. 86,201 crore in 2022-23. National Health Mission has been allocated INR 29,085 crore, while Pradhan Mantri Swasthya Suraksha Yojana (PMSSY) has been allocated INR 3,365 crore. INR 5,170 crore has also been allocated to the newly announced Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PM-ABHIM) with an aim to strengthen Indias health infrastructure and improve the countrys primary, secondary and tertiary care services.

According to the government, inpatient hospitalisation costs have risen by 300% over the past 10 years and nearly six million families had to sell assets or borrow money for treatment, thereby causing considerable financial hardships that affected their socioeconomic standing. With the aim of providing affordable healthcare, the government launched the PMJAY scheme in 2018. The objectives of the scheme primarily include strengthening of physical health infrastructure through sub-centres and government hospitals, and expansion of health insurance coverage through Ayushman Bharat. As per the 2022 annual report of National Health Authority, PMJAY has empanelled more than 28,300 hospitals, issued more than 19 crore e-cards, and provided over 3.9 crore treatments, as of August 31, 2022. More than 1.5 lakh Ayushman Bharat-Health and Wellness Centres (AB-HWCs) are operational pan India, as of December 31, 2022. Under Pradhan Mantri Swasthya Suraksha Yojana (PMSSY), six All India Institute of Medical Sciences (AIIMS) campuses, one each at Patna (Bihar), Raipur (Chhattisgarh), Bhopal (Madhya Pradesh), Bhubaneshwar (Odisha), Jodhpur (Rajasthan), and Rishikesh (Uttarakhand), have been set up. Another AIIMS campus is under construction at Rae Bareli and 13 new campuses have been announced.

Emerging trends in healthcare

While the healthcare delivery sector in India faces several teething issues currently, it also presents immense opportunities for the incumbent as well as new players. Factors such as inadequate bed density and dearth of healthcare personnel highlight Indias poor healthcare infrastructure versus global levels, reflecting the immense potential for healthcare delivery players in the country. For instance, the shift in demographics, towards a higher percentage of population falling in the age bracket of 60 years or more, provides the healthcare players a chance to expand into geriatric and palliative care.

With the internet and mobile subscriber base expected to reach ~235 crore by FY25, the new generation of customers will drive the adoption of digital technologies as healthcare moves away from the confines of a hospital. Remote care and telemedicine are ever-evolving approaches of diagnosis and treatments done remotely, using telecommunication technologies. With the recent pandemic acting as a stimulus, the market size for telemedicine in India (USD 830 million, as of 2019) is projected to increase to USD 5.5 billion by 2025, growing at a CAGR of 31% during 2020-25.

Hospitals are adopting artificial intelligence (AI)-based systems for screening, monitoring, and diagnostic assistance. AI applications include algorithms that analyse chest X-rays and other radiology images, read ECGs and spot abnormal patterns, automatically scan pathology slides and even assess fundus images for signs of retinopathy. This is expected to help the hospitals tide over shortage of skilled manpower as well as manage their cost of delivery. We are also expecting robotics to play a key role in the global as well as Indian healthcare market going forward. While we are witnessing increased instances of robots being used for laparoscopic surgery, automated pharma, and so on, robot nurses as a concept are slowly set to emerge due to the aging population and medical staffing issues. 3D printing is another technological aspect that has the potential to revolutionise healthcare in the future. Medical uses for 3D printing can be organised into several broad categories, including tissue and organ fabrication, creation of customised prosthetics, implants, and anatomical models, and pharmaceutical research regarding drug dosage forms, delivery, and discovery. This will revolutionise not only cardiac and orthopaedic interventions, but also those relating to organ transplants.

These emerging business models and technologies are set to broaden the reach of healthcare facilities as well as help players achieve better efficiencies, improve their predictive capabilities and enable greater personalisation.

Company overview

Currently, MHIL, its subsidiaries and silos, comprise 13 healthcare facilities, including five hospitals and three medical centres in Delhi and the NCR region, with the others located in Mumbai, Maharashtra; Mohali and Bathinda in Punjab; and Dehradun in Uttarakhand. The super speciality hospitals in Mohali and Bathinda are under PPP arrangement with the Government of Punjab. Across all our 13 healthcare facilities, we had an average of 2,285 operating beds.

In addition to the above, Max Healthcare Network has the following 4 partner healthcare facilities (PHFs), wherein the Company and its subsidiaries provide healthcare services across key specialities for a fee and/or a share of revenue:

• Max Super Speciality Hospital (East Block), Saket (a unit of Devki Devi Foundation)

• Max Institute of Cancer Care, Lajpat Nagar (a unit of Devki Devi Foundation)

• Max Super Speciality Hospital, Patparganj (a unit of Balaji Medical & Diagnostic Research Center)

• Max Smart Super Speciality Hospital, Saket (a unit of Gujarmal Modi Hospital & Research Centre)

Our service profile

We provide a wide array of services ranging from primary to quaternary care, including advanced cardiac care, orthopaedics, oncology, renal sciences, neuro-sciences, transplants (liver, heart, kidney, lung, bone marrow, etc.), minimal access metabolic and bariatric surgery, and other services, including obstetrics and gynaecology, paediatrics, nephrology and general surgery. We also provide outpatient services, including consultations for a range of ailments, preventive health screenings, and laboratory services as well as radiology, imaging and emergency services.

In addition to our core hospital business, we have two strategic business units (SBUs), Max Lab and Max@Home. Max Lab offers diagnostic services to patients outside our hospitals, directly as well as through a network of partners, such as clinicians, hospitals, nursing homes and pathology collection centres. It also offers pathology services to patients outside our hospitals through a variety of other channels, including third-party hospital laboratory management, pick-up points and phlebotomists-at-site (PAS). At the end of FY23, Max Lab had operations in 34 cities, including NCR region, Chandigarh, Panchkula, Mohali and other key cities in Punjab, Haryana and Uttarakhand.

