INFORMATION MEMORANDUM MAX INDIA LIMITED. (Incorporated under the Companies Act, 2013 on January 1, 2015) (Formerly known as Taurus Ventures Limited)

Transcription

1 INFORMATION MEMORANDUM MAX INDIA LIMITED (Incorporated under the Companies Act, 2013 on January 1, 2015) (Formerly known as Taurus Ventures Limited) (Max India Limited was originally incorporated as Taurus Ventures Limited on January 1, 2015 and obtained a fresh certificate of incorporation subsequent to the change of its name on February 12, 2016 under the Scheme of Arrangement and the Companies Act, 2013) Registered Office: 419, Bhai Mohan Singh Nagar, Village Railmajra, Tehsil Balachaur, District Nawanshahr, Punjab , India CIN: U85100PB2015PLC Tel.: Fax: Website: Company Secretary and Compliance Officer: Mr. V. Krishnan vkrishnan@maxindia.com OUR PROMOTERS Please refer to Section IV of the Information Memorandum INFORMATION MEMORANDUM FOR LISTING OF 26,69, 83,999 EQUITY SHARES OF RS. 2/- EACH NO EQUITY SHARES ARE PROPOSED TO BE SOLD/OFFERED PURSUANT TO THIS INFORMATION MEMORANDUM GENERAL RISKS Investment in equity and equity-related securities involves a degree of risk and investors should not invest in the equity shares of Max India Limited unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this offering. For taking an investment decision, investors must rely on their own examination of Max India Limited, including the risks involved. The securities have not been recommended or approved by the Securities and Exchange Board of India ( SEBI ) nor does SEBI guarantee the accuracy or adequacy of this document. Specific attention of investors is invited to the statement of Risk factors under Section II of the Information Memorandum. ABSOLUTE RESPONSIBILITY OF MAX INDIA LIMITED Max India Limited having made all reasonable inquiries, accepts responsibility for, and confirms that this Information Memorandum contains all the information with regard to Max India Limited, which is material, that the information contained in this Information Memorandum is true and correct in all material aspects and is not misleading in any material respect, and that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which makes this Information Memorandum as a whole or any of such information or the expression of any such opinions or intentions misleading, in any material respect. 1

2 LISTING The equity shares of Max India Limited are proposed to be listed on the Bombay Stock Exchange Limited ( BSE ) and the National Stock Exchange of India Limited ( NSE ). Max India Limited has submitted this Information Memorandum to the BSE and to the NSE and the same has been made available on our website viz Mas Services Limited, REGISTRAR AND SHARE TRANSFER AGENT Address: T-34, 2nd Floor, Okhla Industrial Area, Phase - II, New Delhi Telephone: /82/83, Fax: info@masserv.com 2

3 TABLE OF CONTENTS SECTION I - GENERAL... 5 DEFINITIONS AND ABBREVIATIONS... 5 FORWARD LOOKING STATEMENTS... 8 CURRENCY OF PRESENTATION... 9 SECTION II RISK FACTORS INTERNAL RISK FACTORS EXTERNAL RISK FACTORS SECTION III INTRODUCTION SUMMARY OF INDUSTRY SUMMARY OF BUSINESS SUMMARY OF FINANCIAL INFORMATION COMPOSITE SCHEME OF ARRANGEMENT STATEMENT OF TAX BENEFITS GENERAL INFORMATION CAPITAL STRUCTURE OBJECTS AND RATIONALE OF THE SCHEME SECTION IV - ABOUT US INDUSTRY OVERVIEW BUSINESS OVERVIEW REGULATIONS AND POLICIES HISTORY OF OUR COMPANY AND CERTAIN CORPORATE MATTERS OUR MANAGEMENT PROMOTERS DETAILS OF GROUP COMPANIES DIVIDEND POLICY SECTION V FINANCIAL INFORMATION FINANCIAL INFORMATION OF THE COMPANY FINANCIAL INFORMATION OF GROUP COMPANIES MANAGEMENT DISCUSSION AND ANALYSIS

4 SECTION VI - LEGAL AND OTHER INFORMATION OUTSTANDING LITIGATIONS AND MATERIAL DEVELOPMENTS A. LITIGATIONS INVOLVING OUR COMPANY B. LITIGATIONS INVOLVING PROMOTERS OF OUR COMPANY: C. LITIGATIONS INVOLVING DIRECTORS OF THE COMPANY: D. GOVERNMENT APPROVALS OR LICENSING ARRANGEMENTS: SECTION VII - REGULATORY AND STATUTORY DISCLOSURES MAIN PROVISIONS OF THE ARTICLES OF ASSOCIATION OF THE COMPANY SECTION VIII OTHER INFORMATION MATERIAL CONTRACTS AND DOCUMENTS FOR INSPECTION DECLARATION

5 SECTION I - GENERAL DEFINITIONS AND ABBREVIATIONS Term Description 1956 Act Companies Act, 1956, as amended from time to time Act Companies Act, 2013, as amended from time to time. AGM Annual General Meeting. Antara Antara Senior Living Limited, having its registered office at Max House 1, Dr. Jha Marg, Okhla New Delhi Appointed Date April 1, Articles Articles of Association of the Company. B2B Business to business. B2C B2G BMDRC Board or Board of Directors BoPP BSE Bupa CAGR Chairman Company or Max India Business to consumer. Business to government Balaji Medical and Diagnostics Research Centre. Board of directors of the Company. Biaxially Oriented Polypropylene Bombay Stock Exchange Limited. Bupa Finance Plc through its subsidiary, Bupa Singapore Holdings Pte. Limited. Compound annual growth rate. Chairman of the Company. Max India Limited (CIN: U85100PB2015PLC039155), having its registered office at 419, Bhai Mohan Singh Nagar, Village Railmajra, Tehsil Balachaur, Dist - Nawanshahr, Punjab , India, formerly known as Taurus Ventures Limited. CRL Crosslay Remedies Limited (CIN: U24239DL2002PLC113719), having its registered office at A 14, Pushpanjali, Vikas Marg Extension New Delhi. DDA Delhi Development Authority. Demerged Undertaking The undertaking comprising of the activity of holding, making, and nurturing of investments in Health and Allied Activities, and the entire corporate management services, on a going concern basis as on the Appointed Date. DDF Devki Devi Foundation. Director(s) Director(s) of the Company. EBITDA Earnings before interest, taxes, depreciation and amortization. Effective Date January 15, FDI Foreign Direct Investment. FIPB Foreign Investment Promotion Board. FSF Four Seasons Foundation. FY Financial Year. GDP Gross Domestic Product. GMHRC Gujarmal Modi Hospital & Research Centre for Medical Sciences GNIDA Greated Noida Industrial Development Authority Health and Allied Activities The activity of making, holding and nurturing investments in health and allied activities represented by MHC, Max Bupa and Antara and their subsidiaries along with related employees, contracts, assets and liabilities, coupled with MFSL s corporate management services. 5

6 Income Tax Act Income Tax Act, 1961, as amended from time to time. Information Memorandum This Information Memorandum of Max India. IRDAI Insurance Regulatory and Development Authority of India. Insurance Act Insurance Act, 1938, as amended from time to time. IT Information Technology. IVF Invitro fertilisation LEED Leadership in Energy and Environmental Design. Life Healthcare Life Healthcare International (Proprietary) Limited. Listing Regulations SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time. MAMBS Max Institute of Minimal Access, Metabolic & Bariatric Surgery. Max Bupa Max Medical Max Skill First Max Ventures and Industries Limited Max Bupa Health Insurance Company Limited, (CIN:U66000DL2008PLC182918) having its registered office at Max House, 1 Dr. Jha Marg, Okhla, New Delhi. Max Medical Services Limited (CIN: U66000DL2008PLC182918), having its registered office at Max House, 1 Dr. Jha Marg, Okhla, New Delhi. Max Skill First Limited (CIN: U85199DL2003PLC119249), having its registered office at Max House, 1 Dr. Jha Marg, Okhla, New Delhi. Max Ventures and Industries Limited (CIN: U85100PB2015PLC039204), having its registered office at 419, Bhai Mohan Singh Nagar, Village Railmajra, Tehsil Balachaur, Dist -Nawanshahr, Punjab , India, formerly known as Capricorn Ventures Limited. Memorandum MFSL MHC MSF Demerged Undertaking MSF NABH NABL NBFC Memorandum of Association of the Company. Max Financial Services Limited (CIN: L24223PB1988PLC008031), having its registered office at Bhai Mohan Singh Nagar, Village Railmajra, Tehsil Balachaur, Dist -Nawanshahr, Punjab , India, formerly known as Max India Limited. Max Healthcare Institute Limited (CIN: U72200DL2001PLC111313), having its registered office at Max House, 1 Dr. Jha Marg, Okhla, New Delhi. The undertaking comprising of the activity of holding, making and nurturing of investment in the manufacturing activities currently represented by Speciality Films Activities, on a going concern basis as on the Appointed Date. Max Specialty Films Limited (CIN: U24100PB2012PLC036981), having its registered office at 419, Bhai Mohan Singh Nagar, Villa, Tehsil Balachaur, Dist -Nawanshahr, Punjab , India. National Accreditation Board for Hospitals and Healthcare Providers. National Accreditation Board of Laboratories. Non-Banking Finance Company. NSE OPD Promoter(s) National Stock Exchange of India Limited. Outpatient Department. Promoter(s) of the Company. Record Date January 28, SCHPL Scheme of Arrangement or Scheme Saket City Hospitals Private Limited (CIN: U85110DL1991PTC042646), having its registered office at Mandir Marg, Saket, New Delhi. Composite Scheme of Arrangement between MFSL, Max India Limited and MVIL and their respective shareholders and creditors, approved by the Hon ble High Court of Punjab and Haryana on December 14,

7 SEBI Securities and Exchange Board of India SEBI Act Securities and Exchange Board of India Act, 1992 SEBI Circular SEBI circular dated February 4, 2013, read with circular dated May 21, SEBI Takeover Regulations SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 2011 Speciality Films Activities The activity of making, holding and nurturing investment by MFSL in the manufacturing activities currently represented by its investment in MSF along with related employees, contracts, assets and liabilities. Stock Exchanges or Exchanges USD Collectively, the BSE and the NSE. United States Dollars UTI Act Unit Trust of India Act, UTI Unit Trust of India. 7

8 FORWARD LOOKING STATEMENTS This Information Memorandum includes statements which contain words or phrases such as will, would, aim, aimed, will likely result, is likely, are likely, believe, expect, expected to, will continue, will achieve, anticipate, estimate, estimating, intend, plan, contemplate, seek to, seeking to, trying to, target, propose to, future, objective, goal, project, should, can, could, may, will pursue, and similar expressions or variations of such expressions, that are forward-looking statements. Our forward-looking statements contain information regarding, among other things, our financial condition, future plans and business strategy. We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that these expectations and projections are reasonable, such forward-looking statements are inherently subject to risks, uncertainties and assumptions, including, among other things: General political, social and economic conditions in India and other countries; Our ability to successfully implement our strategy, our growth and expansion plans and technological changes; Strikes or work stoppages by our employees or contractual employees; Increasing competition in, and the conditions of, the industry; Failure to undertake projects on commercially favorable terms; Changes in government policies, including introduction of or adverse changes in tariff or non-tariff barriers, foreign direct investment policies, affecting the retail industry generally in India; Accidents and natural disasters; and Other factors beyond our control. We undertake no obligation to publicly update or revise any forward- looking statements, whether as a result of new information, future events or otherwise. In light of the foregoing, and the risks, uncertainties and assumptions discussed in Risk Factors and elsewhere in this Information Memorandum, any forward- looking statement discussed in this Information Memorandum may change or may not occur, and our actual results could differ materially from those anticipated in such forward-looking statements. 8

9 CURRENCY OF PRESENTATION In this Information Memorandum all references to Rupees and Rs. and INR are to Indian Rupees, the legal currency of the Republic of India. Certain Conventions; Use of Market Data Unless stated otherwise, the financial data in this Information Memorandum is derived from our financial statements. One fiscal year commences on April 1 and ends on March 31 of each year, so all references to a particular fiscal year are to the 12 month period ended March 31 of that year. In terms of Section 2(41) of the 2013 Act, for companies which have been incorporated on or after January 1 of a year, the financial year will be the period ending on March 31 of the following year, in respect whereof the financial statement of the company or body corporate is made up. Therefore, the first financial year of Max India Limited shall be from January 1, 2015 to March 31, In this Information Memorandum, any discrepancies in any table between the total and the sums of the amounts listed are due to rounding. For additional definitions, please see the section titled Definitions and Abbreviations of this Information Memorandum. Unless stated otherwise, the industry data which is being used throughout this Information Memorandum has been obtained from the published data and industry publications. The information included in this Information Memorandum is based on their respective annual reports and information made available by the respective companies. 9

10 SECTION II RISK FACTORS RISK FACTORS The risks described below and any additional risks and uncertainties not presently known to our Company or that are currently deemed immaterial could adversely affect our Company s business, financial condition, results of operations and prospects and the trading price of our equity shares could decline. Unless specified or quantified in the relevant risk factors below, we are not in a position to quantify the financial or other implication of any of the risks described in this section. The numbering of the risk factors has been done to facilitate ease of reading and reference and does not in any manner indicate the importance of one risk over another. I. INTERNAL RISK FACTORS (A) Risks Relating to our Company s Business 1. Our agreements with our joint venture partner place some restrictions on us in relation to our equity holdings in MHC which may affect us adversely. We operate our healthcare business as a joint venture between ourselves and our joint venture partner, Life Healthcare. We have entered into a joint venture agreement dated August 31, 2014 (the MHC JVA ) with Life Healthcare, pursuant to which we and Life Healthcare each hold 46.28% shareholding in MHC 1. The MHC JVA places certain restrictions on our rights in MHC, including restrictions relating to transfer of shares, rights of first refusal, change in control events, reserved board matters, non-compete and non-solicitation of employees, which could adversely affect our economic and other interests. Further, in terms of the MHC JVA, in the event of an event of default in relation to the Company, Life Healthcare may require the Company to purchase its entire shareholding in MHC at a premium over the market value. Such restrictions in our current joint venture agreement, and any restrictions of a similar or more onerous nature in any new or amended agreements into which we may enter into in the future, may limit our ability to achieve our business objectives, as well as limiting our ability to realise value from our shareholding, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects. 2. Our agreements with our joint venture partner place some restrictions on us in relation to our equity holdings in Max Bupa which may affect us adversely. We operate our health insurance business as a joint venture between ourselves and our joint venture partner Bupa. We have entered into a joint venture agreement dated April 29, 2016 (the Max Bupa JVA ) with Bupa. In terms of the Max Bupa JVA, both Max India and Bupa have agreed that Bupa would increase its shareholding in Max Bupa from the current level of 26% to 49%. The Max Bupa JVA places certain restrictions on our rights in Max Bupa, including restrictions relating to transfer of shares, rights of first refusal, tag along rights, reserved board matters, non-compete and non-solicitation of employees, which could adversely affect our economic and other interests. Further, in terms of the Max Bupa JVA, in the case of an event of default in relation to the Company, Bupa may require (a) the Company to sell its entire shareholding in Max Bupa to Bupa at a discount price of the market value; or (b) the Company to purchase Bupa s entire shareholding in Max Bupa at a premium over the market value. Such restrictions in our current joint venture agreement, and any restrictions of a similar or more onerous nature in any new or amended agreements into which we may enter into in future, may limit our ability to achieve our business objectives, as well as limiting our ability to realise value from our shareholding, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects. Pursuant to the terms of Max Bupa JVA, we have provided certain representations, warranties and indemnities to Bupa and may be required to pay damages to the extent that any such representations, warranties or indemnities 1 The Rights Issue Committee of MHC, at its meeting held on May 11, 2016, has approved the letter of offer and terms and conditions in relation to the proposed rights issue of the equity shares of MHC. The rights issue has been opened from May 16 to May 30,

11 are, or become, inaccurate. We may become involved in claims, disputes or litigation concerning such representations, warranties and indemnities and may be required to make payments as a result of such claims, disputes or litigation. In the event that the shareholder or regulatory approvals are not received or the conditions precedent are not met, or in the event that the Max Bupa JVA is terminated for any reason in accordance with its terms, we may not receive the proceeds from this transaction, and may be required to pay the reimbursement fee or damages to Bupa. Further, in terms of the Max Bupa JVA, in the case of an event of default in relation to the Company, Bupa may require (a) the Company to sell its entire shareholding in Max Bupa to Bupa at a discounted price of the market value; or (b) the Company to purchase Bupa s entire shareholding in Max Bupa at a premium over the market value. Any such event may materially and adversely affect our business, financial condition, cash flows and prospects. 3. We may not be successful in implementing our growth strategies or penetrating new markets. One of our principal business strategies is to rapidly expand our various business segments and to offer new products and services in these businesses. This strategy exposes us to a number of risks and challenges including, among others, the following: rapid growth will require greater marketing and compliance costs than we have incurred in the past; our growth plans may not develop and materialize as rapidly as we anticipate and there can be no assurances that new product/ service lines or businesses will become profitable; we may fail to identify appropriate opportunities and offer attractive new products/services in a timely fashion, putting our businesses at a disadvantage as compared to our competitors; each of our businesses will need to hire or retain skilled personnel who are able to supervise and conduct the relevant new business activities, adding to our businesses cost base; and competitors in the different business segments that we operate in may have more experience and resources than us which may affect our ability to compete. In addition, our growth strategy in the future may involve strategic acquisitions and reconstructions, partnerships, joint ventures and exploration of mutual interests with other parties. These acquisitions and investments may not necessarily contribute to business growth and our profitability or may be unsuccessful. Our acquisitions may require us to assume high levels of debt and contingent liabilities. In addition, we could experience difficulty in assimilating personnel, integrating operations and cultures and may not realize the anticipated synergies or efficiencies from such transactions. Further, we may not be able to fund the growth requirements of our businesses. These difficulties could disrupt our ongoing business, distract our management and employees and increase our expenses. 4. Our Company relies substantially on its subsidiaries and joint ventures to generate earnings, and any decline in the earnings of the subsidiaries/ joint ventures or their ability to pay dividends to the Company could materially and adversely affect the Company s earnings and cash flows. Currently, a significant portion of operations is conducted through the subsidiaries/ joint ventures. A substantial portion of our Company s assets are held by, and a substantial part of its earnings and cash flows are attributable to, the subsidiaries/ joint ventures. If earnings from the subsidiaries/ joint ventures were to decline, our Company s earnings and cash flow would be materially and adversely affected. We cannot assure you that the subsidiaries/ joint ventures will generate sufficient earnings and cash flows to pay dividends or otherwise distribute sufficient funds to enable the Company to meet its obligations, pay interest and expenses or declare dividends. 5. We may decide to retain all of our earnings to finance the development and expansion of our business and, therefore, may not declare dividends on our equity shares. Whether we will pay dividends in the future and the amount of any such dividends, if declared, will depend on a number of factors, including our future earnings, financial condition, cash flows, working capital requirements, capital expenditures and other factors considered relevant by our Board and shareholders. We may decide to retain all of our earnings to finance the development and expansion of our business and, therefore, may not declare dividends on our equity shares. Our ability to pay dividends may also be restricted under certain financing arrangements that we have and may enter into. There can be no assurance that we will, or have the ability to, 11

