Nexus Surgical and Medicare Ltd Management Discussions

Indian Economy

India continued to outpace the worlds major economies amid heightened global uncertainty, driven by domestic consumption and sustained investment in infrastructure and productive capacity. During the financial year 2025-26, the global environment was shaped by geopolitical instability, policy shifts across advanced economies, particularly around trade and industrial policy, tariff escalations, rising energy prices, and volatile capital flows. The Indian government focused on strengthening domestic fundamentals and cushioning external pressures through structural reforms including GST 2.0 alongside tax-relief measures and supportive monetary and fiscal policy.

Indias structural advantages — a large and growing consumer base, favorable demographics, rising digital penetration and improving ease of doing business continue to reinforce the longterm economic outlook. Real GDP growth is estimated at approximately 7.4%-7.6% for F.Y. 2025-26, with broad-based expansion across manufacturing, services and infrastructure, and headline inflation moderated through the year to 3.4% in March 2026, within the Reserve Bank of Indias tolerance band of 2%-6%.

The healthcare and pharmaceutical sector continues to be supported by government policies aimed at strengthening domestic manufacturing and improving access to medicines, including the Production Linked Incentive (PLI) scheme for medical devices, increased budgetary support for the sector, and expansion of affordable-medicine programmes. Continued expansion of organised healthcare infrastructure, rising health-insurance penetration, and growing adoption of digital healthcare platforms further underpin long-term demand for surgical and pharmaceutical products in India — the market the Company operates in as an importer and distributor.

Overall Review:

The global surgical equipment market has grown strongly in recent years, supported by increasing surgical procedure volumes, expansion of hospital infrastructure, rising prevalence of chronic diseases, and growing adoption of modern surgical techniques and standardised surgical tools. Independent market estimates project the global market to reach approximately $53.68 billion by 2030, growing at a compound annual growth rate of around 9.3%, driven by increasing demand for minimally invasive surgeries, rising investment in operating-room equipment, and growing focus on infection prevention and disposable surgical instruments.

The Company, as an importer and wholesale distributor of disposable surgical products such as syringes and sterile equipment storage pouches, is a direct beneficiary of this underlying growth in surgical procedure volumes and hospital demand, even though it does not itself manufacture or develop surgical technology.

Government Initiatives

India has rolled out several initiatives for 2025-26 to boost domestic manufacturing of surgical and medical equipment, reduce import reliance, and strengthen health infrastructure, including the Scheme for Strengthening of Medical Device Industry (a ?500 crore initiative offering capital subsidies and support for clinical evaluation), the PLI Scheme for Medical Devices (an outlay of ?3,420 crore incentivising local production of advanced imaging, implants and critical surgical equipment), and continued central support for Medical Device Parks.

These schemes are primarily aimed at strengthening domestic manufacturing capability. As the Companys own business model is built on importing surgical and pharmaceutical products from overseas manufacturers, these initiatives are relevant to it chiefly as a competitive consideration: over time, successful import-substitution could increase the availability of domestically manufactured alternatives to the products the Company currently imports (see "Risks, Concerns and Threats" below).

Industry Outlook

The surgical and healthcare products market continues to see strong underlying growth driven by an ageing population, rising procedural volumes and expanding hospital infrastructure, offset by cost pressures and evolving regulatory and import-policy conditions.

Key growth drivers relevant to the Companys trading operations in India include

• Expanding Hospital Infrastructure: continued growth in the number of hospitals and healthcare facilities across India, including in tier-2 and tier-3 cities, widening the customer base for surgical disposables.

• Rising Surgical Volumes: an increasing number of surgical procedures performed annually in India supports sustained demand for disposable surgical products.

• Health Insurance Penetration: growing penetration of health insurance and government healthcare spending in India is expected to support continued procurement volumes by hospitals and healthcare providers.

SWOT Analysis Strength:

- An established, multi-year presence as an importer and wholesale distributor of surgical and pharmaceutical disposables in India, with working relationships with overseas manufacturers.

- An asset-light, low-fixed-cost operating model allowing flexibility to scale purchases with demand.

- A debt-free balance sheet, providing financial flexibility to fund working-capital growth internally rather than through borrowings.

- A focused product range (disposable syringes and sterile equipment storage pouches) that keeps operations straightforward to manage with a lean team

Weakness:

- Dependence on a limited number of overseas suppliers and a narrow product category, with limited diversification.

- Exposure to foreign-currency movements on import purchases, with no forward contracts or other hedging instruments currently in place.

- Small scale of operations relative to larger, more diversified medical-products distributors, which may limit bargaining power with suppliers and large institutional customers

- A lean employee base, which increases dependence on a small number of key personnel.

Opportunities:

- Continued expansion of Indias organised healthcare infrastructure and hospital network, widening the addressable customer base for surgical disposables.

- Rising health-insurance penetration and government healthcare spending, supporting sustained procurement volumes by hospitals and institutional buyers.