Launched in FY17, Max@Home leverages our clinical expertise to redefine homecare from traditional assistance-based services to more comprehensive, out-of-hospital-based services. It offers a wide-ranging suite of over 14 specialised services, thereby becoming a one-stop solution provider. These services include critical care or ICU at home, assistance-based services (nursing and health attendants), physiotherapy and advanced rehabilitation care, pathology testing, X-rays, ECG, medicine delivery, nursing procedures, immunization, medical equipment, doctor visits and on-site medical rooms, among others. In FY23, Max@Home services were also made available to our customers through our new Max MyHealth App, offering added convenience to book and track services, such as instant video consults with general physicians, lab tests at home and other homecare services.

Medical technology

The speed and accuracy of diagnosis is key to successful treatment and better outcomes. Hence, we continue to invest in medical technology and equipment as well as modernisation of our hospital facilities to offer quality healthcare services to our patients and expand our range of healthcare services. Our facilities are equipped with contemporary medical technology and equipment, including new generation surgical devices to conduct minimally invasive surgeries, and we focus on obtaining advanced technologies for providing such healthcare services. We believe that investment in technology and equipment is critical to our operations as it leads to better clinical outcomes, lowers ALOS and attracts reputed clinical talent. During the year, we introduced

(i) Ortho Robot at BLK-Max Super Speciality Hospital, which helps to cut bone, position implants, and guide surgeons in positioning instruments more precisely.

(ii) Spine Robot at BLK-Max Super Speciality Hospital, which allows surgeons to perform precise spinal fusion and provide improved screw placement accuracy, decrease surgery time, and reduce exposure to radiation.

(iii) 128 Slice CT scan at Max Super Speciality Hospital, Shalimar Bagh and Max Super Speciality Hospital, Dehradun. This advanced imaging modality has revolutionised the field of diagnostic imaging.

(iv) Digital Mammography at BLK-Max Super Speciality Hospital and Nanavati-Max Super Speciality Hospital, Mumbai, which is a highly advanced mammography system that offers an extremely fast image interval of just 15 seconds and produces high-resolution images with low X-ray dose, dual mode tomosynthesis and comfort functions.

(v) Da Vinci Xi Surgical robot, which is one of the most advanced technologies available in India, at Max Super Speciality Hospital, Mohali and Max Super Speciality Hospital, Dehradun. These robotic surgeries are the safest and most effective across specialties as they are minimally invasive, resulting in minimal blood loss and faster recovery. We also have the same technology installed at our facilities in Saket, Shalimar Bagh, Rajendra Place, Vaishali and Mumbai.

(vi) Digital PET CT scanner at Max Super Speciality Hospital (West Block), Saket redefines precision with advanced sensitivity and detectability parameters compared to analogue PET-CT scanners. This aids in efficient dose management, reduced scan times, devising effective treatment plans and eventually helps in enhancing the patient experience. Diagnosis with digital PET-CT provides a better understanding of the disease progression including the detection of smaller lesions at lower PET isotope doses

Even our PHFs invested heavily in medical technology during the year, adding:

(i) 3.0 Tesla MRI Machine, which is the most advanced radiology technology that gives superior high-resolution images for accurate diagnosis, at Max Super Speciality Hospital, Patparganj

(ii) Da Vinci Xi Surgical robot at Max Super Speciality Hospital, Patparganj

(iii) Ortho Robot at Max Smart Super Speciality Hospital

(iv) Replacement of PET CT scanner at Max Super Speciality Hospital (East Block), Saket

Max Institute of Medical Excellence

Max Institute of Medical Excellence (MIME) is the educational arm of our Company, and is a dedicated centre for education and training of medical and non-medical professionals, allied healthcare staff, corporates, embassies, multinational companies and other medical institutions across India. In FY23, we registered over 9,500 students across various academic programmes and launched new master and PhD courses in the fields of public health, clinical research and healthcare quality management. We also started the prestigious Advanced Trauma Life Support course recognised by the American College of Surgeons, USA. Another feather in our cap was the pan India launch of Advanced Stroke Life Support in association with American Heart association and Gordon Centre, USA.

We continue to be one of the centres recognised by the Joint Royal Colleges of Physicians Training Board (JRCPTB) to deliver post-graduate internal medicine training outside of the UK, and the programme has been awarded Level 3 Accreditation by JRCPTB-UK, signifying standards equivalent to those in the UK. During FY23, we had 51 trainees enrolled under this programme. We also registered 78 trainees under Masters in Emergency Medicine, recognised by the George Washington University, USA. Further, we had over 480 post-graduate trainees enrolled in various programmes accredited by the National Board of Examinations during the year. In a collaboration with United Hospitals in Bangladesh, our team conducted Basic Life Support (BLS), Advanced Cardiac Life Support (ACLS) and Pediatric Advanced Life Support (PALS) courses in their country.

Clinical research

Our clinical excellence is underpinned by evidence-based research through drug and device trials, public health studies, investigator-initiated projects and data research across all major therapeutic areas. This includes endocrinology, public health, NCD epidemiology, cardiology, oncology, neurology, internal medicine, critical care medicine, pulmonology, psychiatry, anaesthesia, minimal access metabolic and bariatric surgery (MAMBS), radiology, nephrology and kidney transplant, obstetrics and gynaecology, IVF, urology, physiotherapy and rehabilitation, ophthalmology, gastroenterology, paediatrics, neonatology, urology, liver and biliary Sciences, rheumatology, emergency medicine, molecular diagnostics and genomics. Moreover, digital technology has come to play a major role in finding novel healthcare solutions, bringing artificial intelligence and machine learning at the forefront, thereby enabling predictive modelling, process optimisation, reducing inter-observer variances and real-world evidence generation. We conduct all our clinical trials under the strict supervision of Clinical Trial Registry of India (CTRI), and these trials are designed to be transparent and compliant with the regulatory standards. During FY23, we successfully conducted over 100 clinical trials and initiated 44 new projects across our Network facilities.

