Max India Ltd Management Discussions.

About the Company

Max India Limited (Max India or the Company), a multibusiness corporate, is a part of the $3 billion Max Group. Max India operates in the Health & Allied Services space through Max Healthcare Institute Limited (MHC), Max Bupa Health Insurance Company Limited (MBHI), Antara Senior Living Limited and Max SkillFirst Limited.

The Company was incorporated on January 1, 2015 as a result of the demerger of the erstwhile Max India Limited (now renamed as Max Financial Services Limited or MFSL). The investments held by MFSL in MHC, MBHI, Antara Senior Living Limited, Max SkillFirst Limited, Pharmax Corporation Limited, Max Ateev Limited and Max UK Limited stood transferred to the Company w.e.f. April 1, 2015.

The Companys key operating businesses include:

Max Healthcare Institute Limited (MHC) is an equal Joint Venture (JV) between MHC and Life Healthcare, South Africas second-largest healthcare chain. This unit provides standardised, seamless and world-class healthcare services, especially focused on tertiary and quaternary care.

Max Bupa Health Insurance Company Limited (MBHI)

a Max India subsidiary, is a 51:49 JV with Bupa Finance Plc., UK, and offers individual and family-oriented health insurance policies across all age groups.

Antara Senior Living Limited is Max Indias wholly-owned subsidiary and offers highly differentiated, world-class senior living communities that fulfill lifestyle, wellness and health-related requirements of senior citizens.

Max SkillFirst Limited (Max SkillFirst) is Max Indias wholly-owned subsidiary. It operates as a shared service centre that offers learning and development solutions as well as training services to companies in the Max Group as well as to external clients.

Corporate Developments

On December 24, 2018, the Company announced that KKR-Radiant Life Care will acquire a majority stake in MHC by purchasing MHCs JV partner, Life Healthcares, stake and subsequently merging Radiant with MHC. The combination of Radiant and MHC will create the largest hospital network in North India. The network is expected to be among the top three hospital networks in India by revenue and the fourth largest in terms of operating beds. The transaction will result in the demerger of Max India into two listed companies, one created by the merger of MHC and Radiant and the other demerged entity, currently named Advaita, which will own the Senior Living Business.

A record date for the completion of this transaction will be set in due course by the Board of Max India.

On February 26, 2019, the Board of Max India approved the sale of its 51% stake in MBHI to the leading private equity firm True North. The transaction will lead to a cash inflow of more than Rs. 500 crore for Max India. The Company intends to utilise the proceeds to invest in both existing and new business opportunities, while also offering an exit opportunity to uninterested shareholders through a capital reduction process, subject to regulatory approvals.

Effective April 1, 2019, Mr. Rahul Khosla, who joined the Max Group in August 2011, transitioned from his role as the Max Group President to a non-executive position. As a part of the transition, Mr. Analjit Singh, Founder and Chairman of the Max Group, took on the position of the Chairman of Max India, previously held by Mr. Khosla, who will also demit his role as Chairman, MHC once regulatory approvals for the transaction with KKR-Radiant are received. This position will then be filled by KKR-Radiant.

Industry Overview

Max Indias key businesses operate in the Health & Allied Services sector. Indian healthcare is one of the fastest growing sectors and is expected to reach ~$370 billion by 2022. The growth fundamentals of the healthcare delivery segment remain strong, although the sector has been facing significant margin pressure for the past couple of years, driven by regulatory interventions such as capping of trade margins of many important medicines, capping of stent and knee implant prices and a potential National Essential Diagnostic List, amongst others. The government launched the Ayushman Bharat scheme, which is a step in the right direction towards increasing health coverage. The sector has witnessed increasing Mergers and Acquisitions (M&A) activity of late, with announcements of IHH Healthcare buying controlling stake in Fortis, Manipal- TPG buying Medanta and Everstone Capital purchasing Sahaydri Hospitals. Much like healthcare, the Indian health insurance sector is also upbeat with gross written premiums witnessing a growth of 22% since FY2018.

Finally, senior living as an industry category is now witnessing a growth phase with existing players developing higher value products as well as new entrants trying to launch their first senior living ventures. However, most of these projects continue to be real estate offerings by traditional real estate players and lack the sharp focus and world-class service standards of Antaras product offering.

Financial Highlights

Max Indias flagship entity MHIL reported consolidated revenues worth Rs. 1,748 crore in FY2019 for its network of owned and managed hospitals, with an EBITDA of Rs. 212 crore and an EBITDA margin of 12.1%. The Company reported a revenue de-growth of 2%, EBITDA growth of 27% and EBITDA margin expansion of 276 bps. MHCs performance was adversely impacted in Q4 FY2018 due to an incident at its Shalimar Bagh hospital and other regulatory interventions. Subsequently, a Transformation Programme with multiple revenue and cost initiatives was undertaken in FY2019, which has seen MHC regain its growth and profitability trajectory, thus exiting Q4 FY2019 on a with a quarter-on-quarter revenue growth of 3% and an EBITDA growth of over 2.1 times from Rs. 28 crore in Q4 of FY2018 to Rs. 58 crore in Q4 FY2019 and EBITDA margin expanded by 654 bps to 13%.

MBHIs Gross Written Premium in FY2019 was recorded at Rs. 947 crore, growing 2 6% over FY2018. MBHIs performance was a result of healthy growth in new sales as well as renewals, and strong channel performance in bancassurance as well as proprietary channels such as agency and digital.

In April 2017, Antara Senior Living commenced operations at its first community near Dehradun, Uttarakhand. Since then, more than half of the apartments in the community have been sold out. In FY2019, Max SkillFirst reported revenues of Rs. 53 crore, which were 17% higher than FY2018, and a positive EBITDA (excluding a one-off expense) of Rs. 4 crore primarily due to better efficiencies. During the year, Max SkillFirst imparted over 3.9 lakh hours of training to more than 1 lakh learners through 90,000+ sessions.

Human Resources

The number of permanent employees in Max India as on March 31, 2019 is 48.

Max India remained steadfast in its focus on building effective corporate governance, a diverse work culture and a pipeline of talented and motivated individuals. This was primarily done through innovative methods of employee learning and development. Some of these efforts include multiple talent management interventions, in-house training programmes as well as sponsoring employees to attend external training and career development programmes for improving their functional and managerial effectiveness.

Communication is key to a well-functioning organisation. To ensure transparent communication, a refreshed purpose and the Company values of Sevabhav, Credibility and Excellence were disseminated to the entire management. The Company also maintains a fluid and agile organisational structure that allows for effective communication channels to ensure they all are aligned to the common business goals and strategy.

Opportunities and Threats

Each of Max Indias businesses presents its unique challenges and opportunities. Its youngest business Antara Senior Living focuses on population in India over 60 years. Currently at 116 million, this segment is growing at 3.8% per annum. As Antara continues to transform its business from an investment-heavy to a capital-light operating model, it is ready to leverage new opportunities in the Delhi NCR and Mohali regions.

Max SkillFirst has identified an opportunity to grow aggressively in the financial services sector in India through its partnership with Cohen Brown, an international leader whose courseware and tools have been utilised in more than 50 countries and translated into 15 languages. The Company will also initiate the work towards tech-led skilling in the B2C Sector.

At this juncture, while Max India is confident of seeding new businesses after completing the sale of its hospitals and health insurance arms, a renewed start always poses the risk of uncertainties such as a delay in transactions beyond the expected time frame due to extraneous factors such as clearances and approvals. As Max India decides the businesses it wants to enter by next year, it is of utmost importance to create significant value for those who chose to remain invested with the Company. The new businesses will be complementary to the Groups focus areas, including life insurance, real estate, senior care and lifestyle.


One of the key focus areas of the Company will be to conclude the MHC and MBHI transactions in a timely manner. The Company will also initiate the process of identifying value- accretive new businesses to fruitfully utilise some of the funds generated from the transactions.

At the same time, it is incumbent on the Company to ensure that all its existing portfolio companies continue to be run effectively and efficiently as per their business plans. Hence,

it will continue to focus on strengthening MHCs existing operations, taking suitable cost actions and expanding outreach in India and abroad to achieve profitable growth. MHC will also add new clinical programmes and sub segment existing programmes. It will oversee a judicious management of cash flows while awaiting funding from the new shareholders.

