Vasa Denticity Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS GLOBAL DENTAL MARKET OVERVIEW

The global dental industry is evolving rapidly driven by technological advances in digital dentistry, increasing patient demand for cosmetic and restorative treatments, and an expanding global supply chain for dental materials and devices. Innovations such as CAD/CAM systems, 3D printing for prosthetics, intraoral scanning, and AI-enabled diagnostics are reshaping clinical workflows and supplier value-chains. Sustainability and regulatory compliance are becoming increasingly important as manufacturers and distributors adopt eco-friendlier materials and packaging while ensuring product provenance and clinical safety.

Trading platforms and speciality distributors now play a crucial role by consolidating multi-brand catalogues, guaranteeing product authenticity, and providing logistics and after-sales support. Market participants who combine a broad product assortment (equipment + consumables), strong vendor relationships, and digital ordering/fulfilment capabilities are positioned to capture the accelerated replacement and upgrade cycles in clinics and labs worldwide.

The company has shown a consistent rise in unique customers year-on-year, increasing from 40,164 in FY 20-21 to 1,05,500 in FY 24-25. This reflects strong and sustained customer acquisition over the years, with notable jumps in FY 21-22 and FY 23-24. The upward trend highlights growing market reach and customer trust in the brand.

INDIAN ECONOMY OVERVIEW - GENERAL

Despite global economic uncertainties, India is expected to remain one of the fastest-growing major economies in FY2025, supported by robust domestic demand, healthy services growth, and government-led infrastructure investment" said ADB Country Director for India, Mio Oka. "Lower inflation, projected to average 3.8% in FY2025, alongside an accommodative monetary policy stance, is anticipated to stimulate credit growth and private investment. Manufacturing competitiveness will benefit from easing input cost pressures, while a normal

monsoon is expected to boost agriculture output. The governments fiscal consolidation efforts, targeting a deficit of 4.5% of GDP in FY2025, will help create space for private sector credit and sustain investor confidence. Although foreign direct investment may remain subdued in the short term due to global financial conditions, it is forecast to improve later in FY2025 with higher industry and infrastructure activity. Goods exports are likely to be tempered by weaker demand in advanced economies, but services exports and domestic consumption are expected

INDUSTRY OVERVIEW

Industry Structure & Developments

The Indian dental industry is characterised by fragmentation at the practice level but increasing organisation through chains, group practices, and specialty centres. From a supply perspective, the market comprises four interlinked segments:

Clinical equipment and devices (dental chairs, airotors, endomotors, autoclaves, intraoral cameras, imaging systems);

Consumables and restorative materials (composites, cements, impression materials, sutures, obturation materials, rotary files);

Digital dentistry and lab solutions (3D printing resins, CAD/CAM materials, milling blocks, scanners);

Specialty & implantology products (implants, prosthetics, orthodontic systems).

Recent developments notable for distributors and trading platforms include: expanded product catalogues exceeding 20,000 SKUs; bundling of newclinic setup services (equipment + disposables + training); and enhanced logistics capabilities reducing stockout risks. Domestic manufacturers are scaling production for routine consumables while high-end devices still rely on global OEMs. This mix creates an opportunity for curated marketplaces to act as the trusted single-source supplier for clinicians.

Sector Overview & Market Size

The dental supplies market in India is expanding steadily with demand across urban and fast-growing non-metro geographies. Key growth drivers include rising per-capita dental visits, increased cosmetic dentistry, expansion of private dental chains, and greater adoption of digital/3D workflows by labs and clinics. Consumables (single-use items, impression materials, restorative kits) generate recurrent revenue, while equipment sales (chairs, motors, imaging) provide higher-value but lower-frequency transactions. Platforms that combine both categories attract and retain customers through basket stickiness and recurring reorder behaviour.

Employment & Human Capital

The dental ecosystems workforce expansion reflects higher clinic openings, greater lab activity, and growth in allied dental services (dental technicians, hygienists, lab technicians). For suppliers, the

primary human capital focus is on building a trained sales force with product technical competency, a responsive customer support team for post-sale service, and logistics personnel skilled in handling medical/delicate equipment. Skill gaps remain in dental lab automation and specialised device servicing; thus, training partnerships with vendors and institutes are strategic priorities.

Digital Transformation & Technology Adoption

Telemedicine, remote diagnostics, AI-enabled imaging, cloud health records, and digital supply-chain management have moved from pilot to scale. For suppliers and distributors (including dental supply marketplaces), investment in real-time inventory, last-mile logistics, tele-sales, and online B2B customer experiences is now table stakes. These capabilities are enhancing order frequency, reducing delivery times, and improving inventory turns.