We are dedicated to the pursuit of excellence in healthcare, not only through patient care but also through the generation and dissemination of knowledge. During this fiscal, our clinicians and academicians across our Network facilities, produced over 350 publications in high-indexed, peer-reviewed journals. We also attracted 3 international and 19 national grants, worth INR 4.8 crore, from various national and global funding agencies including NIHR UK, ICMR, DBT, INSA, BIRAC, Pfizer and Ashoka University.

Fostering a culture of collaboration, we also partner with leading organisations in the field of medical research, academics and innovation to deliver exceptional healthcare services. During FY23, we collaborated with Ashoka University, Institute of Genomics and Integrated Biology, IIIT delhi, IIT Mumbai and Pfizer with an aim to drive medical advancements, enhance patient care and contribute to scientific knowledge.

Nursing initiatives

Our nursing staff consists of dedicated and skilled professionals who play a vital role in delivering high-quality patient care. They are distributed across various units and departments, ensuring that our patients receive comprehensive and specialised attention. Our Company follows clinical acuity-driven staffing to optimise nurse patient ratios to improve outcomes and promote clinical and organisational excellence.

1:6 1:4

Stable Needs moderate assistance

1:2 1:1

Needs Close Critically ill supervision patients

During FY23, our nursing staff showed tremendous resilience and dedication to providing exceptional patient care, which reflected in the patient satisfaction scores obtained from patient feedbacks. Patient satisfaction showed continuous uptrend during the fiscal year, with an overall nursing patient satisfaction rate of 95%.

During the year, we initiated several nursing initiatives to help our nurses excel at their work as well as enhance their skills and performance undertakings.

• Quality Improvement Initiatives

Successful implementation of the ‘One admission, one patient, one cannula project aimed to increase nurse efficiency, decrease phlebitis cases, and enhance the overall patient experience, led to a decrease in the incidence of phlebitis in comparison to the previous year. Reduction in hospital-acquired pressure injuries was also evident due to the implementation of improved nursing processes. Furthermore, in order to reduce the number of needle stick injuries, 5, 10, and 25 litres of puncture-proof containers were made mandatory in areas that use staples, stylets, or guidewires, with an emphasis on no recapping of needles.

• Education and Professional Development

The significance of ongoing learning, skill development, and career advancement in nursing practice is a continuous endeavour at Max Healthcare. By investing in educational initiatives and professional development activities, we aim to enhance the knowledge, competence, and satisfaction of our nursing staff while promoting the delivery of high-quality patient care. Some of the key nursing training and development strategies adopted during the fiscal year to enhance the professional development of nurses include:

(i) A 6-month long internal Critical Care Nursing Certification course at our hospitals in Dehradun, Shalimar Bagh, Gurgaon and Mumbai.

(ii) Nursing induction schedule as well as the content were revamped and implemented across Network hospitals. Over 3,900 nurses underwent centrally driven nursing induction in FY23.

(iii) 14 nurses across Network hospitals completed the American Heart Association Certified Basic Life Support & Advanced Cardiac Life Support instructor development course, 35 nurses completed the Harvard e-certification programme on Advanced Wound management, 55 nurses completed the BMJ clinical research development programme, and over 35 nurses completed Fundamentals in Critical Care Support.

(iv) Operational and functional excellence training programmes were executed for the development of future leaders.

• Revision of Nursing Policies and Strengthening of Nursing Audit

In FY23, recognising the importance of aligning our practices with latest guidelines and best practices, we undertook a comprehensive revision of our nursing policies. Through a diligent and collaborative effort, we carefully reviewed each policy, ensuring that it reflects the most current standards and recommendations in the field of nursing. Our team of experts meticulously analysed existing policies, identified areas of improvement, and incorporated the latest research findings and regulatory updates into the revised versions.

In view of continuous quality improvement, we initiated and successfully completed the first cycle of an inter-hospital nursing comprehensive audit in FY23. The audit process involved several stages, starting with the identification of the audit objectives, preparation of the audit tool, and selection of the audit team, which comprised of chief nursing officers, nursing superintendents, nurse educators, infection control nurses, and senior members from the corporate office. It involved reviewing various aspects of nursing care, including patient assessment, documentation, medication management, infection control, etc. It helped us to identify areas of improvement and implement corrective measures to enhance the quality of care provided to patients.

• Future Goals and Initiatives

Our strategic goals and initiatives planned for the FY24 include plans for staff development, enhancing patient care delivery and fostering innovation through the initiation of College of Nursing and School of Nursing in Delhi NCR and Mumbai, initiation of simulation-based training laboratory, launch and initiation of the Indian Nursing Council approved nurse-practitioner programme in critical care nursing certified by Indraprashtha University, among others.

Digital transformation

In a rapidly evolving healthcare landscape, our commitment to digital innovation has been unwavering. We continue to harness technology and remain steadfast in our mission to deliver exceptional healthcare. In FY23, our digital revenue through web-based marketing activities and online appointments across the Network stood at INR 1,037 Cr, i.e., ~17% of overall revenue.

The highlight for the year, however, was the successful launch of our state-of-the-art doctor and patient app, ‘Max MyHealth. This app already accounts for nearly 10% of all appointment bookings across the Network, demonstrating its swift adoption. With over 200,000 downloads, the apps user-friendly interface has empowered patients to connect with our doctors anytime, besides providing access to their health records digitally and enabling them to book Max@Home services. We have also initiated Phase 1 of our in-patient programme on the app, which will allow patients to track their admission progress, access in-patient reports, and make payments directly through the app. This will help us streamline the in-hospital experience, enhance patient comfort and reduce administrative burdens.

