Modern Diagnostic & Research Centre Ltd Management Discussions

You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Red Herring Prospectus. You should also read the section entitled " Risk Factors " beginning on page 23 and " Forward Looking Statements " beginning on page 16, which discusses a number of factors, risks and contingencies that could affect our financial condition and results of operations.

The following discussion of our financial condition and results of operations should be read in conjunction with our restated financial statements for the period ended June 30, 2025, March 31, 2025, March 31, 2024 and March 31, 2023 including the schedules and notes thereto and the reports thereto, which appear in the section titled " Financial Information of our company " on Page No.164 of the Red Herring Prospectus. The financial statements presented and discussed herein have been prepared to comply in all material respects with the notified accounting standards by Companies (Accounting Standards) Rules, 2006 (as amended), the relevant provisions of the Companies Act and SEBI (Issue of Capital and Disclosure Requirements) Regulations. Our fiscal year ends on March 31 of each year. Accordingly, all references to a particular fiscal year/financial year are to the twelve-month period ended on March 31 of that year. The forward-looking statements contained in this discussion and analysis is subject to a variety of factors that could cause actual results to differ materially from those contemplated by such statements.

OVERVIEW

We are a services provider in diagnostic and related healthcare tests services in India. We offer a one-stop solution for pathology and radiology testing services such as imaging (including radiology), pathology/clinical laboratory. Through our integrated, nationwide network, we offer a complete range of diagnostic facilities in radiology and pathology. We provide healthcare tests and services for use in core testing, patients diagnosis and prevention, monitoring of disease and other health conditions. Our customers include individual patients, hospitals and other healthcare providers and corporate customers.

Our Promoter and Manging Director, Mr. Devendra Singh Yadav started its operations of Diagnostic Centre in the name and style of Modern X-Ray and Clinical Lab as Proprietorship firm in the year 1985 which was designated later on as Modern Diagnostic & Research Centre, in the year 1992. Modern Diagnostic and Research Centre Pvt Limited was incorporated in 2012, we acquired the Business of M/s Modern Diagnostics & Research Centre, Proprietorship Concern through Business Transfer Agreement in 2013.

Our Company was originally incorporated as " Modern Diagnostic & Research Centre Private Limited " as a private limited company, under the provisions of the Companies Act, 2013 vide Certificate of Incorporation dated April 16, 2012 issued by Registrar of Companies, Delhi having Corporate Identification Number U85110DL2012PTC234368. Subsequently, our Company was converted from a private limited company to public limited company pursuant to special resolution passed in the ExtraOrdinary General Meeting of the company held on November 16, 2024 and consequently the name of our Company was changed to " Modern Diagnostic & Research Centre Limited " pursuant to fresh certificate of incorporation dated December 18, 2024 issued to our Company by the Registrar of Companies, Central Processing Centre having Corporate Identification Number U85110DL2012PLC234368. For details of change in name and registered office of our Company, please refer to chapter titled " History and Corporate Structure " beginning on page no. 139 of this Red Herring Prospectus.

We are focused on providing reliable diagnostic and related healthcare tests and value-added services such as home collection of specimens and online access to test reports. We also offer customized test packages to our institutional customers/patients as per their requirement. Our patient centric approach is a critical differentiator which results in several individuals and healthcare providers choosing us as their diagnostic healthcare services provider. Presently, we have 21 centres which includes 18 laboratories and 3 diagnostics centres in 8 states. We offer wide range of diagnostic facilities in Radiology and High-end Pathology. Our healthcare tests and services include Ultrasound and colour doppler, CT scan, MRI, Digital X-ray, Mammography, Heart lab, Neuro lab and laboratory, ECG, CBCT, OPG, PFT etc.

Our diagnostic testing portfolio includes (i) " Pathology " which includes Anatomical Pathology, Clinical Pathology, Forensic Pathology and Molecular Pathology; (ii) " Radiology " which includes Diagnostic Radiology and Interventional Radiology such as

X-ray, Computed Tomography (CT scan), Magnetic Resonance Imaging (MRI), Ultrasound etc. We perform these tests and services in our clinical laboratories using sophisticated and computerized instruments.

We focus on providing quality diagnostic and related healthcare tests and services to patients. We believe our focus on the patient as a customer is a critical differentiator in the diagnostic and healthcare industry and, together with what we believe is our brand s recognition for quality diagnostic services, results in individuals and healthcare providers choosing us as their diagnostic healthcare service provider. This is because in India, patients generally choose their diagnostic healthcare service provider based on quality and affordability. Patients and healthcare providers seek good and reliable healthcare service providers.

