Rainbow Childrens Medicare Ltd Management Discussions

<dhhead>Management Discussion & Analysis </dhhead>

INDIA’S ECONOMY OVERVIEW

India remained one of the fastest-growing major economies, supported by strong domestic demand, structural reforms and favorable policies. The country’s rapid economic expansion in recent years enabled it to surpass the UK, becoming the world’s fifth-largest economy. However, in FY 2024-25, global uncertainties, geopolitical tensions and inflationary pressures slowed overall economic growth. As per the second advance estimates from the Ministry of Statistics and Program Implementation (MOSPI), India’s economy grew by 6.5% year-on-year (YoY) in FY 2024-25, compared to 9.2% (as per first revised estimate) in the previous year.

The Consumer Price Index (CPI) inflation for FY 2024-25 is estimated at 4.9%, improving from 5.4% in FY 2023-24.

To ease liquidity challenges, the Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) reduced the repo rate by 25 basis points to 6.25% on 7th February 2025, marking the first rate cut since May 2020. Despite this, the MPC maintained a neutral stance to remain adaptable to economic changes.

Source: *MOSPI NSO Report dated 28th February 2025

#Reserve Bank of India (RBI) Monetary Policy Committee (MPC) report dated 9th April 2025

In FY 2024-25, India maintained steady economic growth, supported by a strong manufacturing sector, a growing services industry and increased infrastructure investments. Government-led initiatives, including digital transformation and financial inclusion programs, enhanced domestic manufacturing and attracted foreign direct investment

(FDI) in key sectors. Access to capital, changing investment trends and credit availability played a key role in business growth, infrastructure development and job creation during the year. Inflation remained a major concern in

FY 2024-25, primarily driven by global supply chain disruptions and volatile commodity prices. In response, the RBI’s Monetary Policy Committee (MPC) reduced the repo rate twice by 25 basis points, lowering it to 6% by April 2025, while continuing with an accommodative policy stance. Consumer Price Index (CPI) inflation for

FY 2024-25 is projected at 4.9%, down from 5.4% in the previous year and is expected to decline further to

4.0% in FY 2025-26. Despite external challenges, India’s robust domestic fundamentals, growing middle class and proactive policy measures are expected to support stable medium-term economic growth.

India’s economy is expected to grow steadily at 6.5% year-on-year in FY 2025-26, sustaining the pace achieved in FY 2024-25. Stabilization of global crude oil prices within the range of USD 60 to USD 65 per barrel is likely to ease inflationary pressures and support overall economic momentum. However, recent tariff measures have created mixed impacts·posing challenges for export-driven sectors by affecting global competitiveness, while benefiting domestic industries by reducing import dependence and spurring local demand. Exporters are facing margin pressures and limited market access, whereas domestic manufacturers are gaining from increased protection and opportunities to scale operations. Despite continued geopolitical uncertainties and market volatility, India’s economic outlook remains favorable, with growth projected to outpace the global average. The Government of India has rolled out various initiatives to enhance the accessibility, affordability and quality of healthcare across urban and rural regions. These efforts aim to boost social welfare, improve workforce productivity, reduce income disparities and promote inclusive development. Alongside healthcare, sustained investments in infrastructure, renewable energy and digital transformation are expected to drive long-term growth and strengthen India’s global standing.

INDUSTRY OVERVIEW

Indian Healthcare Industry

The Indian healthcare sector has witnessed strong growth in recent years, supported by favorable demographics, rising incomes, greater health awareness, digital advancements and government support. While challenges such as infrastructure gaps and limited insurance coverage remain, they also create opportunities for increased investment in the sector. As a major contributor to both revenue and employment, the healthcare sector continues to grow through improved service delivery and steady capital inflows.

India’s dual public-private healthcare system helps provide affordable, quality care, strengthening its position as a key destination for medical tourism and clinical research. The country’s advantages include a skilled medical workforce and significantly lower treatment costs compared to developed nations. Key growth drivers include progress in diagnostics, medical devices and therapies, along with increased healthcare spending and a stronger focus on quality care. According to CRISIL Intelligence report, the Indian healthcare delivery market reached approximately

Rs. 6.3 trillion in FY 2023-24, The market is expected to grow to Rs. 9.4 9.8 trillion by FY 2027-28.

Healthcare market in India · Key Segments (Rs. trillion)

Industry	FY19	FY24	FY28P	FY19- FY24 CAGR	FY24- FY28 CAGR
Pharmaceuticals Retail	1.7	2.6	3.5- 3.7	9%	8- 9%
Healthcare Delivery	3.9	6.3	9.4- 9.8	10%	10- 12%
Diagnostics	0.6	0.9	1.28- 1.38	7%	10- 12%
Medical Devices	0.5	0.9	1.4- 1.45	13%	11- 12%

(P) - Projection

Source: CRISIL March 2025 Report

The main segments of India’s healthcare industry include pharmaceuticals, healthcare delivery, diagnostics and medical devices. Overall, growth in the sector is supported by factors such as an aging population, the rise in lifestyle-related diseases, growing health awareness, new technology adoption and a growing affluent middle class. The Indian hospital industry serves as the foundation of the nation’s healthcare system, providing essential inpatient and specialized medical services across both public and private sectors. The number of hospital beds in India has grown from 1 million in 2013 to 1.9 million by 2023, while the number of doctors has increased from 646 to 1,000 per million population during the same period. The number of private hospitals also rose from 37,908 in 2013 to 43,486 in 2023, reflecting the sector’s steady expansion.

Source: Crisil report

https://www.fortuneindia.com/macro/indias-healthcare-on-fast-track-growth-trajectory/119785#googfirewarded

India Emerges as a Value Healthcare Destination

India has positioned itself as a prominent global destination for medical travel, offering advanced healthcare solutions at affordable prices. Its modern medical facilities, experienced professionals and integration of traditional wellness practices such as Ayurveda and Yoga attract a growing number of international patients seeking quality care.

To support this sector, the Indian government has introduced various measures, including simplified visa procedures, the establishment of dedicated medical tourism zones and strategic partnerships with private players. The Union

Budget 2025 26 further reinforces this focus by prioritizing initiatives like “Heal in India” to elevate the country’s global standing in healthcare services. India appeals to foreign patients not only for its cost-effective treatments but also for its strong clinical capabilities and the widespread availability of English-speaking medical staff, which ensures smooth communication. Popular procedures include cardiac surgeries, joint replacements, cosmetic enhancements and dental treatments.

India, ranked 10th in the Medical Tourism Index (MTI)

2020-21, has demonstrated a strong recovery following the pandemic-induced decline, registering a 66% rebound in 2021. Continued government efforts, such as the creation of the National Medical and Wellness Tourism Board, have further accelerated sector growth. In calendar year 2024, the industry is projected to expand by 15%, surpassing pre-COVID levels, with approximately 7.3 lakh inbound medical travelers. From January to July 2024, these visitors represented 7.8% of all foreign tourist arrivals.

India’s Medical Value Travel (MVT) sector is witnessing rapid growth, with its market size increasing from USD 2.89 billion in 2020 to a projected USD 13.42 billion by 2026.

This expansion is driven by a rising influx of foreign patients seeking specialized, affordable medical care. The country offers tertiary and quaternary care for serious chronic and non-communicable diseases, along with specialized treatments in areas such as cardiology, orthopedics, neurosciences and oncology. Additionally, India provides comprehensive rehabilitation, functional health therapies and holistic wellness solutions, further strengthening its reputation as a leading global healthcare hub.