From constructively managing nursing staff duties through implementation of the ‘Nursing Duty Roster software to improving doctor efficiency by integrating e-prescriptions with ‘Advanced Speech to Text Solution (Augnito), we have always endeavoured to be at the forefront in adoption of digital solutions to improve our patient and community experience. We have also introduced several AI-led projects, which include Qure AI solutions that mark images as normal/abnormal with a WhatsApp alert of AI-processed results for a radiologists review. Cloud deployment of this solution has already been undertaken at Max Institute of Cancer Care, Lajpat Nagar, Lajpat Nagar and Max Multi Speciality Centre, Panchsheel Park. Siemens Teamplay Digital Health Platform is another innovative solution implemented at Max Super Speciality Hospital, Saket, which is essentially a performance management application that enables reliable and structured analysis of imaging data and secured collaboration. These initiatives, coupled with several others, enable our Company to stand strong in the rapidly changing environment and unlock new opportunities for growth and innovation.

Corporate Social Responsibility (CSR)

Giving back to the society is one of our core beliefs and we have always strived to improve access to high-quality healthcare to the underserved segments of the society. During the year, we touched lives of over 3.63 lakh indigent patients across our Network and provided them free medical services worth over INR 202.9 crore. We provided free medical services across most of our medical specialities, including advanced lifesaving surgeries such as cardiac sciences, neuro sciences, orthopaedics and surgical oncology.

Opportunities and threats

Opportunities

• Expansion in existing facilities and build out of newly acquired land parcels

We have a total bed build-out potential of ~1,100 beds at our existing facilities, through brownfield expansion. Additionally, there is a potential of 2,300 brownfield beds at our PHFs as well. Given the minimal increase in fixed costs associated with such beds and faster occupancy ramp up, this model of expansion offers significant operating leverage and is accretive to our ROCE. Hence, this model continues to be our most preferred manner of expansion.

During this fiscal, we added 92 beds at our existing hospital in Shalimar Bagh, New Delhi through brownfield expansion. Going forward, we have a well-defined plan to further expand our Network bed capacity by FY27, including some of our PHFs:

(i) 190 brownfield beds at Max Super Speciality Hospital, Mohali

(ii) 440 brownfield beds at Nanavati Max Super Speciality Hospital, Mumbai

(iii) 600 brownfield beds at Max Smart Super Speciality Hospital, Saket (PHF), with a further build out potential of 500 beds beyond FY27

(iv) 500 beds at our acquired plot of land in Sector-56, Gurugram

(v) 300 beds in Saket through a medical service agreement with Vikrant Childrens Foundation and Research Centre (PHF), with a further build out potential of 200 beds beyond FY27

(vi) 250 beds in Patparganj, East Delhi through a medical service agreement with Nirogi Charitable and Medical Research Trust (PHF), with a further build out potential of 150 beds beyond FY27

• Asset-light models with real estate investment trusts (reits) and developers for future expansion

We believe that our core competence lies in providing healthcare services ranging from primary care to quaternary care. The healthcare sector is capital intensive and requires continuous investment of capital for operations as well as expansion. In addition to building our brownfield capacity, we have been evaluating several opportunities to set up ‘asset light healthcare facilities across various cities where we currently do not have our own facilities. This ‘asset light model offers an attractive ROCE and minimal development risk, with our investment restricted to ~30-35% of the project costs. In order to implement this strategy, we are actively engaging with real estate developers who can build the hospital facilities as per our specifications, and in turn, we can partner with them to operate and manage these facilities by leveraging our brand and expertise in the healthcare industry.

Along the above lines, in the latter half of FY22, we consummated a 60-year exclusive operations and management agreement for a 300-bed hospital in the attractive micro market of Dwarka in South-west Delhi, where we did not have any existing footprint. The structural work of this hospital is nearing completion and we expect to commission it in the latter half of FY24.

• Inorganic growth opportunities

The shortage of healthcare infrastructure in the country presents a multi-decadal opportunity for investment in the hospital sector. In addition to our brownfield expansions, we continue to actively, but prudently, evaluate inorganic growth opportunities to expand our footprint geographically, serve a larger number of patients as well as deploy our cash surplus from operations strategically.

During FY23, we announced the execution of an ‘Agreement to Sell to purchase a piece of land admeasuring 4,000 square meters in Ghaziabad, adjacent to the hospital owned and operated by one of our wholly owned subsidiaries, Crosslay Remedies Limited. This land acquisition, when fully consummated, has the potential to add ~100 brownfield beds to our capacity in the attractive geography of Ghaziabad.

• Invest in and grow retail pathology and home care services

In addition to the core hospital business, we plan to further scale up Max Lab and Max@Home operations to provide access to quality healthcare services outside of our facilities as well.

The Indian diagnostics industry, valued at ~INR 730 billion, is projected to grow at a healthy CAGR of 10-12% by FY25. For Max Lab, our initial focus is to deepen and widen our presence in the cities wherein Max Healthcare already has a presence through Network facilities. To fortify our market presence and extend our reach, Max Lab is actively expanding its network of third-party managed patient collection centres (PCCs), pick-up points (PUPs) in doctor clinics, and hospital lab management (HLM) services. This discerning investment endeavours to enhance accessibility and convenience for our esteemed customers. In the upcoming year, our primary focus will be on expanding our network in Uttar Pradesh, Punjab, Haryana, and Uttarakhand. In FY22, we established Max Lab Limited as a wholly owned subsidiary to incubate and further drive its growth independently. During FY23, Max Lab has placed significant emphasis on enhancing services and implementing market activation programmes to deliver an exceptional customer experience. Our endeavours encompass the establishment of new company-owned, company-operated centres (COCOs) and collection centres. Furthermore, we have implemented robust marketing initiatives targeting patients as well as channel partners.