The Indian healthcare sector renowned for its dynamic growth potential and diverse components was estimated to value at an impressive USD 216 billion in FY23. This sector is projected to nearly double to an estimated USD 454 billion by FY28, representing a robust compound annual growth rate of 16%. The market revenue of diagnostic sector in India reached INR 981 billion in 2023 from INR 710 billion in 2020 and further estimated to grow to INR 1,055 billion in 2024, clocking a CAGR of 10.4% between 2020-2024. Between 2024E-2030F, the country s overall diagnostic market revenue is projected to grow at 13.1%

CAGR with revenue slated to reach to INR 2,204 billion (Source: D&B report).

Our visionary Promoters and Directors, Mr. Devendra Singh Yadav and Mrs. Deepali Yadav, bring a wealth of experience to the healthcare industry, with 40 and 12 years of expertise, respectively. Their deep understanding of the sector, combined with their leadership skills, has played a crucial role in shaping and expanding our company. As seasoned professionals, they are driven by a strong passion for healthcare and a commitment to excellence. Their strategic vision and progressive thinking have been instrumental in driving innovation, enhancing patient care, and fostering sustainable growth. Under their guidance, our organization continues to evolve, adapt to industry advancements.

We have also implemented a PACS (Picture Archiving and Communication System) for efficient data storage, retrieval, and management of medical images. This advanced system allows us to securely store diagnostic images such as X-rays, CT scans, MRIs, and ultrasounds in a digital format, eliminating the need for physical film. Additionally, PACS enables seamless remote access to medical images and reports via the internet. This allows radiologists and healthcare professionals to analyze and interpret diagnostic images from any location, improving workflow efficiency and ensuring faster reporting. With this system, patient data remains securely stored while providing quick and convenient access for accurate diagnosis and timely medical decisions.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

For details in respect of Statement of Significant Accounting Policies, please refer to Restated Standalone Financial Statements under chapter titled " Restated Financial Statements " beginning on page 164 of this Red Herring Prospectus.

Factors Affecting our Results of Operations

Our business is subjected to various risks and uncertainties, including those discussed in the section titled " Risk Factors " beginning on page 23 of this Red Herring Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

Our ability to successfully implement our growth strategy and expansion plans;

Our ability to attract, retain and manage qualified personnel;

General economic and business conditions in the markets in which we operate and in the local, regional, national and international economies;

Our ability to expand our geographical area of services

Rapid innovation or unforeseen technological failures may adversely affect our business and financial condition

Competition from existing and new entities may adversely affect our revenues and profitability;

Our business and financial performance is particularly based on market demand and supply of our services;

The performance of our business may be adversely affected by changes in, or regulatory policies of, the Indian national, state and local Governments;

Unforeseen clinical trial failures or research difficulties can delay progress or increase costs

Health crises or environmental regulations may disrupt operations or increase demand for certain products

Any downgrading of India s debt rating by a domestic or international rating agency could have a negative impact on our business and investment returns;

Changes in Government Policies and political situation in India may have an adverse impact on the business and services of our Company;

The occurrence of natural or man-made disasters could adversely affect our results of operations and financial condition.

RESULTS OF OUR OPERATION

	For Stub Period Ended				For The Year Ended 31st March
Particulars	30.06.2025	% of Total Revenue	2025	% of Total Revenue	2024	% of Total Revenue	2023	% of Total Revenue
Revenue:
Revenue from
	2,250.10	99.24	7,794.54	98.91	6,713.05	97.76	5,628.17	99.43
Operations
Other income	17.13	0.76	85.91	1.09	154.15	2.24	32.36	0.57
Total revenue	2,267.23	100.00	7,880.46	100.00	6,867.21	100.00	5,660.53	100.00
Expenses:
Cost of Material
	567.69	25.04	1,881.48	23.88	1,763.94	25.69	1,752.43	30.96
Consumed
Employees Benefit
	562.87	24.83	1,966.68	24.96	1,829.04	26.63	1,811.33	32.00
Expenses
Finance costs	55.83	2.46	190.79	2.42	180.63	2.63	141.04	2.49
Depreciation and
	119.86	5.29	418.97	5.32	392.29	5.71	386.76	6.83
Amortization
Other expenses	533.35	23.52	2,150.13	27.28	2,014.89	29.34	2,163.19	38.22
Total Expenses	1,839.60	81.14	6,608.05	83.85	6,180.79	90.00	6,254.74	110.50
Profit before
exceptional and
	427.63	18.86	1,272.40	16.15	686.41	10.00	(594.21)	(10.50)
extraordinary items
and tax
Exceptional Items	-	-	-	-	-	-	-	-
Profit before
extraordinary items	427.63	18.86	1,272.40	16.15	686.41	10.00	(594.21)	(10.50)
and tax
Extraordinary items	-	-	-	-	-	-	-	-
Profit before tax	427.63	18.86	1,272.40	16.15	686.41	10.00	(594.21)	(10.50)
Tax expenses:
Current tax	135.55	5.98	379.48	4.82	126.35	1.84	-	-
Deferred Tax	(7.75)	(0.34)	(3.89)	(0.05)	(19.41)	(0.28)	(21.02)	(0.37)
Total Tax Expenses	127.80	5.64	375.59	4.77	106.93	1.56	(21.02)	(0.37)
Profit (Loss) for the
period from continuing	299.82	13.22	896.81	11.38	579.48	8.44	(573.20)	(10.13)
operations