Dental Industry ?€” Structure & Trends

The dental market in India remains largely fragmented at the clinic level, with a growing emergence of speciality chains and group practices in metropolitan and tier-II cities. Demand drivers include cosmetic dentistry, implantology, and increasing adoption of modern restorative materials and equipment. The manufacturing base for dental consumables and equipment is strengthening ?€” domestic players are expanding production of clinical disposables, impression materials, temporary restoratives and certain lab-based prosthetics, while higher-end implants and specialised equipment continue to be supplied by global OEMs.

OPPORTUNITIES AND THREATS

Opportunities:

1. Expanding Dental Industry: The Indian dental market continues to demonstrate robust growth fuelled by increasing global awareness of oral health, preventive care, and cosmetic dentistry. This expanding sector offers VASA Denticity Limited significant potential to grow its market presence and diversify its product offerings to meet rising demand.

2. Digital Health and E-Commerce Growth: The accelerating adoption of digital platforms and e-commerce within healthcare enables greater reach and convenience. VASA Denticitys strong online infrastructure and digital capabilities position the company to capitalize on increased online purchases of dental products and services.

3. Global Market Expansion: Leveraging its scalable online platform, the company is well-placed to enter new international markets. Expanding globally will not only diversify revenue streams but also mitigate risks associated with regional economic fluctuations.

4. Innovation and Technology Adoption: Rapid advancements in dental technology, including digital dentistry, AI-based diagnostics, and new dental materials, provide opportunities for the company to continuously upgrade its portfolio, attract premium clientele, and establish itself as a leader in innovative dental solutions.

5. Strategic Partnerships and B2B Collaborations: Collaborations with dental clinics, hospitals, dental institutes, and corporate chains can facilitate bulk sales, long-term contracts, and co-development of customized solutions, thereby strengthening market position and recurring revenue.

6. Sustainability Initiatives: Growing consumer and institutional interest in eco-friendly and sustainable dental products present an opportunity for VASA Denticity to innovate and market green solutions, enhancing brand reputation and meeting evolving environmental standards.

7. Rising Dental Tourism: Indias status as a cost-effective and quality destination for dental procedures continues to rise. This trend offers potential for the company to serve international patients and dental service providers accessing Indian dental products and equipment

Threats:

8. Complex Regulatory Environment: Expansion across diverse regions involves navigating differing regulatory requirements. Compliance demands can be resource-intensive and pose challenges for timely market entry and operations.

9. Supply Chain Risks: Global supply chain uncertainties ?€” including geopolitical tensions, logistics disruptions, and raw material shortages ?€” could impact the companys ability to maintain product availability and meet delivery timelines.

10. Technological Disruption: The fast pace of innovation in dental technology requires continual investment in research and development. Failure to keep pace may render current offerings obsolete or negatively affect competitive advantage.

11.Intense Competition: The dental product market is highly competitive, with well-established players and emerging startups vying for market share. Sustaining differentiation through quality, innovation, and superior customer service is critical to maintaining market position.

12. Counterfeit and Substandard Product Infiltration: The growing online marketplace faces risks from counterfeit or low-quality products, which could harm the companys brand integrity and customer trust if not vigilantly managed.

13. Changing Consumer Preferences: Economic factors and shifts in dental care behaviours could alter purchasing patterns, requiring VASA Denticity to remain agile and responsive to evolving market needs.

14. Cybersecurity and Data Privacy: Increasing reliance on digital platforms heightens vulnerability to cyber threats and data breaches. Robust cybersecurity frameworks and compliance with data protection laws are imperative to safeguard customer information and maintain trust.

15. Economic Uncertainty and Price Sensitivity: Economic downturns or fluctuations may increase customer price sensitivity, potentially impacting sales volume and profitability margins. The company must balance competitive pricing strategies with sustainable profit management.

KEY PERFORMANCE HIGHLIGHTS

Over the years, The Company recorded consistent year-on-year growth in total orders fulfilled, reflecting robust

demand, customer trust, and operational scalability.

Our customer base continued to expand, with a steady rise in the number of unique customers served, underscoring

the Companys widening market reach and brand acceptance.

Our company has demonstrated robust revenue growth over the past year, driven by increased market demand and expansion into new customer segments."

The consistent upward trend in revenue highlights our strong operational performance and effective sales strategies

Strong Revenue Growth:

Building on a 24% increase in our customer base, our revenue growth this fiscal year reflects the expanding trust and loyalty of over 209,000 dental professionals relying on our services. This robust growth is a direct result of our comprehensive product range and quick fulfillment capabilities, ensuring customer satisfaction and repeat business.

