Nephro Care India Ltd Management Discussions

Indian Economy

India, recognised as the fastest-growing major economy, continued to expand in FY2024–25, although the high base effect moderated growth. This tempered pace came despite several underlying challenges.

GDP growth stood at 6.5% in FY25, driven by positive consumption trends, a rural demand rebound, growth in services, and a rising share of high-value manufacturing in exports.

A key sector contributing to this growth is healthcare. It is one of the largest contributors to both employment and revenue. Indias healthcare ecosystem spans across hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance, and medical equipment. The sectors dynamism is driven by rising demand, improved service delivery, and increased investments from both government and private players.

Reflecting this commitment, public healthcare expenditure rose to 2.5% of GDP in FY25. This increase underscores the governments sustained focus on strengthening healthcare infrastructure and accessibility across the country.

The rising demand for healthcare services and the escalating medical equipment cost significantly contributed to medical inflation. The medical inflation rate stood at 12% during the year.

Meanwhile, macroeconomic stability was maintained with annual inflation easing to 4.6% in FY25, down from 5.4% in the previous fiscal. This moderation supports stronger household purchasing power and further bolsters domestic consumption

	Q1	Q2	Q3	Q4
	FY24-25	FY24-25	FY24-25	FY24-25
Real GDP growth(%)	6.7	5.4	6.2	7.4

Outlook

In 2025-2026, the Indian economy is expected to grow moderately, with a projected real GDP increase of 6.3-6.8% from a high base. India will strengthen its position as one of the fastest-growing major economies, significantly contributing to global GDP growth. External headwinds like global economic sluggishness, geopolitical instability, trade disputes, and supply chain disruptions may impact Indias economic trajectory. Sluggish urban consumption, rising food inflation, and muted capital investment could dampen overall momentum.

Moreover, public healthcare expenditure is expected to reach 1.9% of GDP by FY26. In line with this, the government has allocated _99,858 Crore (US$11.5 billion) in the Union Budget 2025–26 to support the development, maintenance, and enhancement of the nations healthcare infrastructure.

(Sources: The Business Standard, India Today, Mint, PIB, The Economics Times, The Financial Express, Trading Economics, IBEF)

Healthcare Potential in Asia-Paci_c

Overview

The Asia-Pacific region is positioned to assume a leadership role within the global healthcare market, with projections indicating that it will emerge as the fastest-growing region in terms of healthcare expenditure by the year 2030. It is anticipated to comprise more than 20% of the total global healthcare spending. Demographic transitions, rising income levels, an escalation in disease prevalence, and an augmented awareness of personal health and wellness primarily drive this increase.

Challenges

Despite this growth, the region continues to confront significant challenges, including access to quality care, affordability, and the overall efficiency of the healthcare system, which remain critical concerns. These systemic issues underscore the necessity for innovative solutions to bridge the gaps in service delivery, infrastructure, and policy frameworks.

Evolving Landscape

Meanwhile, consumer behaviour is shifting rapidly. Individuals are taking a more proactive role in managing their health and are increasingly willing to invest in better care. Recent data shows that approximately 50% of all consumers and a notable 58% of Gen Z plan to increase their healthcare spending. Their motivation lies in improving health outcomes, enhanced experiences, and greater convenience and efficiency in care delivery.

This evolving landscape presents vast opportunities for healthcare providers, insurers, and innovators. The path forward will be defined by how well stakeholders can respond to consumer expectations, integrate digital health solutions, and build inclusive, resilient healthcare systems across the Asia-Pacific region.

(Source: Bain & Company)

(https://www.bain.com/insights/asia-pacific-front-line-of-healthcare-2024/)

Indian Healthcare

Healthcare has emerged as one of Indias largest and fastest-growing sectors in revenue and employment. It encompasses a wide range of services, including hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance, and medical equipment.

The Indian healthcare market reached US$638 billion in FY25. This growth was driven by expanding healthcare coverage, improved services, and increasing investments from both the public and private sectors.