12 declare and pay any dividends on the equity shares at any point in the future. Further, we may not be able to fund the growth requirements of our businesses. 6. Investments in liquid funds, mutual funds and debt securities. We have undertaken, and in the future may undertake further investments in various liquid funds, mutual funds and debt securities. Such investments subject us to risks associated with the companies in which such funds are further invested and we can provide no assurances that any such investments will be successful or meet our expectations. If they do not, we may suffer losses, dilute value to shareholders or may not be able to take advantage of appropriate investment opportunities. 7. Certain subsidiaries/ joint ventures are involved in various legal and other proceedings in India and may face certain liabilities as a result. We and our subsidiaries and joint ventures are involved in legal proceedings and claims in India in relation to certain civil and company law matters, consumer disputes and tax matters. These legal proceedings are pending at different levels of adjudication before various courts, tribunals and other competent authorities. We cannot assure you that these legal proceedings will be decided in favour of us or our subsidiaries/joint ventures. Any adverse decision may have a significant effect on our reputation, business and results of operations of our subsidiaries/joint ventures. For more information regarding these legal proceedings, please refer to Section VI Legal and Other Information and Material Developments in this Information Memorandum. 8. We own certain intellectual property rights and any failure to enforce our rights could have an adverse effect on our business prospects. We and our subsidiaries/joint ventures own certain trademarks and copyrights relating to our businesses. Ours and our subsidiaries /joint ventures ability to enforce our trademarks and other intellectual property rights is subject to general litigation risks. If we or our subsidiaries/joint ventures are not successful in enforcing some or all of our intellectual property rights for any reason, the affected business may experience a material adverse effect on its competitive position and its business. In our various businesses we may also rely, in part, on mutual trust for protection of intellectual property, trade secrets and confidential information. While each of our businesses takes precautions to protect their intellectual property related rights and confidential information against breach of trust by their employees, consultants, customers and suppliers, it is possible that unauthorized disclosure of confidential information may occur. If these events were to happen, it would negatively affect our business operations and profitability. 9. Some of the trademarks we use in our business are pending registration. We use the trademark MAX and its associated logos for our businesses. The trademark MAX is owned by us and, in terms of the Scheme of Arrangement, we are required to grant the right to use the MAX trademarks to MFSL and MVIL royalty free and by way of perpetual license, on such terms and conditions as may be mutually agreed between such parties. The MAX trademark is also licensed and/or to be licensed by us to certain other companies/entities, and therefore there is there is a risk of damage to the reputation of such trademark on account of any adverse acts done by any of such companies/entities. Further, some of these MAX trademarks are pending registration under various classes of the Trademark Rules, 2002, at different stages with the trademark authorities. We cannot assure you when these trademarks will be registered with the trademark authorities. Our ability to enforce the MAX trademarks is subject to general litigation risks. If we are not successful in enforcing some or all of the MAX trademarks for any reason, or, if any of the licensees breach the license agreement for any reason, our business may experience a material adverse effect on its competitive position. Furthermore, while we believe and it is our effort that our products and services do not infringe upon the intellectual property rights of other parties, we cannot assure you that such infringement claims, leading to a material adverse impact upon us in the form of extended litigation, financial outflows and negative publicity, will not be asserted against us. 12

13 10. Any future equity offerings, the exercise of existing stock options or the issue of additional stock options under an employee stock option plan, may lead to dilution of your shareholding in our company or affect the market price of our equity shares. As an investor in our equity shares, you may experience dilution in your shareholding to the extent that we make future equity offerings or issue stock options under any employee stock option scheme. As a result, the percentage of shareholding held by you may be subsequently diluted in the event and to the extent that future offerings of equity shares are made by us and additional options are issued or options are converted into equity shares in terms of our employee stock option scheme. 11. We may not be successful in implementing our business strategies. The success of our business will depend greatly on our ability to implement our business strategies effectively. For further details, please refer to the section titled About Us in Section IV in this Information Memorandum. Even if we have successfully executed our business strategies in the past, there can be no assurance that we will continue to execute our strategies on time and within the estimated budget, or that we will meet the expectations of our customers and clients. We expect our strategies to place significant demands on our management and other resources and require us to continue developing and improving our financial, operation and other internal controls. Our inability to manage our business strategies could have an adverse effect on our business, financial condition and profitability. 12. Our consolidated indebtedness and the conditions and restrictions imposed by our financing and other agreements could adversely affect our ability to conduct our business and operations. As of December 31, 2015, the company has no indebtedness, other than a corporate guarantee for Rs. 1,229 million issued in favour of Antara. However, as of December 31, 2015, MHC s network of hospitals have consolidated debt of Rs. 10,709.9 million and Antara has a debt of Rs 1,229 million. In addition, we may incur substantial additional indebtedness in the future. Our indebtedness could have several important consequences, including but not limited to the following: We may be required to dedicate a portion of our cash flows towards repayment of our existing debt, which will reduce the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate requirements and our growth plans; Our ability to obtain additional financing in the future may be impaired due to a probable high debt to equity ratio; Fluctuations in market interest rates may affect the cost of our borrowings, and hence cash outflows towards debt service since a portion of our consolidated indebtedness is payable at variable rates; There could be a material adverse effect on our business, financial condition, results of operations and prospects if we are unable to service our indebtedness or otherwise comply with financial covenants of such indebtedness; and We may be more vulnerable to economic downturns, may be limited in our ability to withstand competitive pressures and may have reduced flexibility in responding to changing business, regulatory and economic conditions. Some of the financing and other agreements also stipulate that, except with shareholder and third party consents, including lender consents, we are restricted from carrying out certain activities and entering into certain transactions, which could have significant consequences on the business and operations of our subsidiaries and joint ventures. Specifically, we require, and may be unable to obtain, third party consents to incur additional debt, increase or modify our capital expenditure plans, undertake any expansion, pay dividends, or merge with or acquire other companies, whether or not there is any failure by us to comply with the terms of such agreements. In addition, under certain of these agreements, in the event of default, our lenders have the right to appoint a director on our Board. There can be no assurance that we will receive any required consents on time or at all. If we fail to obtain such consents, it may adversely affect our ability to conduct our business and operations and implement our business plans. 13

14 13. Our promoters hold a substantial stake in the Company and they may take actions that are in conflict with the interests of our other shareholders. Our Promoters hold affirmative votes for certain specific decisions relating to the Company. The interests of our Promoters may be different from the interests of our other investors and you may not agree with the actions the Promoters may take on certain matters. 14. We have entered into an agreement to divest our stake in clinical research, which contains certain indemnities and non-compete obligations. Pursuant to an agreement dated April 20, 2015, the Company, has divested its entire shareholding in Max Neeman Medical International Limited to JSS Medical Research Inc. Under the aforesaid agreement, we have undertaken various indemnification obligations which we believe are customary in transactions of this nature. Although the agreement also provides for a specific liability period within which such indemnity may be claimed against us, should we become liable for any material payments under these indemnification obligations, it could have an adverse effect on our financial condition and results of operations. 15. Our Promoters, including our Founder and Chairman Emeritus, are involved in a number of businesses, in their personal capacities, which are independent of the Company and we may not be aware of events or circumstances related to the Promoters that could have a negative impact on our businesses. Our Promoters, including our founder and chairman emeritus, are involved in various other businesses which are independent of the Company and its subsidiaries or joint ventures. We are not privy to any more information in relation to these independent business interests and we have not independently carried out any due diligence exercise in relation to these interests. To the extent that there is negative publicity or events regarding any Promoter in their personal capacity, or on any of the independent activities and/or businesses conducted by them, we can give no assurance that such negative publicity or events will not have an adverse effect on our businesses, prospects or on the market price of our equity shares. 16. We are highly dependent on our senior management team, including the senior management teams in each of our operating subsidiaries/joint ventures and business segments. We are highly dependent on the members of our senior management teams in each of the businesses we operate to manage current operations and meet future business opportunities and challenges. We believe we have built a strong team of senior and talented professionals to oversee the operations and growth of our various businesses. We have a founder and chairman emeritus, chairman and managing director, and many other senior management personnel across our varied business segments all of whom have significant experience in each of the businesses they operate. Our success is substantially dependent on the expertise and services of our management teams. We maintain directors and officers liability insurance. Since our businesses are characterized by intense competition, we cannot assure you that we will be able to retain our skilled senior level personnel or continue to attract new senior-level employees in the future. The loss of the services of any of these personnel could have an adverse effect on our business, financial condition and results of operations. Further, the rapid growth across our various businesses may be contingent upon our ability to recruit and retain highly skilled personnel, and on our ability to integrate new personnel into our organization. We face significant competition in recruiting and retaining skilled personnel for our diverse businesses. While we consider our employee relations to be good, there can be no assurance that we will not face future disruptions to our operations due to disputes or other problems with our employees, which may adversely affect our business and results of operations. 17. Any future equity offerings by our subsidiaries/ joint ventures, either pursuant to existing employee stock option plans of such subsidiaries/joint ventures or otherwise, may lead to the dilution of the Company s shareholding in these subsidiaries/joint ventures. MHC has adopted certain employee stock option plans, particulars of which are provided in Section III Introduction included elsewhere in this Information Memorandum. Any issue of shares by MHC, pursuant to such stock option schemes adopted by it, and any future equity offerings by any of our subsidiaries/ joint ventures, including by MHC, may result in a dilution of the Company s shareholding in such subsidiaries/ joint ventures. 18. There are a number of legal proceedings against our directors, our promoters and our group companies. Our Directors, Promoters and group companies are parties to certain legal proceedings initiated by or against such parties. These proceedings are pending at different levels of adjudication before various courts, tribunals, enquiry 14

15 officers, and appellate tribunals. For more information regarding legal proceedings against the Directors, Promoters and group companies, see Outstanding Litigation and Material Developments in Section VI of this Information Memorandum. (B) (i) Risks Relating to our Healthcare Business Joint-venture risk 19. There could be different opinions with our joint venture partner on certain matters relating to the operations of MHC. We operate our healthcare business as a joint venture between ourselves and our joint venture partner, Life Healthcare. Certain decisions relating to the operations of MHC including capital expenditure, acquisition of assets, business plans and operating budgets, increase in employee and management compensations, declaration of dividends, diversification of business and expansion into new geographies, restructuring / mergers and acquisitions, change in management and issue of equity capital amongst others require the consent of both the partners, as mandated under the MHC JVA. We may not agree with Life Healthcare on some or all of these matters which could lead to conflicts with Life Healthcare, delays in MHC s decision making, lost opportunities and decisions that may not be in best interests of Max India and MHC and may affect us and MHC adversely. A joint venture involves special risks where the joint venture partner may have economic or business interests or goals inconsistent with or different from those of Max India and MHC. Life Healthcare, our joint venture partner may also take actions contrary to our instructions or requests or in direct opposition of our or MHC s policies or obligations. Disputes could arise between us and Life Healthcare that could result in significant losses to MHC as well as to us. There can be no assurance that our best commercial interests and business philosophy will be consistent with those of Life Healthcare or that they will be willing to fulfil their obligations under the MHC JVA, either of which could have a material adverse effect on our business, operations and prospects 20. We have entered into an agreement in relation to an investment in MHC, which requires MHC to provide the investor with an exit opportunity. MHC has entered into an agreement dated July 13, 2007 with Max India and International Finance Corporation ( IFC ), which was subsequently amended by way of the amendment agreement dated September 30, 2013 to include Life Healthcare (collectively, IFC Investment Agreement ). In terms of the IFC Investment Agreement, MHC is required to provide an exit as acceptable to IFC on or prior to the time period agreed between the parties for such exit. In the event that MHC is unable to do so, it may be required by IFC to buy-back all the equity shares of MHC held by IFC. In the event that the MHC is required to undertake such-buy back, it could have a material adverse effect on MHC s business, prospects, financial condition and results of operations. (ii) Litigation risk 21. There are outstanding litigations against MHC and its subsidiaries/joint ventures. The outcome of such proceedings may materially affect our Company's business, results of operations, financial condition, reputation and future prospects. MHC and its subsidiaries/joint ventures may become subject to additional litigation in the future which may adversely affect our reputation and competitive position, as well as our liquidity and financial position. There are certain legal proceedings which are pending at different level of adjudication in various courts, tribunals, appellate authorities and enquiry officers pending against MHC, the subsidiaries/joint ventures. Our Company has adopted a materiality policy for the purpose of disclosure relating to litigation against MHC and its subsidiaries/joint ventures in the Information Memorandum, as set forth in the section titled "Outstanding Litigation and Material Developments" in Section VI (Legal and Other Information and Outstanding Litigations and Material Developments). From time to time, MHC may be subject to additional litigation alleging, among other things, medical negligence and product liability for medical devices used by it or pharmaceuticals it dispenses. Damages awarded under Indian law and by Indian courts may vary and tend to be unpredictable. MHC s insurance coverage also may be inadequate. If any indemnity is insufficient to cover the damages awarded, MHC may be required to make substantial payments or modify or restrict its operations, which could have an adverse impact on its business, financial results, reputations and prospects. 15

16 (iii) Operating Performance risk 22. MHC s business and operations are highly dependent on its doctors, nurses and other healthcare professionals as well as other key personnel, and the loss of, or inability to attract or retain, such persons could adversely affect our business and results of operations. MHC s performance and the execution of its growth strategy depends substantially on its ability to attract and retain leading doctors and other healthcare professionals, particularly nurses and paramedic personnel. MHC competes to retain such personnel with other healthcare providers, including those located outside India. The market for doctors, particularly in highly specialized areas, is extremely competitive. The factors that are typically considered by doctors in determining their place of work include the level of compensation, the reputation of the hospital and its owner, the quality of the facilities, research opportunities and community relations. MHC may or may not compare favourably with other healthcare providers on these factors. Many of these healthcare professionals are well-known personalities in their fields and operates in regions with large patient s base and referral networks, and it may be difficult to negotiate favourable terms and arrangements with them. MHC s agreements with its doctors typically include mutual termination provisions with prior notice of one to 6 months, or in some cases on the payment of compensation in lieu thereof to or from the doctor. MHC s performance also depends on its ability to identify, attract and retain other healthcare professionals, including nurses, to support the multi-specialty and super-specialty practices at its hospitals. In particular, the worldwide nursing shortage may make it difficult for it to attract and retain nurses who may choose to pursue similar opportunities abroad and may also cause domestic salaries and wages for nurses to rise. If MHC is unable to attract or retain doctors or other medical personnel as required, it may not be able to execute its growth strategy, maintain the quality of its services and could be forced to admit fewer patients to its existing hospitals. MHC may incur increased costs to retain and recruit medical personnel, and such costs may further increase in the future due to increased competition and shortage of trained and skilled healthcare personnel. 23. MHC s contractual arrangements with some of its doctors may give rise to conflicts of interest and timeallocation constraints and adversely affect its operations. MHC s contracts and arrangements with some of it s doctors, who provide services on a part-time basis, also permits them to maintain their own private practices as well as positions in a limited number of hospitals and clinical setups. Certain number of MHC s most senior doctors may also maintain positions at local clinics or have affiliations with teaching hospitals. These arrangements may give rise to conflicts of interest, including with regard to how these doctors allocate their time and other resources between our hospitals and other clinics or hospitals where they work and where such doctors refer their patients. Such conflicts may prevent MHC from providing a high quality of service at its hospitals and adversely affect the level of it s patient intake. 24. MHC s business and operations are subject to various risks associated with the properties on which its hospitals are located. Land title records in India do not always provide conclusive evidence of title, and title insurance is generally not available. Some of the properties for MHC s hospitals, which are leased properties, are in fragmented portions, and there may not be the same quality of title for all portions relevant to any particular hospital. Title uncertainties, including related litigation, may also cause delays in, and may otherwise curtail, the acquisition of other hospitals, the building of new hospitals and other expansion plans. 25. MHC s business and operations are subject to risks associated with its agreements with the societies that own some hospitals. MHC does not own 4 of the hospitals in its network, namely (i) the Max Super Specialty Hospital Saket (a unit of DDF) in South Delhi, (ii) Max Super Specialty Hospital Patparganj (a unit of BMDRC) in East Delhi, (iii) Max Multi Speciality Hospital Greater Noida (a unit of FSF) in Greater Noida and (iv) Max Smart Super Speciality Hospital (a unit of GMHRC) in South Delhi. These hospitals, which contribute to MHC s network revenues, receive medical services from MHC pursuant to service agreements with the concerned societies. These hospitals to whom MHC provides medical services pursuant to these services agreements may also involve significant investment. MHC may not achieve the operating levels that it expects from these projects and it may not be able to achieve its targeted return on investment or intended benefits from these projects. Further, there could be an 16

