Medinova Diagnostic Services Ltd Management Discussions

Industry structure and developments

The Indian healthcare sector has become a major contributor to India?s growth and employment, covering diverse segments like hospitals, medical devices, clinical trials, telemedicine, medical tourism, health insurance and medical equipment. The Indian diagnostics industry has emerged as a preferred play within the expanding healthcare landscape, driven by attractive margins and significant growth potential.

The diagnostic industry is growing steadily in India and is expected to grow at a CAGR of approximately 5% to 7% over the next five years. The Indian home healthcare market size was valued at USD 8.8 billion in 2022. It is expected to expand at a compound annual growth rate (CAGR) of 19.29 per cent from 2023 to 2030. The diagnostic equipment segment is expected to register the fastest CAGR of 20.27 per cent during the forecast period.

Digital advances in healthcare are further set to embrace voluminous growth in the upcoming years. For instance, the Internet of Things (IoT) has brought in a new wave of digital transformation. Particularly, manufacturers of medical devices are adopting IoT as a tool to improve operational efficiency and offer real-time insights based on patient data.

The Diagnostic industry is on the brink of transformative changes in 2024, driven by cutting-edge technologies and a commitment to improving patient outcomes. The integration of artificial intelligence, the rise of point-of-care testing, advancements in liquid biopsy technology, digital health platforms and the expanding applications of genomic medicine are shaping a future where diagnostics is not only more accurate but also more accessible and patient centric. As these trends unfold, they hold the promise of revolutionizing how we approach disease detection and management, ultimately paving the way for a healthier and more connect world.

As the diagnostic market continues to evolve, companies that can adapt to changing trends and provide valuable solutions will be well-positioned to capitalise on these opportunities. Due to the increased reliance of medical experts and professionals on the diagnostics segment to validate, accurately diagnose the illnesses, and provide the necessary treatment protocols, as well as the shift in consumer psyche and preference who are now extra cautious about their health and well-being, have also helped the diagnostic industry solidify its position as a key component of the healthcare segment.

With new competitors entering the diagnostic market, such as health tech companies, large conglomerates, reputable pharmaceutical companies, and startups, there has been a significant level of disruption in both the B2C and B2B market segments. These competitors tried to increase their revenue share in the diagnostic industry by using ‘price? as a crucial differentiator.

The introduction of newer wearables and self-monitoring tools such as glucometers, oximeters, and technologically advanced devices pose strong challenges to the diagnostics sector.

Healthcare is expected to remain a major contributor to the economy in the coming years as various policies, innovations and investments are anticipated to shape the industry?s future impacting economic growth. The increasing focus on digital health solutions, telemedicine and other technological advancements in the healthcare industry has opened new avenues for growth and innovation.

Private healthcare players will continue to play a critical role in the industry as they continue to provide healthcare services to more than 70% of the country?s rural population and 80% of the urban population.

The Indian diagnostic sector has experienced steady double-digit growth, estimated at around 12-14%. This growth is fueled by factors such as rising awareness of preventive and diagnostic testing, alongside technological advancements and the growing geriatric population in India.

The sector is witnessing a significant impact from technological advancements such as AI, wearables and other mobile technologies, along with Internet of Things, are expected to take the healthcare services to the next level.

Competition Risk: The Company faces intense competition from new players including large conglomerates, hospital chains, pharma companies, health tech platforms and startup companies, which may weaken the outlook, slow down growth, and put price pressures to bring margin and return ratios under stress. To mitigate this risk, the Company emphasizes redefining its cost-base to neutralize some of the stress on returns.

Technological Risk: The Company operates in a highly technology-driven market. Technological advancements in the field may result in a decline in demand for the Company?s products and services.

To mitigate this risk, the Company focuses on offering tests which are more accurate and economical, as compared to those available in the market.

Skilled Manpower Shortage Risk: The Company?s success depends on its ability to find and retain outstanding employees, and failing to do so could significantly harm its performance. To mitigate this risk, the Company focuses on an engaging HR practice and strives to make it a desirable place to work.

The Company has an efficient internal control system in place. The policies and procedures, covering financial and operating functions, are also documented. The system controls are designed to provide reasonable assurance for maintaining proper accounting records. This reinforces reliability of financial reporting, monitoring of operations, and protection of assets from unauthorized use or losses and compliance of regulations.

The scope and coverage of audits include:

Reviewing and reporting of key process risks

Adhering to operating guidelines and statutory compliances

Recommending improvements for monitoring and enhancing efficiency of operations

Ensuring reliability of financial and operational information

The Audit Committee periodically monitors and reviews the significant internal audit observations. It also reviews compliance with accounting standards, risk management and control systems.

‘Human Resources? are recognized as a key pillar of any successful organization and so is for Medinova. The company puts constant efforts in recruiting and training the employees and ensures to bring out the best of them. The company adopts an HR policy and ensures that all the employees are aware of personnel policies. The needs of the employees are addressed with high importance and efforts are made to provide a highly challenging and healthy environment. Besides all these, the company places high emphasis on professional etiquette required of every employee. As on March 31, 2024 the number of employees employed are 58.

During the year under review, on standalone basis, the Company generated total revenue from operations of

778.12 lakhs as compared to 775.83 lakhs in the previous year from the business operations. The operations resulted in a net profit after tax of 75.27 Lakhs as against net profit after tax of 63.00 lakhs in the previous year.

The Company achieved consolidated revenue from operations of 1016.52 Lakhs as against 999.30 Lakhs in the previous year. The Company has earned a consolidated net profit after tax of 199.89 Lakhs as against net profit after tax of 166.52 Lakhs in the previous year.

In accordance with the SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015, 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 financial ratios. The company has identified the following ratios as Key Financial Ratios:

Statements in this report on Management Discussion and Analysis describing the Company?s objectives, projections, estimates, expectations or predictions may be ‘forward-looking statements? within the meaning of applicable laws and regulations. Such statements represent the intention of the Management and the efforts being put into place by them to achieve certain goals. These assertions are predicated on a number of assumptions and future activities. Since the Companys operations are impacted by several internal and external factors outside of its control, actual results could significantly differ from those stated or inferred. Any forward-looking statement published here only speaks as of the date it was made and only reflects the Companys current intentions, beliefs, or assumptions. The Company disclaims any obligation to update or modify any forward-looking statements, whether as a result of new data, unexpected developments, or other factors. Readers are urged to use their best judgement when determining the risks connected to the Company.