Source: https://pib.gov.in/PressReleasePage. aspx?PRID=2082732 https://pib.gov.in/PressReleasePage.aspx?PRID=2099519

Digital Healthcare

India is establishing itself as a global frontrunner in digital healthcare by harnessing a strong digital infrastructure, an innovative private sector and a diverse population to deliver scalable, cost-effective solutions. National programs such as the Ayushman Bharat Digital Mission (ABDM), CoWIN platform and eSanjeevani telemedicine service are bridging healthcare gaps and improving access while setting international standards for digital health transformation. Key technologies driving this evolution include telemedicine, mobile health apps, wearable devices, electronic health records and AI-powered diagnostic and monitoring tools, whose adoption was accelerated significantly during the

COVID-19 pandemic.

INDIA’S DYNAMIC DIGITAL HEALTHCARE ECOSYSTEM BENEFITS FROM STRATEGIC PARTNERSHIPS, CONTINUOUS INNOVATION AND RISING INVESTMENT FROM BOTH DOMESTIC AND INTERNATIONAL STAKEHOLDERS. THE COUNTRY’S LEADERSHIP IN THE WHO’S GLOBAL INITIATIVE ON DIGITAL HEALTH AND ITS EFFORTS IN PROMOTING CROSS-BORDER COLLABORATION UNDERSCORE ITS ROLE AS A MODEL FOR LOW- AND MIDDLE-INCOME NATIONS

The country’s digital healthcare market is set for robust growth, with projections indicating a rise to USD 946.04 billion by 2030 at a CAGR of 22.2% from 2025 onwards.

This growth is supported by widespread smartphone usage, improved internet connectivity and expanding healthcare IT infrastructure. The telemedicine sector alone, valued at USD 3.10 billion in 2024, is expected to grow at a CAGR of 20.5% through 2033, driven largely by demand for remote consultations and digital health integration, particularly in South India. Increasing patient awareness and a shift towards patient-centered care are encouraging greater adoption of digital solutions, while healthcare providers and payers continue to integrate these technologies to enhance service quality and efficiency.

India’s dynamic digital healthcare ecosystem benefits from strategic partnerships, continuous innovation and rising investment from both domestic and international stakeholders. The country’s leadership in the WHO’s Global

Initiative on Digital Health and its efforts in promoting cross-border collaboration underscore its role as a model for low-andmiddle-incomenations.ByadvancingAIdiagnostics, telemedicine and harmonized digital health standards, India is transforming healthcare delivery domestically and offering scalable frameworks for global adoption.

Source: https://www.weforum.org/stories/2025/01/india-can-be-a-global-pathfinder-in-digital-health-here-s-how/ https://www.imarcgroup.com/india-telemedicine-market https://www.grandviewresearch.com/press-release/global-digital-health-market#:~:text=Digital%20Health%20Market%20 Growth%20%26%20Trends,growth%20driven%20by%20 various%20factors.

Indian Healthcare Insurance Industry Overview

As per the Insurance Regulatory and Development Authority of India (IRDAI), around 573 million people in India had health insurance coverage in FY 2023-24, up from 288 million in FY 2014-15. Despite this growth, overall insurance penetration remained relatively low at 40-42% in FY 2023-24. This is expected to rise to 45-50% by FY 2025-26. Health insurance penetration is a major growth driver for the healthcare sector. The health insurance coverage has increased from 288 million in FY 2014-15 to 573 million in FY 2023-24, yet penetration remains at 40 42%. With projections of 45 50% coverage by FY 2025-26, more people are expected to access quality healthcare, boosting demand for medical services.

Health insurance premiums remain the largest segment within the non-life insurance industry, even though growth has slowed following the implementation of the 1/n rule.

SAHIs have consistently delivered growth that exceeds the overall health segment. Consequently, the health segment’s market share has increased from 35.3% in FY 2022-23 to 38.6% in FY 2024-25. The total premium for the health segment stood at Rs. 90,667.7 crore in FY 2022-23. This amount expanded to Rs. 1,09,006.5 crore in FY 2023-24, marking a strong YoY growth of 20.2%. The momentum carried into FY 2024-25, with total premiums reaching Rs. 1,18,687.9 crore, reflecting a YoY growth of 8.9% compared to FY 2023-24.

According to the IMARC Group, the Indian health insurance market was valued at USD 145.0 billion in 2024 and is projected to reach USD 308.0 billion by 2033, growing at a CAGR of 8.70% from 2025 to 2033. Key growth drivers include rising healthcare costs, an increase in lifestyle-related diseases, growing awareness and strong contributions from regions such as North and South India. These regions benefit from better healthcare infrastructure, expanding corporate coverage, higher insurance penetration, supportive government policies and rising digital adoption.

Source: https://www.careratings.com/uploads/ newsfiles/1745386639_Non-Life%20Insurance%20 Update%20for%20March%202025.pdf

Transformation of the Healthcare Sector

India’s healthcare industry is poised to benefit significantly from rapid advancements in digital technology, which are improving accessibility, operational efficiency and care quality. Innovations such as Electronic Health Records (EHRs), Artificial Intelligence (AI), blockchain, telemedicine and mobile healthcare apps are enhancing diagnostics, treatment and patient engagement, particularly in remote and rural areas. Biotechnology is also playing a central role in healthcare innovation through the development of personalized therapies, cutting-edge vaccines and oncology treatments. The ongoing rollout of 5G technology, coupled with rising smartphone adoption and increasing health consciousness, is set to accelerate the digitalization of healthcare services and drive inclusive sectoral growth.

Advancements in technology are driving the growth of the India mother and child healthcare market. Innovations in medical devices, including fetal monitors, neonatal incubators and portable ultrasound machines, are improving maternal and infant care by reducing complications during pregnancy and childbirth. AI-based diagnostics and predictive analytics are enabling early detection of high-risk pregnancies, allowing for timely interventions. Remote healthcare solutions are bridging the gap between rural and urban areas, enabling expecting mothers to consult specialists without the need to travel long distances. Wearable health trackers and mobile apps are supporting mothers in monitoring their health, tracking fetal growth and receiving real-time medical advice. Improved fertility treatments, advanced neonatal care

ADVANCEMENTS IN TECHNOLOGY ARE DRIVING THE GROWTH OF THE INDIA MOTHER AND CHILD HEALTHCARE MARKET. INNOVATIONS IN MEDICAL DEVICES, INCLUDING FETAL MONITORS, NEONATAL INCUBATORS AND PORTABLE ULTRASOUND MACHINES, ARE IMPROVING MATERNAL AND INFANT CARE BY REDUCING COMPLICATIONS DURING PREGNANCY AND CHILDBIRTH.

units and robotic-assisted surgeries are further enhancing healthcare outcomes. In addition, companies are focusing on launching digital platforms to provide teleconsultations and health education.

Global Maternity and Pediatric Care Industry

The global maternity and pediatric healthcare market had emerged as a crucial segment focused on improving health standards for mothers and children. According to IMARC

Group, the market was valued at USD 904.5 billion in 2024.

It is projected to expand at a strong compound annual growth rate (CAGR) of 11.0% from 2024 to 2033, reaching an estimated value of USD 2,427.8 billion by 2033.

The global maternity and pediatric care segment is experiencing significant growth, driven by the rising adoption of digital health solutions that enhance accessibility, efficiency and patient engagement. The increasing reliance on healthcare insurance coverage has further supported this expansion by ensuring broader access to essential services for mothers and children. Additionally, higher healthcare spending continues to improve the quality and reach of maternal and child healthcare.

Advancements in diagnostics, therapeutics and vaccines tailored for children, along with a stronger focus on preventive care, are further strengthening the sector. The growing global child population and heightened awareness of pediatric health issues are also contributing to this positive momentum, supported by an expanding range of specialized medical devices and support services.