Indias healthcare delivery system is broadly divided into the public and private sectors. The government manages the public healthcare system, primarily focusing on providing basic health services through Primary Healthcare Centres (PHCs) in rural areas, and operates limited secondary and tertiary care facilities in key urban centres. In contrast, the private sector dominates in offering secondary, tertiary, and quaternary care, maintaining a strong presence in metropolitan, tier-I, and tier-II cities.

In 2024, the healthcare sector was one of Indias largest employers, providing jobs to approximately 7.5 million people.

A Global Hub for Healthcare

India has graduated into a preferred destination for R&D and clinical research for global healthcare companies, due to its cost advantages and robust research infrastructure. India holds a competitive edge in the global healthcare landscape due to its vast pool of skilled medical professionals and cost-effective services. Additionally, surgical procedures in India cost approximately one-tenth of those in Western countries. This affordability has significantly boosted medical tourism, attracting international patients each year. In 2024, Indias medical tourism market was valued at US$ 7.69 billion, and it is expected to grow to US$ 14.31 billion by 2029.

Government Initiatives in 2025

To address its expanding healthcare requirements, India must fulfil the objective of 34.5 skilled health workers for every 10,000 individuals in the population. This endeavour necessitates the recruitment of an additional 6,50,000 nurses and midwives, in conjunction with 1,60,000 doctors by the year 2030. To confront the challenges associated with the workforce, the government has implemented ambitious and progressive initiatives within the Union Budget for 2025.

The establishment of healthcare skill development funds, the creation of modern training centres, and the revision of curricula to incorporate emerging fields such as AI-driven care and robotic surgery showcase the Governments efforts to align Indias healthcare skills with the dynamic needs of an ever-evolving healthcare space. Specialised training in advanced technologies has also been prioritised to mitigate workforce shortages.

The "Heal in India, Heal by India" mission assumes a significant role as healthcare professionals persist in spearheading excellence and innovation through collaborative efforts between private-sector entities and technological advancements partners.

Outlook

Indias healthcare sector is set for significant growth, with revenue projected to reach US$ 774 billion by 2030. The country is on track to become one of the top three global healthcare markets, supported by increased public health spending, a skilled workforce, and rising demand for AI-driven solutions. The expanding medical device industry, demographic shifts, and advances in telemedicine and data analytics are expected to accelerate job creation, including three million new tech roles.

(Sources: IBEF, Business Standard, India connected)

(https://www.ibef.org/industry/healthcare-india)

(https://www.business-standard.com/economy/analysis/india-s-demographic-edge-a-key-to-addressing-global-healthcare-crisis-125013001514_1.html) (https://www.indiaconnected.co.uk/industries/healthcare-sector-india/#:~:text=As%20of%20 2024%2C%20Indias%20healthcare,total%20of%207.5%20million%20employees)

Demand Catalyst

Government Spending: In the Union Budget 2024-25, the government allocated _ 90,958 Crore (US$ 10.47 billion) for the development, maintenance, and strengthening of the nations healthcare system. This marks a 13% rise over the revised estimate of 2023-24.

Digital Integration: India has established a dedicated framework to integrate emerging fields such as AI-driven care and robotic surgery to remain at the forefront of global healthcare innovation.

Ayushman Bharat: The creation of over 73 Crore Ayushman Bharat Health Accounts (ABHA), as of January 2025, clearly reflects the growth and digital transformation of Indias healthcare sector, marked by a shift towards integrated and tech-enabled services that enhance accessibility and efficiency, along with rising health awareness and active engagement among the population.

Increasing Population: With a population exceeding 1.4 billion, India is witnessing rising health awareness, an ageing demographic, and a growing shift towards preventive healthcare, all of which are expected to drive strong demand for healthcare services.

FDI Inflow: Since 2020, the Indian government has permitted 100% Foreign Direct Investment (FDI), opening up significant opportunities for global investors. Between April 2000 and September 2024, the drugs and pharmaceuticals sector attracted FDI inflows of _ 2,00,148 Crore (US$ 23.04 billion).

Health Insurance: Rising health insurance penetration is expanding access to medical services, making healthcare more affordable and increasing patient footfall.