Sustained Growth Driven by Customer Loyalty:

With a remarkable 70% customer returning rate, our revenue growth is fueled by consistent repeat purchases and a commitment to quality, reinforcing our market leadership in the dental supplies sector.

Efficiency and Scale Boosting Revenue:

An average delivery time of less than 4 days guarantees rapid access to essential dental supplies, supporting increased order volumes and contributing to revenue expansion.

Expanding Product Portfolio Supporting Revenue:

Our extensive offering of over 22,000 unique dental products and onboarding of 468 brands in FY25 have opened new avenues for revenue growth, catering to a wide spectrum of customer needs.

Revenue Growth Backed by Quality Assurance:

Stringent quality control measures have minimized product returns to just 1.8%, ensuring customer satisfaction and driving steady revenue inflow.

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OUTLOOK

DENTAL TOURISM:

The Indian dental market is poised for exponential growth with India emerging as a preferred global hub for dental products, materials, and treatments by 2025. Dental tourism continues to accelerate as international patients seek the countrys high-quality and cost-effective dental care solutions. The convergence of advanced dental technologies, skilled professionals, and competitive pricing strengthens Indias position as a leading destination for dental procedures worldwide.

DENTAL TREATMENT COST:

Rising dental treatment costs in developed countries, exacerbated by limited insurance coverage for many dental procedures, are driving more patients to seek affordable alternatives abroad. India offers a compelling value proposition, delivering premium-quality treatment at significantly lower costs, a trend expected to intensify and further stimulate demand from international and domestic patients alike.

VAST MARKET:

Indias dental ecosystem comprises over 5,000 dental laboratories and in excess of 300 dental institutes offering diverse oral healthcare education and services. This extensive infrastructure, combined with growing consumer awareness and rising incomes, supports a vast and rapidly expanding domestic market that positions India as a major producer and supplier of dental products and materials globally.

EXPECTED GROWTH:

The Indian dental market is forecast to register a compound annual growth rate (CAGR) exceeding 20% in the near term. Key growth drivers include increased investments in multispecialty hospitals, the proliferation of organized dental chains, technological innovation, and heightened public focus on oral health and aesthetics. This dynamic environment is expected to sustain strong industry momentum through FY 2024-25 and beyond.

ORAL CANCER CHALLENGE:

India continues to face the significant public health challenge of being the oral cancer capital of the world. In 2023, oral cancer constituted nearly 30% of all cancer cases nationally, predominantly due to high tobacco consumption. This underscores the urgent need for intensified preventive health initiatives, early detection programs, and awareness campaigns to mitigate the impact on the populations oral and overall health.

GLOBAL VS. ASIAN MARKETS:

While the global dental materials market continues to grow steadily, the Asian market is expected to outpace global averages, with India leading this surge. Indias rising healthcare expenditure, expanding middle class, and increasing dental awareness are propelling its dental industry to a competitive leadership position within Asia. These factors collectively offer substantial opportunities to scale exports and integrate with wider regional markets.

VASA Denticity Limited remains strategically positioned to leverage these promising market dynamics. By continuing its focus on product innovation, market expansion, and addressing public health challenges such as oral cancer, the company is confident in sustaining growth and enhancing its contribution to Indias dental healthcare ecosystem in FY 2024-25.

RISKS AND CONCERNS

Given the wide scale of operations and the dynamic nature of the dental healthcare industry, VASA Denticity Limited is exposed to a broad spectrum of strategic, operational, financial, regulatory, and market-related risks. Our Company has established a comprehensive risk management framework aimed at identifying, analyzing, mitigating, and monitoring risks that could impact the achievement of our business objectives and operational performance.

The Board of Directors, through the Audit Committee, periodically reviews the risk heat map to assess high and critical risks facing the Company. The Committee guides and oversees the implementation of robust risk mitigation strategies, including risk avoidance, transfer, control measures, and continuous monitoring. The Companys risk governance combines formally documented policies in critical areas such as legal compliance, regulatory adherence, and treasury management, complemented by an informal approach for emerging operational threats.

1. Regulatory and Compliance Risks: The industrys regulatory environment is complex and varies across jurisdictions. Non-compliance or delays in adhering to changing regulations can expose the Company to penalties, operational disruptions, and reputational damage.

2. Supply Chain Disruptions: Dependency on global and domestic suppliers for critical raw materials and equipment exposes the Company to risks from geopolitical tensions, logistical challenges, and raw material price volatility, which can impact product availability and cost structures.

3. Technological Innovation Risks: Rapid technological advancements require continuous investment in research and development to maintain competitiveness. Failure to innovate timely could result in loss of market share or obsolescence of existing product lines.