Indian Maternity and Pediatric Care Industry

India’s maternity and pediatric care sector plays a critical role in shaping the country’s overall healthcare landscape, given the size and diversity of its population. With a growing focus on improving maternal and child health outcomes, the sector is witnessing increased investment, policy support and technological integration. Rising awareness around prenatal and postnatal care, coupled with evolving consumer expectations for quality and accessible services, is further driving transformation within this space.

The India mother and child healthcare market reached a size of USD 29.6 million in 2024. According to IMARC Group, the market is expected to grow steadily, reaching USD 75.8 million by 2033, at a compound annual growth rate (CAGR) of 11.00% during the period 2025 2033.

Indian Maternity and Pediatric Healthcare Market Size

(in USD Billion)

The growth of this market is being propelled by increasing adoption of advanced technologies, particularly artificial intelligence (AI)-driven diagnostics and predictive analytics, which support early detection of complications and timely medical interventions. Additionally, ongoing public-private partnerships are playing a crucial role in strengthening the maternal healthcare infrastructure across the country, thereby widening access to quality care for mothers and children.

GOVERNMENT INITIATIVES

India’s strong focus on digital healthcare transformation has positioned it as a potential global leader in this space.

Between FY 2014-15 and FY 2021-22, government health expenditure increased from 29.0% to 48.0%, while out-of-pocket expenditure fell from 62.6% to 39.4%. Key digital initiatives like the Ayushman Bharat Digital Mission (ABDM), e-Sanjeevani, U-WIN and Tele MANAS are driving improvements in accessibility, efficiency and inclusivity in healthcare delivery. With continued investment in digital infrastructure, policy support and innovation, India is set to become a global model for digital healthcare transformation.

The healthcare system is undergoing a significant digital shift, driven by initiatives like ABDM and the Digital Health Incentive Scheme (DHIS). These efforts aim to integrate technology into healthcare delivery nationwide. The World

Economic Forum has recognized India’s potential to lead in digital health innovation. This transformation is supported by better data sharing, strong public-private partnerships and scalable service models, which can serve as a benchmark for other countries.

1. A yushman Bharat Pradhan Mantri Jan Arogya Yojana

(AB PM-JAY):

A s of24 th March 2025, over 36.9 crore Ayushman Cards were issued. Between FY 2014-15 and FY 2021-22, the rise in government health spending and the decline in out-of-pocket expenditure saved over Rs. 1.25 lakh crore. In March 2024, coverage was extended to 37 lakh ASHAs, AnganwaWorkers and Helpers along with their families.

From 29th October 2024, free treatment benefits of up to Rs. 5 lakh per year were offered to nearly 6 crore senior citizens aged 70+, regardless of income.

The scheme includes a three-tier grievance redressal system and has introduced HEM 2.0 to boost private hospital participation.

2. Pr adhan Mantri Ayushman Bharat Health

Infrastructure Mission (PM-ABHIM):

Launched with an out lay of Rs. 64,180 crore for 2021-26, this centrally sponsored scheme aims to improve health infrastructure at all levels and prepare for future health emergencies. As of 3rd December 2024, support was provided for building 17,788 Sub-Centers and 11,024 urban Health & Wellness Centers, renamed

Ayushman Arogya Mandirs (AAMs), mostly in slum areas. The scheme also supports 3,382 Block Public Health Units, 730 Integrated Public Health Labs one in each district and 602 Critical Care Hospital Blocks in districts with populations over five lakh.

3. A yushman Bharat Digital Mission (ABDM):

Launched in September 2021, the ABDM aims to create a unified digital health ecosystem. As of

6th February 2025, over 73.98 crore Ayushman Bharat

Health Accounts (ABHA) were created and more than

49.06 crore health records were linked. Over 3.63 lakh health facilities were registered on the Health

Facility Registry and more than 5.64 lakh healthcare professionals on the Healthcare Professional

Registry. Over 1.59 lakh facilities were actively using ABDM-enabled software.

4. e -Sanjeevani Expanding Telemedicine Services:

India ’s National Telemedicine Service, e-has delivered over 34 crore consultations as of 2nd February 2025. It operates through 17,051 hubs and 1,31,793 spokes, covering 130 specialties and is especially useful in remote areas.

5. U- WIN Portal Digitizing Immunization Records:

A s of25 th November 2024, the U-WIN portal registered 7.43 crore beneficiaries, held 1.26 crore vaccination sessions and recorded the administration of 27.77 crore vaccine doses. It provides digital vaccination records, SMS alerts and self-registration features.

6. T ele MANAS Expanding Mental Health Support:

Launched on th October 2022, Tele MANAS has 10 handled over 20 lakh calls as of April 2025. It offers 24/7 counseling services in 20 languages through 53 cells across 36 States and Union Territories.

7. FDI in Healthcare:

Since 2000, 100% FDI is permitted under the automatic route in hospitals. By FY 2023-24, cumulative FDI equity inflows reached USD 10.27 billion in hospitals and diagnostics, USD 22.53 billion in pharmaceuticals and USD 3.29 billion in medical appliances.

8. Medical Visa:

To further support medical value travel,

Government introduced a separate Ayush Visa category on 27th July 2023, facilitating foreigners seeking treatment under the Ayush system of medicine. As of

4th December 2024, a total of 123 regular Ayush Visas, 221 e-Ayush Visas and 17 e-Ayush Attendant Visas have been issued. Additionally, the Ministry of Health and Family Welfare launched the Advantage Healthcare India portal, providing a one-stop resource for international patients seeking medical treatment in India.

Source: https://pib.gov.in/PressReleasePage. aspx?PRID=2082732 https://www.mordorintelligence.com/industry-reports/india-hospital-supplies-market https://www.imarcgroup.com/india-health-insurance-market https://www.imarcgroup.com/india-telemedicine-market

ETHealthworld.com+1Press Information Bureau+1Press

Information Bureau https://pib.gov.in/PressReleasePage.aspx?PRID=2101737 The Times of India Kalinga TV+2Daijiworld+2Press Information Bureau+2 Press Information Bureau+1The Lancet+1The Economic Times+1Digital Sansad+1 https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2094604 https://pib.gov.in/PressReleasePage.aspx?PRID=2116209 https://pib.gov.in/PressReleasePage.aspx?PRID=2080067

PIB · Summary of Economic Survey

FY 2025-26 Budget Highlights

The Government of India has significantly enhanced its healthcare budget for FY 2025-26, allocating Rs. 99,859 crore a notable 11% increase over the previous year. The budget reflects continued commitment to strengthening healthcare infrastructure, expanding cancer care, improving primary health services, advancing digital health systems and promoting inclusive healthcare coverage across the country.

Key Budget Initiatives:

1. Infrastructure & Access: The Government plans to establish 200 Day Care Cancer Centers during FY 2025-26, with a broader target of covering all district hospitals within the next three years. An allocation of Rs. 9,406 crore has been made to the

AB-PMJAY Scheme. The funding for the Pradhan Mantri Swasthya Suraksha Yojana (PMSSY) has been the increased by 15% to support medical education, with a plan to introduce 10,000 new undergraduate and postgraduate medical seats. The PM-ABHIM has seen a 41% increase in funding, aimed at enhancing healthcare infrastructure and pandemic preparedness.

2. Healthcare Affordability: To reduce treatment costs, the Government has exempted 36 life-saving drugs from Basic Customs Duty (BCD) and introduced a concessional 5% duty on six additional critical drugs.

Further, drugs supplied under Patient Assistance

Programs will be exempted from BCD when distributed free of cost.