The Indian home healthcare market is expected to more than double by 2025, from ~INR 430 billion in 2020 to ~INR 1.6 trillion in 2025. According to estimates, 70% of regular hospital needs today can be serviced at home, and this is only poised to increase, as the Indian home healthcare market remains largely underpenetrated (~3.6% of total health spending in India against ~8.3% in the US). Through Max@Home, our foray into out-of-hospital services has provided credible play in this nascent, highly unorganised yet fast growing segment. The home healthcare opportunity is significant as it sets to benefit all the stakeholders, be it by way of increasing access and affordability for patients, helping hospitals manage bed burden of low complexity cases, or growing advocacy for timely medical intervention post pandemic. We plan to capitalise on three potential growth levers for this SBU – offering end-to-end clinical solutions instead of occasional interventions, leveraging digitalisation and going deep across our existing geographies.

• Improve case mix and channel mix

We continue to focus on investing in state-of-the-art medical technology, attracting skilled clinical talent, and enhancing our expertise in tertiary and quaternary care areas. This will help us add procedures that are more sophisticated and thereby improve our case mix. Further, we intend to optimise our channel mix by improving the share of international, cash walk-in and insured patients. In addition, we intend to build on our upcountry markets to improve the share of high-end tertiary care procedures as patients travel from far-flung areas to metro cities, such as Delhi-NCR and Mumbai, to avail complex and superior quality treatment. Our Company attracts patients from all of North India, including Uttar Pradesh, Bihar, Jharkhand, Punjab, Haryana, Rajasthan and other key states. We intend to deepen our reach in the country by penetrating new cities or regions, and establishing a greater number of sales offices or OPD centres to cater to the local population and divert relevant cases to our tertiary care facilities for high-end procedures.

• Medical tourism

India is quickly emerging as a major medical tourism destination, ranking 10th in the Medical Tourism Index (MTI) for 2020-21 out of 46 destinations of the world by Medical Tourism Association, USA. We believe that India is highly competitive in terms of healthcare costs at equivalent clinical outcomes compared to developed countries such as the United States, the United Kingdom and Singapore.

Country-Wise Cost of Key Treatment Procedures (In Usd)

Ailments (In USD)	US	Korea	Singapore	Thailand	India
Hip replacement	50,000	14,120	12,000	7,879	7,000
Knee replacement	50,000	19,800	13,000	12,297	6,200
Heart Bypass	1,44,000	28,900	18,500	15,121	5,200
Angioplasty	57,000	15,200	13,000	3,788	3,300
Heart valve replacement	1,70,000	43,500	12,500	21,212	5,500
Dental implants	2,800	4,200	1,500	3,636	1,000

Source: CRISIL Research

We continue to be amongst the leading providers of care to international medical value travellers in Delhi-NCR region, and we intend to build up this segment. We treat international patients from multiple countries, with key inflows from Iraq, Uzbekistan, Yemen, Kenya, Bangladesh, Ethiopia, etc. We intend to focus on attracting more medical value travellers from select markets, including those in the Middle East, Africa, Southeast Asia and CIS countries, by increasing our marketing efforts in these regions. We intend to leverage our brand recognition, and our direct and indirect presence, to attract medical tourists through owned or partner representative offices, clinician visits to these countries for OPD consultations, health camps as well as capitalise our existing patient base.

In furtherance of this strategy, we decided to establish company- and partner-owned Patient Assistance Centres (PACs) across key markets. We had existing PACs in Kenya and Nigeria, and we further expanded into UAE in FY23. During FY23, we established four more company-owned PACs, one each in Oman, Ethiopia, Myanmar and Uzbekistan. These PACs guide patients in their journeys, connect them with clinicians of repute over VCs, help them procure and understand treatment plans, advise them in their decision making, help arrange travel documents and assist them in seamless transfer to our hospitals. We are also focusing our efforts on contracting institutional patient referrals from government and public sector organisations abroad. We executed a contract with MOH Iraq in December 2022 and similar arrangements were signed with state owned medical institutions in Mongolia in Rs.une 2022. We have initiated registration of PACs in Bangladesh and Nepal as well, which will become operational in the current fiscal.

Threats

• Increasing competition and shortage of skilled clinical talent

Healthcare being a high growth sector is attracting many new entrants, including established business houses and entrepreneurs. Most of these players are focused on metros and Tier 1 cities. Thus, there is increased competition in these markets that adversely affects the profitability and growth potential of existing players. New players might offer lower rates, adopt unfair practices and compete with us for doctors and other medical professionals. In such a situation, we may have to reduce the price of services or run the risk of not being able to attract patients, doctors and other healthcare professionals to our healthcare facilities, leading to an adverse impact on our business operations. If we are unable to maintain a competitive edge, our market share, business, financial condition and results of operations could be adversely affected.

Furthermore, the skills and experience of our healthcare professionals, including doctors and nurses are paramount for ensuring clinical excellence at our hospitals. As a result, we need to continuously attract, engage, train and retain competent doctors as well as other healthcare professionals to maintain our competitive edge in the industry. However, high demand and supply gap for skilled talent may pose difficulties in recruiting or retaining top talent. Besides, we compete with other healthcare services providers for recruitment and retention of healthcare professionals, including doctors. Additionally, in case of reputational damage to the brand or negative publicity and increase in attrition rates, there may be delays in sourcing skilled manpower, given the significant shortage of professionals in the Indian market.