(Sources: IBEF, Business Standard, India Connected)

(https://www.ibef.org/industry/healthcare-india)

(https://www.business-standard.com/economy/analysis/india-s-demographic-edge-a-key-to-addressing-global-healthcare-crisis-125013001514_1.html) (https://www.indiaconnected.co.uk/industries/healthcare-sector-india/#:~:text=As%20of%20 2024%2C%20Indias%20healthcare,total%20of%207.5%20million%20employees)

Indian OPD Sector

Indias OPD sector is undergoing significant transformation; the post-pandemic developments have led the sector to accelerate the adoption of digital technologies and virtual healthcare solutions. In 2024, Indias outpatient (OPD) healthcare sector experienced substantial growth, driven by increased demand for accessible and affordable medical services.

In 2024, Indias outpatient care market was projected to generate approximately US$26.67 billion in revenue, and is projected to reach US$37.45 billion by 2029, with an annual growth rate of 8.86%.

In recent years, the medical landscape has witnessed a noticeable shift in favour of outpatient surgery services, especially in cities. Patients are shifting progressively towards procedures that let them leave the hospital the same day and avoid the bother and cost of overnight stays. This allows patients to have less invasive surgeries with relatively shorter recovery times without interfering with their regular schedules and encourages more people to seek timely medical intervention.

Digital Integration

The integration of digital technology, especially the widespread use of smartphones and improved internet connectivity, has significantly enhanced the accessibility and reach of outpatient care in India, particularly in rural areas.

Remote consultations via telemedicine platforms have become increasingly common, reducing the dependence on in-person visits and bridging the healthcare gap between urban and rural regions. This has improved patient convenience and eased the burden on hospitals.

The emergence of advanced health technologies, alongside strategic collaborations within the industry, is reshaping the OPD sector, enhancing its efficiency, accessibility, and focus on patient well-being.

Outlook

Indias healthcare system is in the process of aligning with the rapidly evolving digital landscape. The supply of services and infrastructure often falls short of meeting the increasing needs. Innovations such as AI-driven diagnostics and blockchain-enabled secure medical records pave the way for a more efficient and future-ready system.

Indias digital healthcare sector is expected to reach US$37 billion by 2030, with an estimated one billion digital health users by the same year. With strategic investments and collaborative innovation, India is poised to become a global model for digitally integrated, inclusive healthcare.

(Sources: Statista, Pazcare, Praxisga, Expresshealthcare)

(https://www.pazcare.com/blog/healthcare- digitalization-in-india-how-technology-has-transformed-indias- opd-segment#:~:text=Transforming%20Indias%20OPD%20 (Out%2DPatient,US%2437%20billion%20by%202030.) (https://www.statista.com/outlook/hmo/hospitals/outpatient-care/india) (https://www.praxisga.com/PraxisgaImages/ReportImg/praxis-report-on-outpatient-healthcare-market-in-india-Report-3.pdf?utm_source=chatgpt.com) (https://www.expresshealthcare.in/news/the-rising-demand-for-outpatient-surgery-services-a-global-trend-with-an-indian-lens/444139/)

Indias Growing Renal Health Crisis

Global Burden: Chronic Kidney Disease (CKD) has insidiously emerged as one of the most pressing global health concerns, currently ranked as the seventh leading cause of death worldwide. It affects over 850 million individuals and is both extensive and profoundly personal.

Economic and epidemiological data underscore why kidney disease should be placed on the global public health agenda - kidney disease prevalence is increasing globally, and it is now the seventh leading risk factor for mortality worldwide.

Moreover, demographic trends, the obesity epidemic and the sequelae of climate change are all likely to increase kidney disease prevalence further, with serious implications for survival, quality of life and health care spending worldwide.

Importantly, the burden of kidney disease is highest among historically disadvantaged populations that often have limited access to optimal kidney disease therapies, which greatly contributes to current socioeconomic disparities in health outcomes.

Alarmingly, CKD is anticipated to become the fifth leading cause of death by the year 2040, indicative of a rising incidence of kidney-related ailments that pose a significant challenge to healthcare systems globally.