3. Digital & Rural Health: All rural Primary Health Centers will receive broadband connectivity through BharatNet, strengthening rural healthcare delivery. The allocation for the ABDM Scheme has been increased by 51% to Rs. 340 crore to support the development of robust digital health systems.

4. Public Health Programs: The National Health Mission

(NHM) has received a budget increase of 3%, with a total allocation of Rs. 37,227 crore. Significant boosts have been provided for organ transplant programs (up by 50%) and tele-mental health services (up by 77%).

5. Medical Research & Biosecurity: The Department of Health Research (DHR) has received a 15% budget increase, while Rs. 3,126 crore has been allocated to the Indian Council of Medical Research (ICMR). Funding for One Health and pandemic preparedness platforms has increased by 87%, reflecting a strategic focus on integrated health responses.

6. Human Resources for Health: There has been a 189% increase in the allocation for health workforce training, with a particular emphasis on strengthening the nursing sector.

7. Allied Programs: The Ministry of AYUSH has received a 14% budget hike to Rs. 3,993 crore, with increased funding earmarked for AYURGYAN and the Ayurswasthya Yojana. Funding for the Swachh Bharat Mission (Urban) has more than doubled to Rs. 5,000 crore. The Jal Jeevan Mission will continue until 2028, aiming to ensure universal access to clean drinking water.

8. Disease Surveillance & Emergency Preparedness:

There have been substantial increase in allocations for pandemic response mechanisms, including a

184% rise in the COVID-19 Global Fund and a 526% increase for Emergency Medical Services Human Resource Development (EMS HRD). At the same time, the budget for epidemic prevention tools has been rationalized, witnessing a 56% cut.

9. Tax Reforms for Charitable Institutions: The Government has relaxed compliance requirements and extended the validity period for small charitable institutions. Additionally, reforms to Tax Collected at

Source (TCS) and Tax Deducted at Source (TDS) have been introduced to reduce the operational burden on these institutions.

Overall, the Union Budget for FY 2025-26 a comprehensive and inclusive approach to healthcare, combining infrastructure development, digital transformation, affordability and enhanced human resource capacity to strengthen India’s health ecosystem.

Source: https://assets.kpmg.com/content/dam/kpmgsites/ in/pdf/2025/02/healthcare-pov-union-budget-2025-26. pdf.coredownload.pdf

TRENDS AND OPPORTUNITIES IN THE INDIAN HEALTHCARE SECTOR

1. Emerging Healthcare Delivery Models

The traditional hospital ownership model has become increasingly cost-prohibitive, especially in metros and Tier-1 cities, due to a steep rise in land prices in recent years. As a result, private healthcare operators are adopting alternative business models such as lease agreements, operations and maintenance contracts, medicities (integrated healthcare hubs), one-stop care centers and franchise arrangements. These new models are reshaping the healthcare delivery landscape and broadening the sector’s reach across different geographies.

2. Expansion into Tier-2 and Tier-3 Cities

Private healthcare providers are actively expanding into Tier-2 and Tier-3 cities, driven by rising disposable incomes and significant unmet medical needs in these areas. Leading hospital chains are tailoring their pricing strategies to cater to the unique economic dynamics of these regions while simultaneously offering advanced super-specialty care in metros and Tier-1 cities. This approach facilitates the development of a comprehensive and integrated healthcare network covering both urban and semi-urban locations.

3. Increasing Public-Private Partnerships (PPPs)

Public-Private Partnership (PPP) models have emerged as a vital solution for bridging the healthcare infrastructure gap, particularly in Tier-2 and Tier-3 cities where access to quality medical services remains limited. These partnerships combine government-led efforts to enhance affordability and accessibility with private sector investment, innovation and operational efficiency. Typically, private players oversee facility management and technology deployment, while government entities ensure regulatory compliance and public accountability. This collaborative model helps deliver efficient, inclusive and sustainable healthcare services in underserved regions.

4. Demographic Shifts Driving Demand

India is witnessing a steady rise in the demand for healthcare services, largely due to increasing life expectancy and a changing demographic structure. A significant contributor to this trend is the growing elderly population, which generally requires more frequent and specialized medical attention. In 2011, around 8% of the Indian population was aged 60 years and above. This proportion is projected to increase to 12.5%, or approximately 191 million people, by 2026. Despite this clear demographic change, there remains limited availability of detailed data and focused research on the healthcare needs of older adults. However, it is widely acknowledged that aging individuals are more prone to health-related concerns. The United Nations Population Fund (UNFPA), in its November 2012 publication “Report on Status of Elderly in Select States of India, 2011”, highlighted that nearly 66% of the elderly population reported having at least one chronic illness such as diabetes, hypertension, arthritis, asthma or heart disease. The report also pointed out gender-based patterns, indicating that men are more vulnerable to conditions such as heart, kidney and skin disorders, while women show higher prevalence of ailments like hypertension, arthritis and osteoporosis.

5. Expansion of In-Patient Services

The share of IPD services in India’s healthcare market is estimated to have reached approximately 71% by FY 2023-24. This reflects a strong emphasis on treatment options that involve hospitalization and overnight stays. Although Out-Patient Department (OPD) services record a higher number of visits, it is the IPD segment that contributes the larger share of revenue for hospitals, driven by the cost of surgeries, hospital admissions and specialized care. The growing number of hospitals expanding their IPD capabilities, along with the rise in complex health cases that require extended treatment durations, is expected to sustain momentum in this segment.

6. Private Sector Leadership

The private healthcare sector is playing a pivotal role in the expansion of India’s healthcare delivery market. Private hospitals, specialty centers and clinics are making substantial investments in state-of-the-art medical infrastructure, advanced technology and skilled professionals to cater to the increasing demand for high-quality healthcare. These institutions are also focusing on enhancing patient experience through tailored and specialized services, which are particularly appealing to affluent and urban populations. As a result, the private sector is emerging as a leader not just in terms of revenue, but also as a driver of innovation and service quality across the healthcare landscape.

Outlook

The outlook for India’s healthcare sector remains robust, driven by the rising concern for non-communicable diseases (NCDs) and increasing demand for advanced healthcare services. Cardiovascular diseases and diabetes are expected to see a significant rise of 34% each by 2030, underscoring the urgent need for enhanced preventive and treatment measures. Cancer incidence, forecasted to grow by 41%, will further intensify healthcare challenges, emphasizing the importance of early detection and improved oncology care.

Given that NCDs are projected to contribute to 74% of morbidity and mortality by 2030, the healthcare industry must prioritize scalable, patient-centric solutions that improve access, affordability and quality of care. Investments in digital health, diagnostics and chronic disease management will be critical to addressing these growing health concerns. Furthermore, continued government support and public-private partnerships will play a vital role in strengthening healthcare infrastructure and expanding outreach, especially in underserved regions. delivery

Private hospitals in India are expected to add approximately 4,000 beds in FY 2025-26, following the addition of nearly 6,000 beds in FY 2024-25, with a projected investment of Rs. 11,500 crore. Ongoing innovation and digitization are reshaping the healthcare sector, supported by a strong pipeline of medical advancements and favorable government policies aimed at improving access and patient outcomes. However, sustaining this growth will require tackling key challenges. A significant issue is the shortage of specialized healthcare professionals, particularly in Tier 2 cities. Additionally, there is a need for stronger incentives to encourage sustainability across the healthcare industry.

In addition, the corporate healthcare is projected to achieve a 15% increase in sales in FY 2025-26, supported by expanded bed capacity, higher occupancy levels and improved average revenue per occupied bed (ARPOB). The diagnostics industry is also forecasted to grow at a rate of 14%. Public healthcare spending is anticipated to reach 1.9% of GDP, with the government committing substantial funds to support the sector’s development.

