Sangani Hospitals Ltd Management Discussions

The Management of Sangani Hospitals Limited presents the Management Discussion and Analysis (MD&A) of the Company for the year ended on March 31, 2024, and its outlook for the future. This outlook is based on assessment of current business environment. It may vary due to future economic and other developments both in India and Abroad.

It contains financial highlights but does not contain the complete financial statements of the Company. It should be read in conjunction with the Companys Audited Financial Statements for the year ended on March 31, 2024.

GLOBAL HEALTHCARE SECTOR OUTLOOK:

The global health care sector is undergoing a period of unprecedented transformation, driven by technological advancements, demographic shifts, and evolving patient needs. In 2024, several key trends are poised to shape the future of health care delivery.

Lingering COVID-19 effects are still contributing to widespread labor shortages and escalating costs, while the adoption of artificial intelligence (AI) presents possible solutions. Predicted to play a pivotal role in streamlining health care processes, AI promises precision and efficiency from administration, to operations, to supply chain and to patient care. Sustainability takes center stage as health care organizations adopt eco-friendly practices, addressing both environmental concerns and cost savings. Remote technologies are reshaping care delivery, extending beyond medical services to holistic social care, recognizing the link between social determinants and well-being. In response to rising costs, stakeholders implement innovative strategies, from value- based care models to workforce adaptations, defining the sectors future at this critical juncture.

In the wake of the COVID-19 pandemic, healthcare systems worldwide are embracing emerging technologies to address ongoing challenges, including cost reduction, improved access to care and a shortage of skilled workers. AI and other technologies offer the potential to personalise patient interactions, streamline administrative and care processes and free up clinicians to focus on complex procedures. Sustained investments in technology are crucial to fully harness its potential and transform healthcare delivery.

The global healthcare sector faces a severe shortage of workers, with projections indicating a shortfall of 10 million by 2030. This shortage is driven by various factors, including burnout, limited talent pipelines, demographic changes and migration rates. The demand for healthcare workers is expected to surge by 29% in the next decade, requiring transformative measures to address this critical challenge.

Climate change poses significant health risks, particularly in low-income areas with poor health infrastructure. The healthcare sector needs to adapt its practices to mitigate the impact of climate change on patient care and healthcare delivery. Healthcare organisations should implement sustainability measures to reduce their environmental impact and improve resilience to climate change. Additionally, healthcare providers should work with policymakers to develop climate- resilient healthcare infrastructure and collaborate with community organisations to address the social determinants of health that are exacerbated by climate change.

INDIAN HEALTHCARE INDUSTRY:

Healthcare has become one of Indias largest sectors, both in terms of revenue and employment. Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment. The Indian healthcare sector is rowing at a brisk pace due to its strengthening coverage, services, and increasing expenditure by public as well as private players.

Indias healthcare delivery system is categorised into two major components - public and private. The government, i.e., the public healthcare system, comprises limited secondary and tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form of Primary Healthcare Centers (PHCs) in rural areas. 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.

Indias competitive advantage lies in its large pool of well-trained medical professionals. India is also cost-competitive compared to its peers in Asia and Western countries. The cost of surgery in India is about one-tenth of that in the US or Western Europe. The low cost of medical services has resulted in a rise in the countrys medical tourism, attracting patients from across the world. Moreover, India has emerged as a hub for R&D activities for international players due to its relatively low cost of clinical research.

Government Initiatives

Some of the major initiatives taken by the Government of India to promote the Indian healthcare industry are as follows:

• Union Minister of Health and Family Welfare and Chemicals & Fertilizers Dr. Mansukh Mandaviya, virtually launched MedTech Mitra, a platform designed to support young Indian innovators in the MedTech sector by aiding in their research, development, and regulatory approvals, aiming to reduce import dependence and transform India into a leading US$ 50 billion MedTech industry by 2030, while fostering indigenous development of affordable, quality medical devices and diagnostics, in line with the vision of Viksit Bharat and Atmanirbhar Bharat.

• PoshanAbhiyan is a Centrally Sponsored Scheme with the implementation of the scheme being done by States/UTs. To ensure that all Anganwadi Centres are equipped with Smartphones and Growth Monitoring devices (GMDs) such as Infantometer, Stadiometers, and Weighing Scale for Mothers and Infant, the Ministry has released revised guidelines for technical specifications and replacement of GMDs by the States.

• In the Union Budget 2023-24:

> On February 25, 2024, Prime Minister Narendra Modi marked a significant stride in Indias healthcare landscape by inaugurating five new All India Institute of Medical Sciences (AIIMS) across different states. These AIIMS facilities, situated in Rajkot (Gujarat), Bathinda (Punjab), Raebareli (Uttar Pradesh), Kalyani (West Bengal), and Mangalagiri (Andhra Pradesh), signify a transformative step towards bolstering tertiary healthcare infrastructure.