Review of Restated Financials

Key Components of Company s Profit and Loss Statement

Revenue from operations: Revenue from operations mainly consists from Sales of services

Other Income: Other Income Consist of Interest Income, Foreign Exchange Fluctuation & Misc. Income etc.

Expenses: Company s expenses consist of Cost of Material Consumed, Depreciation Expenses, Employee Benefit Expenses,

Finance Cost & Other Expenses.

Cost of Material Consumed: Cost of material consumed consist of material consumed in providing the services during the year.

Employee Benefits Expense: Employee benefit expenses includes Salaries and Wages, Director Remuneration, Contribution of Provident & Other Funds, Gratuity Expenses, Staff Welfare Expenses etc.

Finance Cost: Finance Cost includes Interest & Bank Charges.

Depreciation and Amortization Expense: We recognize Depreciation and Amortization expense on a SLM Basis as per the rates set forth in the Companies Act, 2013/ Companies Act, 1956, as applicable.

Other Expenses: Other expenses includes Advertisement Expenses, Legal & Professional Charges, Power & Fuel, Rent Expenses, Repair & Maintenance Expenses, Conveyance Expenses, Printing & Stationary, Courier & Logistics, Sample Collection Charges, and Testing Charges etc.

Review of Operations for the period ended on June 30, 2025:

Revenue from Operation

Revenue from operations for the period ended on June 30, 2025 amounting to Rs 2250.10 lakhs represent 99.24% of Total Revenue

Other Income

Other Income Consist of Interest Income, Profit on Sale of Fixed Assets & Other Misc. Income etc. amounting to Rs. 17.13 Lakhs represent 0.76% of Total Revenue.

Cost of Material Consumed

Cost of Material Consumed consist of Material Purchases amounting to Rs. 567.69 Lakhs represents 25.04% of Total Revenue.

Employee Benefit Cost

Employee benefit expenses include Salaries and Wages, Directors Remuneration, Professional Tax Expense, Bonus & Incentive Expenses, Ex Gratia Payment, Contribution of Provident & Other Funds, Gratuity Expenses & Staff Welfare Expenses etc. amounting to Rs.562.87 Lakhs represents 24.83% of Total Revenue.

Finance Cost

Finance Cost includes Interest paid on borrowings, Bank Charges amounting to Rs. 55.83 Lakhs represents 2.46% of Total Revenue.

Depreciation

Depreciation charged on SLM method amounting to Rs. 119.86 Lakhs represents 5.29% of Total Revenue

Other Expenses

Other expenses includes Advertisement Expenses, Legal & Professional Charges, Power & Fuel, Rent Expenses, Repair & Maintenance Expenses, Conveyance Expenses, Printing & Stationary, Courier & Logistics, Sample Collection Charges, and Testing Charges etc. amounting to Rs. 533.35 Lakhs represents 23.52% of Total Revenue.

Profit Before Tax

The Profit before tax for the period ended on June 30, 2025 was Rs. 427.63 Lakhs representing 18.86% of Total Revenue.

Tax Expenses

Tax Expenses consisting of Current Tax & Deferred Tax for the period ended on June 30, 2025 was Rs. 127.80 Lakhs representing 5.64% of Total Revenue.

Profit After Tax

The Profit after tax for the period ended on June 30, 2025 was Rs. 299.82 Lakhs representing 13.22% of Total Revenue.

Fiscal 2025 Compared with Fiscal 2024

Revenue from Operations

Revenue from Operations increased by 16.11%, from 6,713.05 lakhs in Fiscal 2024 to 7,794.54 lakhs in Fiscal 2025. This growth was primarily attributable to higher sales volumes, improved product mix, and expansion into new customer segments and geographies.

Other Income

Other Income decreased by 44.26%, from 154.15 lakhs in Fiscal 2024 to 85.91 lakhs in Fiscal 2025, primarily due to lower income from non-core activities.