4. Market Competition: The dental healthcare sector is highly competitive, with both established and emerging players. Increased competition could pressure pricing, margins, and customer retention.

5. Quality Control and Counterfeit Product Risks: There is a risk of counterfeit or substandard products entering the market, particularly in online sales channels. Vigilant quality assurance and supply chain controls are essential to safeguard brand reputation and customer trust.

6. Cybersecurity and Data Privacy: As the Company increasingly leverages digital platforms and handles sensitive customer and business data, cybersecurity threats and data breaches pose significant risks. Compliance with data protection laws and implementation of stringent security measures are ongoing priorities.

7. Economic and Market Volatility: Macro-economic uncertainties, changes in consumer spending behavior, and fluctuations in input costs can impact sales and profitability. The Company remains vigilant in monitoring these external factors and adjusting its strategies accordingly.

8. Public Health Challenges: The high incidence of oral cancer and other oral health issues in India pose both a public health and market challenge. There are risks related to evolving healthcare policies, public awareness, and demand dynamics that the Company closely monitors to align its strategic responses.

In the opinion of the Board, none of the identified risks threaten the existence of the Company. However, continued focus on risk management and agility in responding to both anticipated and unforeseen challenges will be crucial in sustaining growth and safeguarding stakeholder interests.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

VASA Denticity Limited has established a robust internal control framework designed to safeguard the Companys assets and ensure the accuracy and reliability of its financial and operational information. Our internal control systems encompass a structured and comprehensive internal audit process that is entrusted with the responsibility of evaluating the effectiveness of controls, identifying gaps, and recommending improvements.

The internal audit function operates under the supervision of the Audit Committee of the Board of Directors, ensuring independence and objectivity in its assessments. Monthly business reviews are conducted to track operational performance and initiate corrective actions when necessary. Furthermore, capital expenditure is subject to stringent controls, with dedicated processes to authorize investments and ensure timely and budget-compliant project execution.

To strengthen internal controls, the Company deploys a risk-based audit approach encompassing concurrent audits, thematic audits, exceptional reporting, and IT-enabled transaction controls. These measures are complemented by continuous management reviews and use of dashboards to monitor critical operational parameters and control effectiveness on an ongoing basis.

During the year under review, all internal controls were tested and evaluated rigorously. No material weaknesses were identified in the design or functioning of the internal control systems. Similarly, statutory auditors evaluations did not reveal any significant deficiencies or material misstatements attributable to a

The Company remains committed to continuously enhancing its control systems in alignment with evolving business requirements and regulatory expectations. This ongoing emphasis on control adequacy reassures stakeholders of the Companys robust governance and operational resilience.

FINANCIAL OPERATIONAL PERFORMANCE:

During the year under review, the Company continued to undertake its business of providing various dental products. Accordingly, the Companys Income from Operations was Rs. 24,936.57 lakh as against Rs. 17,188.31 lakh in the corresponding previous year. The Company earned a Net Profit of Rs. 1,696.76 lakh during the year as against Rs. 1,507.58 lakh in the corresponding previous year.

The Financial Statements for the year ended 31 March 2025 have been prepared in accordance with the Companies Accounting Principles generally accepted in India, including the Accounting Standards prescribed under Section 133 of the Companies Act, 2013.

WAREHOUSING SPACE EXPANSION

The Company has consistently increased its warehousing space year-on-year to support business growth and operational efficiency. As of 31st March 2025, total warehousing capacity reached approximately 57,775 sq. ft., a significant rise from 8,000 sq. ft. in FY 2020-21. This expansion reflects our commitment to strengthening supply chain capabilities and ensuring timely fulfilment of customer demand.

HUMAN CAPITAL

VASA Denticity Limited recognizes that its employees are the cornerstone of the Companys sustained growth and innovation in the dental healthcare sector. Our commitment to building a strong, skilled, and motivated workforce is reflected in our ongoing initiatives aimed at talent acquisition, retention, development, and fostering a vibrant workplace culture.

WORKFORCE & CULTURE:

With an emphasis on creating an inclusive and positive work environment, the Company continued to expand its talent pool during FY 2024-25. We prioritize employee well-being and career growth, fostering a culture of open communication, collaboration, and innovation. These efforts contribute to high employee engagement and a sense of belonging within the organization.

TALENT ATTRACTION AND RETENTION:

In the competitive healthcare and technology markets, attracting and retaining high-quality talent remains a key focus. VASA Denticity Limited has implemented contemporary recruitment strategies, leveraging diverse channels for outreach, including digital platforms, employee referrals, and campus engagements. Our

proactive approach to diversity and inclusion helps us harness a broad range of skills and perspectives.

