Vijaya Diagnost. Management Discussions


Global economy

On the surface, the global economy appears to be recovering gradually from the adverse impact of the pandemic and the Russia-Ukraine conflict. Following the reopening of its economy, China is witnessing a strong resurgence. Supply- chain constraints are easing and the wars repercussions on energy and food markets are receding. Simultaneously, central banks synchronised tightening of monetary policy is expected to curb stubborn inflation. According to the IMF, global growth will peak at 2.8% this year before gradually climbing to 3.0% in 2024. Global inflation will decline, but considerably slower than anticipated, from 8.7% in 2022 to 7.0% this year and 4.9% in 2024.

The emerging markets and developing economies (EMDEs) have demonstrated remarkable resilience amid global economic turmoil, clocking a growth rate (fourth quarter over fourth quarter) of 4.5% this year. The slowdown is concentrated in advanced economies, especially the euro area and the UK, where growth (also fourth quarter over fourth quarter) is expected to drop to 0.7% and -0.4%, respectively, this year before reaching 1.8% and 2.0% in 2024.

[Source- IMF World Economic Outlook, April 2023]


Central banks across the world are endeavouring to strike a balance between aspirational growth and inflationary pressures. Despite multiple rate hikes and other safeguards to tighten liquidity, inflation remains a core concern. With most of the major economies sliding into recessionary lows, Asia is positioned as the primary engine for growth during 2022.

With proper regulation of the monetary policies, seizing of the geopolitical conflicts, mitigation of supply-chain disruptions and efficient management of the lingering impact of COVID, the health of the economy is set to improve.

Indian economy

Despite an uncertain global economic outlook, India has experienced macroeconomic and financial stability. The country has recorded an uptrend in its growth momentum by clocking a growth of 7.2% in FY23 (Source- the National Statistical Organisation). This indicates a sound macroeconomic policy environment as well as the economys inherent resilience, which shielded it against global shocks. India has been one of the worlds fastest-growing major economies, contributing more than 12% to global growth on average during the last five years (Source- the Reserve Bank of India).

The Union Budget for 2023 provides a positive outlook for the Consumer Products and Retail sector1 . Consumer spending has picked up post-COVID, leading to an increase in imports which is expected to reach USD 70 billion by the end of FY23. Greater focus on financial inclusion, measures to boost rural demand, the Make in India initiative and start-ups are expected to spur employment opportunities, increase disposable incomes and fuel consumer demand.


Strong credit growth, stable financial markets and the Governments focus on infrastructure and capex are likely to pitch in substantial investments. Notwithstanding the grim global outlook, the fact that the Government of India and RBI have been able to safeguard the Indian economy from an impending global recession underscores Indias strong economic fundamentals. India shows signs of recovery and pent-up credit demand over the last two years offers hope for new growth opportunities in the domestic market.

Industry overview

Indias healthcare sector

The healthcare delivery market in India is posed to record strong growth in the medium term. According to CRISIL Research, the industry is projected to surpass pre-Covid levels in FY22 and achieve a compound annual growth rate (CAGR) of 10-12% between FY22 and FY27. This growth can be allributed to longterm structural factors, robust fundamentals and improving affordability. The expansion of the Ayushman Bharat scheme for the sector is also expected to drive growth. Additionally, the resurgence of high-revenue medical tourism may lead to positive prospects due to the relaxation of international travel restrictions.

Indias growing demand for an innovated healthcare

When compared to other sectors, the healthcare sector in India has been lagging primarily due to a lack of innovation. The pandemic has revealed the significance of remote medical services, backed by digitisation and automation. As a densely populated nation, India needs technologically advanced, high- quality medical services available at affordable price points across the country.

The fundamental growth drivers of Indias healthcare market include rapid urbanisation, an ageing population and increasing incidences of chronic diseases. The healthcare sector, comprising hospitals, diagnostic centres, pharmaceutical companies and health insurance organisations, is growing at a swift pace owing to a higher number of health complications affecting people of all age groups.

Successful vaccination drive

Following the COVID vaccine rollout, the healthcare industry wholly participated and partnered with the Government for its successful execution. One of the notable accomplishments in the history of Indian healthcare has been the administration of more than 2 billion vaccine doses to the countrys citizens.2

Improved life expectancy and shifting demographic profiles

With the steady increase in Life expectancy, the demographic composition of the nation is undergoing a significant transformation. According to the 2011 data, approximately 8% of the Indian populace consisted of individuals aged 60 years or older, and it is projected to rise to 12.5% by 2026. Unfortunately, there is a Lack of comprehensive documentation regarding the healthcare requirements of the elderly population. Nonetheless, it is widely acknowledged that this age group is more susceptible to health-related concerns due to their heightened vuLnerabiLity.