Indias Burden: India, which accounts for nearly one-fifth of the global population, exemplifies the growing burden of Chronic Kidney Disease (CKD). The prevalence of this disease is estimated to be approximately 800 cases per million individuals. In comparison, the incidence of End-Stage Renal Disease (ESRD) is reported to be around 150 to 200 cases per million.

Diabetic Nephropathy (DN) is a growing public health problem with a high economic burden. DN is the main cause of chronic kidney disease (CKD) and end-stage renal disease (ESRD). This is especially true in India, which has the highest incidence of diabetes in the world, earning it the infamous title of ‘The Sugar Factory of the World.

CKD in India is often diagnosed late. Lack of awareness often plays an important role, and the absence of symptoms (higher incidence of interstitial nephritis and CKD of unknown origin) contributes to the delay. The burden of kidney failure is increasing, with almost 210,000 new cases being diagnosed each year.

Managing CKD is complicated for patients due to various socioeconomic factors. With very little financial support and a lack of nephrologists, patients find it difficult to access health care services. They often default to therapy because of financial constraints and progress to end-stage kidney failure. Under pressure, many start alternative medications, which often worsen their kidney disease.

With millions of individuals living with undiagnosed or untreated renal issues, the necessity for timely and accessible renal care has never been more paramount.

Source: Kidney360

(https://journals.lww.com/kidney360/fulltext/2023/05000/journey_of_a_patient_with_ckd_in_india.18.aspx)

Dialysis: A Lifeline for Patients with Kidney Failure

As the incidence of chronic kidney disease (CKD) and end-stage renal disease (ESRD) continues to increase, dialysis has emerged as a vital, life-sustaining therapy for patients exhibiting severely impaired kidney function. Dialysis serves as renal replacement therapy (RRT), playing a crucial role in the removal of toxins, excess fluids, salts, and waste products from the bloodstream. By purifying the blood and restoring electrolyte balance, dialysis provides patients not only a method of survival but also enhances their quality of life.

Dialysis is generally administered in two principal forms: Hemodialysis and Peritoneal dialysis. Hemodialysis entails diverting the patients blood to a machine, where it is externally filtered before being returned to the body. Conversely, Peritoneal dialysis presents a more adaptable and home-based method. It utilises the peritoneum—a natural membrane within the abdominal cavity- as a filter.

Outlook

The trajectory of Indias renal care sector signals both an urgent health challenge and a promising growth opportunity. The growing prevalence of CKD and End-Stage Renal Disease (ESRD), coupled with lifestyle-related risk factors such as diabetes and hypertension, is driving sustained demand for renal replacement therapies.

The Indian dialysis market illustrates the increasing demand for such therapies. In 2024, the market size reached US$ 5.0 billion. It is projected to more than double, achieving US$ 11.3 billion by 2033. This anticipated growth, characterised by a CAGR of 8.83% from 2025 to 2033, emphasises the escalating need for dialysis services in the context of rising kidney-related disorders.

Demand Drivers

Increasing prevalence of kidney disease (CKD): Chronic kidney disease is a significant health concern in India, with a significant number of cases currently diagnosed across the country in 2025.

Government healthcare initiatives: The Government of India has introduced several healthcare reforms to enhance dialysis access. Launched in 2016, the Pradhan Mantri National Dialysis Programme continues to expand, now offering free dialysis services across more than 1,100 districts nationwide.

Technological advancements: The dialysis sector in India has benefited from substantial technological advancements, such as the integration of AI in dialysis machines. These innovations improve treatment accuracy and reduce human error, helping to improve patient outcomes. This shift has also led to the rise of portable dialysis machines, enabling more patients to receive treatment from home.

Lifestyle Changes: Sedentary lifestyles and poor dietary habits are contributing to the early onset of kidney disorders, boosting long-term dialysis demand.