We offer competitive compensation frameworks, reward performance through targeted incentive programs, and provide career advancement opportunities. Employee retention is further supported by comprehensive learning and development initiatives designed to build capabilities and prepare employees for future leadership roles.

LEARNING AND DEVELOPMENT:

We invest significantly in continuous professional development to ensure our workforce stays abreast of the latest technological advancements and industry best practices. Training programs, workshops, and e-learning modules are regularly deployed, enabling skill enhancement and fostering an innovative mindset conducive to business growth and operational excellence.

EMPLOYEE ENGAGEMENT AND WELLNESS:

Employee engagement initiatives remain a vital component of our human capital strategy. Regular feedback mechanisms, health and safety programs, and wellness campaigns are instituted to support employees holistic well-being. Our leadership team actively promotes a supportive climate that encourages creativity, accountability, and mutual respect.

DIVERSITY AND INCLUSION:

VASA Denticity Limited embraces diversity across gender, culture, and backgrounds. We are dedicated to cultivating an inclusive workforce that reflects the communities we serve, recognizing that diverse teams drive better decision-making and business outcomes.

As of March 31, 2025, the Companys permanent employee strength stands at 355, reflecting measured growth aligned with operational expansion and increasing market demands.

Looking ahead, VASA Denticity remains committed to enhancing human capital capabilities by further strengthening talent management practices, promoting innovation, and building a sustainable, employeecentric workplace to support long-term business success.

INFORMATION TECHNOLOGY (IT)

In todays rapidly evolving dental healthcare landscape, Information Technology (IT) plays a crucial role in enhancing the operational efficiency and customer experience of VASA Denticity Limited. The Company has continuously invested in strengthening its IT infrastructure to support seamless business processes, data management, and digital innovation, enabling it to maintain a competitive edge.

Our robust IT systems integrate key business functions such as supply chain management, inventory control, order processing, customer relationship management, logistics, and financial reporting. This integration has helped in minimizing product shortages, reducing pilferage, avoiding out-of-stock situations, and enabling timely delivery of products to our customers.

The Company leverages advanced data analytics and real-time dashboards to monitor critical operational metrics, facilitating prompt decision-making and enhancing transparency across departments. Moreover, IT enables efficient cash management and automates routine administrative tasks, contributing substantially to overall operational excellence.

VASA Denticity Limited prioritizes cybersecurity and data privacy, implementing stringent controls and protocols to safeguard sensitive customer and business information. Compliance with relevant data protection regulations remains a continual focus area, along with efforts to fortify defences against emerging cyber threats.

In line with its growth ambitions, the Company is committed to ongoing IT innovation, harnessing new technologies to improve user experience on its digital platforms and broaden its reach in domestic and international markets. Investments in automation, cloud computing, and AI-driven tools are planned to further streamline operations and support scalable business expansion.

Overall, IT forms the backbone of VASA Denticitys strategy to deliver superior service, optimize operational workflows, and maintain agility in a dynamic market environment.

KEY FINANCIAL RATIOS

The company demonstrates a strong liquidity position, as indicated by a current ratio of 7.71 times, showing it can comfortably cover its short-term liabilities. Debt-related ratios like the Debt-Equity Ratio and Debt Service Coverage Ratio are not available, which reflects minimal debt. In terms of profitability, the company delivers a good return to shareholders with a 13% Return on Equity (ROE) and an 18% Return on Capital Employed (ROCE), indicating efficient use of capital and solid earnings. Operational efficiency appears robust, with the company turning over its trade receivables 18.25 times and trade payables 17.88 times, suggesting it collects receivables quickly and pays suppliers promptly. The net capital turnover ratio of 2.28 times shows effective utilization of working capital. Finally, a net profit ratio of 7% reflects moderate profitability relative to revenue. Overall, the companys financial health and operational efficiency are strong.

CODE OF CONDUCT

The Board has laid down a Code of Conduct and Ethics for the Members of the Board and Senior Management Personnel of the Company. All Board Members and Senior Management Personnel have affirmed compliance with the Code of Conduct for the financial year 2024-25. Requisite declaration signed by Mr. Vikas Agarwal, Chairman & Managing Director to this effect is given below.

Compliance with the Code of Business Conduct and Ethics as provided under Regulation 26 (3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, all Board Members and Senior Management Personnel have affirmed compliance Code of Business Conduct and Ethics for the year ended March 31, 2025.

By and on behalf of Board of Directors VASA DENTICITY LIMITED

Sd/-

Vikas Agarwal

Chairman and Managing Director DIN:07487686

Place: New Delhi Date: 14.08.2025