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Fortis Healthcare Ltd.

BSE: 532843 Sector: Health care
NSE: FORTIS ISIN Code: INE061F01013
BSE 00:00 | 25 Oct 248.85 -7.25
(-2.83%)
OPEN

256.10

HIGH

256.10

LOW

248.10

NSE 00:00 | 25 Oct 248.90 -7.25
(-2.83%)
OPEN

253.55

HIGH

255.80

LOW

247.95

OPEN 256.10
PREVIOUS CLOSE 256.10
VOLUME 91568
52-Week high 304.00
52-Week low 123.30
P/E
Mkt Cap.(Rs cr) 18,787
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 256.10
CLOSE 256.10
VOLUME 91568
52-Week high 304.00
52-Week low 123.30
P/E
Mkt Cap.(Rs cr) 18,787
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Fortis Healthcare Ltd. (FORTIS) - Chairman Speech

Company chairman speech

Dear Shareholders

At the outset I would like to express my deepest gratitude to all our clinicianshealthcare and administrative members of the Fortis fraternity for their tireless effortsand unceasing commitment in treating patients infected by the novel coronavirus. Workingcollaboratively with the Central and State Governments Fortis ensured full compliancewith all institutional guidelines prioritising and maintaining patient safety asprotocols for management of patient care and hospital operations evolved continuouslythroughout the past year. In the last one year over 33000 COVID-19 patients weresuccessfully treated and discharged over 1.18 lakh patients were treated at the fluclinics/OPDs and approx 2.5 million COVID-19 molecular and serology tests were conductedby our partner SRL Diagnostics. At the peak of this pandemic the Company reserved 1600beds (40% of beds available) for COVID-19 patients. Currently 23 Fortis hospitals areclosely partnering with the Government in the vaccination drive across the country. Theremarkable leadership vision and foresight of our Medical Council (our governance bodyoverseeing clinical practices) has ensured that the best-in-class protocols are in placeleading to desired outcomes.

FY 20-21 has truly been a challenging year. Multiple preparation efforts at severallevels from March 2020 ensured that all our units across the country could effectivelyconfront the surge of infections. Our operations were impacted severely during thecountrywide lockdown. Postponement of non-COVID-19 services and elective surgeries forover three months resulted in reduced activity. The modest recovery of the overallbusiness from September onwards meant we saw revenues decline when compared with theprevious financial year. However the management's focus with full support from theBoard on productivity and cost efficiency measures improving cash generation andliquidity made considerable difference. We

used the crisis to good measure to improve clinical practices and governance protocolsensuring high-quality outcomes. All these helped us bring the business to near normallevels by end of FY21.

Keeping in mind the needs of both COVID-19 and non-COVID-19 patients there have beenvarious new initiatives in the past year. To mention a few Fortis Hospital Vadapalani a250-bedded (with 35 operational beds currently and the rest scheduled to open in FY-22)multispeciality hospital was opened in October 2020 as the second Fortis facility inChennai. An endoscopy unit was inaugurated at Fortis Hospital Bannerghatta RoadBengaluru along with Karnataka's first state-of-the-art advanced Biplane Cath Lab to

provide safer care for neurovascular disorders. The Fortis National Mental HealthProgramme launched Sukoon Health a dedicated in-patient psychiatric hospital under theDepartment of Mental Health and Behavioural Sciences. Fortis Anandapur Kolkata launchedthe city's only Dual Source Dual Energy Somatom Drive CT scanner making it a fast andclinically superior means of diagnosis for geriatric paediatric and trauma patients.Fortis Hospital Mulund Mumbai introduced Central Mumbai's first Tesla Advanced BiomatrixMRI to ramp up the Radiology offerings. Additionally 13 SRL laboratories for COVID-19RT-PCR testing were added over a span of 9 months bringing the total (across the country)to 15 and 498 collection centres were added to the network to improve reach and access.

On the digital front our telemedicine and video-based consults increased rapidlyacross the Fortis network amidst the pandemic touching a peak of 15% of total consults -one of the highest across the country. We successfully rolled out our in-house customisedHIS platform OneFortis enabling a seamless experience for patients employees vendorsand other stakeholders across the network. The MyFortis platform customer lifecyclemanagement will be fully integrated with other Fortis digital systems in the comingmonths. These and other initiatives around data analytics will help build an organisationthat is technologically future ready and able to meet the rising demands of 21st centurypatients clinicians and employees. SRL diagnostics also developed its technologicalinfrastructure to handle the surge in testing specifically with respect to homecollection. Technology such as AI tools data analytics and ChatBots were leveraged toimprove customer experience and

ensure the safety of those conducting the tests. In the last quarter there was amassive spurt in the number of people signing up on the SRL mobile app. Today roughly 3.3million patients have an SRL Diagnostics mobile app.