17 adverse impact on the hospitals owing to the operations of the respective societies, which may also affect the results of operations and financial condition of MHC. The hospitals located in the National Capital Region of Delhi, are operated by their respective societies, which are charitable institutions registered under the Societies Registration Act, 1860 and hold perpetual leases of land allotted at nominal rentals by the DDA or GNIDA for the specific purpose of constructing and developing healthcare facilities on such land. These leases may be revoked by the DDA or GNIDA in the event that the usage of such land is not in accordance with the terms of such leases and the society loses its status or in the event of any proposed transfer or assignment of these plots of land without the prior written consent of the DDA or GNIDA. Any termination of these leases will adversely affect MHC s ability to provide healthcare services at these hospitals, which will materially and adversely affect its results of operations and financial condition. Pursuant to the service and other agreements with these societies, MHC and its subsidiaries have advanced certain amounts to these societies to be used for the construction and operation of the hospital facilities. As on December 31, 2015, amounts aggregating to Rs million were outstanding against advances and aforesaid services by MHC and its subsidiary from the respective societies. MHC s financial condition and results of operations will be adversely affected in the event that these societies fail or neglect to repay such amounts. In accordance with the terms of the service agreements with these societies, MHC generally relies on the societies to pay for the infrastructure maintenance and upgrades of the hospitals. If the societies do not provide adequate resources for such improvements, the quality of care at these hospitals may decline, and the reputation of all the hospitals within MHC s network and its results of operations may be adversely affected. Further, we understand that there are certain legal proceedings involving, and statutory notices issued against, such societies, which are pending before various courts, tribunals and regulators, in relation to inter alia allegations of medical negligence, billing disputes, labour matters and tax matters. Some of the key litigation proceedings pending against, and statutory notices received by, such societies which have come to our notice are in relation to (i) alleged violation of the Competition Act, 2002 by Max Super Specialty Hospital, Patparganj (unit of BMDRC), Max Super Speciality Hospital, Saket (a unit of DDF) and Max Smart Super Speacility Hospital, Saket (a unit of GMHRC); (ii) notice issued by the Directorate of Health Services seeking recovery of a sum of Rs. 320 million from Max Super Speciality Hospital, Saket (a unit of DDF) in relation to alleged non-compliance with the obligations of the said hospital towards the economically weaker sections; and (iii) proceedings before before the Income Tax Appellate Tribunal, Delhi, which has held that the activities of DDF were for non-charitable purposes, which has resulted into the reopening of assessments of DDF for multiple years. Under the services agreements MHC has executed with each of the socities, MHC has provided certain indemnities against any losses that may be incurred by such societies on account of any act or omission by MHC in operating the hospitals. Therefore, in the event that MHC is required to pay any sums as indemnification to either of the socities, for any losses suffered by them under any litigations or such litigations impact the ability of these socities to discharge their obligations towards MHC, or such litigations result in modification/termination of these agreements, it may have an adverse impact on the profitability of these hospitals and, in-turn, their ability to pay MHC for the services rendered, thereby impacting MHC s profitability. 26. Leases for properties on which MHC s hospitals are located may not be renewed and it may lose possession of the leased properties and buildings thereon. Hospitals and medical centres operated by MHC in the areas of Panchsheel Park, Noida, Pitampura and Dehradun have been taken on lease. For further details of these premises, please refer to the Business Overview section, in Section IV- About Us of this Information Memorandum. These leases are for fixed durations and in most cases can be terminated by the lessor prior to their term in the event of failure by MHC to pay rent in accordance with the terms and conditions of the leases In the event the leases in respect of these premises are terminated or are not renewed upon their expiry, MHC will not be able to continue the operation of the hospitals and medical centres from these sites, as a result of which MHC would lose its investments, including the hospital and medical centre buildings located at these sites. 27. MHC operates in a fragmented industry and faces increasing competition from other hospitals and healthcare providers, which may have adverse effects on its competitive position and results of operations. MHC competes with other private hospitals, smaller clinics as well as hospitals owned or operated by non-profit and charitable organizations. It will also have to compete with any future healthcare facilities located in the regions in which it operates or will operate in the future. Some of these competitors may be more established and have 17

18 greater financial, personnel and other resources than MHC. In addition, even in situations where one of MHC s hospitals is the dominant provider of healthcare in a particular locality, patients may still favour other hospitals. New or existing competitors may price their services at a significant discount to MHC s or offer greater convenience or better services or amenities than it provides. An increase in the number of comparable healthcare facilities may exert pricing pressures on some or all of MHC s services. Some of MHC s competitors also have plans to expand their hospital networks, which may exert further pricing and recruiting pressure on it. If MHC is forced to reduce the price of its services or is unable to attract patients and doctors and other healthcare professionals to its hospitals, its business and results of operations may be adversely affected. 28. MHC s income is dependent on inpatient income and occupancy rates, which could decline due to a variety of factors. MHC s primary source of income is from inpatient treatments. Growth of in inpatient income and increasing or maintaining occupancy rates at its hospitals is highly dependent on brand recognition, wider acceptance in the communities in which it operates, its ability to attract and retain well-known and respected doctors, its ability to offer the most desired services in the communities in which it operates, its ability to develop super-speciality practices and its ability to compete effectively with other hospitals and clinics.growth of in inpatient income may also be impaired by the absence of a fully developed health insurance sector, lack of appropriate government programs and the rapidly growing but relatively small proportion of people in India with health insurance. In addition, inpatient income and occupancy rates at MHC s super-speciality hospitals are partly dependent on referrals from its general multi-speciality hospitals. MHC s inability to increase growth in inpatient treatments or occupancy rates may adversely affect its business and results of operations. 29. Max Super Specialty Hospital, Saket (a unit of DDF), Max Super Specialty Hospital, Patparganj (unit of BMDRC), Max Smart Super Speciality Hospital, Saket (a unit of GMHRC) and Max Super Specialty Hospital, Shalimar Bagh are required to provide free treatment to indigent persons. The Honourable High Court of Delhi passed an order on March 22, 2007 directing 26 hospitals in Delhi, including MHC s service agreement hospitals, Max Super Specialty Hospital, Saket (a unit of DDF) and Max Super Specialty Hospital, Patparganj (a unit of BMDRC) and Max Smart Super Speciality Hospital, Saket (a unit of GMHRC) to make available 10% in-patient beds and 25% of its out-patient volume for free treatment to indigent persons, by virtue of these hospitals being located on land allotted at concessional rates by the DDA. The High Court by way of such order has directed these hospitals, along with 24 other hospitals in Delhi, to provide free treatment to indigent persons. Later, Max Super Specialty Hospital, Shalimar Bagh too came under the purview of the same order in lieu of MHC being allotted land at concessional rate by DDA. Any increase in such obligation could negatively impact MHC s revenues and results of operations. 30. A significant portion of MHC revenues comes from a limited number of major customers. An adverse change in a customer relationship could harm business and financial results. MHC has entered into agreements to provide healthcare services to employees of a limited number of payers at negotiated or preferential rates. MHC also provides healthcare services to veterans of the armed forces under the government-run Ex-Servicemen Contributory Health Scheme (ECHS) and to employees of the Central Government and certain State Governments under their respective health schemes. These arrangements provide an important source of patients for MHC and, therefore, have a significant impact on its occupancy rates and revenues. The revenues from its major customers may fluctuate and any adverse development in its relationships with such customers could affect the business, financial condition, cash flows and results of operations. Any inability to renew such arrangements or inability to negotiate more such arrangements in the future, on terms favourable to MHC or at all, may also have an adverse impact on its business and financial results. 31. Information technology system failures could adversely affect MHC s business. MHC s IT systems are a critical part of its business and enable it to manage clinical systems, medical records and inventory. It also relies on its IT systems to practice telemedicine, where its doctors consult with each other and patients via conferencing arrangements. Any technical failures associated with its IT systems, including those caused by computer viruses and other unauthorized tampering, and may cause interruptions in MHC s ability to provide services to its patients. Corruption of certain information could also lead to delayed or inaccurate judgments or diagnosis in its treatment of patients and could result in damage to the welfare of its patients. In addition, MHC may be subject to liability as the result of any theft or misuse of personal information stored on its systems. 18

19 32. MHC may be subject to labor unrest, slowdowns and increased wage costs. As of December 31, 2015, MHC had approximately 11,075 personnel (including doctors and visiting consultants), in its network of hospitals. India has stringent labour legislations that protect the interests of workers, including legislation that sets forth detailed procedures for the establishment of unions, dispute resolution and employee removal, and legislation that imposes certain financial obligations on employers upon retrenchment. While MHC considers its current labour relations to be good, there can be no assurance that it will not experience future disruptions to its operations due to disputes or other problems with its work force, which may adversely affect its business and results of operations. MHC also contracts certain ancillary services such as food and beverage, housekeeping and security to independent agencies. As of December 31, 2015, approximately 5090 contract workers were working at its network of hospitals. The number of contract workers may vary from time to time based on the nature and extent of work contracted to independent contractors. All contract workers engaged at MHC s facilities are assured minimum wages that are fixed by the respective state governments. Any upward revision of wages required by such state governments to be paid to such contract labourers, or the unavailability of the required number of contract labourers, may adversely affect MHC s business and its results of operations. 33. MHC is bound to abide with Government regulations on imposing pricing controls on our services and products which may adversely affect its profitability. The Government of India has been active in imposing pricing controls primarily in administered drugs through its department, National Pharmaceutical Pricing Authority ( NPPA ). NPPA fixes the ceiling prices on essential drugs and formulations and has capped prices on many drugs or drug formulations till date. In December, 2015, the Pant Committee, constituted by the Department of Pharmaceuticals under Ministry of Chemicals and Fertilisers, has recommended to bring in necessary regulations to fix upper cap on trade margin on all drugs (whether scheduled or non-scheduled) to provide drugs at an affordable price to the consumer. There are similar discussions ongoing to bring additional items e.g., cardiac stents, knee implants etc., under pricing controls. These recommendations, if implemented, will impact the industry likewise and MHC may or may not be immune to the resulting impact on revenue and profits. 34. If MHC fails to achieve favourable pricing on medical equipment, drugs and consumables or is unable to pass on any cost increases to its payers, its profitability could be materially and adversely affected. MHCs profitability is susceptible to the cost of medical equipment, drugs and consumables. It is affected by its ability to achieve favourable pricing on its medical equipment, drugs and consumables from its vendors, including thorough negotiations for vendor rebates, as well as other vendor financing received with respect to its medical equipment in the normal course of business. Because these vendor negotiations are continuous and reflect the ongoing competitive environment, the variability in the timing and the amount of incremental vendor discounts and rebates can affect MHC s profitability. These vendor programmes may change periodically, potentially resulting in higher cost of medical equipment, drugs and consumables leading to adverse profitability trends, if MHC cannot adjust its prices to accommodate such increase in costs. Further, such increased costs may negatively impact MHC s ability to deliver quality care to its patients at competitive prices, or at all. If MHC is unable to adopt alternative means to deliver value to its patients, its revenue and profitability may be materially and adversely affected. MHC may be unable to anticipate and react to the increase in cost of medical equipment, drugs or consumables in the future, or may be unable to pass on these cost increases to its payers, which could materially and adversely affect its profitability. 35. Compliance with applicable safety, health, environmental and other governmental regulations is costly and may adversely affect MHC s competitive position and results of operations. MHC is subject to laws enacted by the Union legislature as well as by the State legislatures, governing, among other things, the following: Conduct of its operations; Additions to facilities and services; Adequacy of medical care; Discharge of pollutants in the air and water and handling and disposal of bio-medical, radioactive and other Hazardous waste; 19

20 Confidentiality, maintenance and security issues associated with health-related information and medical records; and Screening, stabilization and transfer of patients who have emergency medical conditions. Safety, health and environmental laws and regulations in India are stringent and it is possible that they will become significantly more stringent in the future. If MHC is held to be in violation of such regulatory requirements, including conditions in the permits required for its operations, by courts or governmental agencies, it may have to pay fines, modify or discontinue its operations, incur additional operating costs or make capital expenditures. Any public interest legal proceedings related to such safety, health or environmental matters could also result in the imposition of financial or other obligations on MHC. Any such costs could adversely affect MHC s competitive position and results of operations. 36. MHC is yet to obtain certain licenses, registrations and other approvals and renewals thereof required in the ordinary course of business and the failure to obtain such approvals in a timely manner or at all may materially adversely affect its operations. Further, MHC s business is subject to extensive regulation by the Indian Government and any failure to obtain required regulatory approvals or failure to comply with any applicable regulation could have an adverse effect on its business. MHC has applied for, but not received, certain licenses, registrations, no objection certificates, permits, clearances, other approvals and renewals required in the ordinary course of business as a result of expiration of existing approvals. If MHC does not receive such approvals it may be unable to offer certain of its services or maybe required to discontinue operations at one or more of its hospitals and this may have a material adverse effect on its financial results. MHC s business is subject to extensive government regulations which require MHC to regularly obtain and renew licenses, no objection certificates, permits, clearances and approvals from various government and regulatory bodies. Furthermore, there can be no assurance that MHC will succeed in obtaining all requisite approvals in the future for its operations in a timely manner nor can there be any assurance that compliance issues will not be raised in respect of certain operations conducted prior to the date of this Information Memorandum. 37. MHC makes acquisitions as part of its growth strategy from time to time and may be unable to successfully integrate the operations or achieve the synergies and other benefits we expect from such acquisitions. MHC has recently acquired (i) 77.95% equity shareholding (on a fully diluted basis) in CRL which operates Pushpanjali Crosslay Hospital at Ghaziabad (renamed as Max Super Specialty Hospital Vaishali); and (ii) 51% equity shareholding (on a fully diluted basis) in SCHPL which provides medical healthcare services to Saket City Hospital (renamed as Max Smart Super Speciality Hospital) at Saket. Similarly, MHC may make further acquisitions from time to time as part of its growth strategy. MHC may not be able to effectively integrate or achieve the desired profitability from such acquisitions. As a consequence, we may be exposed to additional risks, including: Loss of patients or key clinicians; Failure to realise expected synergies and cost savings; Difficulties in co-ordinating and consolidating corporate, administrative and support functions; Unforeseen and unexpected patient initiated litigation; Exposure to unforeseen legal and statutory non-compliance liabilities; and Inability to incorporate management best practices. Any difficulty encountered in integrating the operations of the acquired assets could result in higher integration costs and lower savings than expected and hence impact the consolidated financial performance. Further, businesses that MHC may acquire in the future may have unknown or contingent liabilities, including liabilities for failure to comply with healthcare laws and regulations, and it may become liable for the past activities of such businesses. Moreover, its ability to make further acquisitions is subject to various factors that may involve delays or problems, including the failure to receive or renew regulatory approvals, the cost of land, constraints on human and capital resources, the unavailability of equipment or supplies or other reasons, events or circumstances. Future projects may incur significant cost overruns and may not be completed on time or at all. Further, the acquisition by MHC in the future may involve significant investment and MHC may not achieve the operating levels that it expects from such projects (present and future). Further, MHC may not be able to achieve 20

21 its targeted return on investment or intended benefits from these projects. 38. Reliance on third-party and manufacturers and suppliers of equipment, reagents, and drugs. Failure of such third parties to meet their obligations could adversely affect our business and results of operations. MHC sources its equipment, reagents and drugs from third party suppliers under various arrangements. Any failure to procure such equipment, reagents or drugs on a timely basis, or at all, from such third parties and on commercially suitable terms, could affect its ability to provide services. Certain of its medical equipment are also procured under lease agreements. Under some of these agreements, the supplier generally has the discretion to terminate the agreement with a specified period of notice in the event of a breach of any term or condition of the agreement, including but not limited to default in payment of the applicable fee. Any such termination and consequent removal of the installed equipment may adversely affect MHC s operations. In addition, manufacturers and suppliers may discontinue or recall equipment, reagents or drugs used by MHC, which could adversely affect its ability to provide its services, and therefore, could adversely affect its business and results of operations. MHC also relies on a limited number of equipment vendors on an exclusive basis to carry out repairs and maintenance of its equipment. MHCs dependence on a limited number of service providers exposes it to risks of delays or inability in carrying out repairs and maintenance of equipment. MHC may also be unable to find alternative service providers in time, or at all, and at a suitable cost. Any such delay or inability could cause disruptions in our operations and adversely affect its business, financial condition and cash flows. 39. If MHC uses hazardous materials in a manner that causes injury or accident, it could be liable for damages and its business, reputation and financial condition could be materially and adversely affected. MHC s operations involve the use of hazardous and flammable materials, including chemicals, radioactive and nuclear materials. Most of the radiation therapy and diagnostic imaging equipment which MHC uses, contains radioactive and nuclear materials or emit radiation during operation. Radiation, radioactive materials and nuclear materials are extremely hazardous unless properly managed and contained. MHC generally contracts with third parties for the disposal of such materials and wastes. However, MHC cannot eliminate the risk of contamination or injury from such materials. In the event of any contamination or injury resulting from use of hazardous materials, MHC could be held liable for any resulting damages, and any liability could strain or even exceed its resources. MHC also could incur significant costs associated with civil or criminal fines and penalties. (iv) Growth Risk 40. An inability to manage MHC s growth could disrupt its business and reduce its profitability. MHC has experienced high growth in recent years and we expect its business to grow significantly as a result of its proposed expansion plans. MHC expects this growth to place significant demands on its resources, operations, management and require it to continuously evolve and improve its operational, financial and internal controls across the organization. In particular, continued expansion increases the exposure to certain additional risks, including, (a) difficulties arising from operating a significantly larger and more complex organization and expanding into new geographic areas and territories; (b) difficulties in the assimilation and seamless integration of the assets and operations of the expanded operations with the existing hospitals; (c) the loss of patients or key doctors; (d) the diversion of management s attention from other hospitals; (e) the failure to realize expected profitability or growth in new ventures; (f) the failure to realize expected synergies and cost savings; (g) difficulties arising from coordinating and consolidating corporate and administrative functions, including integration of internal controls and procedures; and (h) unforeseen legal, regulatory, contractual, labour or other issues. An inability to manage growth may have an adverse effect on MHC s business and results of operations. 41. MHC hospitals are currently geographically concentrated in North India and it may not gain acceptance or be able to replicate its business strategy successfully outside its current markets. MHC currently operates all of its hospitals in North India, specifically in the Delhi NCR region, Punjab and Uttarkhand. This concentration increases the risk that, should adverse economic, regulatory or other developments occur in this region, its business and financial results may be adversely affected. In addition, any plans to expand outside this region subjects MHC to various challenges, including those relating to its lack of familiarity with the 21

22 culture and economic conditions of these new regions and its lack of brand recognition and reputation in such regions. MHC may, in the future, consider operations and maintenance contracts or acquire greenfield sites for hospitals in regions outside these existing regions. If one or more of these hospitals joins the MHC network, it may be more difficult for it to integrate them or capitalize on its existing brand equity with respect to these hospitals as MHC s experience operating in regions outside North India and specifically Delhi NCR, Punjab and Uttarkhand is limited. If it is not successful in expanding its hospital network, its business may be adversely affected. 42. If MHC is unable to identify expansion opportunities or experiences delays or other problems in implementing its business strategy, its growth, financial condition and results of operations may be adversely affected. MHC s growth strategy depends on its ability to build, acquire and/or manage additional hospitals. It may also expand, improve and augment its existing hospitals. MHC has several such projects under review, and is continuously evaluating other projects. MHC may or may not be able to identify suitable greenfield sites for new hospitals, acquisition candidates or hospital management opportunities, or negotiate attractive terms for such projects. Potential title uncertainties regarding the lands on which potential acquisition targets and operation and management opportunities are, or may be located, including related litigation, may also adversely affect MHC s expansion opportunities. The number of attractive expansion opportunities may be limited, and may command high valuations. MHC may be unable to secure the necessary financing to implement expansion projects. Any new project it undertakes could be subject to a number of risks, including the types of risks associated with the integration of such new or expanded operations into existing operations. MHC may face challenges while renovating and rebuilding existing hospitals or re-positioning existing hospitals that it acquires or for which it assumes management responsibility. Integrating new hospitals with its other hospitals will require significant managerial and financial resources. 43. Some of the hospitals in MHC s network may be subject to changing Government and/or statutory policies since they have been developed in the Public-Private-Partnership (PPP) model. MHC may have availed Government schemes to lower project costs subject to delivering on certain terms and conditions set by the Government. There is no guarantee that any such terms or conditions will be satisfied partially or fully putting the project along with invested the capital at risk. Two of MHC s network of hospitals at Bhatinda and Mohali are operated under the PPP arrangement with the Government of Punjab whereby land has been allotted on long term lease on a revenue share basis. These hospitals are being operated under concessionare agreement between the subsidiaries of MHC and the Government of Punjab. Arrangements of such kind are prone to political and other risks associated with the changes in the Government/ its policies and its style of functioning. MHC s planned project at Mullanpur has been allotted land at concessional rates by the Greater Mohali Area Development Authority (GMADA) subject to meeting certain terms and condition including but not limited to meeting project timelines related to construction and commissioning of the proposed hospital. MHC does not guarantee that it will be able to meet all those terms and conditions which may put the project along with invested capital at risk. 44. MHC may experience delays in the implementation of some of its hospital projects in the future. MHC, as a part of its growth agenda, plans to execute hospital projects in order to expand its footprint and also augment the bed capacity in existing hospitals. The timely completion of such projects by their very nature depends on multiple factors including but not limited to the availability of labour, regulatory approvals, land and building related approvals (including but not limited to increase in floor area ratio) and third party supplies of equipment etc. In the event these projects are delayed beyond a reasonable time/cost overrun, they can adversely impact the growth and profitability of MHC. (v) Financial Performance and Management Risk 45. MHC s indebtedness and the conditions and restrictions imposed by its financing arrangements may limit its ability to acquire more hospitals and increase growth. As on December 31, 2015, MHC had Rs. 10,709.9 million of consolidated loan funds. Its existing operations and its expansion plans require substantial capital resources. It may incur additional debt in the future, as part of its expansion plans. However, MHC may be unable to obtain sufficient financing on terms satisfactory to it, or at all. More so, MHC s ability to raise debt from domestic lenders for downstream investments has been restricted 22

