Nexus Surgical and Medicare Ltd Management Discussions

Indian Economy

Indias healthcare landscape has undergone a transformation, propelled by substantial investments in infrastructure development. The Union Health Ministrys allocation of Rs. 90,658.63 core in the interim Budget for 2024-2025 reflects a 12.59 percent increase highlighting the governments prioritisation of healthcare expenditure.

As the world observes World Health Day, India celebrates significant milestones in its healthcare sector, with a focus on infrastructure development, access to quality care and the rollout of transformative initiatives.

Indian healthcare industry has been on an upward trajectory, boasting a remarkable compound annual growth rate (CAGR) of around 22 per cent.

The hospital market in India, valued at USD 98.98 billion in 2023, is set to continue its upward trajectory, with projections indicating a CAGR of 8.0 per cent from 2024 to 2032. By 2032, the market is estimated to reach value of USD 193.59 billion.

In addition to the burgeoning hospital market, several other segments of the Indian healthcare industry are witnessing rapid growth and expansion.

The telemedicine market, for instance, is expected to touch USD 5.4 billion by 2025, growing at an impressive CAGR of 31 per cent. Similarly, AI applications in healthcare are projected to grow at an annual rate of 45 per cent by 2024, indicating a significant shift towards technology-driven healthcare solutions.

The healthtech sector is also poised for substantial growth, with hiring expected to increase by 15-20 percent in 2024.

With groundbreaking investments and visionary policies, India is reaffirming its commitment to ensuring health and wellness for all citizens.

Total 202 healthcare infrastructure projects worth Rs 11,700 crores across 23 states and union territories, encompassing medical colleges, specialty units and research facilities were introduced.

Overall Review:

Innovations in cardiology, robotic surgery, internet-connected wearable devices, and other areas may also spur dealmaking in 2024. Innovation across robotics, AI, machine learning, and IOT are driving advancement in this field, and 2024 should include a range of deals focused in these areas.

? Healthcare Sector: It comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment.

? Indias healthcare delivery system is categorised into two major components – public sector and private sector.

? Public Sector: It 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.

? Private Sector: The Private Sector provides the majority of secondary, tertiary, and quaternary care institutions with a major concentration in metros, tier-I, and tier-II cities.

Government Initiatives

Between April 2000-December 2023, the FDI inflow for the drugs and pharmaceuticals sector stood at US$ 22.37 billion.

Inflows in sectors such as hospitals and diagnostic centres and medical and surgical appliances stood at US$ 9.81 billion and US$ 3.26 billion, respectively, between April 2000-December 2023.

Recent developments in the Indian healthcare industry are as follows:

? In May 2023, Temasek, a Singaporean investment company, invested US$ 2 billion in Manipal Health Enterprises, a leading healthcare provider in India, highlighting the growing interest in the Asian healthcare market.

? In September 2023, Nirma a diversified Indian conglomerate, acquired a 75% stake in Glenmark Life Sciences, a pharmaceutical company, for US$ 689 million. This transaction marked one of the biggest Indian healthcare Merger & Amalgamation deals of the year.

? As of August 1, 2023, a total of 24.33 crore Ayushman cards have been created. To prevent, detect, and deter healthcare fraud and to ensure that eligible beneficiaries receive adequate treatment, the Government of India is using Artificial Intelligence (AI) and Machine Learning (ML). As of October 2023, a total of 26 crore Ayushman cards have been created.

? As of February 20, 2023, more than 220.63 crore COVID-19 vaccine doses have been administered across the country. While as of May 11, 2023, more than 2.20 billion COVID-19 vaccine doses have been administered across the country.

? Multinational healthcare company Abbott has committed to converting 75 Primary Health Centres (PHCs) to Health and Wellness Centres (HWCs) in nine Indian States, in collaboration with Americares India Foundation, a nonprofit organisation dedicated to relief and development in the field of health. This will benefit over 2.5 million people from under-resourced communities every year.

? Under the Interim Union Budget 2024-25, the Ministry of Health and Family Welfare has been allocated Rs. 90,659 crore (US$ 10.93 billion), an increase of 1.69% compared to Rs. 89,155 crore (US$ 10.75 billion) in 2023-24.

? Pradhan Mantri Swasthya Suraksha Yojana (PMSSY) was allocated Rs. 2,400 crore (US$ 0.29 billion)

? Human Resources for Health and Medical Education was allotted Rs. 5,016 crore (US$ 0.60 billion)

? National Health Mission was allotted Rs. 38,183 crore (US$ 4.60 billion).

? Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) was allotted Rs. 7,500 crore (US$ 0.90 billion).

Industry Outlook

Indias healthcare sector is extremely diversified and is full of opportunities in every segment, which includes providers, payers, and medical technology. With the increase in the competition, businesses are looking to explore the latest dynamics and trends which will have a positive impact on their business.

India is a land full of opportunities for players in the medical devices industry. The country 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 the population. Besides, Indian medical service consumers have become more conscious towards their healthcare upkeep. Rising income levels, an ageing population, growing health awareness and a changing attitude towards preventive healthcare are expected to boost healthcare services demand in the future. Greater penetration of health insurance aided the rise in healthcare spending, a trend likely to intensify in the coming decade.

The Government aims to develop India as a global healthcare hub and is planning to increase public health spending to 2.5% of the countrys GDP by 2025.

There is a need to adopt technology wherever possible to streamline the operational and clinical processes for healthcare facilities in order to manage efficient patient flow.