Even as regulatory changes continue to put pressure on margins, it will ensure that cost optimisation efforts do not impact patient safety or medical quality but are focused on increasing the productivity of spend, ensuring better negotiations with vendors and eliminating non-valueadding activities. MBHI will aim to retain and boost its sales momentum with the right product and channel mix while adding more customers through its innovative product and service proposition. Antara Senior Living will strive towards the swift and successful launch of new growth projects in Delhi NCR and North India, while continuing to improve sales velocity and collections at its Dehradun location.

The Indian healthcare industry is expected to grow at a CAGR of 22% till 2022, achieving a revenue of $372 billion. Factors such as an increasing and ageing Indian population, growing disease burden, and increasing government focus, rising awareness and insurance penetration among the populace are expected to drive this growth further. Additionally, increasing investments, growing innovation and entrepreneurship are expected to increase the market size, thereby boosting the contribution of healthcare to the countrys GDP.

The low cost of medical services and presence of world- class hospitals have resulted in a rise in the countrys medical tourism, attracting patients from across the world. The medical tourism market in India is growing at a CAGR of ~25% and is expected to have a market value of $9 billion in 2020. An additional striking aspect of Indian healthcare is the growing popularity of traditional and alternative medicine techniques such as Yoga, Ayurveda, Siddha, Unani and Homeopathy. With India being projected as one of the frontrunners in quality healthcare services today, it is estimated that the number of medical tourists would only increase in the coming years.

The Indian healthcare sector is expected to generate close to 7.5 million direct employment opportunities by 2022. With a shift in focus towards quality of service, particularly with the rising demand for tertiary and quaternary care, the industry requires specialised and highly skilled resources.

The Government of India has announced two major initiatives under the Pradhan Mantri Jan Arogya Yojana (PMJAY, popularly known as Ayushman Bharat) and the move to bring healthcare closer to homes via health and wellness centres. The National Health Protection Scheme is the largest government-funded healthcare programme in the world, which is expected to benefit 100 million poor families in the country by providing a cover of up to Rs. 5 lakh per family per year for secondary and tertiary care hospitalisation. In the long run, Ayushman Bharat shall become the universal health scheme for majority of the population.

The Central Government has made a budgetary allocation of Rs. 61,398 crore for the health sector for FY2020, with Rs. 6,400 crore earmarked for the ambitious PMJAY health insurance scheme launched on September 23, 2018. The outlay is one of the highest and reflects a 16 % increase over the allocation of Rs. 52,800 crore in FY2019.

About Max Healthcare

Max Healthcare has a network of 14 facilities in North India, offering services across all 30 specialities. Of these, 11 facilities are located in Delhi-NCR and the others in the cities of Mohali, Bathinda and Dehradun. The Max network includes state-of-the-art tertiary care hospitals in Saket, Patparganj, Vaishali, Smart, Shalimar Bagh, Mohali, Bathinda and Dehradun; secondary care hospitals at Gurugram, Noida & Greater Noida; and an outpatient facility and speciality centre at Panchsheel Park, Pitampura and a cancer care centre at Lajpat Nagar. The Super Speciality Hospitals in Mohali and Bathinda are under Public-Private Partnership (PPP) arrangement with the Government of Punjab. Max Healthcare has a base of over 3,000 doctors, 10,000 employees and over 2.8 million patients from over 130 countries, across the network of 14 hospitals.

During the year, the Noida hospital was temporary closed for a complete revamp of the facility and the hospital is expected to reopen in Q1 of FY2020. Further, the construction work for the addition of 90 beds (Tower B, Oncology Block) at Vaishali hospital was completed in Q4 FY2019 at the cost of ~ Rs. 100 crore. We are expecting to receive the Occupancy Certificate and other approvals for commercial launch of the Tower. The hiring of doctors and staff is presently underway.

Major Achievements and Awards for FY2019

Due to the steadfast focus on Clinical Safety and Service Excellence, Max Healthcare has an impeccable track record and high success rate in terms of complex surgeries and patient care parameters. In lieu of the same, Max Healthcare has received several awards and accolades in various service areas:

A) Clinical Safety

a) Max Smart received Gold for Project Suraksha - sepsis-related patient care outcomes - at the Asian Hospital Management Awards ceremony

b) Max Hospital Patparganj received the first award for Maximizer Quality Project for Reduction of Medication Administration Error at NABH National Healthcare Quality Conclave

B) Operational Excellence

a) Peoples Choice Award for Persistency in Project Management for Project Uday - to improve patient retention from Outpatient Department (OPD) - at ASQ conference, Seattle

b) Max Hospital Saket was awarded Gold at QCI DL Shah National Quality awards for Improving Patient Experience and Reduction of TAT in Emergency

C) Service Excellence

a) Bronze award for Life Savers Project (Max Bike Responder) at ASQ conference, Seattle

b) Peoples Choice Award for Best Use of Data in Project Management through Project AGILE - to reduce patient discharge Turnaround Time (TAT) - at ASQ conference, Seattle

c) Max Hospital Saket was the winner of Nursing Excellence Award at Business Standards awards

D) Others

a) Peoples Choice Award for Community Impact through Project Go Green - to reduce the hospitals air conditioning cost - at ASQ conference, Seattle

Operational Performance

Max Healthcare did reasonably well with respect to the growth across operational parameters owing to strong operational control and focus on growth areas. Some of the parameters are defined below:

IP Occupancy % - Bed occupancy for FY2019 has been 71.4% as compared to 69.8% for the last financial year. The occupancy has increased marginally this year owing to positive improvement in the East and North zones. South and Outside NCR zones showed a dip due to clinician exits in Max Smart and Max Mohali. Occupancy was low in the first quarter i.e., 68.1% due to certain international factors such as turbulence in Afghanistan, the previously mentioned clinician exits in Mohali in Orthopaedics and Cardiothoracic and Vascular Surgeons (CTVS), and some unanticipated clinician leaves in June. However, occupancy has increased significantly in the last quarter to 74.0%, thereby improving the full year occupancy. The operational bed capacity increased merginally to 1,382 as against 1,343 in FY 18 since the last two years.

COE Revenue Share - Revenue for key clinical specialities or Centres of Excellence (COEs) (i.e., Cardiac Sciences, Orthopaedics, Neuro Sciences, Oncology, MAS, Liver and Biliary Sciences, and Renal Sciences) has increased by 3% compared to last year. Growth is largely driven by Oncology in medical and radiation sub-specialities owing to new clinician hiring, technology improvement, internal referrals between sub-specialities, and increasing patient loyalty and confidence. Other specialties that have shown remarkable growth of around 7-11% compared to last year are Neurosciences, Renal Sciences, and Liver and Biliary sciences. Orthopaedic revenue has de-grown by 28% compared to last year primarily due to the exit of a senior clinician along with his team at Max Mohali. New clinicians have been hired and revenues are slowly recovering. Overall share of COE specialities has improved slightly, by 51%, in FY2019 compared to 50.4% in FY2018.

Average Length of Stay (ALOS) and Average Revenue Realised (ARR) - ALOS or patient TAT has increased from 3.11 in FY2018 to 3.20 in FY2019 due to an increased complexity of case mix. The inpatient ARR declined by 1.6% while the hospital ARR improved by 4.6% during FY2019.

Financial Performance

MHIL achieved Consolidated Revenue of Rs. 1,748 crore in FY2019 and recorded a de-growth of ~2% compared to last year. The consolidated operating margin (before interest and depreciation) has increased from 9.4% in FY2018 to 12.1% in FY2019, resulting in total EBIDTA of 212.2 crore in FY2019. Net loss stood at Rs. 0.5 crore as compared to loss of Rs. 17.4 crore in the previous year.

Max Healthcare has achieved slightly higher revenues than last year, but is much lower than expected for FY2019 due to clinician exits in Max Mohali & Max Smart, dip in upcountry business performance due to temporary factors and international factors such as political unrest in Afghanistan, currency issues in Ethiopia and Turkmenistan, etc. The Company launched an Max Extended Care (MEC) programme to extend the reach of Max tertiary care to upcountry patients by ethically promoting services in various specialties through continuing medical education, upcountry patient assistance centres and OPD centres.