> On January 18, 2024, the Union Cabinet was briefed on a Memorandum of Understanding signed between CDSCO, India, and ARCSA, Ecuador, fostering cooperation in medical product regulation, enhancing international coordination, and potentially boosting Indias pharmaceutical exports.

> On November 8, 2023, India and Netherlands inked a significant Memorandum of Intent in The Hague, aiming to bolster cooperation on medical product regulation, thereby elevating the quality of healthcare services for both nations.

> 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).

• In July 2022, the World Bank approved a US$ 1 billion loan towards Indias Pradhan Mantri-Ayushman Bharat Health Infrastructure Mission.

• To promote medical tourism in the country, the government of India is extending the e- medical visa facility to the citizens of 156 countries.

• In May 2022, the Union Government approved grants for five new medical colleges in Gujarat with a grant of Rs. 190 crore (US$ 23.78 million) each. These colleges will come up in Navsari, Porbandar, Rajpipla, Godhra and Morbi.

• In November 2021, the Government of India, the Government of Meghalaya, and the World Bank signed a US$ 40-million health project for the state of Meghalaya. The project will improve the quality of health services and strengthen the states capacity to handle future health emergencies, including the COVID-19 pandemic.

• In September 2021, Prime Minister Mr. Narendra Modi launched the Ayushman Bharat Digital Mission. The mission will connect the digital health solutions of hospitals across the country. Under this, every citizen will now get a digital health ID and their health record will be digitally protected.

• In September 2021, the Telangana government, in a joint initiative with World Economic Forum, NITI Aayog and HealthNet Global (Apollo Hospitals), launched the ‘Medicine from the Sky project. The project will pave the way for drone delivery of life-saving medicines and jabs in far-flung regions of the country.

• According to a spokesperson, the Indian government is planning to introduce a credit incentive programme worth Rs. 50,000 crore (US$ 6.8 billion) to boost the countrys healthcare infrastructure. The programme will allow firms to leverage the fund to expand hospital capacity or medical supplies with the government acting as a guarantor and strengthening COVID-19-related health infrastructure in smaller towns.

• In July 2021, the Ministry of Tourism established the ‘National Medical & Wellness Tourism Board to promote medical and wellness tourism in India.

• In July 2021, the Union Cabinet approved the continuation of the National Ayush Mission, responsible for the development of traditional medicines in India, as a centrally sponsored scheme until 2026.

• In July 2021, the Union Cabinet approved the MoU between India and Denmark on cooperation in health and medicine. The agreement will focus on joint initiatives and technology development in the health sector, to improve the public health status of the population of both countries.

• In June 2021, the Ministry of Health, and Family Welfare, in partnership with UNICEF, held a capacity-building workshop for media professionals and health correspondents in Northeastern states on the current COVID-19 situation in India, to bust myths regarding COVID-19 vaccines & vaccination and reinforce the importance of COVID-19 Appropriate Behaviour (CAB).

Road Ahead

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.

References: Department for Promotion of Industry and Internal Trade (DPIIT), RNCOS Reports, Media Reports, Press Information Bureau (PIB), Union Budget 2023-24

(Source: www.ibef.ora/bloas)

BUSINESS OVERVIEW

Our Company was originally incorporated as "Sangani Hospital Limited" in Keshod, Gujarat, a public limited company under the Companies Act, 2013, pursuant to a certificate of incorporation dated November 11, 2021 and certificate of commencement of business dated December 14, 2021 issued by the Registrar of Companies, Ahmedabad. The Corporate Identification Number of our Company is U85300GJ2021PLC127189.

We are a multi-speciality healthcare provider operating in Keshod and Veraval region of Gujarat with a combined bed capacity of 68 beds. Our services primarily include super speciality services, speciality services and other support services. We also operate pathology laboratory and medical store. Currently, we operate out of two hospitals i.e. Sangani Hospital at Keshod, Junagadh, Gujarat and Sangani Super Speciality Hospital, Veraval, Gujarat.

Sangani Hospital is 36 beds multi-speciality hospital with primary, secondary and tertiary care facilities. It is strategically located near Keshod bus stand and railway station making it accessible to fifty-four adjacent small villages. Sangani Super Speciality Hospital is 32 beds multi-speciality hospital with significant focus on tertiary care facilities.