In addition, there is the challenge to think beyond the obvious and promote virtual care protocols, and telehealth services, which can be leveraged to reduce the patient-load burden to a large extent.

To sum it up, there is an urgency to make healthcare service and service providers more transparent operationally. This will help ensure people and processes can be made easily accountable to provide better healthcare services.

In the Union Budget 2023-24, the government allocated Rs. 89,155 crore (US$10.76 billion) to the Ministry of Health and Family Welfare.

Segment-wise/Product-wise Performance:

The Company is engaged mainly in trading activities of medical supplies and as such there are no other reportable segments as defined by Indian Accounting Standard 108 on "Operating Segments" issued by the Institute of Chartered Accountants of India.

Risks, Concerns and Threats:

India is a rapidly developing country with a population of over 1.4 billion people. While the country has made significant progress in improving access to healthcare, the challenge of financing healthcare for all remains a significant obstacle. We need to explore the current state of health financing in India, the challenges it faces, the risk factor, concerns and threats alongwith the opportunities for improvement.

- Current State of Health Financing in India

In India, healthcare is financed through a combination of public and private sources. The public sector is responsible for providing healthcare services to the majority of the population, particularly those who are unable to afford private healthcare. The private sector, on the other hand, caters to those who can afford to pay for healthcare services.

Despite the governments efforts to increase funding for healthcare, Indias public health expenditure remains low compared to other countries with similar levels of economic development. The low level of funding has resulted in inadequate healthcare infrastructure, shortage of healthcare professionals, and limited access to essential medicines and treatments. As a result, India faces significant challenges in achieving universal health coverage and addressing the burden of disease in the country.

- Challenges in Health Financing in India

One of the major challenges facing health financing in India is the lack of financial protection for individuals seeking healthcare services. Out-of-pocket expenditure accounts for over 60% of healthcare expenditure in India, which places a significant financial burden on individuals and families. This burden is particularly severe for those living below the poverty line, who are often unable to access the healthcare services they need due to financial constraints.

Another challenge is the inadequate allocation of funds towards preventive healthcare services. While the government has made efforts to increase funding for preventive healthcare, such as immunization programs, it remains insufficient compared to the burden of preventable diseases in the country. This has led to a significant burden of disease, particularly in rural areas, where access to preventive healthcare services is limited.

- Opportunities for Improvement

Despite the challenges, there are opportunities for improvement in health financing in India. One such opportunity is the increased use of technology to improve healthcare delivery and reduce costs. Digital health solutions, such as telemedicine and mobile health applications, can help to bridge the gap in healthcare access and improve the quality of care, particularly in rural and remote areas.

Another opportunity is the increased focus on preventive healthcare services. By investing in preventive healthcare, such as vaccination programs, the government can reduce the burden of disease and minimize healthcare costs in the long term.

Finally, there is a need for increased public-private partnerships to address the challenges facing health financing in India. Private healthcare providers can play a significant role in expanding access to healthcare services, particularly in urban areas, where the demand for healthcare services is high. By partnering with the government, private healthcare providers can help to bridge the gap in healthcare access and improve the quality of care.

Additionally, there are also opportunities for improving health financing through innovative financing mechanisms. One such mechanism is social health insurance, which pools resources from individuals and employers to provide healthcare coverage. While the implementation of social health insurance in India has been limited, it has the potential to improve financial protection for individuals seeking healthcare services.

Furthermore, the government can also consider increasing the allocation of funds towards health research and development. By investing in research and development, India can develop innovative solutions to address the burden of disease in the country and reduce healthcare costs in the long term.

It is also essential to address the issue of healthcare workforce shortage in the country. India has a shortage of healthcare professionals, particularly in rural areas. The government can address this by increasing funding towards training and education of healthcare professionals and implementing policies to encourage healthcare professionals to work in rural and remote areas.

Internal Control System:

The management believes that internal controls are the prerequisite of governance and that action emanating out of 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 to prevent and detect fraud, errors and irregularities and overall minimizes the risks. The Company has a well-established internal controls framework comprising a set of policies, procedures and systems, instrumental in enhancing the efficiency and effectiveness of business operations, reducing risks and costs, and improving decision-making and accountability. Internal financial controls framework, sub-set of internal controls framework assures the reliability and accuracy of financial reporting and the preparation of financial statements for external purposes following generally accepted accounting principles.

Financial Performance w.r.t. Operational Performance:

During the year, the Company has earned Total Revenue of Rs. 3,50,107.70 hundreds in comparison to Rs. 1,56,690.34 hundreds during the previous year. The total expenses have been increased from Rs. 1,33,809.65 hundreds to Rs. 3,21,039.17 hundreds. The Net Profit after tax is Rs. 21,330.85 hundreds in comparison with Rs. 17,070.48 hundreds during the previous year. The transformational journey has embarked upon and the Company remains confident of a sound growth trajectory in FY2024 and thereafter.

Safety, Health and Environment:

Your 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. 2023-24	F.Y. 2022-23
Debtors Turnover Ratio1	8.73 times	71.74 times
Current Ratio2	1.41 times	1.57 times
Net Profit Margin (%)3	6.14%	10.99%

1Debtors Turnover gone down due to increase in trade receivables of the Company.

2Current Ratio gone down due to Increase in current assets and increase in current liabilities. ³Net Profit Margin gone down due to increase in the business of the Company.

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.