• Regulatory risks faced by the healthcare industry

In India, healthcare is regulated by different laws and regulations in various states. Further, healthcare costs in India have increased significantly over the past decade. Consequently, there have been and may continue to be proposals by legislators and regulators to limit tariff increases, cap margins and fix the price of procedures and diagnostics. The central government has the power to regulate prices for essential medicines. Till date, the government has capped prices for four devices – cardiac stents, drug-eluting stents, knee implants, and intra-uterine devices. In addition, The National Pharmaceutical Pricing Authority (NPPA) is tasked with periodically reviewing and regulating the prices of pharmaceutical formulations and drugs to curb overcharging and supply shortage. For instance, in Rs.une 2023, NPPA made downward revisions to the ceiling prices of 18 formulations and retail prices of 23 new drugs by bringing them under price control. Such regulatory actions may have a transitory impact on our Companys operating margins since we may have to renegotiate with vendors and may face delays in sourcing these regulated formulations / drugs due to temporary supply chain disruptions caused by such pricing regulations.

Likewise, the qualifications and practice of our healthcare professionals are also strictly regulated and any non-compliance can lead to penalties including fines, loss of license or restrictions on healthcare facilities and operations, which could materially or adversely affect our business and reputation.

These current or future laws, rules and regulations may also impede our operations and affect our continued growth.

• Technology disruption

The market for healthcare equipment and products is characterised by periodic technological changes, frequent new equipment and service introductions, changes in patients needs and ever-evolving industry standards. New equipment and tools based on advanced technology or revised industry standards can render our existing equipment and tools obsolete. To provide services effectively at our facilities, we continually aim to enhance our equipment and develop our facilities, as well as provide sufficient training to our staff to satisfy the sophisticated treatment requirements at our hospitals.

However, procuring and integrating new services and tools at commercially suitable terms and in a cost-effective manner may be difficult, particularly as market preferences can change rapidly. Significant investment is required on an ongoing basis to prevent obsolescence of equipment. Besides, hospitals may not always have sufficient funds to continually invest in such equipment and facilities or access latest technology routinely. Inability to remain up to date with current trends and needs of the healthcare industry may result in loss of market share, which may adversely affect our business.

Financial performance

FY23 was a momentous year for our Company as it delivered a robust financial and operational performance, initiated execution of projects for greenfield and brownfield bed expansions, and exhibited the results of commendable execution of our operational strategy. Our Companys Board recommended a maiden dividend of 10% for approval of the shareholders at the ensuing Annual General Meeting. In addition, we successfully commissioned and operationalised a newly constructed 92-bed oncology block at Max Super Speciality Hospital, Shalimar Bagh, taking its total bed capacity to 372 beds.

Audited Financial Results of MHIL (Consolidated)

H in crore

	For the year ended	For the year ended
	31 Mar-23 (Audited)	31 Mar-22	(Audited)*
Income
Revenue from operations	4,563		3,937
Other income	139		122
Total income	4,702		4,059
Expenses
Purchase of drugs, consumables and implants	937		930
Increase in inventories of drugs, consumables and implants	(15)		(8)
Employee benefits expense	809		760
Professional and consultancy fee	986		809
Other expenses	604		497
Finance costs	84		101
Depreciation and amortization expense	232		221
Total expenses	3,638		3,311
Net profit before exceptional items and tax	1,064		748
Net profit after tax	1,103		608
EBITDA	1,380		1,070
EBITDA Margin %	29.3%		26.4%

* Figures for the previous periods have been regrouped and reclassified to conform to the classification of the current period, wherever necessary.

FY23 vs. FY22 results

Total income: Total income increased by INR 643 Crore or 16% to INR 4,702 Crore for FY23, from INR 4,059 Crore for FY22, primarily due to increase in revenue from operations by INR 626 Crore.

Revenue from operations: Revenue from operations increased by INR 626 Crore or 16% to INR 4,563 Crore for FY23 from INR 3,937 Crore for FY22. The increase was primarily driven by higher occupancies and OPD footfalls, improved revenues from medical tourism and increasing penetration of insurance. There was a significant drop in revenue from COVID-19 vaccination and related tests from INR 221 Cr in FY22 to INR 2 Cr in FY23.

Purchase of pharmacy, drugs, consumables and implants:

Purchase of pharmacy, drugs, consumables and implants remained flat with no increase at INR 922 Crore for FY23 from INR 923 Crore for FY22. Decline in ratio from 23.4% in FY22 to 20.2% in FY23 was attributed to change in mix, tariff increase, procurement efficiencies and drop in share of revenue from vaccination.

Employee benefits expense: Employee benefits expense increased by INR 49 Crore or 6.5% to INR 809 Crore for FY23 from INR 760 Crore for FY22. The increase was primarily due to annual merit increase and new hiring. There was a reduction in ESOP related costs during FY23.

Other expenses: Other expenses increased by INR 108 Crore by 21.7% to INR 604 Crore for FY23 from INR 497 Crore for FY22. The increase was primarily due to (i) increase in legal and professional fees, mainly due to significant growth (+24%) in revenues from international patients and other growth-related initiatives undertaken during the fiscal (ii) lab investigation and patient catering expense due to increased footfalls; (iii) increase in power & utility due to higher consumption; (iv) and increase in equipment hiring charges (mainly due to robotics).

Professional and consultancy fees: Professional and consultancy fees increased by INR 177 Crore or 22% to INR 986 Crore for FY23 from INR 809 Crore for FY22. The increase was in line with the increase in the revenue from operations, adjusted for drop in revenue from COVID-19 vaccination in FY23 compared to the previous year.

Finance costs: Finance costs decreased by INR 17 Crore or (17%) to INR 84 Crore for FY23 from INR 101 Crore for FY22. The decrease was primarily due to pre-payment of debt and increased cash flow from operations.