During the year, the revenues from the walk-in and third- party administrators / insurance channels grew by 7%. Similarly, the revenue growth from institutional revenues stood at 7.6%. However, the revenues from international patients were static due to the reasons mentioned above.

Further, government regulations such as trade margin capping on oncology drugs in February 2019 impacted the revenue and margins. However, Max Healthcare did exceedingly well on managing costs. It improved EBIDTA margins through strict cost control actions under the umbrella of project Transformation 3.0. The focus on driving efficiencies and re-engineering of processes across the network hospitals has led to the improvement of gross margin by 46 bps, more than 51% reduction in deductions from credit bill by Public Sector Units (PSUs), and lower power and fuel costs than the previous year despite increase in occupancies and footfalls.

Going forward, Max Healthcare expects to continue to drive efficiencies from process optimisation powered by a stronger set of tools, technological investments, automation and analytics. Further, with pressure on margin consequent to the regulatory actions in the later part of the year, the cost optimisation through procurement efficiencies, material usage and bed usage throughout will be the focus area for the organisation. We also strive to continually focus on investing in the latest medical technology, attracting skilled physicians and surgeons, and developing our expertise in high-growth tertiary care areas to serve the increasing demand for sophisticated clinical care and procedures.

Information and Medical Technology and Quality Certifications

Max Healthcare is constantly leveraging technological advancements to enable timely access of information to patients and clinicians, leading to enhanced patient safety, care and outcomes. In FY2019, there were several notable technology interventions at Max Healthcare covering aspects such as patient safety, data tracking, employee communication and better customer engagement. Some of the initiatives that were launched include enhancements to the Customer Relationship Management platform for business growth, new version of e-prescription with improved user interface and speciality specific templates to further enhance patient safety and doctor adoption. Bar Coded Medication Administration (BCMA) has been launched in Oncology to help in reducing medication errors. Vios - the IoT-based platform for step-down care is live in all Delhi NCR units with the capability of real-time continuous monitoring of key vitals. Anurakshan, a tool for recording live updates of equipment maintenance schedule, breakdown time, etc., has been successfully deployed across Max Healthcare units for better preventive and predictive maintenance, and improved uptimes and utilisation of critical bio medical and engineering equipment.

Patient Portal and App 2.0 - A one-stop portal for healthcare services, serving as a digital locker for all patients records, has been launched with the facility to book appointments and check in, online payments and discounts, family linkage and to order emergency and Max@Home services. Further, the Max@Home digital platform that was launched to enable seamless service delivery and continuum of care to patients has been further enhanced with deployment of all service lines, including physiotherapy, nursing and pathology. Also, the Lab Information Management System has been successfully launched across all Max hospitals, seven Hospital Lab Management contracts, and 550+ collection centres in FY2019.

Significant progress has been made in enhancing operational performance and analytics through deployment of new analytical dashboards that can provide real time data

visualisation, alerts and reports. Predictive analytics for diagnosing readmission risk of cardiac patients with acute Myocardial Infarction condition has also been successfully deployed. In all, these initiatives during the year helped to elevate the quality of medical care and decision-making process while keeping the cost of care in check.

During the year, Max Healthcare has completed the construction of its new Oncology tower at Max Vaishali to cater to the growing needs of cancer patients in East Delhi and Uttar Pradesh. State-of-the-art Operation Theatres (OTs) and diagnostics have been installed with new technologies such as 3D Laparoscopy System with 3D Imaging, which ensures a more accurate view with superior image quality and depth perception. Also, a high- end ultrasound machine was installed at Max Vaishali, with single-crystal transducers to enable images to be captured at greater depth in the body.

Max Patparganj commissioned its first Advanced ExacTrac System with Frameless SRS to enable highly accurate Radiosurgery treatments with advanced 6D correctional accuracy. Digital Radiography Systems for Max Dehradun, Shalimar Bagh, Gurugram, Vaishali and Noida has been procured for better time efficiency through bypassing chemical processing and enhanced Images.

Max Healthcares clinical governance framework, capably led by the Clinical Directorate, Physician and Nursing Leadership, has worked relentlessly to implement safe, effective and efficient systems for patient care. Our unending focus is to strive for the best possible clinical outcomes and minimise clinical risks for our patients. Eleven hospitals under the Companys network are NABH accredited, in addition to JCI accreditation for Saket. New facilities are being continuously brought under the umbrella of quality accreditations. The Max Oncology Centre in Lajpat Nagar has successfully completed NABH accreditation, Blood Bank at Max Mohali is NABH certified and IVF centre at Max Panchsheel is now ISAR accredited. This helps keep the mission of establishing Max Healthcare medical facilities, clinical expertise, technology, safety standards and medical research at the highest level, comparable to the best-known institutions of the globe.

Some of the other key initiatives and achievements in the field of quality improvement are:

(i) Combined Hospital Acquired Infection Rate, including Central Line Associated Blood Stream Infection (CLABSI), Catheter Associated Urinary Tract Infections (CAUTIs), Ventilator Associated Pneumonia (VAP) and Surgical Site Infections (SSIs) have reduced significantly, from 0.61 in FY2018 to 0.45 in FY2019

(ii) Door-to-needle time: 92% of stroke patient were thrombolysed in less than 60 minutes in FY2019

(iii) Category 2 and 3 death rates have dropped from 15% in FY2018 to 11% in FY2019

(iv) Venous Thromboembolism (VTE) compliance rate has also shown continuous y-o-y improvement, from 72% in FY2016 to 89% in FY2019

(v) Indian Market Research Bureau (IMRB) Emergency Satisfaction scores have risen from 54% in FY2018 to 64% in FY2019.

Service Excellence

Service Excellence is the core premise around which our healthcare operations are structured. Our group continues to deliver highest standards of service for our patients and takes learning from global institutions, elevating standards of healthcare delivery across network. The path to Service Excellence was paved with various initiatives such as Sanchay, i.e., a service-to-sales transformation journey, Sevabhav training for all supporting cadre and process reengineering projects. Transparent goals, robust governance mechanism and encouragement through reward and recognition helped the cause.

Our group continues to deliver the highest standards of service for our patients. On a global platform, at the ASQ conference held at Seattle, Washington in May 2018, Max Healthcare won the Bronze award for Life Savers Project, Max Bike Responder. This win makes us the only healthcare organisation in the last decade to win at this prestigious conference. To continue our quality improvement journey, we plan to further strengthen the processes in both clinical and non-clinical areas.

Human Resources

The evolving socio-economic environment and market changes have redefined the people function within healthcare organisations. Max Healthcare has proactively adapted and aligned itself to these reforms by ensuring that human resources is equipped to manage changes in the workforce as well as prepare itself for the future. We strongly believe that an improved employee experience is the key to a workplace that fosters productivity and belongingness. In line with these values, we launched Saarthi, the HR Helpdesk to address and resolve employee queries on attendance, benefits, etc. across platforms such as phone, email and the Web with flexible times and locations. In order to enhance employee experience in the initial duration of tenure, we also conceptualised and implemented a robust assimilation programme for new hires at General Manager (GM) and above levels on an organisational scale. Clinicians are the mainstay of the hospital and to inculcate the values of Sevabhav, Excellence and Credibility at grassroots, Medlnductwas institutionalised as an introductory session about life at Max Healthcare. This year, the consolidation of the Medlnduct programme led to new modules aimed at consultants and higher levels of clinicians in collaboration with our Learning and Development partners. At Max Healthcare, it is our constant endeavour to put forth employee views and promote excellence and team work. Based on employee feedback on various formal and informal forums, we have been working towards a fair and transparent performance management system. The most significant and unprecedented change was discontinuing the process of relative ranking for OL1 and OL2 cadres in Nursing and Front Office. Instead, a linear scale performance review process coupled with roll out of quarterly incentive program for rewarding top talent was introduced, based on clear data-driven parameters.

We pioneered apprentices in the hospital industry through Vidyarthee, an initiative that serves as a launchpad for creating a talent pipeline at a massive scale while optimising costs. In its second lap, Vidyarthee saw an even higher participation. We had 470 Vidyarthee apprentices on our rolls as on March 31, 2019 and the number is increasing every day.