23 because of foreign owned enterprises. As a result, its acquisition and development activities may have to be curtailed and its growth may be adversely affected. The agreements governing some of MHC s debt obligations include terms that require it to maintain certain financial ratios, comply with certain reporting requirements, restrict its ability to make capital expenditures and investments, declare dividends, merge with other entities, incur further indebtedness and incur liens on, or dispose of, its assets, undertake new projects, change the management and/or the board of directors of MHC and its subsidiaries/joint ventures, and modify its capital structure. Certain debt agreements also provide the lenders with the right to appoint a nominee director on the board of MHC upon an event of default. Failure to comply with the terms of its debt agreements or obtain waivers there under could result in the acceleration of some or all of the debt, as well as the cross-acceleration of other debt, which could adversely affect MHC s liquidity and restrict its expansion plans. MHC s level of indebtedness could have other important consequences, including: Requiring it to dedicate a substantial portion of its operating cash flow to making periodic principal and interest payments on its debt, thereby limiting its ability to take advantage of significant business opportunities and placing it at a competitive disadvantage compared to healthcare providers that have less debt; Making it more difficult for it to satisfy its obligations with respect to its debt; Increasing its vulnerability to general adverse economic and industry conditions; Limiting its flexibility in planning for, or reacting to, changes in its businesses; and Llimiting its ability to borrow additional funds or to sell or transfer assets in order to fund future working capital, capital expenditures, any future acquisitions, research and development and technology processes and other general business requirements. 46. MHC has provided guarantees in relation to certain loans obtained by healthcare service providers under MHC s network of hospitals. In the event of any default by such healthcare service providers, such guarantees may be invoked against MHC, which could materially and adversely affect its financial condition and cash flows. MHC has provided corporate guarantees in relation to certain loans and financial facilities obtained by healthcare service providers under MHC s network of hospitals, amounting to Rs. 2,473 million as at December 31, 2015, from various banks and financial institutions. In the case of defaults by such subsidiaries/joint ventures in meeting their obligations under the loans and financial facilities, including their repayment obligations, the guarantees may be invoked against MHC. Consequently, MHC may be required to undertake the obligations of the relevant healthcare providers in relation to the relevant loan or financial facility, which could materially and adversely affect MHC s financial condition and cash flows. 47. A significant portion of MHC s and its subsidiaries /joint ventures outstanding debt is subject to fluctuations in interest rates, which may adversely affect its financial results. As on December 31, 2015, approximately 95% of MHC s and its subsidiaries /joint ventures outstanding debt was subject to interest payments based on floating rates. Interest rate fluctuations can be highly unpredictable, and can be further affected by a number of factors, including global economic trends and adverse events in the global financial markets. MHC has not invested in any instruments to hedge against interest rate risk. MHC s failure to effectively manage its interest rate risk sensitivity could result in increased debt service costs and adversely affect MHC s results of operations. 48. MHC has incurred net losses in the past and may incur additional net losses in the future. MHC has incurred additional net losses in the past and may incur additional losses in the future. In addition, its newly acquired, built or managed hospitals typically incur net losses during the initial years of operations. Rapid technological advances, technological failures and other challenges related to its medical equipment could adversely affect MHC s business. MHC uses sophisticated and expensive medical equipment in its hospitals to provide services, including devices required for super-specialty procedures. Medical equipment needs to be frequently replaced as innovation can rapidly make existing equipment obsolete. Replacement of equipment may involve significant costs. Any such costs incurred could adversely impact MHC s ability to improve its profitability. 23

24 49. MHC may not have adequate insurance coverage for its current or future litigation, and adverse orders, judgements or other resolutions in such cases may adversely affect its financial condition and results of operations. MHC is exposed to the following potential liability risks that are inherent in the business of delivery and provision of healthcare services: Liabilities may exceed its available insurance coverage or arise from claims outside the scope of its insurance coverage. MHC provides medical services to patients who are resident outside of India but have travelled to India on visa including but not limited to medical tourist visas, business visas or tourist visas. Claims under laws in such foreign countries may expose it to far greater liability than what exists in India, and it may not have adequate insurance to cover such liability. MHC may not be indemnified against losses that may arise from acts of omissions at the hospitals managed by it under medical services contracts. Further there is no guarantee that hospital owners will have the resources to pay the indemnity owed to MHC. MHC does not maintain any business interruption insurance. MHC has, in the past, not experienced any business disruptions. However, any business disruption could result in substantial expenses, diversion of resources and could have a material adverse effect on its business, financial condition and results of operations. Additionally, although pursuant to the terms of the medical consultancy contracts with MHC s specialist physicians, such specialist physicians are required to obtain professional indemnity insurance, some of its specialist physicians may not maintain such insurance or personal indemnity insurance obtained by physicians/clinicians may not be adequate to cover all risks, claims or demands. 50. If MHC does not receive payments on time from its payers, its financial condition and cash flows may be materially and adversely affected. MHC s patients include patients who are beneficiaries of third party payer agreements. Each third party payer agreement typically specifies the services covered and terms of payment including but not limited to applicable exclusions, approved tariffs and terms of payment. During fiscal years 2013, 2014 and 2015, MHC network of hospitals billed Rs. 3,557 million, Rs. 4,273 million and Rs. 5,515 million respectively, to third party payers which represent 31%, 30% and 32%, respectively, of its total revenue from operations. As of March 31, 2015, MHC network of hospitals have outstanding gross receivables of Rs. 2,091 million from third party payers. MHC network of hospitals makes provisions for disallowances and doubtful trade receivables in its financial statements on account of the probability of not being able to collect the amounts billed to third party payers. Provisions for disallowances reduce MHC network of hospitals revenue from operations and provisions for doubtful trade receivables increase MHC network of hospitals expenses and thus reduce MHC s network of hospitals profitability. 51. MHC does not currently pay any dividends and may not pay dividends in the future. MHC has not declared dividends in the past. MHC currently retains all of its earnings to finance the development and expansion of its business and, therefore, does not intend to declare dividends on the equity shares in the near foreseeable future. MHC s ability to pay dividends will depend upon a number of factors, including its results of operations, earnings, capital requirements and surplus, general financial conditions, contractual restrictions, applicable Indian legal restrictions and other factors considered relevant by its board of directors. 52. MHC relies substantially on its subsidiaries/joint venture to generate earnings, and any decline in the earnings of the subsidiaries/joint venture or their ability to pay dividends to MHC could materially and adversely affect MHC s earnings. Currently, MHC conducts a significant portion of its operations through its subsidiaries/joint venture. A substantial portion of MHC s assets are held by, and a substantial part of its earnings and cash flows are attributable to, the subsidiaries. If earnings from the subsidiaries/joint ventures were to decline, MHC s earnings and cash flow would 24

25 be materially and adversely affected. We cannot assure you that the subsidiaries/joint venture will generate sufficient earnings and cash flows to pay dividends or otherwise distribute sufficient funds to enable MHC to meet its obligations, pay interest and expenses or declare dividends. 53. MHC avails certain benefits under the EPCG (Export Promotion Capital Goods) Scheme, which may not continue to be available to us and it may be required to repay certain amounts to the Government of India if it does not meet our export obligations pursuant to the EPCG Scheme scheme risk. MHC s newly acquired hospital, Pushpanjali Crosslay Hospital (renamed as Max Super Specialty Hospital, Vaishali), has an obligation to earn foreign exchange as per the regulations of the EPCG scheme. The amount of custom duty saved under the EPCG scheme is Rs. 154 million. If the hospital is not able to earn the foreign exchange to the level of its obligations, it may be subjected to payment of additional custom duty with interest and penalty. (vi) Related Party and People Risk 54. MHC has entered into various related party transactions. MHC has various transactions with related parties, including its subsidiaries, associates, directors and their relatives, employees, the Promoter and their relatives and the Promoter group entities. These related party transactions include inpatient income, outpatient income, management fees, grant and repayment of loans, interest income on loans advanced, interest expense on loans taken, grant and receipt of corporate guarantees, purchase of medical consumables and pharmacy items and payment of managerial remuneration, etc MHC believes that all such transactions have been conducted on an arm s length basis in the ordinary course of business. However, in the event that obligations owed to MHC arising from such transactions are not fulfilled, either individually or in the aggregate, MHC s business and financial condition and/or results of operations may be adversely affected. MHC will continue to enter into related party transactions in the future, in the normal course of business. Such transactions, either individually or in the aggregate, may have an adverse effect on MHC s business, revenues, results of operations and financial condition. (vii) Other Risks 55. Various healthcare industry challenges may also adversely affect our operations. MHC is impacted by the challenges currently facing the healthcare industry. It believes that the key ongoing industry-wide challenges are providing quality patient care in a competitive environment and managing costs. In addition, its business and results of operations may also be affected by other factors that affect the entire industry, such as: Technological and pharmaceutical improvements that increase the cost of providing, or reduce the demand for, healthcare; General economic and business conditions, both nationally and regionally; Demographic changes; and Changes in the distribution process or other factors that increase the cost of supplies. In particular, the patient volumes and operating income at MHC s hospitals are subject to economic and seasonal variations caused by a number of factors, including, but not limited to: The business environment of local communities; The number of uninsured and underinsured patients in local communities; Seasonal cycles of illness; Climate and weather conditions; and Physician recruitment, retention and attrition. Any failure by MHC to effectively face these challenges could have a material adverse effect on its business and results of operations. 25

26 56. Political/financial instability in certain countries particularly from those where patients come on a medical visa to get treatment done in MHC s network of hospitals will impact international patient volumes and hence revenue margins adversely. A part of MHC s network revenue (~ 10%) is derived from international medical value travellers from various countries. Any adverse events, including but not limited to, devaluation of currency, strife, war, deteriorating diplomatic relations with India etc. may adversely impact the flow of such patients and consequently may lead to drop in revenue and profitability. 57. MHC s reputation will be adversely affected, if any of its hospitals are deemed to have been involved with medical negligence or are deemed to have participated in unethical medical practices. If events were to occur whereby any of MHC s hospitals were deemed to be involved in medical negligence or unethical medical practices, this could have a negative effect on MHC s reputation and make it more difficult to execute its growth strategy and attract new patients, doctors and/or other medical personnel to its new or existing hospitals. MHC cannot provide any assurance that such events will not occur in a manner that would adversely affect its results of operations or financial condition. 58. Risks related to MHC s network of hospitals All risks related to MHC, as set forth in sub-part (B) Risks Relating to our Healthcare Business herein, shall also apply to MHC s network of hospitals. (C) Risks Relating to our Health Insurance Business 59. Like any other joint venture, there could be a difference of opinion with our joint venture partner on certain matters relating to the operations of Max Bupa. We operate our health insurance business as a joint venture between ourselves and our joint venture partner, Bupa. The Max Bupa JVA places certain restrictions on our rights in Max Bupa, including restrictions relating to transfer of shares, rights of first refusal, tag along rights and reserved board matters. We may not agree with Bupa on some or all of these matters which could lead to conflicts with Bupa and delays in Max Bupa s decision making, lost opportunities and decisions that may not be in best interests of us and Max Bupa and may affect us and Max Bupa adversely. 60. The interests of our joint venture partner in our health insurance business may differ from our own and they may take actions that adversely affect us and Max Bupa. We operate our health insurance business as a joint venture between ourselves and our joint venture partner, Bupa. A joint venture involves special risks where the joint venture partner may have economic or business interests or goals inconsistent with or different from those of the Company and Max Bupa. Bupa may also take actions contrary to our instructions or requests or in direct opposition of our or Max Bupa s policies or obligations. Disputes could arise between us and Bupa that could result in significant losses to Max Bupa as well as to us. There can be no assurance that our best commercial interests and business philosophy will be consistent with those of Bupa or that they will be willing to fulfill their obligations under the Max Bupa JVA, either of which could have a material adverse effect on our business, operations and prospects. 61. Max Bupa is subject to potential changes in regulatory policy and guidelines that can adversely affect its business, operations and financial results. It is possible that Max Bupa s business operations and financial results could be materially adversely affected by regulatory policy changes which may present it with new challenges. If Max Bupa fails to adequately respond to such changes or does not do so as effectively as its competitors, its business, operations and financial results may be materially and adversely affected. We cannot predict the enactment or content of new legislation and regulations or changes to existing laws or regulations or their enforcement, interpretation or application, or the effect they will have on Max Bupa s business operations or financial results. Even if we could predict such matters, it is not possible to eliminate the adverse impact of public policy changes that would fundamentally change the dynamics of the health insurance industry. Examples of such changes include changes in the tax treatment of health insurance for individuals, compulsory public listing of insurance companies, corporate agency guidelines coupled with distribution open architecture, 26

27 adherence to Rule 17E of the Insurance Rules, 1939, potential increase in rural and social obligations, mandatory coverage for specific diseases, difficulty/delay in price increases liability related to unsolicited commercial calling by agents, limits on expense ratios and commissions, etc. 62. Max Bupa s business activities are highly regulated. If Max Bupa fails to comply with applicable laws and regulations, it could be subject to adverse regulatory actions (penalties) or suffer reputational harm which may have a material adverse effect on its business. Compliance with future laws, regulations and/or judicial decisions may reduce Max Bupa s profitability and limit its growth. Max Bupa s business is subject to extensive regulation. The laws and regulations governing its operations and interpretations of those laws and regulations change frequently, can be inconsistent or conflicting and generally are designed to benefit and protect customers rather than the insurer or its investors. If Max Bupa fails to comply with laws and regulations, it could be subject to fines, penalties, premium refunds or corrective actions which could have a material adverse effect on its cash flows, financial condition and operating results. 63. Max Bupa is subject to litigation and adverse legal proceedings (related to claims, policy issuance etc.). These proceedings may be costly to defend, may result in changes in Max Bupa s business practices, harm its reputation and adversely affect its business and operating results. Max Bupa is involved in claims, lawsuits and other legal proceedings arising in the ordinary course of its business. Litigation and other adverse legal proceedings could materially adversely affect its business or operating results because of reputational harm to it caused by such proceedings, the costs of defending such proceedings, the costs of settlement or judgments against it, or the changes in its operations that could result from such proceedings. 64. Max Bupa may not be able to accurately forecast its expenditure on claims, which could adversely affect its operating results. Premiums for Max Bupa s health insurance products are priced in advance based on its forecasts of healthcare and other benefit costs during a fixed premium period, which is generally 1 year. These forecasts are typically developed several months before the fixed premium period begins, are influenced by historical data, are dependent on Max Bupa s ability to anticipate and detect claim trends, and require a significant degree of judgment. As a result, Max Bupa s profits are particularly sensitive to the accuracy of its forecasts and its ability to anticipate and detect claim trends. Max Bupa s healthcare and other benefit costs can be affected by external events that cannot be forecasted or projected and over which it has little or no control, such as emerging changes in the economy, public policy, epidemics, pandemics, terrorist attacks, or other man-made disasters, natural disasters or other events that materially increase utilization of medical and/or other covered services, as well as changes in customers behavior and healthcare utilization patterns and hospital billing practices. Max Bupa s healthcare and other benefit costs can also be affected by changes in its business mix, products, contracts with network hospitals and clinics, underwriting, rating and/or claims processing methods and processes. A number of factors contribute to rising healthcare and other benefit costs, including changes in healthcare utilization patterns, the increasing incidence of lifestyle diseases, changing demographic characteristics, advances in medical technology and increases in the cost of medicines and drugs, general economic conditions (such as inflation and employment levels), healthcare provider and customer fraud, and numerous other factors that are or may be beyond Max Bupa s control. Max Bupa s operating results and competitiveness depend in large part on its ability to appropriately manage future healthcare and other benefit costs through underwriting criteria, product design and network hospital arrangements. These factors may adversely affect Max Bupa s ability to predict and manage healthcare and other benefit costs, which can adversely affect its competitiveness and operating results. 65. Max Bupa may not be able to obtain adequate premium rate increases or new product approvals or product revisions, which would have an adverse effect on its operating results and could magnify the adverse impact of increases in claim costs. Any new product introductions or product related modifications i.e. premium rate increase or product revisions generally must be filed with the IRDAI and are subject to their approval, which creates risk for Max Bupa. Under the existing regulations premium rate increases or product revisions generally require a review by the IRDAI and cannot be revised upwards for a period of upto 1 year once fixed. This can magnify the adverse impact on Max Bupa s operating margins and operating results of increases in healthcare and other benefit costs by restricting its 27