Cost of Materials Consumed

Cost of Material Consumed increased marginally by 6.66% from 1,763.94 lakhs to 1,881.48 lakhs, consistent with higher production volume.

Employee Benefits Expense

Employee Benefit Expenses rose by 7.53% from 1829.04 Lakhs to 1,966.68 lakhs. The salaries and wages increased significantly due to rise in employee count, director remuneration declined slightly, balancing overall personnel costs. Gratuity and group insurance expenses also rose marginally.

Finance Costs

Finance Costs increased by 5.62% from 180.63 Lakhs to 190.79 lakhs mainly due to increased borrowings from banks. Bank charges remained steady, indicating the cost pressure was primarily interest-driven.

Depreciation and Amortisation Expense

Depreciation and Amortization grew by 6.80% from 392.29 lakhs to 418.97 lakhs, reflecting minor capital additions and ongoing depreciation of installed medical and IT infrastructure.

Other Expenses

Other Expenses increased by 6.71% from 2014.89 Lakhs to 2,150.13 lakhs, in line with business expansion and inflationary cost pressures.

Total Expenses

The reduction in expense ratio (as a percentage of revenue) from 90.00% in Fiscal 2024 to 83.85% in Fiscal 2025 reflects improved operating efficiency, better cost management, and economies of scale achieved during the year.

Profit Before Tax

The Company s Profit Before Tax (PBT) increased substantially by 85.37%, from 686.41 lakhs in Fiscal 2024 to 1,272.40 lakhs in Fiscal 2025. This improvement was driven by higher revenues and cost optimization efforts across manufacturing and administrative functions.

Tax Expenses

Tax expenses increased from 106.93 lakhs in Fiscal 2024 to 375.59 lakhs in Fiscal 2025, corresponding to higher profitability during the year.

Profit After Tax

The Profit After Tax (PAT) increased by 54.76%, from 579.48 lakhs in Fiscal 2024 to 896.81 lakhs in Fiscal 2025.

Fiscal 2024 Compared with Fiscal 2023

Revenue from Operations

Revenue from operations grew by 19.28%, from 5,628.17 lakhs in FY 2023 to 6,713.05 lakhs in FY 2024. This growth was driven by the expansion in domestic diagnostic services, particularly in Haryana, Rajasthan, and West Bengal.

Other Income

Other income rose significantly by 376.36%, from 32.36 lakhs to 154.15 lakhs. The spike is largely attributable to increased miscellaneous income ( 151.11 lakhs), including gains from sale of assets.

Cost of Materials Consumed

Material consumption remained almost flat, increasing marginally from 1,752.43 lakhs to 1,763.94 lakhs. This reflects steady procurement practices, with a controlled increase in medical consumables in proportion to service volumes.

Employee Benefits Expense

Employee costs increased slightly by 0.98%, from 1,811.33 lakhs to 1,829.04 lakhs. While salaries and wages remained stable, director remuneration declined slightly, balancing overall personnel costs. Gratuity and group insurance expenses also rose marginally.

Finance Costs

Finance costs rose by 28.07%, from 141.04 lakhs to 180.63 lakhs, mainly due to increased borrowings from banks and private lenders. Bank charges remained steady, indicating the cost pressure was primarily interest-driven.

Depreciation and Amortisation Expense

Depreciation increased slightly by 1.43%, from 386.76 lakhs to 392.29 lakhs, reflecting minor capital additions and ongoing depreciation of installed medical and IT infrastructure.

Other Expenses

Other expenses decreased by 6.86%, from 2,163.19 lakhs to 2,014.89 lakhs. The reduction is primarily due to lower sample collection costs and consultancy expenses. However, rent, insurance, and conveyance expenses remained substantial due to expanded operational activity.

Total Expenses

Total expenses decreased slightly by 1.18%, from 6,254.74 lakhs to 6,180.79 lakhs, owing to the combined effect of flat employee and material costs, and reduced other expenses.

Profit Before Tax

The company recorded a turnaround, reporting a profit of 686.41 lakhs in FY 2024 compared to a loss of 594.21 lakhs in FY

2023. This reversal was a result of increased revenue and better control over expenses.

The company has successfully stabilized its expenses, resulting in a strong financial recovery in FY 2024. It reported a profit of

686.41 lakhs, a notable improvement from the loss of 594.21 lakhs in FY 2023. This positive shift was largely driven by increased revenue, which played a key role in strengthening profitability. Alongside revenue growth, the company maintained effective cost management and operational efficiency, contributing to a more stable and sustainable financial position.