Government policies and initiatives


Indias healthcare sector is poised for robust growth with advanced pharma, improved health-tech, medical tourism and government- aided infrastructure initiatives.!

In the Union Budget for the fiscal year 2023-24, the Ministry of

Health and Family Welfare received an allocation of INR 89,155 crore. This amount marks a growth of approximately 3.4%when compared to the allocation of INR 86,200 crore in the previous fiscaL year, 2022-23. The increase in aLLocation is primariLy aimed at bolstering expenditure to further develop and maintain a robust healthcare infrastructure. Additionally, the allocation intends to enhance the readiness of the healthcare system to effectively address the nations escalating healthcare requirements.

• The National Health Mission (NHM) has received an allocation of INR 29,085 crore for the centrally sponsored component in the FY24. This amount represents a reduction of 21% in comparison to the allocation of INR 37,000 crore in the previous FY23. As for the Central Sector component of NHM, an amount of INR 341 crore has been allocated specifically for the National Digital Health Mission.

• As a part of budget allocation department of Health Research, Rs. 2,360 Crs was allocated to the Indian Council of Medical Research (ICMR) for the encouragement of coLLaborative research and innovation.

• Announced a mission to eliminate sickle cell anaemia by 2047, entailing universal screening of 7 Crs people, aged between 0-40 years in affected tribal areas.

• In line with the objective of achieving universal health coverage, the Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) has been allocated INR 7,200 crore in FY24. This allocation is a 12% increase from the previous year, where INR 6,412 crore was allocated for the programme in FY 2022-23. The enhanced funding aims to support the sustained implementation and expansion of AB-PMJAY, thereby ensuring improved access to healthcare services for the beneficiaries of the scheme.

• An allocation of INR 33 crore has been made for the development of nursing services in the current fiscal year. This marks a substantiaL increase of 67% compared to the budget allocation of INR 20 crore in FY23. The augmented funding is especiaLLy intended to fortify and enhance the nursing sector in alignment with the establishment of 157 new nursing coLLeges across the country. The aim is to strengthen the nursing workforce and enhance the quaLity of nursing education and services.

• The National Tele Mental Health Programme has been allocated INR 134 crore with the objective of ensuring universal access to high-quality mental healthcare services. This allocation aims to support the implementation of 24x7 tele-counselling services, enabling individuals across the nation to avail mental health support remotely. The vision behind this initiative is to bridge the gap in mental healthcare accessibility and provide timeLy assistance to those in need, thereby promoting mentall well-being on a broader scale.

• Announced the plan to allow select facilities under the Indian Council of Medical Research (ICMR) to be used for research by medical college faculty members and private sector R&D teams, in order to encourage collaborative research and innovation.

• The allocation for Family Welfare Schemes witnessed a 6.7% spike, rising from INR 484 crore in FY22 to INR 517 crore in FY23.

Indias diagnostic sector

One of Indias fastest growing service categories is diagnostics. The sector is witnessing an increasing demand as early detection of diseases can help save Lives. The diagnostic segment bears high responsibility towards people and the rising number of chronic diseases and LifestyLe-reLated diseases, along with a high geriatric population of the country are leading to an increasing demand in this segment.

As of FY 2022, Indian diagnostic lab market registered a revenue of USD 14796.21 miLLion and it is further predicted to grow at a CAGR of 11.65% from 2023 to 2027, to reach USD 25667.21 million by 2027.3 Moreover, diagnostic industry in India has a growth projection of about 14%, reaching USD 20 billion by 2026 from USD 10 billion in 2021.

Diagnostic industry can be broadly bifurcated into two subsegments, pathology and radiology. PathoLogy which accounts for 57% of the diagnostic market in India, is a scientific process which involves removal of body fluids, organs and tissues, for the diagnosis of diseases through examination. Radiology is the process of diagnosis, which uses radiations such as X-ray, MRI, CT scan, ultrasonography and many more. The segment of radiology constitutes 43% of the market in the domestic diagnostic sector. 4

Rising demand for diagnostic chains and wellness testing packages

Although stand-alone centres and hospital-based centres make up 83% of the total market share, there is promising growth of national and regional diagnostic chains as patients demand high-quality services and are willing to pay for them. Moreover, with the technological advancements, diagnostic centres need best-in-class medical equipment and devices for conducting tests, which require higher amounts of investment. This is often difficult for the stand-alone centres.

Most of the leading diagnostic chains are offering wellness packages in their test catalogues, offering multiple related tests at a discounted rate. This helps identify any disease at an early stage before it becomes chronic.

Rising trend of AI integration in medical imaging

There is wider acceptance for point-of-care (POC) diagnostic tools that combine AI, data analytics and other smart features to provide quicker and more accurate diagnostic results. Improved accessibility to these tools also suggests that preventive screening is preferred. POC devices can prove to be the game changers for early detection of chronic disorders such as diabetes, heart diseases and cancer. One of the crucial points, is that the smart digital solutions often act as the first line of diagnostic services, particularly in rural areas, where there is a lack of adequate healthcare facilities.