28 ability to reflect these increases in its pricing. There is no guarantee that Max Bupa will be able to obtain premium rate increases that are actuarially justified or that are sufficient to make its policies profitable. If Max Bupa is unable to obtain adequate rate increases, it could materially and adversely affect its operating margins and its ability to earn adequate returns or cause it to withdraw certain products. 66. Competitive and economic pressures may limit Max Bupa s ability to increase pricing to reflect higher costs or may force it to accept lower margins and cause its operating results to be negatively affected. The health insurance industry in India is extremely competitive and is seeing the entry of new players in the Indian market which is further increasing competitive pressures in this segment. Max Bupa s insurance policies are generally for a period of 1 to 2 years, and its customers have considerable flexibility to change from Max Bupa to its competitors. One of the key factors on which Max Bupa competes for customers is overall price of its products. It is therefore under pressure to restrict premium price increases despite being faced with increasing healthcare and other benefit costs and increasing operating costs. If Max Bupa is unable to increase its prices to reflect increasing costs, its profitability will be adversely affected, while, if it is unable to limit its price increases, it may lose customers to competitors with more favorable pricing, adversely affecting its revenues and operating results. In response to rising prices, Max Bupa s customers may elect to reduce benefits and choose to buy different types of policies from it that are less profitable. Such elections may result in reduced membership in Max Bupa s more profitable insurance products and/or lower premiums for its insurance products, which may adversely affect its revenues and operating results. 67. If Max Bupa fails to compete effectively, its operating results, financial condition and cash flows could be materially and adversely affected. Max Bupa s business faces significant competition and it competes with other health insurance providers in the industry on the basis of many factors, including perceived overall quality, quality of service, comprehensiveness of coverage, cost, product design, breadth and quality of hospital networks and quality of customer support programs. Some of Max Bupa s competitors may have greater capabilities and resources, a more established reputation, superior network hospital arrangements, better business relationships, lower cost structures or other factors that give such competitors a competitive advantage. If Max Bupa fails to develop new products, differentiate its products from those of its competitors or demonstrate that its products result in its customers receiving quality affordable care, its ability to retain or grow its customer base, its competitive position and its overall business, operating results, financial condition and cash flows could be materially and adversely affected. 68. The reserves that Max Bupa holds for expected claims are based on estimates that involve an extensive degree of judgment and are inherently variable. If actual claims exceed Max Bupa s estimates, its operating results could be materially adversely affected and its ability to take timely corrective actions to limit future costs may be limited. Max Bupa s estimates of expected claims and healthcare costs payable are based on a number of factors, including those derived from historical claim experience, but this estimation process also makes use of extensive judgment. Considerable variability is inherent in such estimates, and the accuracy of the estimates is highly sensitive to changes in customer and product mix, changes in the utilization of medical services, changes in medical cost trends and the introduction of new benefits and products. Owing to the above factors, if actual claims are higher than estimated, Max Bupa s operating results are likely to be adversely affected. 69. Max Bupa is dependent on its ability to recruit, retain and develop a diverse and competent workforce. Max Bupa s products and services and its operations require a large number of employees and its success is dependent on its ability to engage, retain and motivate its employees to maintain consumer-focus and to innovate. Max Bupa s business would be adversely affected if it fails to adequately and effectively recruit, integrate, retain and develop key talent and/or align its talent with its business needs, particularly given the current environment, which is rapidly changing and seeing the entry of new entrants in the industry which increases demand and competition for existing skilled personnel which results in high attrition rates in the industry. 70. Sales and distribution of Max Bupa s products and services are dependent on its ability to attract and motivate its agents, internal sales personnel and independent third party brokers and maintain and grow its bancassurance partnerships. Max Bupa s products are sold primarily through its agents, bancassurance partner networks, sales personnel and 28

29 independent brokers. There are some distribution agreements as well with some of the distribution partners (banks, brokers or corporate agents) like minimum guarantee, commission claw-back, profitability commitments etc. and its sales could be adversely affected if it is unable to attract, retain or motivate its partners, agents, brokers and employees or if it does not adequately provide support, training and education to this distribution network regarding its complex product portfolio, or if its sales strategy is not appropriately aligned across distribution channels. This risk is heightened as Max Bupa focuses on the direct consumer business segment. 71. Max Bupa may be subject to penalties or other regulatory actions as a result of the marketing practices of brokers and agents selling our products. There has been increased scrutiny by the regulatory agencies regarding the marketing practices of brokers and agents selling health and other insurance products. Insurers are also being made liable for unsolicited commercial calling done by their agents. This could result in fines, penalties and the imposition of corrective action plans and/or changes to industry practices, which could adversely affect Max Bupa s ability to market its products. 72. If Max Bupa fails to provide its customers with quality service that meets their expectations, its ability to retain and grow its customer base will be adversely affected. Max Bupa s ability to attract and retain customers is dependent upon providing cost effective, quality customer service operations (such as call center operations, claims processing and on-line access and tools) that meet or exceed its customers expectations. Max Bupa depends on third parties for certain of its customer services including pre-policy medical check-ups, annual health check-ups, provider network (hospitals), loyalty benefits etc. If Max Bupa or its vendors fail to provide service that meet customers expectations, it may have difficulty retaining or growing its customer base which can adversely affect its operating results. 73. If Max Bupa is unable to enter into collaborative agreements with healthcare providers (hospitals and clinics) on satisfactory terms, it may have an adverse effect on its operating results and its ability to enhance its hospital networks, contain its medical costs and grow its business. Max Bupa s operating results are dependent in part upon its ability to simultaneously contract competitively with and develop and maintain favorable relationships with hospitals, clinics and other healthcare service providers. Max Bupa s relationships with these providers are affected by the rates it pays them for services rendered to its customers, by its business practices and processes and by its payment and other hospital network relations practices. The breadth and quality of Max Bupa s networks of available providers are important factors when customers consider its products and services. The failure to maintain or to secure new cost-effective healthcare provider contracts, may result in a loss of or inability to grow its customer base which could adversely affect its operating results. If Max Bupa fails to attract more healthcare providers to collaborative arrangements, or is less successful at implementing such arrangements than its competitors, its attractiveness to customers may be reduced, it may lose or be unable to grow its customer base and its ability to profitably grow its business and/or its operating results may be adversely affected. 74. Adverse conditions in the Indian and global capital markets can significantly and adversely affect the value of Max Bupa s investments in debt and other investments, its operating results and its financial condition. The global capital markets, including credit markets, continue to experience volatility and uncertainty. As an insurer, Max Bupa has a significant investment portfolio that supports its policy liabilities and surplus and is comprised entirely of debt securities. As a result, the income which Max Bupa earns from its investment portfolio is largely driven by the level of interest rates and volatility, uncertainty and/or disruptions in the global capital markets, particularly the Indian financial markets, and governments monetary policy which can significantly and adversely affect the value of its investment portfolio, thereby its operating results and/or its financial condition by reducing the value and/or liquidity of the securities it holds in its investment portfolio, reducing its net investment income and operating results and causing period-to-period volatility in its net income. Although Max Bupa seeks to match the duration of its assets and liabilities and to manage its credit and counterparty exposures as required by regulations/internal governance processes, a failure to adequately do so could adversely affect its net income and its financial condition and, in extreme circumstances, its cash flows. 75. Wide-spread prevalence of healthcare providers and customer frauds in India, if not managed and dealt with appropriately, can have a significant risk on Max Bupa s profitability. 29

30 Healthcare provider fraud is typically characterized by knowingly submitting false statements or making misrepresentations of fact to obtain the healthcare payment for which no entitlement would otherwise exist, knowingly soliciting, paying, and/or accepting remuneration to induce or reward referrals for items or services reimbursed by insurance companies or making prohibited referrals for certain designated health services. Anyone can commit healthcare fraud. Fraud schemes range from solo ventures to broad-based operations by an institution or group. Healthcare provider fraud, that is not prevented or detected, impacts Max Bupa s medical cost trends and increases fraudulent claims volume, which may lead to additional costs and an increase in disputed claims and litigation. 76. Max Bupa s strategy to focus on direct consumer business vs group business and target a niche set of customers viz high net worth and mass affluent customers, poses a concentration risk for the business. This risk is also accentuated by the company s strategic decision to be present only in certain geographic locations across India. Max Bupa s primary focus is the direct consumer business (retail/b2c) and the overall strategy is built around creating a very strong position with significant structural advantages in the business. The company has a very selective play in the group business with focus only on renewing existing profitable accounts. In the retail segment, Max Bupa s product as well as service proposition is tailored for high network individuals/mass affluent customers, thus posing a concentration risk for the company. Any adverse development in the target segments (demographic) or the geographies where the company is present can have a significant impact of the business outcomes and results. 77. Max Bupa s business operations dependent on the industry structure and the number of insurers operating in this space. The health insurance industry in India has attracted large number of players over the last few years and is expected to be the fastest growing segment in the insurance industry. Entry of multiple insurance players, global health insurers, Indian major business houses as well as life insurers have either evinced their interest in the health insurance segment or launched business operations or strengthened their health insurance portfolio, thus giving a boost to the industry in the recent past. If Max Bupa is not able to manage this well and respond to the developments by way of consolidating its position in the market, there would be a significant impact on the business outcomes and profitability of the business. 78. If Max Bupa s compliance systems and processes fail or are deemed inadequate, it may suffer reputational harm and become subject to regulatory actions or litigation which could adversely affect its business, cash flows, operating results, financial condition and prospects. Max Bupa s business is subject to extensive and complex regulations, and many of its contracts with customers include detailed compliance requirements. If Max Bupa s systems and processes which are designed to maintain compliance with applicable requirements, and/or prevent and detect instances of, or the potential for, noncompliance fail or are deemed inadequate, it may suffer reputational harm and be subject to regulatory actions, litigation and other proceedings which may result in fines, suspension or loss of license, any of which could adversely affect its business, cash flows, operating results, financial condition and prospects. 79. Information technology system failures could adversely affect Max Bupa s business. Max Bupa s IT systems are a critical part of its business and enable it to manage its records and inventory. Any technical failures associated with its IT systems, including those caused by computer viruses and other unauthorized tampering, may cause interruptions in Max Bupa s ability to provide services to its customers. Corruption of certain information could also lead to delayed or inaccurate judgments or diagnosis in its treatment of patients and could result in damage to the welfare of its patients. In addition, MHC may be subject to liability as the result of any theft or misuse of personal information stored on its systems. (D) Risks Relating to our Senior Living Business 80. Availability of suitable expansion opportunities meeting Antara s growth needs at the right valuation. Antara s growth strategy depends on its ability to build, additional senior living communities. It also may expand, improve and augment its existing senior living communities. Antara may or may not be able to identify suitable greenfield sites for new senior living communities, acquisition candidates, or negotiate attractive terms for such projects. Potential title uncertainties regarding the lands on which potential acquisition targets and operation and management opportunities are or may be located, including related litigation, may also adversely affect Antara s 30

31 expansion opportunities. The number of attractive expansion opportunities may be limited, and may command high valuations. Antara may be unable to secure the necessary financing to implement expansion projects. Any new project it undertakes could be subject to a number of risks, including the types of risks associated with the integration of such new or expanded operations into existing operations. 81. Optimal management of resources balancing growth needs. Antara expects its business to grow as a result of its expansion plans. Antara expects this growth to place significant demands on its resources, operations, management and require it to continuously evolve and improve its operational, financial and internal controls across the organization. In particular, continued expansion increases the exposure to certain additional risks, which include (a) difficulties arising from operating a significantly larger and more complex organization and expanding into new geographic; areas and territories; (b) difficulties in the assimilation and seamless integration of the assets and operations of the expanded operations. Other additional risks include, (a) diversion of management s attention from other projects; (b) failure to realize expected profitability or growth in new ventures; (c) failure to realize expected synergies and cost savings; (d) difficulties arising from coordinating and consolidating corporate and administrative functions, including integration of internal controls and procedures; and (e) unforeseen legal, regulatory, contractual, labour or other issues. 82. Availability and retention on skilled manpower, availability and retention. Antara s performance and the execution of its strategy depend substantially on its ability to attract and retain skilled and unskilled manpower and personnel in the senior living industry. Antara competes for these personnel with other industry players. The market for such personnel is extremely competitive. The factors that are typically considered by persons in determining their place of work include the level of compensation, the reputation of the senior living communities, the reputation of its owner, the quality of the facilities and community relations. 83. The risk of legal proceedings being initiated against Antara for death, illness or injury sustained by its residents, cannot be ruled out. Antara may become involved in legal proceedings arising out of any death, illness or injury sustained by any of its residents. Such litigation may result in changes in Antara s business practices, harm its reputation and adversely affect its business and operating results because of reputational harm caused to it by such proceedings, the costs of defending such proceedings, the costs of settlement or judgments against it, or the changes in its operations that could result from such proceedings. 84. Antara may not be successful in implementing our business strategies. The success of Antara s business will depend greatly on its ability to implement its business strategies effectively. There can be no assurance that Antara will execute its strategies on time and within the estimated budget, or that Antara will meet the expectations of its residents. Any dissatisfaction by the residents on the services rendered by Antara could lead to a reputational loss. Antara expects its strategies to place significant demands on its management and other resources and require it to continue developing and improving its financial, operation and other internal controls. Antara s inability to manage its business strategies could have an adverse effect on its business, financial condition and profitability. 85. Competition in the senior living industry is increasing, which could impede Antara s growth and have a material adverse effect on its future revenues and earnings. The senior living industry, despite being in its early stages in India, has seen the entry of a large number of players in recent years and therefore is likely to become highly competitive in the short to medium term. Antara competes with numerous other companies with similar offerings and in general, barriers to competitive entry are not very high and new market entrants are expected to continue to enter the segment. Some of Antara s competitors may have greater financial resources and lower costs of capital than what it is able to obtain. Consequently, Antara may encounter competition that could limit its ability to attract new residents, increase resident charges, attract and retain capital partners for its ventures or expand its development activities or its business in general, which could have a material adverse effect on its future revenues and results of operations. Similarly, overbuilding or oversupply in any of the geographic regions in which Antara has projects in progress could cause it to experience decreased occupancy, reduced operating margins and lower profitability in the future. 31

32 86. Inability of seniors to afford Antara s total consideration for lease rental/lease premium or monthly charges (including downturns in housing markets or the economy) could cause its occupancy rates, revenues and results of operations to decline. Costs to seniors associated with independent and assisted living services are generally met through personal income and savings. Only seniors with significant regular income and assets can afford to pay Antara s total consideration for the lifetime lease and recurring fixed monthly resident charges. Future economic downturns or changes in demographics could adversely affect the ability of seniors to afford these payments. If Antara is unable to retain and/or attract seniors with sufficient income, assets or other resources required to afford the payments associated with its senior living services, its future occupancy rates, revenues and results of operations could decline. If there is macro illiquidity in the real estate sector across India, potential residents shall face difficulty in disposing their existing real estate investments to pay for the total lease consideration of an apartment at Antara. Therefore, the future revenue, occupancy rates and results of operations depend on the ability of the potential lessees to be able to dispose their existing real estate investments and lease an apartment at Antara. 87. Risks relating to expansion/growth. Antara s ability to successfully expand existing senior living communities will depend on a number of factors, including, but not limited to, its ability to acquire suitable sites/land parcels at reasonable prices, its success in obtaining necessary zoning, licensing, and other required governmental permits and authorizations, and its ability to control construction costs and accurately project completion schedules. Additionally, Antara anticipates that the construction of new senior living communities may involve a substantial commitment of capital for a period of 4 to 5 years or more until the new senior living communities or expansions are operating and producing revenue, the consequence of which could be an adverse impact on Antara s liquidity. 88. Antara s projects require the services of third parties during the construction and operational phase, which entails certain risks. Antara s projects require the services of third parties during the construction phase. These third parties include contractors, sub-contractors, project management firms, architects, engineers, surveyors and suppliers of labour and materials. The timing and quality of construction of the projects Antara develops depends on the availability and skill of those third parties, as well as contingencies affecting them, including labour and raw material shortages and industrial action such as strikes and lockouts. There is no assurance that skilled third parties will continue to be available at reasonable rates and in the regions in which Antara is constructing its projects. As a result, Antara may be required to make additional investments or provide additional services to ensure the adequate performance and delivery of contracted services and any delay in project execution could adversely affect its profitability. Additionally, Antara relies on manufacturers and other suppliers and does not have direct control over the products they supply, which may adversely affect the construction quality of its developments. Antara has outsourced, and may in the future continue to outsource, construction related activities and in some cases project management to third-party contractors. If the contractors and other service providers fail to perform their respective obligations satisfactorily with regard to a project, Antara may be unable to develop the project within the intended timeframe, at the intended cost, or at all. In such circumstances, Antara may be required to incur additional cost or time to develop the property to the appropriate standard of quality and in a manner consistent with its development objective, which could result in reduced profits or, in some cases, significant losses. Antara may also not be able to recover compensation for any resulting defective works or materials. While Antara believes that it has adequate contractual safeguards in this regard, it cannot assure you that the services rendered by any of its independent construction contractors will always be satisfactory or match its requirements for quality. 89. There may be time and cost overruns in relation to Antara s project. The time required to complete construction of Antara s planned senior living communities may be subject to substantial increases due to many factors, including shortages of, or price increases with respect to, construction materials or equipment, technical skills and labour, acquisition of land, construction delays, unanticipated cost increases, changes in the regulatory environment, adverse weather conditions, third party performance risks, environmental risks, changes in market conditions, delays in obtaining the approvals and permits from the relevant authorities and other unforeseeable problems and circumstances. Any of these factors may lead to delays in, or prevent the completion of a project. Any delays in completing Antara s projects as scheduled could result in dissatisfaction among its customers, resulting in negative publicity and lack of confidence among future potential residents for its projects. 32

33 90. Unleased project inventory or significant time taken in leasing the same could lead to significant losses. Although the decision to undertake and develop a project is taken after detailed analysis of the project site and its potential, there can be no assurance that the units in the projects developed by Antara will be leased entirely, despite an appropriate marketing and pricing strategy. To lease vacant inventory, Antara may be required to lower the upfront lease payments of units in its projects, which may reduce its profitability. Unleased inventory could ultimately lead to reduction of project profits, or even financial losses for Antara. Since Antara s projects are financed to a significant extent by debt, significant time lags in leasing project inventory would also increase Antara s interest costs. 91. Risk of market acceptance of Antara s product offering and innovative leasehold business model. Antara faces market risk for the acceptance of its current product offering and leasehold business model. Antara wishes to ensure that the senior living community that is being created remains a senior living community in the long term. The real estate market follows a typical real estate apartment disposal model whereby the apartments are sold with a freehold title deed, enabling the resident to freely re-sell the apartment to anyone and the sale cannot be restricted to seniors only. Hence, an innovative leasehold title deed model has been created and developed as a mechanism that also enables the appreciation in property prices to go to the customer. Antara differs from the market in the pricing structure for the total consideration paid towards the lifetime lease of the apartment and fixed monthly charges for the plethora of fixed services offered. Therefore, Antara s future profitability and expansion depends on the market acceptance for its product and service offering as well as the leasehold business model. 92. Antara may not be able to develop all of its planned projects. Antara s ability to develop its planned projects is subject to a number of risks and contingencies including nonreceipt of the necessary approvals required for the intended developments and any other legal, financial, economic, regulatory or environmental factors. If any of these risks materialize, Antara may not be able to develop its planned projects in the manner it currently contemplates and it may not be able to implement its business strategy effectively, which could have a material adverse effect on its business, results of operations and financial condition. 93. Antara s failure to generate sufficient cash flow to cover required interest and principal payments could result in defaults of its related debt. As of December 31, 2015 Antara had a total debt of Rs. 1,229 million. Antara cannot give any assurance that its ventures will generate sufficient cash flow from operations to cover the required interest and the principal payments in the future. Any payment or other default could cause the lender to foreclose upon Antara s assets securing the debt with a consequent loss of income and asset value to Antara. 94. For a limited number of initial residents, Antara proposes to provide a unique exit guarantee/capital guarantee for the termination of the lease deed. For a limited number of initial residents, Antara provides a unique exit guarantee/capital guarantee for the termination of the lease deed. If after a period of 5 years from the date of the lease deed, the resident chooses to voluntarily terminate the lease deed/decides to exit the community, Antara will then market the apartment to new eligible lessees. In the event, no residents are identified for a period of 1 year from the date of such termination notice, Antara will offer an exit guarantee to the maximum extent of the total consideration paid at the time of application/commencement of the lease deed. This may result in additional costs being incurred by Antara. 95. Risk of delayed payment collection due to macro illiquidity in the real estate market. The current payment mix in the business is that 20% of bookings are on time linked payment, 52% are on paymenton-possession and the remaining 28% is on pre payment model. Customer default/delays on payment-onpossession is a risk given the high macro illiquidity in the market. Antara allows for cancellation of allotments by residents before the issue of possession letter/signing of lease deed. On receieving any such notice for cancellation, Antara is liable to return the money within 45 days after deducting the earnest money. II EXTERNAL RISK FACTORS 96. There is no prior trading history for the equity shares of the Company. 33