To create a happy workplace that emphasises camaraderie, collaboration and credibility, I Appreciate You was launched as a Sampark app to foster appreciation and congeniality at work. Since its launch in February 2019, it has given employees an opportunity to thank their colleagues.

The We Can ideation app was also launched to encourage new ideas on cost optimisation, revenue enhancement and improving patient safety. Many such ideas are now being implemented and the second edition is under evaluation by a panel consisting of top leadership and subject matter experts. Saarthi-Do You Know Series helped familiarise employees with various facets of people processes and tools at their disposal.

Max Groups core value of Sevabhav was exemplified through Pankh, our flagship Corporate Social Responsibility (CSR) umbrella. Through our marquee activities focused on helping special and underprivileged kids, women and senior citizens, we touched 8,000+ lives in the last financial year. The units that created the most impact with their initiatives were identified and felicitated by our senior leadership. Several initiatives to strengthen bonds and increase engagement with clinicians took force this year. Doc Talk, training with Pragati and initiatives such as Chintan ensured that we remain nimble and adjust to the ever-changing business and legal landscape.

To promote excellence, Max Healthcare automated some of its HR processes, including generation of appointment letters for all new joiners. We also launched a database management tool for visiting consultants, which enabled real-time data updates and comprehensive dashboards as well as Management Information Systems.

At Max Healthcare, we understand that our most important asset is our talent. Through increased efforts and teamwork, we were able to exceed our retention targets for both clinical and non-clinical key talent this year. These results are an impetus for us to achieve new milestones in our areas of specialisation through collaborative participation and innovation.

Regulatory Environment

The regulatory changes in FY2019 are outlined as below:

Minimum Wages in Delhi

On March 3, 2017, the Delhi government, by its notification dated March 3, 2017, enhanced the minimum wages for all classes of workmen/ employees in all scheduled employments under the Minimum Wages Act, 1948 (MW Act). Max Healthcare complied with the change in law and paid the wages at enhanced rates as per the March 2017 Notification. On August 4, 2018, the March 2017 Notification was quashed by the Delhi High Court (HC) for violating Article 14 of the Constitution, the MW Act, natural justice and due process principles. Max Healthcare again complied with change in law and reduced the minimum wages to the applicable level that existed prior to the March 2017 Notification. On September 13, 2018, the Delhi government moved the Supreme Court against the Delhi HC judgement quashing, inter alia, the March 2017 Notification. With effect from October 31, 2018, the Supreme Court, as an interim measure during the pendency of the proceedings, restored the MW Act, fixed as per the March 2017 Notification. The Supreme Court also made it clear that no recovery of amount already paid shall be made by employer(s).

National Essential Diagnostics List

A draft note on National Essential Diagnostics List had been released by the Indian Council of Medical Research (ICMR) (similar to the Pharmaceutical List) for public comments by January 31, 2019. The pricing guidelines and their implications are not yet known fully. We are keeping a close track to determine their impact on the Company.

Anti-Cancer Drug Price Control

In February 2019, the National Pharmaceutical Pricing Authority (NPPA) brought 42 non-scheduled anticancer drugs under price control through trade margin

rationalisation. The trade margin has been capped at 30%. The NPPA currently fixes prices of drugs placed in National List of Essential Medicines (NLEM) under Schedule I of the Drug Price Control Orders (DPCO). So far, around 1,000 drugs have been brought under price control under the initiative. Non-scheduled drugs are allowed an increase of up to 10% in prices every year, which is monitored by the NPPA. This is likely to adversely impact the economics of cancer treatment therapies, which involve high-end equipment and a specialised controlled environment.

CSR and Community Initiatives

The Max India Foundation (MIF) founded in 2008, is the CSR arm of Max Group, with a mission to provide quality healthcare to the underprivileged, provide holistic and focused wellbeing of underserved communities through village adoption, facilitate awareness of health-related issues and work for an eco-friendly environment. This is done by engaging Max Group employees and partnering with reputed NGOs in the execution of projects. The details of the activities of MIF have been provided in the Business Responsibility Review section of this Annual Report.


In FY2019, Max Healthcare was focused on strengthening its existing operations, taking stringent cost actions and expanding the outreach in India and abroad to achieve financial gains. The business will continue to identify and implement initiatives to achieve sustained revenue growth. This will involve adding new clinical programmes and sub-segmenting existing programmes. Further, with pressure on margin consequent to some of the regulatory actions detailed above, the cost optimisation efforts will be accelerated and this will continue to be an ongoing focus area for the organisation. However, it will be ensured that no cost rationalisation impacts patient safety or medical quality, and will be more focused on increasing the productivity of spend, eliminating waste, better negotiations with the vendors and weeding out non value-added activities. Patient Centricity, Medical Excellence and Service Excellence will continue to be an integral part of Max Healthcares vision of building an admirable institution. In three to four years, we want to become the most trusted name in healthcare, with dominance in the areas of tertiary and quaternary care segments.

As announced on December 24, 2018, Radiant Life Care Private Limited (Radiant), a leading Indian hospital management company, acquired a majority stake in Max Healthcare, purchasing 49.7% stake from the South Africa- based hospital operator, Life Healthcare. This combined entity of Max Healthcare and Radiant will create the largest hospital network in North India, which will become among the top three hospital networks in India by revenue and the fourth largest in India in terms of operating beds. Max Healthcare will immensely benefit from the merged entity as it will go on to operate over 2,204 beds throughout 12 hospitals across India, including tertiary and quaternary care facilities, offering high-end critical and super speciality care supported by strong local brands such as BLK Hospital, Max Saket Hospital, Max Smart Hospital, Max Patparganj Hospital and Nanavati Hospital. The combined business is expected to provide significant growth potential and compelling business synergies. By providing best-in-class patient care, the combined business plans to address Indias growing demand for quality medical treatment.

Max Bupa Health Insurance Company Ltd. (MBHI), a Max India subsidiary came into being in 2010 through the formalisation of a 51:49 joint venture between Max India Limited, a specialist in the life insurance and healthcare sectors, and Bupa, UKS 70-year-old healthcare giant with presence across 190 countries.

Max Bupa was the third standalone health insurance company to be launched in India at a time when the health insurance penetration in India was abysmally low. Over the years, Max Bupa, besides establishing itself as one of the most trusted names in its chosen segment, has helped make a contribution towards propelling the growth of the health insurance sector through customer education programmes and proactive outreach across social media platforms.

What sets Max Bupa apart from other health insurers in the Banking, Financial Services and Insurance (BFSI) segment is its laser-sharp focus on driving customer-centric profitable growth. Our purpose of helping our customers lead healthier, more successful lives, unifies us as an organisation and forms an integral part of our DNA. Our constant endeavour is to put our customers at the forefront of everything we do - be it our product design, our service promise, our claims philosophy or our brand promise. We continue to delight our customers everyday at each touch point and are deeply committed to helping them lead healthier, more successful lives. This has helped us build a loyal base of 2.5 million customers, persistent best-in-class rates and a strong market reputation.

• Max Bupa has designed innovative, customer-centric health insurance offerings, in line with its customers evolving health needs and across life stages. We have pioneered several customer-centric features such as any age enrollment and lifelong renewability in the industry, which later became a part of the regulatory framework.

• Service excellence is embedded in Max Bupas DNA and we provide a hassle-free experience at each customer touch point, be it the point of sale, claim, service or renewal. We were the first ones to own the moment of truth by introducing the 30-minute cashless claims promise. At Max Bupa, we are committed to paying genuine claims. Our entire claims philosophy has been built keeping in mind the criticality of the moment in the lives of our customers.

• We continue to lay deep emphasis on customer-centric innovations. Last year, we introduced the AnyTimeHealth machine, a completely automated, technology-based model that offers an instant awareness-to-purchase journey. We also introduced Point of Care, which is in line with our customer-first agenda.