(Source: Marketresearch)

(https://www.marketresearch.com/Ken-Research-v3771/India-Dialysis-Outlook-40698415/)

Transplant: the Best Option, but Fraught with Challenges

A transplant is considered the best treatment, but getting a kidney transplant requires determination and dedicated effort by the patient and family. Finding a willing, suitable donor with good histocompatibility leukocyte antigen and cross-match, and getting appropriate clearances, is a major challenge. Long wait time for deceased donor transplants is another reality.

The Transplantation of Human Organs and Tissues Act 1994, amended in 2011, has laid down rules and regulations. New rules to expand the "donor pool" were added to redefine "near relatives."

More recently, in 2023, the government made changes to the policy of organ donation. An age barrier that limited the number of seriously ill individuals over 65 who could donate organs was removed by the ministry. This age group of senior citizens can now sign up to receive donations from living donors. Removing constraints relating to residency is another crucial step toward facilitating the timely transplantation of organs.

However, there are many challenges in optimising renal transplantation in India:

- Since law is a state subject, not all states have adopted the 1994 Act and its 2011 amendments, and several states are yet to implement these changes.

- There is a lack of awareness about the transplantation procedure. Legislators and policymakers need to recognise the patients role, ensuring that transplant laws involve the patient and caregiver in the decision-making process.

- Kidney transplants are not performed in all states. Patients in states with non-existent transplant programs are at a major disadvantage.

- State financial assistance is usually restricted to patients getting treatment within the state.

- Unethical and illegal practices are a big dampener for genuine donors. In this chaotic situation, the authorisation committee gets innovative and often stops transplants as a knee-jerk reaction. In most situations, transplant activities are suspended, further aggravating the situation.

Kidney Transplants in India: Current Landscape

Transplant Centres

- Total Kidney Transplant Centres: ~600

– Public Sector: 75

– Private Sector: Remaining centres

Organ Transplants (2018-2022)

According to the Union Health Ministry and the National Organ and Tissue Transplant Organisation, the top three organs transplanted in India over the last five years were:

1. Kidney

– Total Transplants: 43,983

– Share of Total Transplants: 75%

2. Liver

– Total Transplants: 13,084

– Share of Total Transplants: 22%

3. Heart

– Total Transplants: 911

Kidney Transplants in 2023

- Total Kidney Transplants: 13,642

– From Living Donors: 11,791

– From Deceased Donors: 1,851

Demand-Supply Gap

- Estimated Annual Requirement: 200,000 kidney transplants

- Actual Transplants (2023): 13,642

- Observation: A significant gap exists between demand and availability, underscoring the urgent need to scale up transplant infrastructure and awareness.

India is second in the world in kidney transplants, after the US, but it mainly relies on living donations.

Company Overview

Nephro Care was established in Kolkata in 2014 by Dr. Pratim Sengupta. This institution is a specialised healthcare establishment dedicated to providing comprehensive medical services for patients with renal conditions. Through a holistic approach to treatment, Nephro Care addresses not only the physiological requirements of its patients but also emphasises lifestyle management and spiritual well-being, thereby promoting a complete pathway to wellness.

With a team of highly qualified physicians, experienced paramedical professionals, and a proficient management team, Nephro Care delivers patient-centric care that is founded on principles of scientific understanding, ethical practice, and transparency. The centre provides a diverse array of advanced renal treatments customised to meet individual needs, ensuring medical excellence at every stage.

Financial Performance

	For the period ended
Particulars	31-March-25	31-March-24
Revenue from	4,603.11	2,723.08
Operations
% of total revenue	96.78%	98.66%
Other income	152.69	37.00
% of total revenue	3.21%	1.34%
Total Income	4,755.80	2,760.08

KEY FINANCIAL RATIOS

Particulars	2024-2025	2023-2024	Change %	Reason for change
Current ratio (in times)	2.01	1.86	8.21%	-
Debt-equity ratio (in times)	-	-	-	-
Return on equity ratio (%)	10.62%	51.30%	-79.29%	The Return on Equity declined primarily due to a reduction in net profit during the year
Trade payables turnover ratio (in times)	4.88	6.37	-23.38%	-
Net profit ratio (%)	7.91%	16.53%	-52.19%	Decline in profit led to a reduced net profit ratio.
Return on capital employed (%)	13.44%	44.71%	-69.95%	Decline due to increase in human resources as a result of expansion
Return on investment (%)	5.81%	4.00%	45.30%	Income from Mutual Fund
Inventory Turnover Ratio (in times)	16.55	21.72	-23.79%	-

Significant changes (i.e., change of 25% or more as compared to the immediately previous financial year) in Key Financial Ratios, along with explanation.