The diagnostic market has a huge scope of becoming a profitable business with plethora of growth opportunities. With advancements in technology and increased demand for personalised treatment, there is a growing need for innovative diagnostic solutions that can accurately and efficiently detect diseases.

As the diagnostic market continues to evolve, companies that can adapt to changing trends and provide valuable solutions will be well-positioned to capitalise on these opportunities. Due to the increased reliance of medical experts and professionals on the diagnostics segment to validate, accurately diagnose the illnesses, and provide the necessary treatment protocols, as well as the shift in consumer psyche and preference who are now extra cautious about their health and well-being, have also helped the diagnostic industry solidify its position as a key component of the healthcare segment.


Intense Competition and Impact on Pricing:

With new competitors entering the diagnostic market, such as health tech companies, large conglomerates, and start-ups, there has been a significant level of disruption in both the B2C and B2B market segments. These competitors tried to increase their revenue share in the diagnostic industry by using price as a crucial differentiator.

Decline in Covid-19-related Tests:

After the third wave of the Covid-19 pandemic, diagnostic companies are experiencing a decline in demand for Covid-19 tests - one of the top-selling tests that drove up their revenues during the last two fiscal years.

Rising trend towards self-monitoring and diagnosis:

The development of self-monitoring tools, including glucometers, oximeters and other such medical devices, creates the possibility of lowering the frequency of regularly needed tests.

Venturing into new geographies:

India being a diverse country in terms of its demography, disease profile and healthcare system creates a challenge for the large diagnostic players to establish their footprint across the country. Local players have a strong market presence due to their familiarity with market dynamics.

Huge capital investment:

With ongoing advancements in technology, medical devices and analysers are prone to upgrade and change. To stay relevant in the diagnostic market, companies need to incur huge capital investments and high maintenance costs.

(Source: Industry-Getting-Ready-To-Overcome-Challenges-To-Outshine-In-The-Indian- Healthcare-Space/29-01-2022-419157/)


With a strategic regulation to provide standardised quality of service at affordable price for the majority of Indian citizens, the diagnostic market in India is expected to witness steady growth. This will create opportunities for local players and new businesses planning to enter the market. Additionally, greater focus on preventive healthcare and rising prevalence of chronic diseases will further drive the demand for diagnostic services in the country.

Company overview

Vijaya Diagnostic Centre, one of the largest integrated diagnostic chain in South India, has a legacy spanning over four decades. The Companys objective is to provide fast and transparent, pathology and radiology services to its patients at an affordable price range. The Company has a broad network, spread across 20 cities in India with over 121 centres. These centres are equipped with cutting-edge equipment and are operated by skilled technologists, radiologists, pathologists, microbiologists, and doctors. It has onboarded over 200 doctors in the field of radiology, pathology and microbiology. With more than 3.2 million footfalls, Vijaya Diagnostic Centre has conducted 10.1 million+ tests during the FY 2022-23.

In addition to walk-in testing, the Company has always placed a strong emphasis on point-of-contact testing and home collection services. It has also expanded its test catalogue to include speciality tests, disease-specific profiles, and personalised packages. By meeting their needs, the Company also aims to expand its corporate clientele. The development of new wellness and chronic disease management initiatives is yet another focus area of the Company.

Performance review

Operational Highlights

• The Companys B2C revenue accounts for 95% of the total revenue.

• The Company has recorded a footfall of 3.2 million.

• The Company has conducted a total of 10.1 million tests.

Financial Performance

(Rs. in Lakhs)



2022-23 2021-22 2022-23 2021-22
Revenue from Operations 44,957.93 45,087.93 45,922.27 46,236.99
Earnings Before Depreciation, Interest, Tax and Exceptional Items 17,897.01 19,985.58 18,202.73 20,369.01
Finance Cost 2,087.61 1,625.56 2,094.79 1,645.03
Depreciation 6,139.43 5,213.65 6,172.01 5,268.61
Profit before Tax 11,127.30 14,438.08 11,351.00 14,738.43
Provision for Tax Profit after Tax 2,803.91









(Rs. in Lakhs)



2022-23 2021-22 2022-23 2021-22
Other Comprehensive Income 19.39 19.10 20.16 20.66
Total Comprehensive Income for the Period 8,342.78 10,829.57 8,540.86 11,087.42
Basic EPS (H) 8.16 10.60 8.29 10.76
Diluted EPS (H) 8.12 10.54 8.26 10.69

Key Financial Ratios

Ratios FY 2022-23 FY 2021-22
Debtors Turnover (in times) 2.67 2.86
Inventory Turnover (in times) 18.62 20.66
Interest Coverage Ratio (in times) Nil Nil
Current Ratio (in times) 4.17 4.08
Debt Equity Ratio (in times) Nil Nil
Operating Profit Margin (in %) 40 44
Net Profit Margin (in %) 19 24
Return on Net Worth (in %) 15.54 23.43


1. Return on Net Worth - There is a decrease in return on net worth in the current year on account of decrease in profit for the year.