Depreciation and amortisation expense: Depreciation and amortisation expense increased by INR 11 Crore or 5% to INR 232 Crore for FY23 from INR 221 Crore for FY22. This includes the impact of capitalization of 92-bedded oncology block at Max Shalimar Bagh and change in estimated useful life of hand instruments.

Profit before exceptional items and tax: Due to the reasons mentioned above, profit before exceptional items and increased by INR 316 Crore or 42% to INR 1064 Crore for FY23 from INR 748 Crore for FY22.

Key Financial Ratios

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key sector-specific financial ratios.

Our Company has identified the following ratios as key financial ratios:

Particulars	FY23	FY22	% Change
Current Ratio (times) (1)	1.86	1.32	40.69
Debt Equity (times) (2)	0.09	0.15	-36.04
Debt Service Coverage	8.19	5.11	60.34
Ratio (times) (3)
Return on Equity (%) (4)	16.12	10.15	58.79

(1) Current Ratio: Improved primarily on account of cash from operations during the year.

(2) Debt Equity Ratio: Improved primarily on account of repayment / prepayment of term loan and increase in ‘other equity due to net profit for the year.

(3) Debt Service Coverage Ratio: Improved due to reduction in debt, coupled with increase in earnings.

(4) Return on Equity: Improved primarily on account of improved profitability.

Improvement in net debt position

During the year, our net debt position (excluding lease liability) improved from INR 291 Crore as on March 31, 2022 to a Net cash surplus of INR 758 Crore as on March 31, 2023. Improvement is primarily driven by improved cash from operations and lower spend on capital expenditure and growth initiatives during FY23.

Particulars	March 31, 2023	March 31, 2022
Gross debt	565	727
Put option liability	150	139
Gross debt, including put option liability	715	865
Cash and bank balance	1,472	575
Net debt (excluding lease liability)	-758	291
Amount invested in Capex and growth initiatives	336	660

Human resources

At Max Healthcare, we are dedicated to fostering a professional culture that nurtures our people and empowers them to thrive in their careers, while contributing to the success of the Company. In line with our business requirements, we consistently work towards strengthening our team, while actively engaging with them through a range of initiatives including learning and development opportunities, HRIS / HRMS enhancements, recognition of their achievements, and providing avenues for career growth.

Learning & Development: We believe that motivated and enthused teams build great organisations, and hence our aim is to create platforms that enable our teams to thrive and reach their full potential. Employees underwent 995,000 hours of upskilling programmes in FY23.

• The Max Talent Development Programme, the first-of-its-kind in healthcare, was launched in November 2022 with the intent of creating a platform for high-potential transitioning leaders who have displayed strong commitment towards Max Healthcare through their exemplary performance and competent behaviour. Under this programme, nearly 200 eligible employees underwent rigorous transparent evaluation processes, which included psychometric assessments and multiple assessments on organisational competencies and role criticality.

Customised learning paths for leaders were curated based on the learning preferences and career aspirations of high potential candidates. Hospital Operations Programme for Excellence (HOPE), an immersive and experiential programme was launched for employees seeking to grow in Operations, while the Functional Upskilling Programme for Excellence (FUPE) was launched for employees aspiring for leadership roles in their existing functions.

Additionally, we launched new Capability Development initiatives targeted at employees of every cadre:

(i) Service Excellence Programme for Frontline patient-facing teams

(ii) Management Development Programme for all People Managers

(iii) HR Capability Development Programme for eligible employees from Human Resources

(iv) Neev for our outsourced teams

We also launched the Front Office Transformation Programme, which was designed to strengthen the functional competencies and capabilities of the Front Office teams through well-defined functional learning paths.

Compensation and Benefits: We have defined an employee ownership programme which allows employees to receive equity ownership. Presently, ESOP Scheme 2022 has been extended to our clinicians and non-medical employees. The organisation has a well-defined compensation structure to ensure equal pay for all employees. Both men and women who are hired for entry-level positions at the same level receive identical compensation. We also have a smooth transition programme for new parents, offering them leave benefits that comply with the appropriate regulations.

Employee Engagement: Max Healthcare received the prestigious certification from Great Place to Work? Institute. The GPTW certification is a measure of employees sense of pride in their work and trust towards their team as well as the organisation.

By participating in an anonymous online survey, our employees shared their opinions, reflecting their sense of pride in their work and trust in their team and organisation. The Culture Brief? and Culture Audit? helped capture the unique aspects of our organisations culture that set us apart.

Our overall Trust Index Score* at Max Healthcare was 76% and we scored exceedingly well on all dimensions of survey – pride, the credibility of management, respect for people, fairness at the workplace and camaraderie among people. It reinforces our belief that we are on the right track to building a coveted organisation with a team of enthused people, driven by our purpose – ‘To serve. To excel.

*Trust Index Score is the percentage of employees that shared a positive response (rated 4 or 5 on a 5-point scale) to the 59 statements of the survey.

Digital HR: Adhering to our philosophy ‘To Serve. To Excel, we continue to enhance employee experience, improve efficiency and ensure better process controls through technology advancements in the HR domain. During the year, the following initiatives were rolled out in this regard:

• Launch of improved onboarding experience with data completion and accuracy

• Implementation of ‘ONExp for ease of navigation through single window access across all modules of HRIS

• Strengthened Performance Management module by introducing metric-based goal setting and ‘Check in to drive real-time tracking of goals

• Rolled out ‘Rehiring Module for effortless data migration during internal transfers and re-hiring

• Implementation of ‘web view in HRIS Mobile Application, through which the users who do not have access to a computer will also be able to operate all modules of HRIS

• Tracking of Individual Development Plans for the participants of capability building programmes

• Rolled-out ‘Directory on HRIS with features like call, message, chat on workgroup to enable better connect among employees.

