Mohini Health & Hygiene Ltd Management Discussions.

Industry Structure and Developments

Healthcare Industry

The Indian healthcare sector is one of the fastest growing sectors with a rising coverage for disease, services and increasing expenditure by the public.

Indian healthcare delivery system is categorised into two major components - public and private. The Government, i.e. public healthcare system comprises limited secondary and tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form of primary healthcare centres (PHCs) in rural areas. The private sector provides majority of secondary, tertiary and quaternary care institutions with a major concentration in metros, tier I and tier II cities.

Indias competitive advantage lies in its large pool of well-trained medical professionals. India is also cost competitive compared to its peers in Asia and Western countries.

The Mohini Health & Hygiene Limited is also contributing its valuables achievements in providing the health care accessories for the people in India and abroad. To cater the needs of consumers MHHL is making research in the health care products & for providing hygienic life style to people.

Health care industry has also become one of the leading destinations for high-end diagnostic services with tremendous capital investment for advanced diagnostic facilities, thus catering to a greater proportion of population. Now a days consumers have become more conscious towards their healthcare upkeep.

Market Size

The healthcare market can increase three fold to Rs 8.6 trillion (US$ 133.44 billion) by 2022.

India is experiencing 22-25 per cent growth in medical tourism and the industry is expected to reach US$ 9 billion by 2020.

There is a significant scope for enhancing healthcare services considering that healthcare spending as a percentage of Gross Domestic Product (GDP) is rising. The governments expenditure on the health sector has grown to 1.4 per cent in FY18 from 1.2 per cent in FY14. The Government of India is planning to increase public health spending to 2.5 per cent of the countrys GDP by 2025.

OPPORTUNITIES AND THREATS.

Opportunities and Threats.

Opportunities

Booming Medical Tourism Market

Indian medical tourism industry is US$3 bn having posted~20% CAGR in 2009-15 and is expected to clock ~30% CAGR over the next 5 years

Cost arbitrage (30-70% cheaper) to play a major role in attracting international patients

Indian Healthcare on Investors Radar

Strategic and financial investors are betting big on the under-penetrated Indian healthcare market

Recent strategic & financial transactions imply increased investors interest.

National Health Policy 2017 has set Ambitious Targets

Universal healthcare coverage - Increase health expenditure as a percentage of GDP from the existing 1.15 % to 2.50 % by 2025

The Ayushman Bharat - Pradhan Mantri Jan Arogya Yojana (PMJAY), the largest government funded healthcare program is targeting more than 500 million beneficiaries

Threats

The existing healthcare infrastructure of India is not sufficient to meet the needs of the rising population. There is a shortage of funds and staff in the public healthcare institutions.

High costs of land, building associated with rapidly evolving medical technology put burden on the operator

Limited support from the government and patients financial inability restricts the delivery of healthcare services to tier 1 cities

India has 0.7 doctors per 1,000 patients as compared to China‘s 1.9 doctors

India is the worlds second largest populated country. From 760 million in 1985 to 1.3 billion in 2015, the rising population demands a continuous growth and improvement in the healthcare facilities.

The public expenditure on health is only 1.2 % of the total health expenditure. This is extremely low when compared to the WHO recommendation of 5%.

Rural-urban disparity: There is a huge demand-supply gap in the rural areas which is reflected by the higher percentage of the population and a lower percentage of healthcare services in the rural areas. The primary healthcare centers (PHCs) are short of more than 3,000 doctors as a majority of healthcare professionals are located in the urban areas.

Segment - wise or product-wise performance

The Company is engaged in manufacturing of absorbent cotton, medical consumable products and cotton waste recycling and there are no separate reportable segments.

Outlook

The Company is continuously working on strengthening the business. It has been successfully executing major orders from prestigious customers and it has been enjoying the confidence of all customers across the country with repeat orders. The Company has embarked on improving margins in all products by reducing the various costs and focused on the high margin products. The results of these initiatives are expected to improve the overall profitability of the Company further during the current year.

Risks and concerns

There has been considerable progress in implementing a structured risk management framework in the Company. The framework is now well documented with laid down dissemination procedures and this is updated periodically.

Internal control systems and their adequacy

The Company believes that internal control is a necessary concomitant of the principle of governance that freedom of management should be exercised within a framework of appropriate checks and balances. The Company remains committed to ensuring an effective internal control environment that provides assurance on the efficiency of operations and security of assets.

Well established and robust internal audit processes, both at business and corporate levels, continuously monitor the adequacy and effectiveness of the internal control environment across the Company and the status of compliance with operating systems, internal policies and regulatory requirements. In the networked IT environment of the Company, validation of IT security continues to receive focused attention of the internal audit team.

The Internal Audit function consisting of professionally qualified accountants and other specialists reviews the quality of planning and execution of all ongoing projects involving significant expenditure to ensure that project management controls are adequate to yield ‘value for money.

The Audit Committee of the Board met four times during the year. It reviewed, inter-alia, the adequacy and effectiveness of the internal control environment and monitored implementation of internal audit recommendations including those relating to strengthening of the Companys risk management policies and systems. It also engaged in overseeing financial disclosures.

Discussion on financial performance with respect to operational performance

The financial year 2018-19 was good for company. Company achieved a growth of 13.26% in exports from 9751.06 Lakhs to Rs. 11043.69 Lakhs. Companys EBIDTA is increased by 11.21% from 1860.77 Lakhs to 2069.30 Lakhs.

Material developments in Human Resources / Industrial Relations front, including number of people employed

The Company continues to maintain a very cordial and healthy relationship with its work force across all its units. A dynamic and transparent performance appraisal system along with various positive initiatives towards employee welfare requirements ensured maintaining the employees morale at greater heights. The Company also offers financial support for medical and other needs of employees from time to time.

Acknowledgment

The Directors would like to express their sincere appreciation for the co-operation and support received from shareholders, bankers, financial institutions, regulatory bodies, customers, suppliers, employees at all levels and other business constituents during the year under review.

For & on Behalf of the Board of Directors Mohini Health & Hygiene Limited

Sd/-

CHAIRMAN

Mr. Sarvapriya Bansal

DIN 02540139

Date: 30th August, 2019

Place: Pithampur (M.P.)