Internal Control Systems and Their Adequacy

Nephro Care India Limited upholds high ethical standards, fortified by a robust internal control framework delineated in this statement. This system protects operational integrity by ensuring precise financial reporting, safeguarding assets against fraud, and improving efficiency through stringent adherence to regulations.

Our internal control framework is based on key pillars that support integrity and excellence. We foster a control environment that promotes ethical conduct and emphasises internal controls. We perform ongoing risk assessments to identify and mitigate potential threats. Comprehensive measures address these risks, ensuring adherence to established procedures. Clear communication is essential for all employees to understand their roles within this framework.

We monitor and enhance our internal control framework for effectiveness and adaptability. Our board and senior management oversee its development and performance. While the system offers assurance, evolving risks and unforeseen circumstances may affect efficacy. We remain committed to a robust internal control framework, reinforcing our dedication to integrity and excellence.

Our objective is to give stakeholders a clear understanding of our commitment to a reliable internal control framework. We recognise that external factors like foreign exchange fluctuations and regulatory changes pose challenges. To address these, we identify risks at the departmental level, resolving or escalating them to management as needed. This approach ensures effective risk management and strengthens stakeholder confidence.

Nephro Care also prioritises environmental sustainability and actively promotes awareness initiatives. Additionally, we implementstrategiccost-controlmeasurestoenhanceoperational efficiency. Through these efforts, we remain a responsible and forward-thinking leader in the pharmaceutical industry.

Human Resources

At Nephro Care, we recognise that our employees are the foundation of our success. Over the years, our human resources team has focused on initiatives that enhance skills, promote well-being, and cultivate a positive work environment. We are dedicated to attracting and retaining top talent while fostering organisational leadership development. Our commitment to diversity and inclusion drives innovation and strengthens our workforce. Moving forward, we will continue investing in our people, ensuring they can navigate the evolving pharmaceutical landscape.

Risk Management

Beyond conventional business and industry risks, Nephro Care recognises the existence of supplementary challenges, including foreign exchange fluctuations and alterations in regulatory policies.

The organisations proactive risk management strategy encompasses the identification of risks at the departmental level, addressing these challenges directly, or escalating them to management for prompt resolution. This methodology guarantees comprehensive risk mitigation and fortifies stakeholder confidence.

Furthermore, the organisation places a high priority on environmental sustainability and actively advocates for eco-friendly initiatives, concurrently implementing cost-control measures to enhance operational efficiency.

CAUTIONARY STATEMENT

THIS REPORT INCLUDES FORWARD-LOOKING STATEMENTS REFLECTING NEPHRO CARE INDIA LIMITEDS MANAGEMENTS CURRENT EXPECTATIONS AND STRATEGIC OUTLOOK. THESE STATEMENTS OUTLINE NEPHRO CARES OBJECTIVES, PROJECTIONS, AND FUTURE PLANS. HOWEVER, THEY ARE SUBJECT TO INHERENT RISKS AND UNCERTAINTIES THAT MAY RESULT IN ACTUAL OUTCOMES DIFFERING SIGNIFICANTLY FROM THOSE ANTICIPATED.

VARIOUS FACTORS MAY IMPACT THE OPERATIONS, INCLUDING RELIANCE ON TELECOMMUNICATION AND IT SYSTEMS, POTENTIAL GOVERNMENT POLICY CHANGES, AND UNFORESEEN CIRCUMSTANCES. LINCOLN PHARMACEUTICALS LIMITED DISCLAIMS ANY RESPONSIBILITY FOR DECISIONS BASED ON THESE FORWARD-LOOKING STATEMENTS AND IS NOT OBLIGATED TO UPDATE THEM IN THE FUTURE.