Human Resource

Personnel at Vijaya Diagnostic Centre are exposed to advanced and high-end laboratory and diagnostic centres which enable them to work with cutting-edge technology. To allract and retain the employees the Company also grants ESOP as rewards which help foster a high-performance culture. The Company also has a grievance cell to understand employee concerns and to ensure fair and transparent communication. The Company offers regular training and development programmes to its people, led by top level and expert consultant for enhancing their skills. As of March 31, 2023, the total no. of staff are over 2400.

Risks and concerns

Pricing Risk-The Company is subject to government restrictions in terms of price ceilings on the services provided. This may adversely impact its revenue and profitability.

Mitigation-The Company broadly focuses on providing the best quality diagnostic services by leveraging high-end technology to become the first choice of patients.

Penetration Risk- Due to several government regulations and huge concentration of local diagnostic centres across various regions, it is challenging to penetrate in new geographies.

Mitigation-The Company is striving hard to foray into areas which are underserved through a well-integrated hub-and-spoke model, especially in Eastern India.

Technological Risk - The Company operates in a highly technology-driven market. Technological advancements in the field may result in a decline in demand for the Companys products and services.

Mitigation - To mitigate this risk, the Company focuses on offering tests, which are more accurate and economical, as compared to those available in the market. Additionally, the Company leverages its thorough analysis to help the patient and the doctor comprehend the criteria in a detailed and more transparent manner.

Regulatory Risk- There is a constant threat of changing market scenario and government policies related to the countrys economy as well as the healthcare sector in particular.

Mitigation- To stay abreast of the recent developments or changes in regulations, the Company monitors government policies regularly and takes necessary actions whenever required.

Competition Risk- With healthcare industry being among the fastest growing sectors in India, and a low barrier for entry, many large to medium level players are entering the market, creating intense competition.

Mitigation-The Company has established a strong footprint across South India along with building a robust brand recall. It has become a go-to brand for a majority of its clients by providing advanced radiological and pathological services, gaining an edge over its competitors.

Human resource risk- With consistent technological advancements, the personnel need to constantly update their skills and knowledge to keep up with the changing demands of the job market. This poses a risk as the Company needs to ensure that its workforce remains competent and adaptable to new technologies.

Mitigation-The Company grants ESOP to its employees along with providing regular training and development programme which helps them gather requisite skills to excel in their respective roles.


Despite the macroeconomic headwinds, the Company is hopeful about realising its strategic objectives for the year. The management remains optimistic about its growth potential and is closely monitoring market trends and making adjustments to its operations to mitigate any potential risks. The Companys informed strategy of digital transformation, market research backed approach for new market expansion and concentration on enhancement of its existing network of centres will ensure sustainable year-on-year growth. It plans on adopting the highest standards of quality and to deliver a holistic customer experience while employing the advanced technology.

Through optimum workforce management, strategic moves to address intense-competition and foraying into underserved locations in Tier II and Tier III cities, the Company is making sincere efforts to achieve robust growth.

Internal control systems and their adequacy

The Company has an efficient internal control system in place. The policies and procedures, covering financial and operating functions, are also documented. The system controls are designed to provide reasonable assurance for maintaining proper accounting records. This reinforces reliability of financial reporting, monitoring of operations, protection of assets from unauthorized use or losses and compliance of regulations.

The scope and coverage of audits include:

• Reviewing and reporting of key process risks

• Adhering to operating guidelines and statutory compliances

• Recommending improvements for monitoring and enhancing efficiency of operations

• Ensuring reliability of financial and operational information

The Audit Committee periodically monitors and reviews the significant internal audit observations. It also reviews compliance with accounting standards, risk management and control systems.

Cautionary statement

Statements in this report on Management Discussion and Analysis, describing the Companys objectives, projections, estimates, expectations or predictions may be forwardlooking statements within the meaning of applicable laws and regulations. Such statements represent the intention of the Management and the efforts being put into place by them to achieve certain goals. These assertions are predicated on a number of assumptions and future activities. Since the Companys operations are impacted by several internal and external factors outside of its control, actual results could significantly differ from those stated or inferred. Any forwardlooking statement published here only speaks as of the date it was made and only reflects the Companys current intentions, beliefs, or assumptions. The Company disclaims any obligation to update or modify any forward-looking statements, whether as a result of new data, unexpected developments, or other factors. Readers are urged to use their best judgement when determining the risks connected to the Company.