Moreover, the FY 2025-26 Union Budget would aid in building a resilient, inclusive and technology-led healthcare system. Strategic investments in infrastructure, digital health and affordability are expected to strengthen primary care, enhance health outcomes and drive private sector collaboration.

Source: https://neosciencehub.com/indian-corporate-healthcare-sector-on-track-for-15-growth-in-fy26/#:~:text=The%20Indian%20corporate%20healthcare%20 sector,Research%20(Ind%2DRa).&text=Several%20factors%20 are%20converging%20to,hospitals%2C%20particularly%20 in%20urban%20areas. https://www.crisilratings.com/en/home/newsroom/press-releases/2025/02/private-hospitals-to-add-10000-beds-over-this-fiscal-and-next.html

COMPANY OVERVIEW

Rainbow Children’s Medicare Limited (hereafter referred to as ‘Rainbow’ or ‘the Company’) has established itself as a leading healthcare provider specializing in pediatrics, obstetrics and gynecology. The Company began its journey in 1999 by opening a 50-bed pediatric multi-specialty hospital in Banjara Hills. In 2009, Rainbow expanded its services to include maternity care (gynecology/ obstetrics), which contributed approximately 30% of its revenue in FY 2024-25.

Dr. Ramesh Kancharla, an expert with over 25 years of experience in pediatric hepatology and liver transplantation, leads the Company. Rainbow implements a hub-and-spoke operational model to provide its services effectively. The central hospitals focus on delivering comprehensive outpatient and inpatient care, particularly tertiary and quaternary services. Meanwhile, the satellite centers provide emergency care, outpatient consultations and level 3 NICU (Neonatal Intensive Care Unit) services.

Rainbow has successfully implemented this model in Hyderabad and Bengaluru and the Company actively works to replicate its approach in Chennai and the National Capital Region. Rainbow also plans to expand into tier-2 cities in Southern India, aiming to make its specialized healthcare services accessible to a larger population. The Company’s hospitals in South India and the National Capital Region are well-connected to international destinations and recognized as medical hubs, positioning it well to capitalize on the significant medical tourism opportunity.

Rainbow actively provides a wide range of pediatric services, including natal, neonatal and pediatric intensive care, multi-specialty treatments and advanced quaternary care such as multi-organ transplants for children. The Company delivers women’s healthcare services under the “Birthright by Rainbow” brand, offering comprehensive

RAINBOWS BIRTHRIGHT FERTILITY AT KONDAPUR, HYDERABAD RECEIVED

RE-ACCREDITATION FROM JCI DURING FY 2024-25

perinatal care, which includes routine and complex obstetric care, multi-disciplinary fetal care, perinatal genetic and fertility support and a variety of gynecology treatments. Rainbow has made significant strides in expanding its IVF services across the group. The number of centers providing these services has grown from 11 last year to 12 in FY 2024-25. Moreover, during FY 2024-25, Rainbow has launched a pilot project called the Adult Vaccination Outreach Program (AVON) in collaboration with the top five vaccine manufacturing companies.

This initiative aims to address the immunization needs of families and will cover vaccines such as Influenza, HPV, Pneumococcal and Shingles.

In FY 2024-25, Rainbow has expanded its network to operate 19 hospitals with a combined capacity of 1,935 beds, along with 5 outpatient clinics across six cities: Hyderabad, Bengaluru, Chennai, Vijayawada, Vizag and Delhi. The Company ensures high standards by operating 13 NABH-accredited hospitals and 3 EDGE-certified hospitals. Rainbows BirthRight Fertility at Kondapur, Hyderabad received re-accreditation from JCI during the

FY 2024-25. With this achievement, Rainbow has become the only pediatric hospital chain in the country to have three JCI-accredited hospitals: the flagship facilities inHyderabad and Bengaluru, as well as the Kondapur fertility center in Hyderabad.

STRENGTHS

Adoption of an Innovative Hub-and-Spoke Model

Rainbow utilizes an innovative hub-and-spoke model to provide comprehensive healthcare services. Central hubs, with a minimum capacity of 150+ beds, function as regional centers for advanced and specialized care, including secondary, tertiary and quaternary services. Smaller hospitals, referred to as spokes, offer secondary and tertiary services in regional areas and maintain a minimum capacity of 50 beds.

Currently, Rainbow operates four hubs located in Banjara Hills (Hyderabad), Marathahalli (Bengaluru), Guindy

(Chennai) and Malviya Nagar (Delhi). The hub-and-spoke model enhances accessibility by positioning regional spokes 200-250 kilometres from the hubs, ensuring that remote areas have access to quality healthcare. It also optimizes the utilization of specialized facilities such as

PICU and NICU beds, balances a mix of care services and operates cost-effectively.

Strong Brand Identity ensuring Patient Trust

Rainbow has established a strong and recognizable brand in pediatric healthcare. Its reputation for providing advanced medical care and innovative treatment options attracts patients and referrals from healthcare professionals across regions. By building emotional connections with patients and their families, Rainbow has instilled trust and loyalty among its patients, ensuring that families continue to rely on its services for future healthcare needs.

Excellence in Pediatric and Perinatal Care

Rainbow has positioned itself as a leader in pediatric and perinatal care by offering specialized services in areas such as neurology, nephrology, oncology and cardiology. The Company’s ability to seamlessly integrate pediatric and perinatal care gives it a distinct competitive edge in the healthcare sector.

Comprehensive Child-Centric Healthcare Framework

Rainbow places children at the center of its healthcare framework. The Company has created a child-friendly environment designed to reduce stress and anxiety during hospital visits. The Company has trained its staff to interact with children in a comforting and reassuring manner, improving treatment outcomes and patient satisfaction. Such child-centric approach not only enhances care delivery but also strengthens trust between the hospital, children and their families.

Collaborative Multi-Disciplinary Approach

Rainbow adopts a collaborative, multi-disciplinary approach to patient care, integrating expertise from specialists across diverse fields such as pediatrics, neurology, nephrology, oncology and cardiology. Such collaboration ensures that every patient receives a comprehensive and personalized treatment plan, leading to better outcomes. Support staff, including nurses, therapists and administrative personnel, also work in unison to create a seamless and coordinated care experience.

Strategic Doctor Engagement for Round-the-Clock Care

Rainbow’s doctor engagement model ensures that high-quality care is available 24/7. The Company employs over 910+ full-time doctors on a retainer basis, providing consultant-led care for emergencies, neonatal and pediatric intensive care and retrieval services. With approximately 50% of pediatric cases being emergency-driven, it enables timely and effective intervention. Many of Rainbow’s doctors have received advanced training and certifications from countries such as the UK, USA, Canada and Australia, further enhancing the quality of care. Additionally,

Rainbow operates India’s largest private pediatric DNB (Diplomate of National Board) training program, offering postgraduate and fellowship opportunities to train future healthcare professionals.

WEAKNESS

Evolving and Extensive Regulatory Requirements

Rainbow must comply with a wide array of regulations imposed by central, state and local authorities. Theseregulationsincludevariousdomains,includingpatient care, privacy, safety and record-keeping. The dynamic nature of the healthcare regulatory environment requires the Company to allocate considerable resources to ensure compliance and adapt to new mandates.

Meeting these regulatory obligations can be time-consuming and resource-intensive, diverting attention from core patient care activities. It can lead to delays in delivering essential services and reduce operational efficiency. Additionally, certain regulatory restrictions might hinder the Company’s ability to introduce innovative treatments or services, potentially limiting the hospital’s ability to fully meet patient needs. Non-compliance with these regulations could result in fines, legal consequences, or reputational damage, further impacting the Company’s operations and growth.