At Sangani Hospital, Keshod, number of permanent doctors available are 4 and consulting doctors are 12. At Sangani Super Speciality Hospital, Veraval, number of permanent doctors available are 2 and consulting doctors are 9. Other than doctors, number of staff present at Sangani Super Speciality Hospital, Veraval are 14 and at Sangani Hospital, Keshod are 24. Also, as per the requirements, we exchange roles and responsibilities of doctors and staffs at both the hospitals

Both our hospitals offer a comprehensive range of healthcare services in specialties and super specialties, including cardiac sciences, neurosciences, orthopaedics, renal sciences and mother & childcare. We have provided dialysis facility to more than 600 patients and more than 6,000 sessions annually free of cost under the Mukhyamantri Amrutum Yojana (MAA Yojana) and Pradhan Mantri Jan Arogya Yojana (PMJAY). Our team of qualified medical practitioners are trained to handle all kinds of emergencies and ensures that patients get quality healthcare services. Our healthcare staff comprises of Clinical Pharmacist, Microbiologist (DMLT), Medical Officers, Clinical Assistants, Nursing staff, Attendants and Technicians. We strive to deliver advanced healthcare while providing affordable medical services to our patients.

Our hospitals have been certified with ISO 9001:2015 for Quality Management System for the scope of services that includes MD-ICU, ICCU, ECHO-TMT, Dialysis, Orthopaedic Department, PFT, EECP, Diabetic, Clinic, ENT- EAR, NOSE, Throat Head & Neck Surgery, Laser Surgery, Trauma Unit, Endoscopy, Audiology, Vertigo Clinic, OBST & Gynee-USG-Doppler, Normal Delivery, Joint

Replacement Facility, Gynec Surgery, Infertility Clinic, Radiology Unit - Xray, Sonography, CT Scan, General Surgery, all type of general surgery, Dental Surgery, Uro Surgery and hospital services.

Further, our Sangani Super Speciality Hospital at Veraval is certified with National Accreditation Board for Hospitals & Healthcare Providers ("NABH") certification for general medicine, general surgery, orthopaedic surgery (including arthroscopy), urology, 2D Echo, X-Ray, clinical biochemistry, clinical pathology, haematology and pharmacy.

We are also a part of Ayushman Bharat, a flagship scheme of Government of India which was launched and recommended by the National Health Policy 2017, to achieve the vision of universal health coverage (UHC). The initiative has been designed to meet SDG (Sustainable Development Goal) & its underlining commitment. Ayushman Bharat, is an attempt to move from sectoral & segmented approach of health service delivery to a comprehensive need-based health care service. We are also a part of Mukhyamantri Amrutam (MA) scheme launched by Gujarat state to cater families below the poverty line.

Currently, our primary focus is Gujarat healthcare market where we have a understanding of regional nuances, customer culture and the mindset of medical professionals and where there is a significant need for quality and affordable healthcare services.

SEGMENT WISE PERFORMANCE:

Your company has only one segment that is Healthcare.

RISKS AND CONCERNS:

Our Companys future results of operations could be affected potentially by the following factors:

1. Occupancy Rates, Length of Hospital Stay and Revenue Per Bed.

2. Patient volumes and case mix.

3. Government Regulations and Policies.

4. Increase in departments such as urology surgery, laparoscopic surgery, general surgery, and orthopaedic surgery.

5. Expenses Relating to our Purchase of Medical Consumables and Pharmacy Items.

6. Payment of professional fees to doctors and consultants.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

The internal control system is intended to increase transparency and accountability in an organizations process of designing and implementing a system of internal control. They have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use, executing transaction with proper authorization and ensuring compliance of corporate policies.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

Standalone:

Sales and Other Income for the year ended March 31, 2024 amounted to Rs. 1,305.09 Lakhs as against Rs. 1,174.97 Lakhs in the previous Financial Year. Net Profit for the year under review was Rs. 269.61 Lakhs as against Rs. 153.15 Lakhs in the previous Financial Year.

Consolidated:

Pursuant to the provisions of section 129 and 134, 136 of the Companies Act, 2013 read with Rules made thereunder and pursuant to Regulation 33 od SEBI (LODR) Regulations, 2015, your Company had prepared consolidated financial statements of the Company and its subsidiary entity Ankur Distributors.

Sales and Other Income for the year ended March 31, 2024 amounted to Rs. 1,652.01 Lakhs as against Rs. 1,576.24 Lakhs in the previous Financial Year. Net Profit for the year under review was Rs. 269.69 Lakhs as against Rs. 148.37 Lakhs in the previous Financial Year.

HUMAN RESOURCES / INDUSTRIAL RELATIONS:

Your Company has team of qualified and dedicated personnel who have contributed to the consolidation of the operations of your Company. Your Companys industrial relations continued to be harmonious during the year under review. Your Company has succeeded in attracting and retaining key professional and intends to continue to seek fresh talents to further enhance and grow our business.

CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis describing the Companys objectives, estimates, expectations or projections may constitute "forward looking statements", within the meaning of applicable laws and regulations. The current years outlook is Managements perception at the time of drawing this report. Actual results may differ materially from those either expressed or implied in the statement. Important factors that could influence the Companys operations include economic conditions affecting demand/supply and price conditions in the domestic and international markets, changes in the Government regulations, tax laws economic developments within the country and other factors such as litigation, industrial relations and other statutes and other incidental factors.