The following are some of our key differentiators:

1. Customer-centric product offerings

Over the last nine years, Max Bupa has built a rich legacy of providing customer-centric, digitally enabled new- age offerings, which are designed to meet customers health and wellness needs across various life stages. Our portfolio consists of indemnity and fixed benefit plans. Our bouquet of offering include the following:

• Heartbeat, Max Bupa flagship product, is one of the most compelling products in the industry and is synonymous with the introduction of several industry-first features such as any-age enrolment and lifelong renewability, both of which later became a part of the regulatory framework. The latest version of Heartbeat offers unique benefits such as international cashless treatment for critical illnesses and medical evacuation facility globally, flexibility in sum assured up to Rs. 1 crore, lower waiting periods on pre-existing diseases and coverage for up to 19 relationships under a single policy. Other benefits include maternity benefits and coverage for new borns, lifelong coverage for day-care procedures and tapering co-pay benefit for senior citizens.

• Over the years, Health Companion, our second indemnity offering with a wide spectrum of customer-centric features, has become popular and is among the most recommended health plans by industry experts. Its distinguishing features include no-claim bonus, refill benefit and cover for alternative treatments such as Ayurveda, Unani, Siddha and Homeopathy.

• Health Assurance is our fixed benefit plan that offers a lump sum amount to customers in case they are detected with a critical illness or in case of an unforeseen personal accident. The product offers a triple advantage; it covers up to 20 critical illnesses, provides personal accident cover up to Rs. 5 crore and comes with a hospital cash benefit.

• GoActive, the latest entrant in our indemnity product portfolio, is a digitally enabled new-age product from Max Bupa that caters to the daily health needs of Indians. It is a holistic health insurance plan that has been designed to give customers 360-degree coverage for their daily health needs including inpatient hospitalisation and on-the-go access to OPD, diagnostics, personalised health coaching, second medical opinion, behavioural counseling and much more. In a short span of time, GoActive is one of the first few offerings in the market that enables customers to access a digitally enabled ecosystem for all their health needs.

• Health Recharge is a super top-up plan that fulfills the needs of those who are inadequately insured and need a financial buffer during a medical emergency. It comes in sum insured range of Rs. 2 lakhs to Rs. 25 lakhs, with a deductible value between Rs. 1 lakh to Rs. 10 lakhs.

2. Service as a key differentiator

One of the most important aspects that sets Max Bupa apart from other insurers is its laser-sharp focus on service excellence. It is our continuous effort to provide the best services to our customers Some of our differentiators are:

• Max Bupa has created a service proposition in the health insurance industry through cashless claims pre-authorisation within 30 minutes, which is the real moment of truth for any health insurance company. Over 80% of our cashless claims pre-authorisation is done within 30 minutes.

• Max Bupa has leveraged the latest tools to provide a seamless experience to our customers during the entire customer journey. Our self-service apps for our agents and partners - InstaInsure and SARAL - help customers enroll and issue policies faster, thereby creating customer delight at the point of sale.

• Max Bupa has a robust and hassle-free Customer Relationship Management (CRM) tool that helps in faster claims processing for our customers, agents and partners.

3. Legacy of introducing customercentric industry-first offerings

Over the years, Max Bupa has created a strong market reputation of introducing many industry firsts, ranging from its innovative product offerings to its service experience. Besides GoActive, our recent innovations include AnyTimeHealth (ATH) and Point of Care (POC) desks at leading hospitals, which help customers navigate with ease through the otherwise complex and tiring hospitalisation procedures and protocols. Max Bupa plans to expand POC desks to more network providers in FY2020 to deliver a more personalised experience to its customers.

Max Bupa offers both individual and family health insurance plans and has a robust network of over 4,500 leading healthcare providers and 31,000+ agent partners in India. The Company offers high-quality services through a dedicated team of over 2,300 people spread over 42 offices across 30 cities in the country.

With a compelling customer-centric product proposition, coupled with a strong market reputation and deep thrust on innovation, Max Bupa has carved a niche for itself in the health insurance sector.

Industry Overview

In India, the health insurance sector continues to grow exponentially - it is the most rapidly growing segment in the BFSI sector, with Gross Written Premium (GWP) increasing to Rs. 50,891 crore in FY2019. On account of the low percentage of the Indian population having any form of health insurance coverage, the sector presents a huge opportunity of growth and thus continues to attract new players, the most recent being Reliance Health Insurance, which started its operations in FY2018.The rise in lifestyle and chronic diseases such as Cancer, Diabetes and Cardiovascular ailments over the past few years is contributing towards the necessity to be aware of health insurance. According to industry experts, the health insurance market is likely to continue the same growth trajectory for the next 3-5 years.

Max Bupa continues to cater to the Business to Customer (B2C) health insurance sector. Its GWP in FY2019 grew by 26%, higher than the industrys B2C segment growth of 16%. The health insurance industry continues to be dominated by four public sector companies, which together constitute 49% market share. In addition, there are 25 private general insurance players and seven standalone health insurers. While new players enter, there have also been signs of consolidation, with prominent players looking at selling their majority stake.

Operations - Highlights

Max Bupa has further fortified its footprint across the length and breadth of India with a growing base of ~2.5 million customers, serviced via its diverse distribution channels, including a network of 31,000+ agents spread across the country, a telesales team and deep partnerships with leading web aggregators such as Policybazaar. The Company also has strong enduring distribution partnerships with Indian and international banks such as HDFC bank, Bank of Baroda, Standard Chartered Bank, Federal Bank, Deutsche Bank, South Indian Bank, Karur Vysya Bank, Sarv UP Gramin Bank, Bajaj Finserv and Rattan India, which provide it access to millions of customers across India.

Max Bupa offers both indemnity and fixed benefit categories of products serving retail, affinity/bank groups and government-sponsored health insurance programmes. Our indemnity product offerings, including our flagship product Heartbeat, Health Companion and the recently launched GoActive plan, continue to be well received in the market and contribute to steady sales growth. The fixed benefit product Health Assurance comes with varied features including higher sum insured options, up to 3 years of policy tenure and flexible combinations between the three different sub products - AccidentCare, CritiCare and HospiCash. Health Recharge, which was launched last fiscal, a Super Top-up plan, is one of the most competitively priced policies under this category and has played a pivotal role in further enhancing our overall customer base, while giving us an opportunity to upsell to our existing customers.

We also launched a number of customised offerings for our group customer segments, including a 5-year group critical illness policy and a 2-year group health secure cover. We will continue to innovate and expand our retail portfolio in FY2020 to provide our customers with a wider choice of products and services.

Max Bupa continues to heavily invest in technologically enabled solutions to provide exemplary service and seamless processes to all its customers. A robust CRM system, the Agent self-service app, the Instant policy issuance app and the customer self-service app are some of the technologically enabled services that are a part of our offerings. We are investing in new-age technology such as chatbots and artificial intelligence to further enhance and automate customer experience.

In line with the goal of making Max Bupa a truly customercentric organisation, the Max Bupa HERO Program was introduced in FY2018. It was designed to embed service excellence in the organisational matrix and coach each employee to collectively achieve significant business outcomes. Keeping this objective in mind, we encouraged our employees to demonstrate the four core characteristics of a Max Bupa HERO - Helpful, Empathetic, Responsive and Ownership - in their day-to-day business.

Awards and accolades won in FY2019

• Awarded Digital Innovator of the Year 2018-19 by India Insurance Awards for pioneering industry-first digital innovations such as GoActive and ATH

• Felicitated with the Economic Times Brand Equity Award in Best Consumer Health & Fitness Campaign 2018-19 for GoActive

• Ranked among Hottest 50 brands by Paul writer alongside renowned consumer brands

Max Bupa continued to strengthen its brand equity in FY2019

• Over the last nine years, we have deeply invested in building a brand that is true to its purpose of helping customers lead healthier, more successful lives. Moving away from the popular perception of health insurance being a mere low-involvement tax-saving transactional instrument, we have differentiated ourselves by being a brand that is able to drive meaningful conversations with customers regarding what matters to them the most i.e., their health.

• This has helped us create a strong brand connect and has resonated in all our brand campaigns to date, including our most recent GoActive campaign, which showcases health insurance as a wellness product that helps customers stay healthy and out of the hospital vis a vis a product used only at the time of hospitalisation.