With regard to the open offer from IHH Berhard the matter is sub-judice due to aSupreme Court order but hearings have concluded. Orders have been reserved and we arehopeful of clarity once the summer recess is over. Further details are mentioned in theDirectors Report under the sub-heading 'Significant Matters during the year under review.'

The Company's Board of Directors had initiated additional procedures/enquiries ofcertain entities in the Group that were impacted by the matters earlier investigated by anexternal legal firm. This was done considering that the earlier investigation was subjectto the limitations of information available to the external legal firm and theirqualifications and disclaimers as described in their investigation report. The additionalprocedures/enquiries were conducted by Ernst & Young LLP and were satisfactorilyconcluded during the year.

We also welcomed the appointment of two new Additional Directors (non-executive) - MsShailaja Chandra former Secretary in the Health Ministry GOI writer and policy analystand civil servant having more than 40 years in public service and Mr Joerg Ayrle GroupCFO IHH Berhard as a nominee of IHH. The Board have subject to guidance by the SupremeCourt sought a change in the name and branding of the Company and its hospitalsubsidiaries to 'Parkway' an acclaimed brand of IHH Healthcare Berhad. Regulatoryclearances will be sought in due course. We are also considering name change for SRL andwe will advise you in due course.

The Board and the management re-prioritized some of the key strategic areas it hadearlier defined for the coming year. For the year 2021-22 our focus would be on revenuegrowth initiatives including building our franchise in the catchment areas engaging withkey corporate clients strengthening community connect and leveraging our digitalplatforms. We will strengthen key specialties such as cardiology neurology oncologynephrology and pulmonology by upgrading technology onboarding clinicians of repute andrenewing our efforts on Cardiology and Orthopedics. We will continue to invest inOncology Neuro Sciences Gastro Sciences and Renal Sciences to improve margins. At SRLfocus will be to continue investment in new-age technologies and innovative diagnosticssolutions which will empower

clinicians and enable them to collaborate on a real-time basis.

Whilst COVID-19 2.0 has brought in a huge surge of infections the new wave is beingdealt with effectively by our hospitals. The resoluteness demonstrated by our team ofdoctors nurses paramedics and administrative staff makes us confident of gaining patienttrust through continued focus on clinical excellence quality care and patient safety.

Thanks

Ravi Rajagopal

Chairman

Dear Shareholders

I am pleased to present your Company's performance for FY 2020-21. The year has beenunprecedented especially for the healthcare sector across the globe. The COVID-19pandemic has surpassed any healthcare crisis we have ever witnessed. While the significantloss of lives is very unfortunate we also had numerous recovered patients walking out ofour hospitals. The year tested our ability to deliver quality healthcare and compassionatecare under duress. The grit and never-give-up attitude of our clinicians and staff throughthe crisis-ridden year has not gone unnoticed by the community we serve and has resultedin an exponential increase in the trust we have earned which is perhaps our greatestgain.

In tandem with the Government authorities your Company took many steps to efficientlyhandle the crisis. Over 1600 beds were allocated across our network for COVID-19patients. Flu Clinics and Flu Kiosks were launched and 112000 Tele and Video Consultswere conducted which is one of the highest in the country. Home healthcare packages were

provided to patients through our healthcare facilities. We were able to discharge33724 COVID-19 patients post treatment whilst our Flu Clinics screened/treated 118836patients. SRL our diagnostics business did approx 2.5 million RT-PCR tests through itsnetwork of 15 RT-PCR labs across the country.

On the operations front our business was impacted significantly in the first half ofthe year with a drastic reduction in occupancy particularly in the first quarter of thefiscal. As the lockdown restrictions eased in July 2020 we began to witness a gradualrecovery in business through COVID-19 treatments and resumption of non-COVID-19 electivesurgeries and services. Our occupancy improved from 37% in Q1 to 64% in Q4 with theoverall occupancy for the year at 55% versus 68% the prior year. This resulted inconsolidated revenue from operations of ' 4030 Crores for FY21

with 11.2% operating margins as compared to ' 4632 Crores in FY20 and 14.3% operatingmargins.

Being aware of the challenging environment we had prudently initiated timely stepsearly in FY21 to ensure business sustainability. A slew of cost reduction measures wereinitiated with the support of employees with a focus to ensure liquidity and continuity ofoperations. During the course of the second half of the year as business recoverygathered momentum the Company re-initiated its growth and investment plans which arecurrently underway. These include an addition of 1300 beds over the next 3-4 years inselect facilities such as Shalimar Bagh Noida FMRI Mulund Mohali Anandapur and a fewothers. We inaugurated the much-awaited Fortis Hospital Vadapalani our second facilityin Chennai in October 2020 in the presence of the former Hon'ble

Chief Minister of Tamil Nadu. The grand 250-bedded multi-speciality hospital withstate-of-the-art medical equipment quaternary care capabilities and a superb clinicalteam has commenced full-fledged operations. With a steadfast focus on clinical excellencewe added new clinical offerings enabling us to further bridge the gap between healthcareneeds and services provided to our patients. Fortis Escorts New Delhi became one of thefirst centres in India to launch Laser Atherectomy to treat complex cardiac blockages.Fortis Memorial Research Institute Gurugram launched a dedicated Paediatric Solid TumourClinic to treat a variety of malignancies in children. Fortis Hospital Shalimar Bagh NewDelhi launched a Sports Injury Clinic. We would continue to assess all our hospitalassets across the network so as to optimally leverage our presence in select geographiesincluding evaluating underperforming assets investing in high potential facilities andfurther upscaling wellperforming facilities across the network.