Tax Expenses

Current tax expense increased from Nil to 126.35 lakhs due to taxable profit recovery.

Deferred tax saw a credit adjustment of 19.41 lakhs.

Total tax expense was 106.93 lakhs compared to -21.02 lakhs in FY 2023.

Profit After Tax

The company recorded a net profit of 579.48 lakhs in FY 2024, marking a significant improvement from the loss of 573.20 lakhs in FY 2023. This turnaround reflects a strong recovery, supported by increased revenue and better financial management.

Cash Flows

( in lakhs)

Particulars	June 30, 2025	March 31, 2025	March 31, 2024	March 31, 2023
Net Cash from Operating Activities	(629.35)	1,373.21	792.87	(11.89)
Net Cash from Investing Activities	(136.35)	(1,314.28)	(1,103.21)	210.83
Net Cash used in Financing Activities	780.98	(21.74)	336.19	(647.34)

Cash Flows from Operating Activities

Net cash from operating activities for fiscal 2025 was at 1373.21 lakhs as compared to the Profit Before Tax at 1272.40 lakhs while for fiscal 2024 Net cash from operating activities was at 792.87 lakhs as compared to the Profit Before Tax at 686.41 Lakhs. This was primarily due to adjustments against adjustments against, changes in Working Capital & Income Tax Paid.

Net cash from operating activities for fiscal 2024 was at 792.87 lakhs as compared to the Profit Before Tax at 686.41 lakhs while for fiscal 2023 Net cash from operating activities was at (11.89) lakhs as compared to the Profit Before Tax at (594.21) Lakhs. This was primarily due to adjustments against adjustments against, changes in Working Capital & Income Tax Paid.

Net cash from operating activities for fiscal 2023 was at (11.89) lakhs as compared to the Profit Before Tax at (594.21) lakhs. This was primarily due to adjustments against adjustments against, changes in Working Capital & Income Tax Paid.

Cash Flows from Investment Activities

In fiscal 2025, the net cash invested in Investing Activities was (1314.28) lakhs. This was mainly on account of Purchases of Fixed Assets.

In fiscal 2024, the net cash invested in Investing Activities was (1103.21) lakhs. This was mainly on account of Purchases of Fixed Assets and Interest income.

In fiscal 2023, the net cash invested in Investing Activities was 210.83 lakhs. This was mainly on account of sales of Investments by the company during the year

Cash Flows from Financing Activities

In fiscal 2025, the net cash from financing activities was (21.74) lakhs. This was on account of increase in borrowings.

In fiscal 2024, the net cash from financing activities was 336.19 lakhs. This was on account of increase in borrowings.

In fiscal 2023, the net cash from financing activities was (647.34) lakhs. This was on account of payment of borrowings.

Information required as per Item (II) (C) (iv) of Part A of Schedule VI to the SEBI Regulations:

An analysis of reasons for the changes in significant items of income and expenditure is given hereunder:

1. Unusual or infrequent events or transactions

There has not been any unusual trend on account of our business activity. There are no Unusual or infrequent events or transactions in our Company. The transactions are as per usual business operations.

2. Significant economic changes that materially affected or are likely to affect income from continuing operations.

Except for any change in economic policy affecting our industry in India, there are no other significant economic changes that may materially affect or likely to affect income from continuing operations.

3. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations.

Apart from the risks as disclosed under Section " Risk Factors " beginning on page 23 in the Red Herring Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

4. Future changes in relationship between costs and revenues

Our Company s future costs and revenues will be determined by growth of industry in which we operate.

5. Increases in net sales or revenue and Introduction of new services or increased sales prices

Increases in revenues are by and large linked to increases in volume of our business.

6. Status of any publicly announced New Products or Business Segment

Our Company has not announced any new Service.

7. Seasonality of business

Our Business is not seasonal in Nature.

8. Dependence on few customers/ clients

The percentage of contribution of our Company s Top Customers/Clients for the period ended June 30, 2025 is as follows:

Particulars	Customers
Top Ten (%)	9.16%

9. Competitive conditions

Competitive conditions are as described under the Chapters " Industry Overview " and " Business Overview " beginning on pages 92 and 108 respectively of the Red Herring Prospectus.

10. Details of material developments after the date of last balance sheet i.e. June 30, 2025

After the date of last Balance sheet i.e. June 30, 2025, no material events have occurred after the last audited period except as follows:

- The Company has availed additional loan limit as working capital from HDFC Bank Limited amounting 827.00 Lakhs in terms of HCF OD and HCF DLOD facility and new term loan limit HCIF Facility amounting 1500.00 Lakhs vide sanction letter date 21.08.2025.