34 Since the equity shares of the Company have not been previously traded, their market value is uncertain. Following admission, the market price of the equity shares may be volatile. Our Company s operating results and prospects from time to time may be below the expectations of market analysts and investors. At the same time, market conditions may affect the price of our Company s equity shares regardless of the operating performance of our Company. Stock market conditions are affected by many factors, such as general economic and political conditions, terrorist activity, movements in or outlook on interest rates and inflation rates, currency fluctuations, commodity prices, changes in investor sentiment towards the retail market and the supply and demand of capital. 97. Significant trading volumes of the equity shares on the Stock Exchanges on listing could impact the price of our Company s equity shares. Following admission of our equity shares for trading on the Stock Exchanges, there may be a period of relatively high volume trading in the equity shares. A high volume of sales of our equity shares on the Stock Exchanges after admission, or the perception that these sales might occur, could result in volatility in the market price of our equity shares. 98. Our Company may decide to offer additional equity shares in the future, diluting the interests of existing shareholders which could adversely affect the market price of the equity shares. Our Company s ability to execute our business strategy depends on our access to an appropriate blend of debt financing, and equity financing. If our Company decides to offer additional equity shares or other securities convertible into equity shares in the future, this could dilute the interests of existing shareholders which could have an adverse impact on the market price of equity shares. Any additional offering of equity shares by our Company, or the public perception that an offering may occur, could have an adverse impact on the market price of the equity shares. 99. Weak economic conditions may have an adverse impact on our Company s business, financial condition and results of operations. The global credit markets have experienced, and may continue to experience, significant volatility and may continue to have a significant adverse effect on the availability of credit and the confidence of the financial markets, including in India. This volatility could result in softening of demand for the products and services of the Company to a lack of consumer confidence and decreased affordability and may adversely affect our Company s business, financial condition, results of operations and prospects. Additionally, economic and market conditions can adversely affect the performance of our Company since both the revenues and costs of our business lines are linked not only to the consumption abilities of the general public and disposable income available with them, but also, to macro-economic factors like interest rates, currency movements, and inflation Taxes and other levies imposed by the Government of India or State Governments relating to our Company s business may have a material adverse effect on our business. Taxes and other levies imposed by the Central or State Governments that could potentially affect the costs of our products and services include, excise duty, state value added tax, state entry tax and import duties. Any increase or changes in any of these taxes or levies, including a shift to a new goods and service tax structure, or the imposition of new taxes or levies in future, may have a material adverse impact on the business, profitability and financial condition of our Company 101. Changes in Government policies. Changes in Government policy on healthcare and insurance sectors could adversely affect our business prospects, competitive position, or our costs. Changes in interest rates, changes in tax laws, changes in insurance regulations etc may have an adverse impact on the profitability of our Company. Due to the competitive nature of the market, the increase in costs as a result of these changes may not be easily passed on to the customers Political instability or changes in the Government may delay the liberalization of the Indian economy and adversely affect economic conditions in India generally, which may impact our business, financial results and results of operations. The Government of India has traditionally exercised and continues to exercise influence over many aspects of the economy. Our business and the market price and liquidity of our equity shares may be affected by interest rates, 34

35 changes in Government policy, taxation, social and civil unrest and other political, economic or other developments in or affecting India. Since 1991, successive Indian Governments have pursued policies of economic liberalization and financial sector reforms. Although the current Government has announced policies and taken initiatives that support the economic liberalization policies that have been pursued by previous Governments. Moreoever, the the rate of economic liberalization may change, and specific laws and policies affecting commodity futures, foreign investment and other matters affecting investment in our securities may change as well. There can be no assurance that such policies will be continued. A change in the Government in the future may result in a significant change in the Government s policies that may adversely affect business and economic conditions in India and may also adversely affect our business, financial condition and results of operations Any downgrading of India s debt rating by an international rating agency could have a negative impact on our Company s business. Any adverse revision to India s credit rating for domestic and international debt by international rating agencies may adversely impact our Company s ability to raise additional financing and the interest rates and other commercial terms at which such additional financing is available. This could have an adverse effect on our Company s financial performance and our ability to obtain financing to fund growth on favourable terms or at all Financial instability in other countries, particularly emerging market countries, could disrupt our Company s business and affect the price of the equity shares. Although economic conditions are different in each country, investors reactions to developments in one country may have an adverse effect on the securities of companies in other countries including India. A loss of investor confidence in the financial systems of other emerging markets may cause increased volatility in Indian financial markets and the Indian economy in general. Any worldwide financial instability could also have a negative impact on the Indian economy, including the movement of exchange rates and interest rates in India. Any financial disruption could have an adverse effect on our Company s business, future financial performance, shareholders' equity and the price of the equity shares Currency exchange rate fluctuations may affect the value of the equity shares. The exchange rate between the Rupee and other foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. If the investor purchases Rupees to purchase the equity shares, fluctuations in the exchange rate between the foreign currency with which the investor purchased the Rupees may affect the value of the investors investment in the equity shares. Specifically, if there is a change in relative value of the Rupee to a foreign currency, each of the following values will also be affected: The foreign currency equivalent of the Rupee trading price of the equity shares in India. The foreign currency equivalent of the proceeds that the investor would receive upon the sale in India of any of the equity shares. The foreign currency equivalent of cash dividends, if any, on the equity shares, which will be paid only in Rupees. The investor may be unable to convert Rupee proceeds into a foreign currency of its choice or the rate at which any such conversion could occur could fluctuate. In addition, our Company s market valuation could be seriously harmed by the devaluation of the Rupee if investors in jurisdictions outside India analyze our Company s value based on the Rupee equivalent of such other currency and the financial condition and results of operations of our Company converted into such foreign currency. 35

36 SECTION III INTRODUCTION YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE RISK FACTORS AND MORE DETAILED INFORMATION ABOUT OUR COMPANY AND FINANCIAL DATA INCLUDED ELSEWHERE IN THIS INFORMATION MEMORANDUM. A. Overview of the Healthcare Sector in India SUMMARY OF INDUSTRY The hospitals segment of the Indian healthcare sector was estimated at USD 78.4 billion 1 in terms of revenue for the FY It has almost doubled in size from a level of USD 40.0 billion 2 over 5 years ago exhibiting a CAGR of 14.4%. However, the per capita expenditure on healthcare of USD 58 (in 2012) despite having grown at a CAGR of 9.3% over the last 12 years is still amongst the lowest when compared to other developing countries and the South East Asia region. Per Capita Expenditure on Healthcare (U.S.$) Year Brazil 265 1,078 China India U.S.A. 4,818 8,845 U.K. 1,761 3,595 European Region* 933 2,270 South East Asia Region* Global 487 1,025 Source: World Health Organization 3 The total expenditure on healthcare as a percentage of GDP was also amongst the lowest at 3.8% in vis-à-vis 5.4% for China, 9.5% for Brazil, 17.0% for U.S.A and 8.6% globally. Despite significant investments in the sector in recent years, India has just 0.7 hospital beds per 1,000 3 people (this number has improved to 1.3 hospital beds per 1,000 people for India in 2015) vis-à-vis 3.8 in China, 2.3 in Brazil, 2.9 in U.S.A and 2.7 globally)- and 7.0 doctors per 10,000 people vis-à-vis 14.9 in China, 18.9 in Brazil, 24.5 in U.S.A and 13.9 globally for the period , India continues to require sizeable investments in healthcare. Public and Private Healthcare In India, there are 3 main mechanisms for delivery of healthcare services, namely public, private and pub-private partnership. The public healthcare system consists of hospitals, primary health centers, clinics, community health centers and other healthcare facilities run by government/semi-government organizations who offer healthcare services at zero or minimal price. Private healthcare providers comprising privately owned hospital chains, standalone hospitals, clinics and health centers are the primary providers of quality healthcare in India and own and operate a majority of the secondary and tertiary facilities. Over the last few years, the majority of investment in building new healthcare infrastructure has been in this area with a significant proportion incurred by private hospital chains into building multi-disciplinary speciality and super-speciality centres. India also has one of the highest proportion of private healthcare expenditure to total healthcare expenditure which stood at 69.5% in (vis-à-vis 44.0% in China, 52.5% in Brazil, 53.0% in U.S.A and 42.3% globally) The Indian Government also allocated USD 55 billion to Ministry of Health & Welfare in the current five year plan (12 th plan ) which is three times more than the amount allocated in the previous plan. The primary focus of this plan is 2 Source: Dun & Bradstreet Report on Hospitals, June 2015, revenue for 2015 is expected revenue 2 Source: World Health Organisation 3 Source: World Bank 2011 statistics 36

37 providing universal healthcare, strengthening healthcare infrastructure, promoting research & development and enacting strong regulations. It has also been proposed to establish a system of universal health coverage through which each individual would have assured access to a defined essential range of medicines and treatment at an affordable price, which should be entirely free for a large percentage of the population. The Government is also encouraging the public-private partnership (PPP) model to improve availability of heathcare services and provide healthcare financing. Till 2015, a total of 5 projects under the PPP model have been completed and become operational. Key Trends: Private Healthcare Providers With the high capital requirements for setting up hospitals, there has been a move in the healthcare industry of India, towards the hub and spoke model and private healthcare operators are focusing on setting up more primary healthcare facilities which require lower capital investment and provide referral business to their tertiary and quaternary hospitals. There is also an increasing number of hospital chains entering into operations and maintenance contracts, their primary area of expertise without making significant investments in owning the assets and infrastructure. Technological advancements and the need to utilize existing infrastructure more efficiently has also led to the emergence of day care surgery centres which minimize the time that patients have to spend in the hospital. Private hospital chains are increasingly moving beyond Tier I cities and setting up secondary and tertiary centres in Tier II and Tier III cities. Leading hospital chains are also using advanced IT and communication systems to advance their reach through telemedicine. Growth Drivers 1. Changing demographics with the number of people over 60 is expected to increase from 8.3% of the population in 2011 to 9.3% or 118 million people in 2016 and to 10.7% or 143 million people by 2021 which is expected to contribute to the rise in demand for healthcare services, especially tertiary and quaternary care services. 2. Increasing urbanization and rising income levels contributing to an increase in demand and affordability of quality and specialized healthcare. Per capita income is expected to increase at a CAGR of 7.6 % over Per capita expenditure on healthcare in India is USD 68.6 billion. 3. Increased incidence of lifestyle diseases like heart disease, cancer and diabetes with a shift towards sedentary lifestyles and high consumption of high fat and junk food and therefore increased demand for healthcare facilities offering specialized treatment and preventive checks for these. CAGR of hospitalised cases from : (i) Cardiac 18%; (ii) Oncology 16 %; and (iii) Diabetes 19 %. 4. Private players are key contributors to growth in the number of hospitals in metros, Tier II and Tier III cities. The private hospital market in India is estimated at USD 81.0 billion at the end-of During , the market size of private hospitals is estimated to have a CAGR of 24.2%. The increase in number of hospitals in Tier II and Tier III cities has fuelled the growth of private sector. 5. Increased penetration of health insurance as the healthcare insurance market continues to grow at a faster rate of 23% (gross written premium CAGR over the period ) than healthcare delivery thus promising increasing penetration. This growth and spread of healthcare insurance is therefore contributing to the demand for healthcare services by making it affordable and within the reach of the masses. 6. Growth in medical tourism due to its strong value proposition on cost, quality and service. India has a significant advantage with the cost of several specialized medical procedures like cardiac procedures, orthopaedic surgeries, organ transplants etc. being available at world class medical facilities with skilled medical professionals at a fraction of the cost of developed countries. Treatment for major surgeries in India costs approximately ~ 20% of that in developed country. Medical value travel market is estimated to be around USD 3 billion in 2015 and is expected to reach USD 8 billion in India s medical value travel is growing at a CAGR of 20%. 37

38 7. Growing in-patient/out-patient and diagnostic market with the in-patient market expected to grow at a CAGR of 13 % and out-patient market expected to grow at CAGR of 10%. Diagnostic market is expected to grow at a CAGR of 20.4% to USD 32 billion by 2022 from USD 5 billion in Key Challenges Challenges faced in the healthcare market penetration in Tier I cities: Highly competitive market; High capital expenditure/ operating expenditure for healthcare providers; Government price capping of medical implants and consumables; and Regulatory mechanisms are time consuming and exhaustive. Challenges faced in the healthcare market penetration in Tier II/III cities: Price-sensitive market; Infrastructure constraints; Deep economic divide; pricing strategy cannot be uniform across various Tier II and Tier III cities; Local players have strong market positioning; Lack of physician awareness and availability; Lack of skilled human resources, especially nurses and technicians; Service network is inadequate for medical instruments; and Rudimentary distributor network. B. Brief History and Overview of Health Insurance sector in India The non-life insurance market in India consists of 22 private sector and 4 public sector companies. Of the 22 private sector companies, 5 are Standalone Health Insurance Companies ( SAHIs ) Max Bupa Health Insurance Company, Star Health & Allied Insurance Company, Apollo Munich Health Insurance Company, Religare Health Insurance Company and Cigna TTK Health Insurance Company. In India, the life insurance sector with its much longer history is far more developed than the non-life insurance sector and was ranked 11 th in the world with a market share of 2.08% during 2014 by Swiss Re compared to the non-life insurance sector (consisting of fire, marine, motor, health and other segments) which was ranked 20 th with a market share of 0.69% of the global non-life insurance premium. During 2014, the Indian non-life insurance sector witnessed an inflation adjusted growth of 4.8% compared to a growth of 2.9% globally in terms of the non-life insurance premium The non-life insurance penetration, which is the percentage of insurance premium to GDP, has increased from 0.56% in 2001 to 0.70% in 2014 while the non-life insurance density, which is the per capita premium in USD, has increased from USD 2.4 to USD 11.0 for the same period. The health insurance sector continued to be the fastest growing segment in the non-life insurance industry over the last 5 years. The total health insurance premium in FY (period Apr 14-Mar 15) reached Rs 200,960 million from Rs. 174,950 million in FY (period Apr 13-Mar 14), registering a growth of 15% for the year and a 4-year CAGR of 16.2%. Health Insurance Segment GWP in Rs. Million Government 21,980 22,250 23,470 20,820 24,250 Group Insurance 49,520 59,480 71,860 80,580 88,990 Individual 38,810 48,970 59,190 73,550 87,720 Total 110, , , , ,960 38

39 Segment Growth (%) Year CAGR Government 1.2% 5.5% -11.3% 16.4% 2% Group Insurance 20.1% 20.8% 12.1% 10.4% 16% Individual 26.2% 20.9% 24.3% 19.3% 23% Source: IRDAI Annual Report Health insurance on the buyer or demand side can be classified as Government sponsored health insurance, group health insurance (other than government sponsored) and individual health insurance. Over the 4 year period starting from FY till , the share of individual health insurance has grown steeply starting from 35% to reach 44% or Rs. 87,720 million for the year ended At the same time the share of Government sponsored health insurance has declined from 20% to 12% in the same period while the share of group health insurance has remained stable and was 44% for the year ended The demand for individual health insurance followed by group health insurance have been the key drivers for health insurance and exhibited a CAGR of 22.6% and 15% in premiums respectively for the 4 year period ending in financial year Regulatory Overview IRDAI, the key regulatory body for the insurance sector was established in 1999 as an autonomous body to regulate and develop the industry. IRDAI is responsible for regulating, promoting and ensuring orderly growth of the insurance and re-insurance business in India. The insurance sector was opened up for foreign participation in the year 2000 with an FDI limit of 26% and in 2006, the entry of standalone health insurers was allowed in the sector which has led to several joint venture partnerships in the sub-segment between Indian and foreign players. In December 2014, the Government approved an ordinance increasing FDI limit in the insurance sector from 26% to 49% which is expected to bring in a significant amount of investment in the industry. Over the last 1-2 years, the industry has seen significant action related to policy as well as regulatory developments by the Government of India and the IRDAI (guidelines as well as draft proposals) affecting multiple facets of the insurance industry. These regulations and guidelines may have an impact on the business activities of the companies operating in the sector. In addition to other amendments, the Insurance Laws (Amendment) Act, 2015 has relaxed the cap of FDI in insurance and introduced the definition of Health Insurance Business recognizing the health insurance as a separate business which was earlier forming part of the general insurance business. To provide better healthcare services to all, the Government through its national health assurance mission plans to reduce out-of-pocket expenditure on health expenses for the common man. These changes in the Insurance Act and the resulting changes in regulations will have a long term impact on the ecosystem in which standalone health insurance companies operate. Growth Drivers Rising healthcare costs and high level of out of pocket expenses The increase in lifestyle diseases, an increase in the number of people over 60 years of age, advances in medical technology and healthcare inflation are all contributing in the increase in healthcare costs and thereby an increase in the amount of health insurance coverage required. The rising healthcare costs along with very high level of out-of-pocket expenses in India as a percentage of private expenditure (86% in India v/s 76% in China, 59% in Brazil and a global average of 76%) is expected to significantly contribute to the growth of health insurance in India. Low health insurance penetration and coverage In India, health insurance penetration (as a percentage of GDP) is less than 0.2% (as compared to less than 4% for life insurance). The segment has high potential with only less than 5% of the population being covered under private health insurance as compared to 12% in UK, 13% in Spain and less than 45% in Australia. It continues to be one of the most rapidly growing sectors in the Indian insurance industry with an expected growth CAGR of above 15% over the next 3-5 years. Increase in proportion of individuals buying health insurance 39