• We have been recognised among the most trusted and well-known health insurance players in India by multiple consumer surveys, including the coveted Superbrands, for three consecutive years - 2016, 2017 and 2018. Superbrands is one of the most renowned and oldest global accolades that recognises top brands across various sectors by conducting a countrywide consumer survey on brand perception and recall. We were recently conferred with the Economic Times Best Brands Award 2018-19.

• Max Bupa has strengthened its brand equity in the market with its annual flagship event - Walk for Health - which has been running successfully for the last six years and has encouraged many to take up walking for a healthier future. Max Bupa was the first brand in India to take up the cause of walking and advocate its benefits to people across age groups on a national scale. Our Walk for Health is a testament to our commitment towards keeping Indias healthy.

FY2019 Marketing Highlights

• Max Bupa secured one of the highest brand awareness scores among Standalone Health Insurers (SAHIs)

• In order to maintain a consistent brand presence, we invested in an Always On brand strategy during the last fiscal wherein we were present through the year on various digital platforms and radio channels. This was particularly beneficial in building our brand presence in new markets, including Tier 2 and 3 markets that we entered last year.

• Max Bupa had the highest PR Share of Voice i.e., maximum number of news impressions (in print, digital and electronic media) compared to competitors in the fiscal (evaluated by a third-party media monitoring agency called IMPACT)

Changes in Key Financial Rations

The Underwriting Balance Ratio for the year is (12.8)% compared to (4.8)% in the previous year. The Operating Profit Ratio for the year is (7.7)% compared to 0.4% in the previous year. The variance in the Underwriting Balance Ratio and Operating Profit Ratio is attributed towards a onetime revision in the methodology for calculation of Unearned Premium Reserve (UPR) from 1/365 to 50% of Net Written Premium from September 2016 onwards. This had a onetime impact on Net Earned Premium during FY2018 due to movement in UPR. The Net Earnings Ratio for the year is (6.6)% compared to 3.9% in the previous year. Return on Net Worth for the year is (18.4)% compared to 8.9% in the previous year due to change in the UPR methodology.


At Max Bupa, our aim is to achieve customer-centric profitable growth and to become the most trusted health insurer in the country. This can only be achieved by strengthening our trust equity among our customers and people, delivering value to all stakeholders and remaining at the helm of innovation and digitisation at each customer touch point.

The Company is building a gamut of service offerings to become the preferred health and wellness partner of customers across segments. We are deeply focussed on creating seamless customer-centric products that can be distributed through our diverse base of partners across the country. Additionally, our exemplary customer service is a key differentiator and continues to help the Company foster long-term relationships with its customers.

Our endeavour is to become a digital-first health insurer through integration of technology with our existing processes. We have a long-term focus on fortifying its digital offerings to improve customer experiences through digital processes, platforms and tools. We are also investing in building a digitally enabled ecosystem, high-class analytical capabilities and automating underwriting and claims and further improving our operational efficiencies. We are also developing partnerships with health-tech and insure-tech companies.

In order to deliver value to all stakeholders, Max Bupa continues to focus on profitable urban segments. However, to build regional relevance, we are expanding to new geographies in Tier 2 cities. Aligned to this goal, we are strengthening our direct tie-ups with over 4,500 hospitals across 500 cities. We support our customers through our in-house team of dedicated professionals, including doctors and clinical experts.

Max Bupa will continue to invest in the overall growth and development of its employees through its People-First agenda, including the preparation of a forward-looking roadmap, so that it can build itself as an employer of choice and a great place to work.

Regulatory Environment

FY2019 was an interesting year for the Indian insurance industry. It saw the addition of new categories of insurance intermediaries, diversity in the products on offer and evolving business processes. From a regulatory perspective, the year continued to overhaul the existing insurance regulatory framework with new regulations being introduced and existing guidance being amended and updated.

• The Insurance Regulatory and Development Authority of India(IRDAI) issued Modified Guidelines on Standards and Benchmarks for hospitals in the provider network and directed all insurance companies and Third-party Administrators (TPAs) to ensure that all the existing network providers register with the Registry of Hospitals in the Network of Insurers (ROHINI) maintained by the Insurance Information Bureau (I IB). They are also required to obtain either pre-entry level certificate or higher level of certificate issued by the National Accreditation Board for Hospitals and Healthcare Providers (NABH), or state-level certificate or higher level of certificate under National Quality Standards (NQAS) issued by the National Health Systems Resources Center (NHSRC). This would help the insurers have arrangement with quality hospitals, which will, in turn, benefit customers.

• Regulator issued a communication regarding the automation of BAP General Insurance Product Module to include the generation of an automatic Unique Identification Number upon insurers filing information in Form A and uploading documents made accessible with effect from August 1, 2018. This helped in reducing the effort and time involved in the manual filings.

• In reference to the Mental Health Act, 2017, the Regulator had directed all insurance companies to comply with the provisions of the Act, thus ensuring mental illness is covered under medical insurance policy, proposal forms are drafted accordingly and underwriting manuals are put in place with effect from August 16, 2018.

• Regulator also directed all insurance companies to comply with the provision of Human Immuno Deficiency Virus and Acquired lmmune Deficiency Syndrome (Prevention and Control) Act, 2017. The Act clearly directs that no person is to be discriminated against the protected person on any ground unless supported by actuarial studies for denial or unfair treatment.

• IRDAI also advised the insurers to immediately inform the concerned policyholder on his mobile number by an automatic SMS on the receipt of premium under a policy. This will help the customer know the premium amount and when the policy is issued based on the confirmation.

• Prevention of Money Laundering (Maintenance of Records) Amendment Rules, 2019 were released. Changes were made to Rule 9 of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005. While the previous requirements for KYC documents continue, for companies, partnership firms, trusts and unincorporated bodies, an addition was made to acceptable documents; Board resolution authorising the authorised signatories, PAN / Form 60 and a photograph of the authorised signatory of the above entities are required.

• The Supreme Court of India, in its order in The Regional Provident Fund Commissioner (II) West Bengal vs. Vivekananda Vidyamandir & Ors, on February 28, 2019, has held that special allowances will be included within the ambit of the term basic salary for the purpose of calculation of the contribution to the employees provident fund. This is a big change across corporates and requires detailed evaluation to implement.

• Insurers have been advised not to mandatorily seek Aadhaar and PAN/Form 60 from the proposer/ policyholder as part of KYC. This provides a relaxation on mandatory documents. The Regulator has also directed that the insurers will under no circumstance do the authentication using either the e-KYC facility or the Yes/No authentication facility of Unique Identification Authority of India (UIDAI).

Outlook and Risks

Indian health insurance continues to remain a fundamentally attractive industry with growth projections of ~16% over the next 3-5 years. The industry is witnessing the entry of multiple new players in the SAHI space, thus increasing the options of products and providers available to customers. The industry is also going through consolidation (of older players), with prominent players looking at selling their majority stake. With a growth of 16% over last year, the industry is still favouring the B2C segment as witnessed over the last few years and is expected to continue this trend. Max Bupa, now the fifth-largest B2C player in the private insurance industry, plans to continue building on its expertise in the retail segment and add more families through its innovative product and service proposition. With established processes, a stable sales team and growing reputation, Max Bupa will continue to capitalise on its market differentiation with its customer-centric orientation and build long-term customer relationships.

Max Bupas overall approach to managing risk is based on the three lines of defence model with a clear segregation of roles and responsibilities for all the lines. Business Managers are part of the first line of defensc and have the responsibility to evaluate their risk environment and set up appropriate controls to mitigate such risks or avoid them. The Risk Management Function, along with the Compliance Function, Fraud & Risk Control Unit and Chief Information Security Officer, forms the second line of defence. The Internal Audit Function guided by the Audit Committee is the third line of defence and provides an independent assurance to the Board. The Statutory Auditors and regulatory oversight aided by the Appointed Actuary and Panel Actuary in his/her fiduciary capacity is also construed to provide an additional line of defence.