- Potential to broaden the product range within the surgical-disposables and pharmaceutical-trading category, reducing reliance on a narrow product mix

Threats:

- Domestic manufacturing-incentive schemes (such as the PLI Scheme for Medical Devices) are designed to reduce Indias import dependence over time, which could increase competition from domestically manufactured alternatives to the Companys imported product range.

- Volatility in foreign exchange rates and international freight/logistics costs directly affects the landed cost of imported goods.

- Regulatory change under the Drugs and Cosmetics Act, Customs regulations or import policy could affect the cost or availability of the Companys products.

- Competition from other importers and domestic wholesalers in a price-sensitive market.

Segment-wise/Product-wise Performance:

The Company is engaged mainly in trading activities of medical supplies and, as such, there are no separate reportable segments as defined by Indian Accounting Standard (Ind AS) 108 on ‘Operating Segments.

• Import and Foreign Exchange Risk: the Companys core business model involves importing products from overseas manufacturers; adverse movements in exchange rates, combined with the Companys present policy of not entering into forward contracts or other hedging instruments, could affect landed costs and margins.

• Supplier Concentration Risk: reliance on a limited number of overseas manufacturers exposes the Company to supply disruption, quality and pricing risk.

• Regulatory and Import Policy Risk: changes in customs duties, import regulations, or domestic manufacturing-incentive schemes aimed at import substitution could affect the competitiveness of the Companys imported product range.

• Credit and Working Capital Risk: the Company extends credit to customers in the ordinary course of trading (trade receivables of ?132.37 lakh as at 31 March 2026); delays in collection could affect liquidity.

• Inventory Risk: as a trader in medical disposables, the Company carries the risk of slow- moving or obsolete stock.

• Competitive Risk: the Company operates in a price-sensitive market comprising other importers, wholesale distributors and, increasingly, domestic manufacturers benefiting from government incentive schemes.

• Key-Person Risk: with a lean employee base, the Company is dependent on the continued availability of its promoter and management team.

• Regulatory Compliance Risk: as a listed entity, the Company is subject to evolving compliance requirements under the Companies Act, 2013, the SEBI (LODR) Regulations, 2015, and other applicable Indian laws.

Internal Control System:

The management believes that internal controls are a prerequisite of governance and that actions emanating from agreed business plans should be exercised within a framework of checks and balances. The management is committed to ensuring an effective internal controls environment, commensurate with the size and complexity of the business, which assures compliance with internal policies, applicable laws and regulations, ensures reliability and accuracy of records, promotes operational efficiency, protects resources and assets, helps prevent and detect fraud, errors and irregularities, and minimises risk overall. The internal financial controls framework, a sub-set of the internal controls framework, assures the reliability and accuracy of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Financial Performance with respect to Operational Performance:

During the year, the Company has earned Total Revenue of Rs. 7,86,808.65 hundreds in comparison to Rs. 5,72,094.82 hundreds during the previous year. The Net Profit after tax is Rs. 73,611.70 hundreds in comparison with Rs. 49,738.32 hundreds of the previous year. The transformational journey has embarked upon and the Company remains confident of a sound growth trajectory in the upcoming years.

Safety, Health and Environment:

Y our Company as a matter of policy gives greater importance to safety, health and environment and also ensures compliance with applicable legislative requirements.

Human Resources:

The Company has embarked on its journey of "Happiness at the workplace" which has helped to look at employee engagement in a more holistic way.

Key Financial Ratios:

In accordance with the SEBI (Listing Obligations and disclosures Requirements) Regulations 2018 (Amendment) Regulations, 2018, 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 sector-specific financial ratios.

Particulars	F.Y. 2025-26	F.Y. 2024-25
Debtors Turnover Ratio1	5.91 times	5.47 times
Current Ratio2	1.96 times	1.85 times
Net Capital Turnover Ratio3	5.61 times	7.41 times
Return on Capital Employed4	54.87%	62.79%
Return on Equity Ratio5	51.42%	61.03%
Net Profit Margin (%)6	9.36%	8.69%

debtors Turnover Ratio improved during the year, as growth in revenue outpaced the increase in average trade receivables.

2Current Ratio has increased due to Increase in current assets.

3Net Capital Turnover Ratio has declined due to an increase in the Companys net working capital without a proportionate increase in revenue from operations.

4Return on Capital Employed has declined due to a decrease in the Companys operating profit relative to the capital employed during the year.

5Return on Equity Ratio has declined due to a decrease in the Company s profit after tax relative to shareholders equity.

6Net Profit Margin improved during the year, primarily driven by increased profitability. Cautionary Statement:

Statements in this ‘Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, plans or industry conditions or events are ‘forward-looking statements within the meaning of applicable securities laws and regulations. Actual results, performance or achievements could differ materially from those expressed or implied. The Company assumes no responsibility to publicly update, amend, modify or revise any forward-looking statements, based on any subsequent development, new information or future events or otherwise except as required by applicable law.