Significant Capital Investment Requirements

Rainbow operates in a capital-intensive industry that necessitates substantial financial investment to maintain its competitive edge. The Company actively upgrades its equipment to ensure it provides the latest treatments and remains ahead of competitors. However, the rapid pace of technological advancements in healthcare often leads to swift obsolescence, requiring frequent and costly updates. These significant financial outlays can strain the Company’s resources and may also increase treatment costs. Consequently, higher treatment expenses could limit the hospital’s ability to attract patients who are unable to afford advanced medical procedures.

OPPORTUNITIES

Appeal to International Patients

Rainbow has a significant opportunity to position itself as a preferred destination for international patients seeking high-quality healthcare services. The Company’s reputation for excellence, coupled with its cutting-edge infrastructure and skilled medical professionals, makes it an attractive choice for overseas patients. Additionally, Rainbow’s strategic location in a medical tourism hub and its ability to offer competitive pricing without compromising on quality further enhance its appeal. Currently, Rainbow hospitals serve patients from various countries, including Bangladesh, Bhutan, Bahrain, Kenya, Tanzania, Rwanda,

Somalia, Sudan and the Maldives.

Underpenetrated Pediatric Market

India’s rapidly growing cities with populations between 4 and 5 million are experiencing significant development across various sectors. However, these cities lack an adequate number of pediatric hospitals, limiting access to specialized treatment for critically-ill children. Such gap in the market provides Rainbow with a substantial opportunity to expand its presence and meet the rising demand for quality pediatric healthcare. The Company can strengthen its position as a leader in pediatric services by addressing this unmet need while contributing to improved healthcare outcomes in these regions.

Growing Demand for Specialized Maternity Care

The trend of delayed childbirth, driven by advancements in healthcare and changing societal norms, has led to an increased need for specialized maternity care. Rainbow is uniquely positioned to address the complexities associated with advanced maternal age due to its multidisciplinary expertise and state-of-the-art facilities. The Company has the opportunity to expand its maternity care services, reinforce its reputation for excellence and significantly enhance the health and well-being of mothers and infants in India.

THREATS

Heightened Industry Competition

Rainbow faces stiff competition from government-owned healthcare entities and private non-profit organizations, which often benefit from tax advantages and access to endowments or charitable contributions for funding capital expenditures. Additionally, the healthcare sector’s growth has attracted new entrants, further intensifying the competitive landscape. To maintain its market position, Rainbow has implemented several strategies, including offering attractive compensation packages to attract and retain top-quality medical professionals and providing superior services at competitive rates. However, these measures could impact the Company’s profitability.

Reliance on Skilled Healthcare Professionals

Rainbow’s success relies heavily on its ability to attract, acquire and retain highly skilled medical professionals, particularly in specialized fields like pediatrics and obstetrics. The expertise of these specialists plays a critical role in delivering high-quality patient care, elevating the Company’s reputation and driving increased referrals and revenue growth. However, India faces a significant shortage of experienced medical professionals, making it increasingly challenging to recruit and retain talent. Additionally, intense competition for skilled physicians, nurses and technicians exacerbates the difficulty, as competitors also seek to secure top-tier talent.

OPERATIONAL REVIEW

Mature Hospitals (>5 years): As of FY 2024-25, Rainbow operated 10 mature hospitals, with a total capacity of 1,237 beds, of which 1,001 were operational. Rainbow Children’s

Hospital, Guindy, Chennai, completed five years and is now classified as a mature hospital. Total revenue from mature hospitals reached Rs. 11,764 million, reflecting a 8% YoY growth. The Average Revenue Per Occupied Bed (ARPOB) stood at Rs. 55,679/day, compared to Rs. 56,806/day in FY 2023-24, marking a 2% YoY decline. Occupancy levels improved to 57.8% in FY 2024-25 from 54.5% in FY 2023-24.

Total revenue from new hospitals stood at Rs. 3,394 million, reflecting a 63.1% YoY growth. The ARPOB for new hospitals was Rs. 48,751/day, compared to Rs. 51,347/ day in FY 2023-24, reflecting a 5.1% YoY decline. Occupancy levels improved to 36.5% in FY 2024-25 from 30.5% in FY 2023-24.

Key Strategic Initiatives and Achievements in FY 2024-25

The Child Development Center in Hyderabad, now serves as a centralized hub, consolidating child development services across all Rainbow hospitals in the city for integrated and comprehensive care

• Butterfly Essentials, has expanded its presence to 17 hospitals

• A new IVF clinic has been added at the spoke hospital on BG Road, Bengaluru, increasing the total number of

IVF clinics across the group to 12, further strengthening

Rainbow’s footprint in fertility care

• A significant milestone was achieved with the first liver transplant performed at the Chennai hub hospital, coupled with the successful reciept of a liver transplant license for the Bengaluru hub. These developments underscore Rainbow’s strategic focus on elevating the clinical infrastructure and expertise in Chennai and Bengaluru to match the high standards set in Hyderabad

• Further, Rainbow’s commitment to quality and excellence in care was reaffirmed as the fertility services at its Kondapur hospital in Hyderabad received re-accreditation from the Joint Commission International (JCI). The Company now continues to operate three JCI-accredited hospitals, reflecting its adherence to globally benchmarked clinical protocols and patient safety standards

•A new outpatient clinic has been launched in densely populated residential area of Attapur, Hyderabad, operating in conjunction with the hub hospital at Banjara Hills to ensure seamless integration and improved service delivery

Rainbow continued to strengthen its tertiary and quaternary care capabilities across its network. The Company successfully integrated all newly commissioned beds into its ecosystem

The Board has recommended a final dividend of per equity share of face value Rs. 10, amounting to Rs. 304.7 million (i.e., Rs. 3 per equity share), reflecting the Company’s continued commitment to delivering value to its shareholders

A s of31 st March 2025, cash and cash equivalents, fixed deposits and mutual fund investments totaled Rs. 6,989 million. These reserves, coupled with expected internal accruals, provide strong support for all ongoing and planned capital expenditures, enabling Rainbow to Hills, fund its growth through internal resources

• In the National Capital Region (NCR), the Company has completed the groundbreaking at its two land parcels in Sector-44 and Sector-56, Gurugram.

Construction work has commenced at both sites, marking a significant step in Rainbow’s northward expansion during the year

• Rainbow has received the ‘Great Place to certification for the fifth time, reflecting its consistent focus on promoting a strong workplace culture

• Additionally, the Company was honored with

‘Amazing Workplace for Excellence’ award for its outstanding people practices and was recognized by The Economic Times as the ‘Best Place to Work for Women’

• Furthermore, Newsweek acknowledged as the ‘Best Pediatric and Women’s Hospital’ of the year, reinforcing its position as a leader in specialized healthcare

Key Business Updates Project Expansion

The 100-bed regional spoke hospital in Rajahmundry Andhra Pradesh, has entered its final stages of development and is on track to commence operations by the end of Q1 FY 2025-26

Two spoke hospitals in Bengaluru Electronic City (90 beds) and Hennur (60 beds) are progressing as per the schedule and are expected to become operational by the end of Q2 FY 2025-26

Project work has commenced on the 130-bed regional spoke hospital in Coimbatore, with an estimated completion timeline of 20 to 24 months

The Company successfully conducted Bhoomi Puja (groundbreaking ceremonies) in late April at both land parcels in Sector 44 and Sector 56, Gurugram.