40 The absence of a government-funded health program and a high proportion of out-of-pocket expenses on healthcare combined with increased customer awareness, disposable income and demand for high-quality healthcare has contributed to the rapid growth in the proportion of individuals as buyers of health insurance. New channels are increasing distribution reach and penetration. The opening up of Bancassurance in India which allowed banks to sell insurance products, increasing online distribution, and increased selling of insurance products by NBFCs has widened the reach and led to an increase in the penetration of insurance products than what could have been achieved through the traditional distribution channels. Some companies have also tied up with local non-governmental organisations to target rural markets. Customer friendly regulation and increased product offerings. IRDAI has introduced several initiatives and policy changes for the protection of consumer interests, including features like lifelong renewability, portability, no claims loading and increased transparency and service levels by insurers which is expected to continue contributing to the growth of the sector. Insurers have been focusing on developing and offering a diverse range of products which meet diverse needs and offer flexibility and customization options. Government initiatives and tax incentives. Government initiatives like the National Health Assurance Mission, the Rashtriya Swasthya Bima Yojana (a cashless hospitalisation scheme), and Pradhan Mantri Suraksha Bima Yojna (an accident insurance scheme), are expected to increase penetration of health insurance. In the Union Budget, tax deduction for buying health insurance has been increased to Rs. 25,000 (from Rs. 15,000) and to Rs. 30,000 for senior citizens which is further expected to incentivize individuals to buy/enhance health insurance coverage and contribute to the growth of the sector. Key Challenges The health insurance sector faces the below mentioned challenges on account of regulatory or practical difficulties due to the inherent nature of the industry: Increased regulatory activism like the current cap on management expenses that may force SAHIs to curtail investment on innovation, infrastructure, service and distribution, the regulator s 3 year ban on price increases for new products, approvals for product price increases and time for new product approvals; Lack of unified data at an industry level; Fragmented provider market, lack of standardization of health quality standards and clinical governance standards. there are weak clinical governance protocol and quality benchmarks, leading to over-billing to customers on selective basis (particularly people with insurance coverage), lack of proper treatment protocol being followed and inadequate medical examination records; High cost of activation for distribution channels due to stiff competition among the insurers which escalates the commissions and the incentives paid out to the distribution partners (agents, third party distribution); and High incurred claims ratio due to the increase in non-communicable diseases led by the rise in the incidence of diabetes, cardiac ailments and cancer, and a high proportion of fraudulent claims like concealment of preexisting diseases, providing false information regarding the purpose of hospitalization, fake hospital bills and exaggerated claims and fraudulent pathology laboratory reports. C. Senior Living Business Although India is still younger than the USA and Japan from a demographic standpoint, the process of ageing has begun in the country. It is expected that elders in India would increase both in absolute numbers and relative strength, indicating a gradual swing to a senior population. As per census of India projections, the percentage of elders as a percentage of the total population in the country would jump from 7.4% in 2001 to 12.4% in 2026 and touch 19.7% in In 2011, India had about 76 million seniors above the age of 60 years, and it is expected that this figure will grow to 173 million by 2025, further increasing to about 240 million by This marked increase in elderly population would involve a change in an important sociological aspect, the old age dependency ratio. 40

41 Interestingly, by 2050, it is estimated that the number of dependent adults in India will be at par with the number of dependent children. Besides growth in sheer numbers, seniors are also evolving as a customer segment and have needs and wants, which are different from seniors in earlier times. A significant section of seniors today are independent, financially stable, well-travelled, socially connected, and as a result have well developed thoughts of how they want to spend time after retirement. There is, today, a larger percentage of educated seniors than ever before in India. The seniors now consider life after retirement as an opportunity to spend more time with their families, pursue hobbies, develop new interests or even continue working or starting a new career. While it is true that the seniors are more independent and better equipped to take decisions post their retirement, it is equally correct to say that their needs are not well understood and therefore not met appropriately by both the public and the private sector at large. The senior community presents a tremendous opportunity to the service providers. Senior living as an industry category is witnessing a growth phase with existing players trying to step up and develop higher value products as well as new entrants trying to launch their first senior living ventures. While most of the offerings in the market continue to be delivered as real estate products by traditional real estate developers, there are instances where non real estate players have started venturing into senior living. In terms of the size of units, while most of the early communities for senior living were of a size of units, some of the new communities have started over 400 units. The average price point in the market is also witnessing an upward trend with the concept gaining popularity in the mind space of seniors. Senior living continues to be more acceptable as a concept in South and West India with established players expanding to do more projects in their respective regions. However, there are new projects which are coming up in East and North India as well. Growth Drivers Demographic A joint report published by United Nations Population Fund (UNFPA) and Help Age International says that India has over 100 million elderly population at present which is expected to increase to 323 million by 2050, constituting 20% of the total population of the country. Another study by National Commission on Population suggest that the elderly population, which was 5.6% of total population in 1961, grew to 8.3% of the total population as per the 2011 census because of increase in quality of life and better medical services and is slated to incrase to 10.7% by 2021 and 12.4% by On the other hand, the urban population which was 32% in 2014 is expected to increase to 40% of the total population in These two demographic data suggest that the urban elderly population will grow at much faster rate. Lifestyle With increased income and changing lifestyles, the urban senior has become more independent, progressive, and looks forward to a much more active and enriched life than the previous generation. A senior who is in his/her 60s, has seen and witnessed the growth of the country post-independence and is open to try new ideas and concepts. Mobility As the young generation is becoming more and more mobile and shifting their base to look for employment and career growth opportunities, India is witnessing an overall increase in empty nesters. Being concerned with the overall drop in safety and security, rising crime, unsafe public transport, inaccessible healthcare, lack of emergency facilities and services, and increased hassles of day to day lifestyle, there is an increasing number of both the parents and their children who are openly evaluating senior living communities as one stop solution to all of these concerns.. Drop in sales of traditional real estate and need felt for differentiated asset class With large land supplies and massive unsold inventory, developers are increasingly conscious of the need for differentiated residential real estate variants which can help them increase absorption. Challenges Lack of awareness for category differentiation 41

42 Although the senior living sector is a mix of real-estate, healthcare and hospitality and caters to the needs and requirements of aging population, there is a general lack of awareness amongst the Indian population, including the urban educated class, and many still perceive it either as a real-estate product or a healthcare product and start drawing comparisons from service providers of these two sectors, their services and price points. Lack of Government policies Unlike healthcare, insurance or the latest addition of real-estate, there is no law, policy, guidelines or regulations specific to the senior living sector in India. Service tax and other tax benefits For most of the senior living communities operating out of India, the pricing model is a combination of a one-time payment in the form of security deposit/lease rent/buy-out and a monthly charge for providing a number of services and facilities such as maintenance, housekeeping, laundry, food and beverages, day to day healthcare, etc. Unlike other retirement products such as life insurance and health insurance for seniors or healthcare services such as hospitals, there is no service tax exemption for seniors for availing services of senior living communities. Lack of structured financial products for seniors Unlike in the USA and other western countries, there is no structured financial product or social security scheme from the Government for retiring people where one can subscribe at an early age and ripe the benefit at a later stage when the need for moving to such senior living community arises. 42

43 SUMMARY OF BUSINESS Max India, is a multi-business corporation focusing on the core businesses of (i) healthcare, through MHC; (ii) health insurance, through Max Bupa; and (iii) senior living, through Antara. Max India also has interests in learning and skill development, through Max Skill First. Max India will be listed on the BSE and the NSE. Max India is the holding company and has also started providing corporate management services to its group companies, with effect from the FY The corporate management group provides services to the subsidiaries/ joint ventures in matters relating to the function such as treasury, finance, taxation, legal & regulatory, secretarial, investor relations, governance, corporate communication and branding, quality & service excellence, business performance & strategy, fund raising and other management advisory services. (i) Healthcare MHC, together with its operating subsidiaries comprises the healthcare business. MHC is currently a joint venture of the Max group wherein, it holds 46.28% equity shareholding. Life Healthcare, the joint venture partners also hold 46.28% equity shareholding in MHC, while the remaining equity shareholding is held by financial investors and certain employees. MHC is one of the largest private healthcare companies in India. As of December 31, 2015, MHC had a network of 9 quaternary/tertiary care hospitals, 4 secondary care hospitals, and 1 primary care centre, that are either owned or are provided healthcare services pursuant to medical service agreements across northern India. The network comprises 2,563 beds served by over 2, 955 physicians, 4,092 nurses, 1,458 paramedics and 2,010 support staff. The network of MHC s hospitals is either owned by MHC and its subsidiaries or is provided medical services through medical service agreements entered into by MHC and its subsidiaries. Currently, Max Super Specialty Hospital (unit of DDF), Max Super Specialty Hospital, Patparganj (unit of BMDRC), Max Smart Super Speciality Hospital (unit of GMHRC) and Max Multi Specialty Hospital Greater Noida (unit of FSF) are provided medical services pursuant to such agreements. MHC, along with its subsidiaries and network of hospitals and speciality medical centres, currently includes 9 superspeciality and multi-speciality hospitals (focused on quaternary and tertiary care) located in Delhi, Punjab, Haryana, Uttar Pradesh and Uttarakhand. As of December 31, 2015, the combined capacity at these establishments comprised 2,563 beds (including approximately 812 critical care beds). The MHC network also includes hospitals in Gurgaon, Noida and Pitampura (Delhi), which are secondary healthcare establishments, with capacities of 64, 46 and 70 beds respectively. In addition, MHC also operates one specialty medical Centre at Panchsheel Park in South Delhi, which provides outpatient and primary healthcare services, specialty clinics for eye care and dental care, as well as daycare facilities. Eight hospitals in MHC s network have been accredited with NABH certification for patient care and seven hospitals have accreditation from NABL. 5 of the MHC network hospitals are also LEED certified. Max Super Speciality Hospital Saket has also been awarded the Green OT certification from the Bureau Veritas, a European Standards organization and is the first hospital in the country to receive this prestigious accolade. As of December 31, 2015, the MHC network had approximately 2,955 physicians, of which approximately 1,741 were fulltime employees, including several doctors of international repute. MHC follows a model aimed towards healthcare excellence based on focused management and leadership, established systems and protocols, professional development for its healthcare professionals through continuing medical education and training courses, superior infection control and patient safety measures, stringent audit measures, continuous monitoring of patient feedback as well as quality patient care. MHC has a long term vision to expand its network bed capacity from 2,563 to over 5,000 beds organically has the land available for these expansions. In the near term, MHC will focus on expanding capacity at its existing networks (approximately 1200 beds across locations). In July, 2015, MHC completed the acquisition of 77.95% equity shareholding (on a fully diluted basis) in CRL, pursuant to the share purchase cum subscription agreement dated May 28, 2015, as amended ( CRL SSPA ). CRL owns and operates a 260 bed establishment (expandable to 460 beds) Pushpanjali Crosslay Hospital (renamed as Max Super Speciality Hospital, Vaishali), located in the East Delhi-Ghaziabad-Noida corridor. In terms of the CRL SSPA, after the expiry of 4 years from the completion date i.e. July 10, 2015 (i) MHC has a call option right to acquire 31,038,143 shares held by the existing shareholders of CRL at fair market value subject to a floor price of Rs per equity share; and (ii) the existing 43

44 shareholders of CRL also have a put option right to sell such shares held by the existing shareholders of CRL to MHC at fair market value subject to a floor price of Rs per equity share. In November 2015, MHC completed the acquisition of 51% equity shareholding (on a fully diluted basis) in SCHPL, pursuant to the share purchase agreement dated November 27, 2015 ( SCHPL SPA ). SCHPL provides medical services to Saket City Hospital (renamed as Max Smart Super Speciality Hospital), a 225 bed establishment (expandable to 1200 beds) operated by GMHRC located in South Delhi. MHC has an obligation to acquire balance 49% stake in SCHPL for a pre-agreed consideration of Rs billion, subject to receipt of regulatory approvals, which will increase at 12% compounded interest till such acquisition.in terms of the SCHPL SPA, MHC has a call option right to acquire all the remaining shares held by the existing shareholders of SCHPL in accordance with the terms of the SCHPL SPA. Further, after the (i) expiry of 3 years from the completion date i.e. November 27, 2015 or (ii) receipt by the GMHRC of all the approvals required from Governmental authority(ies) as may be required for commencement of the construction of 900 additional beds (taking the total number of beds in the hospital to around 1200 beds), whichever is later, the existing shareholders of SCHPL have a put option right to sell all remaining shares held by them to MHC in accordance with the terms of the SCHPL SPA. During the financial year ended March 31, 2015, the combined revenue of network hospitals in MHC was Rs 17,400 million with an EBITDA of Rs 1,700 million 4. During the 9 months ended December 31, 2015, MHC turned profitable despite 2 large acquisitions. The MHC network of hospitals reported revenue of Rs 15,810 million and EBITDA of Rs 1,517 million. The improved financial performance is on the back of the steady growth of newer hospitals towards breaking even at the EBITDA level as also margin improvements at existing hospitals, driven by revenue growth, improvement in business mix, and cost reduction initiatives. The network derives approximately 65% of its revenue from tertiary care and surgical procedures, which are complex services with superior gross margins. For the year ended March 31, 2015, the average occupancy rate for MHC s network of hospitals was approximately 74% of the operational beds, despite capacity additions and reduction in average length of stay. Improved business mix resulted in average revenue per operating bed of close to Rs 30,000 per day. MHC plans to continue the efforts for achieving higher growth and value creation through the following efforts: Optimizing current network by improving the profitability of mature hospitals through driving improvement in specialty/ channel mix. Increase the share of revenues from quaternary care by building on key specialities such as organ transplants, oncology and neurology. Driving international business and de-prioritizing institutional business. Building on current momentum in FY 17 and onwards to expand margins by optimizing material costs (through procurement efficiencies, formulary management, increasing reusability of consumables) and effectively managing institutional business to reduce provisions, and controlling personnel and corporate costs. Further achieving structural cost saving by building strength in procurement, investing in technology/ digital to improve manpower productivity and re-engineering/ simplifying processes Ability to double bed capacity from 2,563 to over 5,000 beds on existing land parcels. Seeding alternate models e.g., pathology, cancer day care centre and to leverage technology to provide health services outside of hospital. Seamlessly integrating recently acquired hospitals with significant growth potential in chosen geographies like the acquisition of CRL, which operates Pushpanjali Hospital (renamed as Max Super Speciality Hospital, Vaishali) in the NCR region with a potential to grow from 260 beds to 460 beds, which along with its existing network hospital in Patparganj will give it a capacity of over 1000 beds in that region and the acquisition of SCHPL, which provides medical services to Saket City Hospital (renamed as Max Smart Super Speciality Hospital) offers the opportunity to create one of Asia s largest medical facility in the heart of South Delhi. The acquisition of Saket City Private Hospitals Limited gives MHC an opportunity to expand its network in Saket to around 2000 beds over time making this facility, one of the largest single location facilities in Asia with 7 centres of excellence, including beds dedicated to Oncology, state-of-the-art transplant centre and India's first international patient centre. MHC derives competitive advantage from its network presence in Delhi and positive brand image. MHC intends to 4 The above results are for MHC Network of hospitals and includes results for Max Super Specialty Hospital, Saket, (unit of DDF) and Max Super Speciality Hospital, Patparganj, (unit of BMDRC). Only management fee from services provided to FSF for Max Multispecialty Hospital, Greater Noida is included. 44

45 leverage its brand to grow organically in these locations, add advanced quaternary care services and evolve its offerings to serve upcoming diseases burdens such as lifestyle diseases, non-communicable diseases etc. Simultaneously, MHC is exploring avenues to further expand its reach and provide quality care to people at large, outside of its hospital campuses through technology and focused daycare centres. Operations The table below provides certain information about MHC s network of hospitals and healthcare facilities: S.No. Hospital Location Ownership/ Service agreements Commencement of Operations Existing Bed Capacity Peak Bed Capacity Existing Hospitals and Medical Centers 1 Max Super Speciality Hospital West Block, Saket, New Delhi Owned May Max Super Speciality Hospital Shalimar Bagh, New Delhi Owned November Max Super Speciality Hospital Mohali, Punjab Owned* September Max Super Speciality Hospital Bhathinda, Punjab Owned* September Max Super Speciality Hospital Dehradun, Uttarakhand Owned May Max Super Speciality Hospital Ghaziabad, Uttar Pradesh Owned July 2015** Max Hospital Pitampura, New Delhi Leased February Max Hospital Noida, Uttar Pradesh Leased August Max Hospital Gurgaon, Haryana Owned July Max Multi Specialty Centre Panchsheel Park (North), New Delhi Leased January Max Super Speciality Hospital (unit of Devki East Block, Saket, New Delhi Medical Service Agreement December Devi Foundation) 12 Max Super Speciality Hospital Patparganj, New Delhi Medical Service Agreement May (unit of Balaji Medical and Diganostic Research Centre) 13 Max Smart Super Speciality Hospital Saket, New Delhi Medical Service Agreement November 2015*** 225 1,210 (unit of GMHRC) 14 Max Multispeciality Hospital Greater Noida, Uttar Pradesh Service Agreement July Proposed Hospitals 15 Max Super Speciality Hospital Greater Noida, Uttar Pradesh Owned To be decided Max Super Speciality Hospital Mullanpur Owned To be decided ,563 5,123 *Hospitals set up under the Public Partnership Model with the Government of Punjab, wherein MHC s subsidiaries have been granted a concession to build and operate the hospital for a period of 50 years, subject to the payment of a concession fee as per the concession agreement. Land has been provided by the Government of Punjab. **Acquired majority stake of 77.95% (on a fully diluted basis). *** Acquired majority stake of 51% (on a fully diluted basis) in SCHPL, which provides medical services to Saket City Hospital (renamed as Max Smart Super Speciality Hospital), a unit of GMHRC. The proposed expansion plans and the anticipated dates for the commencement of the operation of new hospitals are based on MHC s current plans and estimates. While development of certain of these proposed new and/or expanded properties is currently under progress, there can be no assurance that these hospitals will commence operations within such anticipated time frames or at all. Specialties Through its network of hospitals, MHC provides a broad range of specialties, including advanced cardiac care, orthopedics, oncology, renal sciences, neuro-sciences, MAMBS (specialties for which Centres of Excellence have been created in the MHC network hospitals), and other services including, obstetrics and gynecology, pediatrics, nephrology, and general surgery as well as diagnostic and emergency services. Going forward focus would be on to buliding key specialities such as oncology, neuro sciences, transplant medicine, orthopedics, cardiac sciences, diabetes & bariatric surgeries. MHC s hospitals also provide outpatient services, including consultation for a range of ailments, preventive health screening, and laboratory services as well as radiology and imaging services. Hospitals The following table describes certain key statistics for MHC s network of hospitals: 45