Max Bupa has an operationally independent Risk Management Function in place, headed by a Chief Risk Officer. The function is responsible for the supervision of all risk management activities in the Company, including developing the risk appetite, maintaining an aggregated risk view across the Company and monitoring the residual risks to ensure that they remain within tolerance levels. It also reviews the appropriateness and adequacy of the risk management strategy and develops recommendations to the Risk Committee as necessary. The Risk Management Function also ensures that through various management submissions, the Board is adequately informed on key emerging risk-related issues and if necessary, provides supplementary advice to the Board through the Risk Committee. All important risk-related matters are discussed, reviewed and monitored by this Committee on a periodic basis.

Risk management activities are supervised on behalf of the Board by the Risk Committee, whose responsibilities conform to those prescribed by the IRDAI.

People-first Philosophy

At Max Bupa, we believe that people are our biggest organisational assets and hence, it is our continuous endeavour to create a People-First culture through employee-friendly policies and practices. Our Purpose and Vision are reinforced through various initiatives that keep people at the heart of everything we do. All interventions to engage our employees are driven by the management and extended leadership team.

We are committed towards embedding the organisational values in all our people processes such as recruitment, performance management, talent development initiatives, career progression, rewards & recognition, etc. Our aim is to build a high-performance culture driven by pure meritocracy. Hence, we have taken significant steps towa rds streamlining all processes and policies related to employee performance through a robust performance management exercise that includes regular feedback from managers and subsequent action to be taken by both the employee and the manager.

We also encourage a holistic personal development plan for our people to develop into dynamic professionals. Our business rests on six Core Values - Caring, Respectful, Ethical, Accountable, Trustworthy and Enabling (CREATE). This value system is a key step towards realising our longterm vision of becoming the most admired health insurance company in India.

The deployment of multiple communication tools to effectively engage and communicate with the employees helps propagate an open and two-way communication between the leadership team and the people within Max Bupa. Several key initiatives such as CEO town halls, CEO Red Carpet, function-wise town halls, Company newsletter, employee engagement survey, employee engagement & health-wellness initiatives, etc. serve as a platform to cascade key organisational information and connect with the employees. To analyse and understand the effectiveness of these tools, periodic reviews are held during the year.

This involves assessment of Key Result Areas (KRAs) of each team and the feedback provided in the employee engagement survey.

Last fiscal, we strengthened our employees learning and development journey by introducing more streamlined and effective learning platforms to keep them engaged and help them upgrade their skills to build long-standing careers with us.

In FY2019, one of the most important metrics - Employee Engagement and Satisfaction Score - witnessed a significant increase and participation rate compared to the previous year. The enhanced score and the participation rate are testimony to our commitment to keep our people first in everything that we do at Max Bupa.

Antara Senior Living Limited, part of the Max Group, is based on the idea of creating an active, vibrant residential concept for progressive seniors. Antara is a seamless extension of Max Indias core ethos of Sevabhav, Credibility and Excellence. Common interests, beliefs and enthusiasm shall bond our residents together in inexplicable threads that help friends become family. We believe in building a community where like-minded people can find each other and call it their home. Based on the belief that there is no age limit on a life of activity and significance, Antara has set some benchmarks for other senior living communities.

Industry Outlook

Senior living as an industry category is witnessing a growth phase with existing players trying to step up and develop higher value products as well as new entrants trying to launch their first senior living ventures. While most of the offerings in the market are still being delivered by traditional real estate developers, there are instances where non-real estate players have started venturing into this sector. At present, the market has a well-developed senior home care segment as well, which directly provides clinical and nonclinical services to seniors at their home.

With the concept gaining popularity in the senior space, the new generation of senior living projects are targeting a price segment of Rs. 50-85 lakhs as opposed to earlier projects in the Rs. 20-25 lakhs price segment, ranging from one-bedroom to three-bedroom apartments.

While most of the projects continue to be in the southern part of India, there are new projects that are coming up in East and North India as well. Currently, there are 37 players in the Indian senior living industry, out of which 15 are serious players.

As per a recent study done by the Confederation of Indian Industry (CII), the current senior population in India is 116 million, constituting ~9% of the total population. Population above 60 years in India is the fastest growing demographic segment in the world, growing at 3.8% per annum. There are 90 senior living communities under development, of which 57 are operational. Current senior housing demand from urban and rural sectors is ~2.4 lakh houses and 51,500 houses, respectively, of which High Income Group (HIG) accounts for 60,000 houses and Middle Income Group (MIG) for 70,000 houses. The current senior housing supply from 37 senior living players across all formats and economic segments totals 20,000 units. 53% of senior living units are operational, which translates to around 10,500 functional units, followed by 40% under construction, which comes to 8,000 units, and 7% under planning and designing, comprising 1,400 units.

Our Concept and Positioning

1. Antara Dehradun

India has an increasing population of senior citizens who are well-travelled and are accustomed to a certain quality of life and infrastructure. Antara is a community that enables them to maintain the lifestyle they are habituated to.

Its flagship project named Antara Purukul is spread over 14 acres of lush greenery in Dehradun. Antara is a luxurious, fully-integrated community designed around the safety, wellness and lifestyle requirements of progressive seniors above the age of 55. The promise of a better life at Antara for our residents is built on the pillars of a unique location, thoughtful design, a curated community and holistic wellbeing.

Antara thus is a continuous care proposition - a comprehensive ecosystem that embraces and encourages the idea that life can be magical post 55. With a fulfilling lifestyle and myriad opportunities to explore, engage and enjoy, Antara is an impeccably designed, rigorously serviced community where life is savoured in the luxury of nature with like-minded people.

Antara has been carefully crafted by internationally renowned architects Perkins Eastman from New York and Esteva & Esteva from Spain, with design execution support from Arcop Architecture Inc. and Studio Lotus. With construction partners such as Shapoorjii Pallonji, Suri & Suri Constructions (civil works), Vadhera Builders (finishing works), Sterling Wilson (plumbing and fire fighting) and Jakson (electricals), Antara has been created with a unique design philosophy to encourage the utmost quality of living. This has been woven into the fabric of the community through an adherence to international standards of specific design intervention. With over 60,000 square feet of recreational and wellness spaces, and 197 apartments, Antara Senior Living brings a unique dimension to senior living in the Indian subcontinent.

A typical day at Antara starts with waking up to the picturesque views of Mussourie, going for a morning walk on jogging trail, followed by yoga/meditation. Residents like to enjoy breakfast at Antaras restaurant - Avika. Pre-lunch activities include a creative workshop of pottery and aqua aerobics at The Pool. Residents also have the option of going for a trip to Dehradun in a shuttle. Evening activities include enjoying a movie at The Theatre, language learning in The Library or social engagement activities facilitated by the Resident Engagement Team at Antara, in which residents can volunteer. Antara is equipped with sports facilities such as tennis and badminton courts, and golf lawns, which motivates residents to stay fit while playing their favourite sport. Antara offers various cuisine options in diverse spaces such as Avika, The Bar, The Veranda and Community Kitchen. We prioritise the Heath of our residents and have set up The Antara Wellness Centre, which is managed by our in-house team and offers clinical as well as holistic wellness services to the residents.

2. Antara 2.0

In line with the Boards advice to work on a low-risk and investment-light business model, Antara has been working towards a development management/ joint development model. Based on the learnings from Dehradun pertaining to cost, space efficiencies, design, pricing and ownership models, the team has been able to curate a more efficient model at a competitive pricing while retaining the vision of providing quality of life to its residents, called Antara 2.0.

There are presently two such opportunities that Antara is exploring. The Company is confident of further improving and replicating this new business model in times to come.

Key Developments of FY2019

The key focus of the Company over the course of FY2019 has been twofold:

1. Antara Dehradun

a. To achieve financial sustainability for community operations by improving operational efficiencies and attracting customer footfall to create additional revenues.

b. To market and promote the Antara brand and book apartments for its first residential senior living community at Dehradun (Dehradun Community). This is being done through an increased focus on acquiring clients through experiential tours supported by well-planned campaigns in print and digital media, advertorials that have residents sharing their experiences and events at the Dehradun Community.

2. Growth initiatives

a. To identify the right growth opportunities in line with the Boards mandate i.e., low-risk, capital- light opportunities based on the operator/joint development model. Such opportunities are being explored primarily in Delhi NCR and Mohali with credible developers. Antara will contribute in areas of its core strength i.e., sales & marketing, design development, project management and operations to ensure that the end product is in line with the Companys vision.