Construction work is currently underway at both sites

FINANCIAL OVERVIEW

Financial highlights (Rs. in million)

Particulars	FY 2024-25	FY 2023-24	YOY (%)
Income
Revenue from operations	15,158.66	12,969.00	16.9
Other income	510.08	370.64	37.6
Total Income	15,668.74	13,339.64	17.5
Expenses
Cost of materials consumed	1,949.20	1,652.80	17.9
Employee benefits expenses	2,063.67	1,761.70	17.1
Finance Cost	724.55	590.54	22.7
Depreciation and amortization expense	1,384.40	1,120.82	23.5
Professional fee to doctors	3,690.21	3,053.66	20.8
Other expenses	2,556.70	2,211.99	15.6
Total expenses	12,368.73	10,391.51	19.0
Profit Before Tax (PBT)	3,300.01	2,948.13	11.9
Tax expense
(a) Curr ent tax	873.08	770.39	13.3
(b) D eferred tax expense/(credit)	-35.19	-5.13	586
(c) A djustment of tax related to earlier periods	19.85	-
Total tax expense	857.74	765.26	12.1
Profit for the period/year	2,442.27	2,182.87	11.9

Revenue

The revenue for FY 2024-25 amounted to Rs. 15,158.66 million, reflecting a 16.9% increase compared to Rs. 12,969.00 million in FY 2023-24. The growth was driven by a 12.1% rise in inpatient volumes, a 11.7% increase in outpatient volumes and a 3.4% decline in ARPOB (Average Revenue per Occupied Bed). The growth during FY 2024-25 was primarily fueled by the Company’s specialty services, including pediatric super-specialty, obstetrics, tertiary care and quaternary care services.

These services, characterized by high ARPOB and relatively lower ALOS (Average Length of Stay), contributed significantly to revenue growth. Additionally, the superior case mix effectively mitigated the impact of lower occupancy rates caused by reduced seasonal business.

				% age of revenue
Particulars (Rs. in million)	FY 2024-25	FY 2023-24	YoY Growth	FY 2024-25	FY 2023-24
EBITDA	4,898.88	4,288.85	14.22%	32.32%	33.07%
Profit Before Tax (PBT)	3,300.01	2,948.13	11.94%	21.77%	22.73%
Tax (Including Deferred Tax)	857.74	765.26	12.09%
Profit after tax	2,442.27	2,182.87	11.88%	16.11%	16.83%
EPS - Basic ()	23.97	21.38	12.38%
EPS - Diluted ()	23.84	21.38	11.75%
EBITDA (Pre-IND AS)	4,025.78	3,563.86	12.96%	26.56%	27.48%

Significant Factors contributing to the growth in revenues are stated in table below:

Particulars	Units	FY 2024-25	FY 2023-24	YoY Change
In-patient (IP) volume	#	98,395	87,736	12.15%
Out-patient (OP) volume	#	14,26,733	12,77,087	11.72%
Delivery volume	#	17,349	15,798	9.82%
ARPOB	per day	53,962	55,853	-3.39%
ALOS	# days	2.85	2.65	7.55%
Occupancy	%	50.53%	47.91%	5.47%

EBITDA

In FY 2024-25, the EBITDA stood at Rs. 4,898.88 million, marking a strong 14.22% growth compared to Rs. 4,288.85 million in FY 2023-24. It was driven by strong revenue growth combined with the effective maintenance of an optimized cost structure.

PAT

In FY 2024-25, the Profit After Tax (PAT) was Rs. 2,442.27 million, representing 16.1% of revenue and a 11.9% increase compared to Rs. 2,182.87 million in FY 2023-24.

Other income

Other income primarily consists of interest income from fixed deposits, mutual fund earnings, reversal of expected credit losses and other miscellaneous income.

In FY 2024-25, it experienced a substantial increase of 37.6%, rising from Rs. 370.64 million to Rs. 510.08 million. The growth was mainly driven by below factor:

• A Rs. 171.21 million increase in mutual fund income, resulting from the rebalancing of investments from fixed deposits to higher-yield mutual funds

Expenses

The Company recorded a 19.02% increase in total expenses during FY 2024-25, rising by Rs. 1,977.22 million from Rs. 10,391.51 million in FY 2023-24 to Rs. 12,368.73 million. The growth was primarily driven by a significant 17.14% increase in employee benefits expenses, a 20.84% rise in professional fees paid to doctors and a 15.58% uptick in other expenses.

Other expenses includes contract wages, canteen services, lab investigations, power and fuel costs, repairs and maintenance, business promotion and advertisement efforts, Corporate Social Responsibility (CSR) initiatives and legal and professional fees.

Medical Consumables and Pharmacy Items

The procurement of medical consumables and pharmaceutical items, including associated GST and freight charges, amounted to Rs. 1,949.20 million in FY 2024-25, compared to Rs. 1,652.80 million in FY 2023-24. These costs represented 12.86% and 12.74% of revenues, respectively. The increase as a percentage of revenue was driven by an clinical case mix, centralized lab and vaccination.

OPERATIONAL EXCELLENCE INITIATIVES

Employee Benefits Expense

In FY 2024-25, employee benefits expenses, which include salaries and other benefits, totaled Rs. 2,063.67 million, marking a 17.14% increase from Rs. 1,761.70 million in FY 2023-24. The growth can be attributed to salary increments, the strengthening of the leadership, sales and marketing teams and an increase in the overall employee count due to the addition of new hospitals. As a result, employee benefits expense as a percentage of the hospital’s total revenue rose from 13.58% in FY 2023-24 to 13.61% in FY 2024-25.

Finance Costs

Finance costs mainly consist of interest on lease liabilities under Ind AS 116. In FY 2024-25, financial costs rose to Rs. 724.55 million, up from Rs. 590.54 million in FY 2023-24.

It is primarily due to the interest expenses incurred on new lease liabilities associated with the hospitals added during the year.

Depreciation and Amortization

Depreciation and amortization expenses, which include depreciation on Property, Plant and Equipment (PPE), amortization of intangibles and depreciation of right-of-use assets, increased to Rs. 1,384.39 million in FY 2024-25, compared to Rs. 1,120.82 million in the previous year. The rise is primarily due to higher depreciation on the new units opened during FY 2024-25, along with the amortization of right-of-use assets.

Professional Fees to Doctors

Professional fees to doctors rose to Rs. 3,690.21 million in FY 2024-25, up from Rs. 3,053.66 million in FY 2023-24, reflecting the growth in business and commencement of new hospitals. As a percentage of operating revenue, professional fees increased from 23.55% in FY 2023-24 to 24.34% in FY 2024-25.

Other Expenses

Other expenses increased by 15.58%, reaching to Rs. 2,556.70 million in FY 2024-25, compared to Rs. 2,211.99 million in FY 2023-24. The growth was driven by higher costs in areas such as contract wages, communication expenses, canteen services, lab investigations, power and fuel, repairs and maintenance, business promotion and advertisement, Corporate Social Responsibility (CSR) activities, as well as legal and professional fees.

Income Tax Expense

Income tax expense rose to Rs. 857.74 million in FY 2024-25, compared to Rs. 765.26 million in FY 2023-24, reflecting an effective tax rate of 25.17% for FY 2024-25.

Capital expenditure

The net block grew by Rs. 1,745.76 million, reaching to Rs. 8,132.82 million as of 31st March 2025. The increase is primarily due to the addition of new units in FY 2024-25, including locations in Annanagar (Chennai), Central Hyderabad and Sarjapur (Bengaluru), along with the acquisitionofothermedicalequipment.Furthermore,capital work in progress amounted to Rs. 277.66 million, covering expenditures related to upcoming units in Gurugram, Rajahmundry and Electronic City.