I am pleased to also share that our diagnostics business SRL has weathered the yeargone by admirably well. While Q1 was severely impacted by the pandemic; beginning Q2 therecovery in the diagnostics business was sharper and faster than witnessed in hospitals.This was led by rising test volumes both for COVID-19 and non-COVID-19 tests. With a newleadership at the helm SRL's strategic imperatives of customer and channel focus patientserviceability and test offerings have further been fine-tuned to ensure a sustainable andstronger business momentum which has been aptly reflected in the healthy growth trajectorywitnessed through the year. Towards the year-end we announced and completed theacquisition of the 50% balance stake in our DDRC-SRL joint venture further consolidatingSRL's presence in Kerala and increasing its B2C component. This will help us to furthersupplement our channel strategy and enable us to leverage our size scale and testrepertoire in Kerala and other markets in South India.

During the year your Company also achieved certain key milestones to become adigital-first organisation. We were able to roll-out our in-house custom developedHospital Information System (HIS) platform - OneFortis across the network. All Fortishospitals are now using a single platform with uniform processes and data definitionsenabling a seamless experience for patients employees vendors and other stakeholdersacross the network. In addition we are also focusing on creating a unified platform forcustomer lifecycle management - MyFortis. The app will offer a one- stop shop solution forpatients to book appointments for consultations/diagnostics store and view medicalrecords conduct tele/video consults and organise medicine delivery among other features.This will be a fully integrated digital system. We also rolled out our data analyticsthrough a new Business Intelligence platform during the year which we will continue tobuild to further strengthen our operations.

Overall despite the constrained environment we were able to successfully manage ourliquidity position by extending cost rationalisation initiatives including voluntarysalary reductions lower administrative sales and marketing costs and undertaking onlynecessary capex allocation. In addition to this better working capital managementavailability of bank funding and a gradual improvement in business momentum enabled theCompany to successfully navigate the challenges in the past year.

Last year the Board gave approval for the change in the name and branding of theCompany and its subsidiaries to 'Parkway' an internationally acclaimed brand in the fieldof healthcare belonging to IHH Healthcare Berhad the current promoters of FortisHealthcare. The key considerations for the name change are - a market research conductedby the Company expiry of the current brand license agreements in April/May 2021 and mostimportantly the need to disassociate the company completely from its erstwhile promoters.

SRL Limited would no longer be using the brand 'SRL' and would seek to develop a newneutral brand name and identity unrelated to the IHH group for use in the diagnosticsbusiness. These changes are subject to guidance by the Hon'ble Supreme Court of India.Currently on the legal front while the open offer is sub- judice IHH has reiterated itscommitment to growing our hospital chain and remains our largest shareholder continuingto support our growth plans.

Our focus on improving efficiency and patient satisfaction has won us a number ofprestigious recognitions. Fortis Escorts Heart Institute Okhla Road New Delhi wasfeatured in Newsweek's Best Hospitals 2021 - Top Specialised hospitals list for theCardiology speciality. Fortis Memorial Research Institute Gurugram at Rank 23 was theonly Indian hospital to be listed in Newsweek's top 25 'World's Best Smart Hospitals2021.' In addition four Fortis hospitals were named among the best hospitals in India byNewsweek. Fortis Flt. Lt. Rajan Dhall Hospital Vasant Kunj New Delhi Fortis MemorialResearch Institute Gurugram Fortis Hospital Mulund Mumbai and Fortis Malar HospitalChennai were

ranked 13th 16th 22nd and 34th in the country respectively. The Department of Urologyat Fortis Hospitals Bengaluru was ranked 7th in the country and 3rd in South India bythe Times Health Survey - All India Critical Care Hospital Ranking Survey - 2021. FortisHospital Mohali won the National Award for Excellence in Energy Management for therecord sixth time.

In conclusion I would like to reiterate our focus on quality patient care innovationand continued pursuit of medical excellence. In this regard we will continue to buildupon our team of exceptionally committed clinicians nurses and para-medical staff todeliver world-class patient care services. We will also continue to provide a safeenvironment for patients and employees alike.

Thank you for your trust and confidence in us - we hope to remain worthy of it.

Dr. Ashutosh Raghuvanshi

Managing Director and Chief Executive Officer

.