Business Performance: FY2019

Antara achieved the following results in FY2019:

1. Sales: By March 2019, Antara achieved 108 sales net of cancellations.

2. Collection: Antaras collections at the end of FY2019 totalled Rs. 290 crores.

3. Resident Satisfaction (RSAT) Score: Antara achieved an impressive 89.59% RSAT score in FY2019. The Resident Satisfaction Survey was launched in July 2017 and is conducted on a quarterly basis. The above performance is basis the weighted average score of four surveys conducted during the financial year.

4. Team Engagement Score: Antaras employee engagement score in FY2019 stood at 85.40%.

Outlook for FY2020

Over the course of FY2020, Antara plans to work towards sales launch of the equity-light opportunities mentioned earlier and towards and building a robust pipeline for future growth.

The broad contours of the new operator model are as under:

I. Antara plans to invest Rs. 25-40 crore in Special Purpose Vehicles (SPVs) as reimbursable investment to kick- start sales and early construction needs, while taking care of its corporate cost expenses.

II. While in one model, developer partners are responsible for the land and construction, in the other model, developer partners are only responsible for the land and Antara takes care of all other responsibilities.

III. Antaras responsibility will be to provide design, quality assurance, sales and marketing support, and program management during the project and sales phase and independently run the community operations after handing over the apartments to the residents.

IV. Antara will get fee and/or share of profit for services provided during the project phase as a percentage of revenue.

The focus of the Company will be to launch the sales of such opportunities under advanced stages of agreement signing and also achieve headway on the new growth ideas currently under evaluation.

Max SkillFirst Limited (Max SkillFirst) is a wholly-owned subsidiary of Max India, founded with the vision of impacting the sales and service culture in India by being the most admired learning and development organisation. The Company employs 470 professionals and over 424 freelance trainers.

FY2019 Highlights

• In FY2019, Max SkillFirst imparted over 3.9 lakh hours of training to more than 1 lakh learners through 90,000+ sessions to both Max Group and other accounts.

• Max SkillFirst received the prestigious Great Place To Work certification from the Great Place To Work Institute, India.

• During the fiscal, the Company reported revenues worth Rs. 52.9 crore (17% increase over FY2018) with Loss After Tax of Rs. 2.5 crore mainly due to impairment provision for investment held in Max Skill Firsts fully owned subsidiary, Max One (without impairment, Profit After Tax is Rs. 3.1 crore).

• Some of the Max Skill Firsts key financial ratios have changed significantly (more than 25%) in FY 2019 (without considering the impairment impact). For instance, debt to equity ratio (Loan/ Shareholders Fund) changed from -3.8 last year to -9.7 this year due to change in shareholders fund because of positive net profits (without impairment) this year. Similarly, Return on Net Worth (Net Profit/Shareholders Fund) has also changed from -45% last year to -157% due to change in shareholders fund because of positive net profits this year (without impairment). Operating profit Margin (Operating Profit/Operating Revenue) changed from 5.3% to 7.1% this year due to increase in operating profit on account of reduction in operations cost.

Content as Business Driver

Max SkillFirst has developed over 1,560 hours of content across all accounts by using instructional design principles and leveraging technology and innovation to create high business impact. Some of the accounts for which the Company curated content in FY2019 are as follows:

Max Life: Developed customised content for different channels - Agency, Insurance Marketing Firm (IMF), Customer Advisory Team (CAT), e-Commerce, Associate Partner Channel (APC) and Defence Channel in different formats, via classroom sessions, videos, simulation role plays, etc.

MBHI: Created e-learning content through videos for a mobile app and e-assessment modules on Health Recharge, Health Companion, Upselling and Cross-selling, and HDFC Net Banking for different channels - agency, bancassurance, Direct Sales Team (DST), tele-sales and renewals

MHC: Custo mised content by incorporating stakeholders feedback and by adopting diagnostic methodology and infographics for need-based and frequently occurring scenarios for nursing, front office, Max Lab and pharmacy

B2B: Structured content for higher retention through e-learning platforms on topics such as sales and leadership skills, business processes and common induction programmes.

B2C: Created the Allied Healthcare lab technician digital course on the app with 100+ in-house learning videos and assessments


In FY2019, Max SkillFirst App-based self-learning modules and online knowledge assessment were launched for 1,700+ Agency Development Managers (ADMs), out of which more than 80% have successfully completed either one or more courses at Max Life. To replace classroom training for IC38 examination (IRDAI conducts IC38 examination and only successful candidates become agents) and Selling Skills Workshop (SSW) trainings for candidates and agents, respectively, at select offices, an initiative called Prayas was launched to make these available online through the app. Through the CAT channel of Max Life, the Company launched online tests for producers and leaders, which were attempted by 80% of the users. At India Shelter, a leading housing finance company in the NBFC sector, an automated Interactive Voice Response (IVR) feedback mechanism through mobile calls was launched in October 2018 across all channels.

The Company also won the Brandon Hall Group Excellence Awards 2018 for the third year in a row - a Silver Award in the category of Best Use of Blended Learning for 3D Smart Classroom for best-in-class user experience and learning in Allied Healthcare Diploma Programme. These awards, often called the Academy Awards of Learning, are the most prestigious global awards in the learning and development domain and recognises the top organisations across the world.

People Culture

The organisation grew by 34% in terms of the headcount from 350 employees to 470 employees in FY2019. As part of its people-first culture, Max SkillFirst continued to build on the 4Cs of the Employee Value Proposition (EVP) - Career, Certification, Culture and Compensation. To drive the values, the Company strengthened the value- based Reward and Recognition (R&R) programme through a technology platform called Karma Notes where the organisation recorded more than 1,500 recognitions for its employees. Also, a communication series called Above & Beyond was introduced to recognise the success stories of employees who demonstrate our core values - Excellence, Credibility, Sevabhav, Collaboration and Innovation.

In order to strengthen the quality of talent hired and link it to our EVP of 4Cs, the Company re-trained all the hiring managers on the methodology of value-based hiring and also launched a value-based psychometric tool for hiring and development of talent. Max SkillFirst launched a structured Organisation & Talent Review (OTR) for all the high performers (110 employees) with the objective of nurturing the future talent pipeline and developing key talent for retention and engagement. Through this process, a total of 30 Best Bets were identified. Their future career path was clearly mapped and they were given visibility about their next-level career role with clearly defined Individual Development Plan (IDPs).

New Training Initiatives

In FY2019, the Associate Partner Channel (APC) and Defence Channel trainings of Max Life were acquired and training roadmaps for these accounts were integrated and rolled out. Max SkillFirst supported the MLIC Agency in its office-in-office and greenfield initiatives by hiring 86 new trainers as a part of its proprietary channel expansion plan. Max SkillFirst launched a vintage-based learning roadmap for front office and nursing personnel to equip them with role-specific challenges for MHC. Max SkillFirst on-boarded six new partners at the Bancassurance Channel of MBHI - HDFC Bank, HDFC Security Limited (HSL), HDFC Tele, Karur Vysya Bank, Ujjivan and Rattan India.

New Growth Initiatives

The Company entered into an exclusive partnership with Cohen Brown, an international leader whose courseware and tools have been utilised in more than 50 countries and translated into 15 languages, to deliver its leader-led and technology-enabled trainings through the ProPractice tool in prospective banks in India. Cohen Brown specialises in sales-and-service, cultural and behavioural change consultative and training processes for management, frontline, support/customer service units, and call centres.

Max SkillFirst also signed a three-year contract with India Shelter as the second external B2B client. In the B2C Allied Healthcare business, the Company launched its second direct-to-customer training facility of in FY2019 at Saket and also successfully achieved the student enrolment targets.


Max SkillFirst has prepared itself to grow through different channels. After demonstrating success in the captive business from the Max Group, the Company is now gearing up to capture training assignments for both B2B and B2C markets externally. Max SkillFirst will also open the third B2C Allied Healthcare Centre in FY2020 to achieve growth in the financial year. In addition, the Company will grow aggressively in the financial services industry in India, with its exclusive partnership with Cohen Brown. The Company will also foray further into the B2C sector with imparting tech-led skills training.