Key financial ratios

Overall improvement in operating results led to better key financial ratios as tabulated below:

	Unit	FY 2024-25	FY 2023-24	Change %	Reason
Liquidity ratios
Current Ratio	#	5.46	4.16	31.25%
Inventory Turnover Ratio	Days	7.56	7.73	-2.20%
Trade Receivables/Debtors Turnover Ratio	Days	20.52	21.32	-3.77%
Leverage ratios
Debt Equity Ratio	#		-
Debt Service Coverage Ratio	Times	5.21	5.37	-2.98%
Interest Coverage Ratio	Times		-
Profitability ratios
Operating Profit Margin	%	32.32	33.07	-2.27%
Net Profit Margin	%	16.11	16.83	-4.28%
Return on Equity Ratio/Networth (ROE)	%	17.85	18.72	-4.65%
Return on Capital Employed (ROCE)	%	26.95	27.63	-2.46%

BUSINESS OUTLOOK

The Company remains dedicated to providing exceptional multi-disciplinary pediatric and perinatal care, supported by ongoing investments in state-of-the-art infrastructure, expanded service offerings, recruitment of top-tier talent and the implementation of advanced technologies.

Going forward, the Company will focus on enhancing the performance of its existing units, aiming to optimize their operational efficiency. The addition of new hospitals has deepened the Company’s market penetration and increased its bed capacity, which is expected to create significant growth opportunities in the near future.

Furthermore, the Company is committed to establishing new facilities in strategically selected locations, with a particular focus on launching centers in untapped markets that exhibit a growing demand for high-quality healthcare services. The Company is expected to implement such expansion strategy by adopting a targeted approach in Tier II cities and actively exploring potential new markets using a clinical model. A clinical model refers to a structured framework used in healthcare to guide patient care, diagnosis, treatment and overall medical decision-making. It will enable the Company to conduct a comprehensive feasibility assessment to evaluate the viability and potential of these markets.

In addition, In Vitro Fertilization (IVF) services have emerged as a promising growth avenue and the Company’s concentrated efforts to enhance this service offering are expected to generate further opportunities for expansion. Other areas with significant growth potential include pediatric quaternary care, perinatal care and the Company’s international business. The Company also remains open to actively exploring mergers and acquisitions (M&A) opportunities to accelerate its growth. The Company is confident in its ability to deliver exceptional value to patients and achieve sustained growth by leveraging its core strengths and executing a range of strategic business initiatives.

INTERNAL CONTROLS

Rainbow has prioritized establishing an efficient internal control system to uphold governance standards and ensure operational excellence. The Company has implemented a well-defined internal control framework tailored to the size and complexity of its operations. In addition, Rainbow has enforced stringent measures to ensure effective oversight and risk management.

The Internal Audit function operates under a comprehensive charter approved by the Audit Committee, which outlines its scope, authority and responsibilities. The Audit Committee, comprising four independent directors, provides oversight and ensures that the Internal Audit team reports directly to it. Each year, the Internal Audit team develops a risk-based internal audit plan to evaluate the design and operational effectiveness of controls, subject to the Audit Committee’s approval.

The Company’s functional heads review internal audit reports, prepare detailed action plans with defined timelines and establish a responsibility matrix for each observation. Once these reviews are completed, the reports are presented to the Audit Committee for quarterly reviews and approvals.

Rainbow has also assigned a separate team of auditors to conduct concurrent reviews of daily transactions across all group hospitals. The outcomes of these reviews are evaluated monthly at the unit level and regular updates are shared with management. Such an approach has enabled real-time monitoring and facilitated the prompt resolution of emerging issues.

Moreover, the Internal Audit team conducts annual testing of Entity Level Controls (ELCs) and Internal Controls over Financial Reporting (ICoFR) established by management. The quarterly updates on the status of internal controls, along with a comprehensive Action Taken Report (ATR) to track pending observations, are submitted to the Audit Committee. The systematic and diligent approach reflects the Company’s commitment to continuously monitoring and improving its internal control processes.

HUMAN RESOURCE MANAGEMENT

The healthcare sector operates within a stringent regulatory framework. The HR departments ensure compliance with labor laws, patient confidentiality regulations and ethical standards. Regular audits, training sessions and an effective grievance redressal system maintain organizational integrity and build trust among employees and patients alike. During the year, the Company invested in hiring the right clinical talent across new and existing locations in order to build new specialities and strengthen the existing ones. Additionally, the Company has established a strong leadership team for driving organizational goals.

Rainbow’s unwavering commitment to offering best-in-class training programs and career development opportunities earned recognition from the National Board of Examinations, designating it as a Membership of the Royal College of Pediatrics and Child Health (MRCPCH) Examination Center and training center in India. The Company has cultivated a comprehensive clinical environment within the Rainbow network that supports continuous employee learning and growth. Moreover, the Company also provides firm support for full-time physician retention by offering strong career development and growth opportunities.

As of 31st March 2025, the Company had 3,972 permanent employees, reflecting its focus on building and sustaining a dedicated and skilled workforce.

RISK MANAGEMENT

Rainbow has established a comprehensive Risk Management Framework to address the complexities of its business landscape. Rainbow’s risk management approach aligns with the globally recognized Committee of Sponsoring Organizations (COSO) framework, including various aspects of its business operations. Rainbow’s risk assessment methodology incorporates various tools, such as risk perception surveys, business environment analysis and feedback from internal and external stakeholders. The framework is strategically designed to identify, assess and mitigate potential risks, ensuring the Company’s resilience and sustainable growth in a dynamic environment. The Company’s functional heads play a crucial role in preparing detailed Risk Registers, which serve as foundational documents for the Risk Management framework. Risks are evaluated based on three critical factors: the likelihood of occurrence, the severity of impact and the detectability of the risk.

The Company’s Risk Management practices are governed by a Risk Management Charter, which is reviewed and approved by the Board’s Risk Management Committee (RMC). The committee oversees and monitors all risk management activities to ensure their effectiveness.

Rainbow utilizes monitoring mechanisms such as process walkthroughs, concurrent auditing and risk-based internal audit reviews to ensure effective oversight and address potential risks. This approach focuses on detecting and resolving gaps in internal processes, enhancing operational integrity. Management actively identifies new risks, which are immediately recorded in the Risk Register. Each identified risk is thoroughly analyzed for root causes, with clearly defined indicators established for ongoing monitoring.

A Management Information System (MIS) is also established for each identified risk, ensuring effective tracking. Comprehensive mitigation plans are then developed, with regular progress updates shared with the RMC.

The Company prepares a monthly MIS report summarizing identified risks and presents it to the management for review.

During scheduled RMC meetings, members thoroughly evaluate the status of risks and provide actionable recommendations, which are promptly implemented. Additionally, updates on risk management initiatives are communicated to the RMC on a half-yearly basis to ensure sustained focus on mitigating risks.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)

Rainbow has made significant strides in advancing its ESG vision and promoting business sustainability. The Company has embraced energy-efficient solutions, including the installation of solar rooftops, solar water heaters and the use of Internet of Things (IoT) technology for equipment maintenance and energy monitoring. A notable achievement during the year was the signing of a Memorandum of Understanding (MoU) to secure solar and wind power supply through the open access system.

Rainbow continues to implement comprehensive waste and water management strategies aimed at reducing its ecological impact. On the social front, the Company collaborates with non-profit organizations and educational institutions to promote awareness of pediatric healthcare.

CAUTIONARY STATEMENT

Certain statements that may be made or discussed in this release may be forward-looking statements and/or based on management’s current expectations and beliefs concerning future developments and their potential effects upon Rainbow Children’s Medicare Limited. The forward-looking statements are not a guarantee of future performance and involves risks and uncertainties and there are important factors that could cause actual results to differ, possibly materially, from expectations reflected in such forward-looking statements. Rainbow Children’s Medicare Limited does not intend and is under no obligation, to update any forward-looking statement made in this release.