Environment, energy and fire safety matters

The conservation of environment and energy is central to our operations as our hospitals operate 24/7 and consume huge amounts of energy and water as well as generates substantial amounts of medical and non-medical waste. At Max Healthcare, we have invested in technologies, processes and people to ensure optimum consumption of energy and water in our hospitals and improvement of ecological parameters, year after year. We monitor our emissions, energy, and water consumption per bed through a dedicated environment management department. We optimise the usage of medical equipment, enhance adoption of energy efficient and environment-friendly technologies and strive to improve operational efficacy. This year, we have also started recognising and awarding hospitals for their efforts to conserve energy and water. We undertake several initiatives, such as maximum recycling of treated wastewater, optimising water consumption in general and patient areas, re-using of dialysis RO reject water in cooling towers, organic waste convertors, installation of rainwater harvesting systems and other environment-friendly initiatives.

ISO 14001 is an internationally recognised standard for environmental management and helps organisations improve their environmental performance through efficient use of resources and reduction of waste. It helps them to gain a competitive advantage and earn the trust of stakeholders. This year, six of our facilities have received ISO 14001 (EMS) certification, in addition to two of our PHFs. Green power constituted 33% of our total energy consumption across our Network facilities. Through a sustained implementation of Reduce, Reuse and Recycle (3R) principle for water management, we were able to achieve a reduction in freshwater consumption of 0.98 kiloliters per bed in FY23, from 1.07 kiloliters per bed in FY22. We recycle organic waste as compost on site through use of Organic Waste Converters (OWCs), and more than 50% of the waste generated is being recycled through authorised recyclers.

Given the use of certain chemicals such as alcohol, sanitisers, gases, fuel and other inflammable materials at our facilities, we are exposed to the risk of fire accidents. In FY23, we undertook several initiatives to ensure fire safety at our hospitals, including conducting ~68 mock drills and 2,014 fire safety trainings to increase awareness and train our workforce in case of any fire related accidents.

Risks and concerns

Our Company is exposed to a number of strategic and operational risks. The Board of Directors (the Board) of the Company has put in place an elaborate risk management system for identifying, analysing, assessing, mitigating, monitoring risk or potential threat to achievement of our strategic and business objectives covering various aspects of our business i.e., operations, regulatory, medical, strategic, people and financial. The Audit and Risk Management Committee (A&RMC) has reviewed and approved appropriate risk management guidelines including risk appetite policy, risk categorisation, etc. The risks are categorised into Medical and Non-Medical risks, and two distinct senior management personnel act as Risk Officer for these categories. A&RMC periodically reviews the risk register, risk heat map and the mitigation plan for all high and critical risks or potential events that may have an adverse impact on the reputation, operations, and financials of our Company. The reviews also entail discussion on measures the Company is taking to avoid, transfer, control and mitigate such risks.

The risk management policies and systems are reviewed periodically to reflect changes in market conditions, business activities and risk appetite levels. In the opinion of the Board, none of the risks faced by our Company threatens its existence. However, keeping in view the areas in which our Company operates, risks with respect to litigation by or against our Company, risk of fire and regulatory changes may have a material impact on the Companys financial performance and repute.

Internal financial control systems and their adequacy

Our Company has a robust and well-established system of internal controls, which is modulated from time to time to keep it contemporary and relevant to the current realties. IT system and workflows, schedule of delegation of authority, segregation of duties, budgetary controls, exception reporting, analytics, checklists, self-certification mechanism and periodical risk control testing are the key pillars of the internal control systems. Extensive policies, guidelines and procedures are laid down for all business processes and these are accessible to the concerned employees through the designated web page. The internal control system facilitates adherence to the Companys policies, safeguarding of its assets, prevention and detection of fraud, error-reporting mechanisms, accuracy and completeness of the accounting records. The internal control system has also been designed to ensure timely and accurate compilation of financial statements and management reports and for maintaining accountability of assets. Additionally, it also ensures compliance with statutory laws, regulations and company policies.

An extensive risk-based programme of concurrent audits, internal audits, budgetary controls, exceptional reporting and IT based transaction controls, coupled with constant management reviews and dash boarding of data provide assurance to the Board regarding the adequacy and efficacy of internal controls. The annual internal audit plan is dynamic, aligned to the business objectives of the Company, and reviewed by the A&RMC periodically, including the high and medium risk observations emanating from such audits. Further, A&RMC also monitors the status of management actions emanating from such internal audit reviews. The Internal Audit function and its processes are also subjected to periodic quality assurance reviews by third party experts.

During FY23, these controls were assessed and no reportable material weaknesses in their design or operation were observed. The statutory auditors, during the course of their audit, also did not find any material weakness in controls and / or misstatement resulting from lack of internal controls.

Outlook

Our Companys management continues to strive to build on performance of fiscal 2023 as well as expand the width and depth of our services to serve increasing number of patients, while also improving the quality of care. Our Company has an aggressive plan to expand its bed capacity through various means, including brownfield, greenfield and asset-light models. During the year, we commissioned a 92-bedded oncology block at Max Super Speciality Hospital, Shalimar Bagh. We also announced execution of an ‘Agreement to Sell to purchase a piece of land in Ghaziabad, adjacent to the hospital owned and operated by one of our wholly owned subsidiaries, Crosslay Remedies Limited. Further, we expect to commission the 300-bedded, built-to-suit facility at Dwarka in latter half of FY24, an agreement for which was executed last fiscal in Rs.anuary 2022.

As we step into the new fiscal year, we will continue to pursue our brownfield and other capacity expansion projects, improve operational metrics in the current facilities and businesses, and at the same time, prudently evaluate inorganic acquisition opportunities. We will also focus on strengthening our digital capabilities to ensure maximum reach, efficacy and convenience. Overall, we are confident of continuing our robust performance and fortifying our presence as one of the most well-regarded healthcare providers in India, committed to the highest standards of clinical excellence and patient care.