46 MHC network of hospitals financial and operational performance as on December 31, 2015: 9 month period ended 31-Dec-15 March 31, month period ended March 31, 2014 March 31, 2013 Number of operational beds (average for the period) 2,272 1,680 1,472 1,310 Number of procedures # Cardiac care 13,577 16,655 13,660 11,932 Oncology 3,051 4,237 2,575 1,960 Orthopaedics 8,416 8,915 6,338 4,395 Neurosciences 2,969 4,166 3,288 2,099 Renal sciences 4,914 5,689 3,737 2,613 MAMBS 3,447 4,201 4,029 3,898 Others 20,525 23,617 21,464 17,973 Medical admissions 63,746 64,276 57,581 50,244 Outpatient registrations * 4,064,316 4,503,955 3,826,194 3,636,303 Occupancy rate 71.65% 73.50% 74.31% 69.72% Average length of stay (ALOS) (days) Average realization per OBD (Rs.) 30,296 28,814 26,208 25,129 Inpatient income (Rs. Millions) 12, , , ,704.7 Outpatient income (Rs. Millions) 3, , , ,671.1 Other income (Rs. Millions) Income from SBUs Gross Revenue 15, , , ,488.4 Net Revenue 15, , , ,180.8 Contribution (%) 65.0% 64.1% 63.7% 62.8% EBITDAR [Hospital level] (%) 17.03% 17.06% 15.84% 14.29% EBITDAR [Hospital level] (Rs Millions) 2, , , ,597.2 EBITDA [Hospital level] (%) 15.26% 15.14% 13.91% 12.63% EBITDA [Hospital level] (Rs Millions) 2, , , ,412.5 EBITDA after central cost (%) 10.0% 10.1% 8.3% 6.4% EBITDA after central cost (Rs Millions) 1, , , PBT (%) 0.5% -0.3% -3.3% -5.9% PBT (Rs Millions) Net Worth (Rs Millions) 10, , , ,055.4 Net Debt (Rs Millions) 10, , , ,301.4 Tangible Fixed Asset (Gross Block) (Rs Millions) 19, , , ,223.8 * Outpatient Volumes # Surgical Procedures Notes: Average realization per OBD is based on Inpatient Department (IPD) revenues only EBITDAR figure exclude lease rental amounts EBITDA (Hospital level) exclude central cost EBITDA margin is calculated on net revenue basis 46

47 For hospitals operational for more than 5 years as on December 31, month period ended December 31, 2015 March 31, month period ended March 31, 2014 March 31, 2013 Number of operational beds (average for the period) 1,095 1,084 1, Number of procedures # Cardiac care 6,814 9,083 8,322 9,124 Oncology 1,777 2,397 1,961 1,766 Orthopaedics 3,450 4,197 3,800 3,523 Neurosciences 1,722 2,256 1,759 1,540 Renal sciences 3,132 4,010 2,686 2,309 MAMBS 3,294 4,148 3,918 3,824 Others 13,085 17,269 16,920 15,209 Medical admissions 35,896 44,215 43,110 41,853 Outpatient registrations * 2,883,443 3,432,706 3,033,785 3,218,811 Occupancy rate 75.23% 75.52% 75.95% 76.23% Average length of stay (ALOS) (days) Average realization per OBD (Rs.) 33,203 30,767 27,304 25,742 Inpatient income (Rs. Millions) 7, , , ,497.4 Outpatient income (Rs. Millions) 2, , , ,419.5 Other income (Rs. Millions) Gross Revenue 10, , , ,023.0 Net Revenue 10, , , ,733.6 Contribution (%) 65.84% 64.87% 63.60% 62.34% EBITDAR [Hospital level] (%) 20.34% 19.60% 19.10% 18.96% EBITDAR [Hospital level] (Rs Millions) 2, , , ,845.7 EBITDA [Hospital level] (%) 19.46% 18.71% 18.13% 18.10% EBITDA [Hospital level] (Rs Millions) 1, , , ,761.3 EBITDA after central cost (%) 13.7% 13.5% 12.1% 11.6% EBITDA after central cost (Rs Millions) 1, , , ,128.6 PBT (%) 5.6% 4.3% 1.6% 2.6% PBT (Rs Millions) * Outpatient Volumes # Surgical Procedures Notes: Average realization per OBD is based on Inpatient Department (IPD) revenues only EBITDAR figure exclude lease rental amounts EBITDA (Hospital level) exclude central cost EBITDA margin is calculated on net revenue basis Return on capital employed of the matured units for FY is at 16%. 5 The above results are for the MHC Network of hospitals and includes the results for Max Super Specialty Hospital, Saket (unit of DDF) and Max Super Speciality Hospital, Patparganj, (unit of BMDRC). 47

48 For hospitals operational for less than 5 years as on December 31, month period ended December 31, 2015 March 31, month period ended March 31, 2014 March 31, 2013 Number of operational beds (average for the period) Number of procedures # Cardiac care 6,265 7,572 5,338 2,808 Oncology 1,055 1, Orthopaedics 4,444 4,718 2, Neurosciences 1,179 1,910 1, Renal sciences 1,543 1,679 1, MAMBS Others 5,456 6,348 4,544 2,764 Medical admissions 21,491 20,061 14,471 8,391 Outpatient registrations * 9,32,993 10,71,249 7,92,409 4,17,492 Occupancy rate 67.46% 69.84% 70.36% 48.37% Average length of stay (ALOS) (days) Average realization per OBD (Rs.) 27,336 24,967 23,374 21,960 Inpatient income (Rs. Millions) 3, , , ,207.3 Outpatient income (Rs. Millions) Other income (Rs. Millions) Gross Revenue 4, , , ,465.4 Net Revenue 4, , , ,447.2 Contribution (%) 63.11% 62.67% 64.32% 66.18% EBITDAR [Hospital level] (%) 11.52% 10.44% 5.23% % EBITDAR [Hospital level] (Rs Millions) EBITDA [Hospital level] (%) 7.13% 5.66% 0.00% % EBITDA [Hospital level] (Rs Millions) EBITDA after central cost (%) 2.7% 1.5% -4.4% -29.9% EBITDA after central cost (Rs Millions) PBT (%) -7.4% -7.8% -19.8% -63.0% PBT (Rs Millions) * Outpatient Volumes # Surgical Procedures Notes: Average realization per OBD is based on Inpatient Department (IPD) revenues only EBITDAR figure exclude lease rental amounts EBITDA (Hospital level) exclude central cost EBITDA margin is calculated on net revenue basis (ii) Health Insurance Business Max Bupa is one of the leading standalone private health insurance companies in India. Max Bupa is a joint venture between Max India which holds 74% of the equity share capital and Bupa which holds the balance 26% of the equity share capital. In terms of the Max Bupa JVA, both Max India and Bupa have agreed for Bupa to increase its shareholding in Max Bupa from the current level of 26% to 49%. As on December 31, 2015, Max Bupa had approximately 949,063 urban lives in force under various policies (under different product proposition) with an infrastructure consisting of an agent network of approximately 12,000 agents, 26 offices, 3,500 network hospitals and four bancassurance partner tie-ups. Max Bupa is focused on the urban B2C of the health insurance market with limited play in the B2B and B2G. For the year ended March 31, 2015, its B2C market share amongst private health insurers increased to 9.3% vis-à-vis 7.5% in the previous year ended March 31, Further, the share of the B2C segment in Max Bupa s gross written premium an 6 New hospitals comprise hospitals at Mohali, Bathinda, Dehradun, Shalimar Bagh, Vaishali and Saket. 48

49 increased to 95% during the year vis-à-vis 79% in the previous year with increased focus on the segment. Max Bupa s business rests on six values - Caring, Respectful, Ethical, Accountable, Trustworthy and Enabling (CREATE). This value system is instrumental in making Max Bupa one of the most trusted and admired health insurance players in India. Strategies Max Bupa s vision is to be India s most admired health insurance company with a mission to help our customers have healthier and more successful lives. To realize its goals, Max Bupa s strategy is to be the choicest provider for the affluent segment with a broad base franchise network having customer centric, compliant and cost conscious culture and being digitally enabled for a valuable customer experience. The management of Max Bupa has decided to drive the organization strategy for the year FY by following a portfolio management approach to managing existing customer base and building new business, having a compelling product proposition, building digital capabilities, optimizing expenses to build a robust claims management framework, strengthening processes and technology for building scale, and through effective talent management. Segments and Products Max Bupa was the first health insurance company to launch several industry innovations by introducing products with the highest sum insured options, no age restrictions for enrolment, no claim loading, guaranteed renewability and without any 2 year waiting period for specified illnesses such as cataract, hernia etc. while such restrictions commonly exist across most of the Indian health insurance products. A summary of policies and premium is provided in the table below: Rs. Million 9 Month ended Year ended March 31, December 31, First Year Premium 1, Renewal Premium 1, Total Gross Written Premium (GWP) 3,253 3,727 3,089 2,072 Growth in GWP (%) 30% 21% 49% 109% Total Number of Policies 181, , , ,311 Renewal Rate - B2C Segment 87% 90% 85% 81% Average Premium per life - Overall (Rs.) 4,981 4,818 4,542 4,334 Average Premium per life - B2C Segment (Rs.) 6,794 6,363 5,393 5,121 The decline in the first year premiums for is primarily due to a reduction in the B2B business from Rs 402 million in FY to Rs 47 million in FY as a result of Max Bupa s conscious strategy to reduce exposure to this segment and a decline in the rural business from Rs 79 million in FY to Rs 13 million in FY On the other hand, first year premiums in the B2C business segment, Max Bupa s chosen area of focus, have grown by 21% from Rs 1,145 million in FY to Rs 1,388 million in FY The renewal premiums have grown as a result of a larger book to renew, price increases, and increased focus on the B2C segment, apart from a robust predictive analytics framework enabling focus on customers with higher propensity to renew, enhanced system efficiencies, and implementation of several customer service initiatives. Max Bupa had a gross written premium of Rs. 3,727 million for the year ended March 31, 2015, a growth of 21% over the previous financial year. The growth was driven by increase in the number of new and renewed policies during the year from 204,546 (in the year ended March 31, 2014) to 231,821 (in the year ended March 31, 2015) and an increase in average premium realization per life from Rs. 4,542 to Rs. 4,818 for the year ended March 31, 2014 and March 31, 2015 respectively. During the 9 months ended December 31, 2015, Max Bupa had a gross written premium of Rs 3,253 million, a growth of 30% over the corresponding previous period Max Bupa enjoys one of the highest renewal rates in the industry for its B2C segment which contributed 95% to its gross 49

50 written premium in year The renewal rates for this segment continued to increase to reach 90% for the year up from 85% in and 81% in Max Bupa offers health insurance and personal accident insurance products to four segments: 1. Urban Retail B2C With its focus on the Urban Retail B2C segment, the company s products are largely positioned in the premium sector for high net worth, affluent and mass affluent population in the top towns and cities in India. (a) (b) (c) Heartbeat: Heartbeat is Max Bupa s flagship product for retail customers, offering comprehensive health Insurance cover ranging from Rs. 0.2 million to Rs. 10 million for both individuals and families. Max Bupa Heartbeat Health Insurance plan has features like worldwide cashless treatment for 9 critical illnesses and emergency medical evacuation. The plan was recognised as Innovation of the Year at the Golden Peacock Awards Health Companion: It is an affordable health plan which offers features like no room rent capping, refill benefit, pre and post hospitalisation expenses, Ayush Treatment, all day care treatments with guaranteed renewability for lifetime amongst other features. Health Assurance (Fixed Benefit): Health Assurance is a unique fixed benefit plan that provides flexibilities to cover any sudden eventualities like accidents, critical illnesses and incidences of hospitalisation. 2. Urban Group B2B (a) (b) (c) Group Health Insurance: Comprehensive suite of health insurance that includes hospitalization, OPD treatment, critical illness, health checkup, hospital cash cover and named illnesses. Employee First: Offered under 2 variants: (a) Employee first is a comprehensive health scheme, suited for small and large corporate and institutions for high sum insured (ranging from Rs. 0.1 million to Rs. 5 million) and quality coverage with added maternity benefits and wellness initiatives and (b) Employee first classic accommodates the small and medium enterprises with an insured sum of Rs million to Rs. 0.5 million. Group Personal Accident (Fixed Benefit): Group Personal Accident is a comprehensive personal accident cover for large as well as smaller-sized groups, which provides flexibility to design a cover suited to the requirements of group members with a choice of basic benefits and optional benefits. 3. Rural Retail B2C (a) Swasth Parivar: A health indemnity plan designed to meet the healthcare financing needs of the Indian rural population. It offers an affordable cover with sum insured options of Rs million and Rs. 0.1 million and provides for basic coverage like hospitalisation expenses, medicine and drugs, IVF, blood transfusion, operation theatre charges, diagnostic tests and procedures and surface ambulance. 4. Rural Group B2B (a) (b) Swasthya Pratham: A group health micro insurance cover intended to cater to the group healthcare needs NGO s (non-governmental organisations) and SHG s (self-help groups). The sum insured options ranges from Rs. 5,000 to Rs. 30,000 for individuals and Rs 10,000 to Rs 30,000 for family floater policies. Group Personal Accident (Fixed Benefit): Offers cover for basic benefits like accidental death, permanent total disability, permanent partial disability and temporary total disability plus and flexibility for additional benefits and for extending coverage to dependents 50

51 GWP by Segment Rs. Million 9 months ended Dec'15 Year ended March 31, Urban Retail (B2C) Growth in Urban Retail (B2C) 35% 45% 52% 110% % of Urban Retail (B2C) in Total GWP 97% 95% 79% 78% Urban Group (B2B) Growth in Urban Group (B2B) -71% -69% 45% 77% % of Urban Group (B2B) in Total GWP 1% 5% 18% 18.50% Other - Rural & Social Growth in Rural & Social 376% -84% 8% 1287% % of Rural & Social in Total GWP 1% 0% 3% 4% Post a detailed strategic review conducted in 2014, Max Bupa decided to focus largely on its core area of expertise, the B2C segment and limit its exposure to the B2B segment. Distribution Max Bupa distributes its health and personal accident insurance products throughout India through multiple channels including individual agents, bancassurance partnerships, corporate agents, brokers, and the direct to customer channel (Digital, DST and Tele-sales).The current focus is on agency and bancassurance as primary channels and the key growth drivers complemented by investments in and strengthening of the digital platform. GWP by Business Acquisition Channel Rs. Million 9 Month Ended Year ended March 31, 31-Dec Individual Agents 1,629 1,891 1, Direct Business Corporate Agents Banks Brokers Corporate Agents Others Others Total 3,253 3,727 3,088 2,072 Agent Network Max Bupa had a network of close to 12,000 agents and 26 offices spanning 17 cities across India as on December 31, 2015 forming its largest distribution channel. Gross written premium of Rs. 1,891 million and Rs. 1,365 million generated by the channel contributed 51% and 44% to the total gross written premium for Max Bupa for the years ended March 31, 2015 and March 31, 2014 respectively. Number of policies from the channel also increased from 118,131 to 128,035 for the same period. Bancassurance and Alliance partnerships (Corporate Agents Banks/Others and Brokers) Max Bupa s has bancassurance partnerships with 4 four banks - Standard Chartered Bank (SCB), Federal Bank, Deutsche Bank (DB) and Ratnakar Bank Ltd (RBL) and two non-banking finance company (NBFC) - Bajaj Finance and Muthoot. Max Bupa has recently tied-up with Bank of Baroda, the second largest public sector bank (in terms of market capitalization) with a branch network of 5,400 branches and customer base over 60 million The channel contributed 7% to total gross written premium for the year ended March 31, 2015 vis-à-vis 1% for the year ended March 31, The tie-up with various Banks and large NBFC s enhanced Max Bupa s reach across the country through their branch network, access to their large base of customers and expansion of sales through their trained staff. Max Bupa has also partnered with large brokers like NJ Insurance Brokers, Loyal Insurance etc. 51

52 Direct-to-Customer Business Max Bupa s direct business contributed Rs. 864 million or 23% of gross written premium in the year ended March 31, 2015, up from Rs. 675 million or 22% of gross written premium in the year ended March 31, Telesales: Max Bupa has ~140 dedicated out-bound tele-callers and a state-of-the-art technology infrastructure. Facilities include 60 seconds call-back turnaround time for customers who request for information on Max Bupa s website, chat support and 3-way tele-underwriting through which the prospect and the underwriting team virtually come face-to-face which facilitate speedy decisions and enhance transparency. Direct Sales Force: Max Bupa s dedicated direct sales force consists of ~70 people and focuses on high net worth individuals across the top 4 metropolitan regions (Delhi, Mumbai, Bangalore and Hyderabad). Website: Max Bupa provides a comprehensive website including an end-to-end e-commerce platform and services for its existing customers. Users can get product recommendations based on their requirements, calculate premiums and buy the products. Digital: Max Bupa has partnered with 3 web aggregators and ebrokers including Policy Bazaar, Coverfox and BankBazaar. Max Bupa has created a differential product offering for its brokers and developed specific digital strategies suited to its digital partners and e-brokers. Network Hospitals Max Bupa provides high quality customer centric clinical care through a network of approximately 3,500 healthcare providers spread across 475 cities including a strong network in the Tier II, III IV cities capable of catering to its expanding member base. In-house network empanelment and a meticulous selection process have helped Max Bupa scale up its network from 1,500 providers in 2013 to ~3,500 providers currently. Regular audits and mystery shopping of providers are conducted for managing risk with the network of providers. Max Bupa also has in-house capabilities to perform case management and case reviews for high risk claims and cost control. Solvency Max Bupa s solvency ratio has consistently been higher than the required ratio of 1.50 with this ratio being 2.11 and 2.10 as on December 31, 2015 and as on March 31, 2015, respectively. This indicates a high degree of preparedness to meet unforeseen exigencies and financial strength. 9 Month Ended Year ended March 31, 31-Dec Solvency Ratio Operations/Business Management Health Risk Management (HRM) Max Bupa has invested extensively in its HRM capabilities that form the basis of key business decisions relating to the selection, assessment and management of health risk. Key operating decisions related to product design, underwriting and claims philosophy, choice of market segments as well as product and geographical mix are guided by HRM principles and are enabled by strong health and clinical data analytics. Max Bupa has also made significant progress in enhancing payment integrity, reducing overcharging by providers, fraud detection and control to ensure that only genuine claims are paid by mobilizing claims leakage control measures; thereby maintaining affordable premiums for its suite of health insurance products. Claims Management Since its inception, Max Bupa has been undertaking in-house processing of claims in a market that primarily relies on third party administration of claims. Max Bupa believes that this practice enhances the customer experience significantly since at the time of incurring a claim, the customer is able to deal directly with Max Bupa instead of a third party. Max Bupa promises 30 minutes processing turnaround time ( TAT ) for cashless claims at the time of admission which is 52

53 currently one of the best in the industry whereas all reimbursement claims are processed with an internal TAT of 15 days compared to the IRDAI recommendation of 30 days. The workflow and document management system automation enables Max Bupa to keep the customer aware about his/her claim s status at all times though system generated s, SMS and fax to the providers. Underwriting and Pricing Max Bupa has a consistent, transparent and standard operating procedures driven approach to underwriting applications to maintain a healthy portfolio. Its underwriting team consists of professional doctors who are well trained and have a deep knowledge of underwriting principles. Max Bupa tries to ensure that lives are underwritten based on its pre-defined guidelines and every customer is treated fairly. A technical audit is conducted every 6 months by Milliman, which is among the world's largest providers of actuarial and related products and services. Investments Rs. Million 9 Month Ended Year ended March 31, 31-Dec Debt Government Securities and Bonds 1,292 1, Corporate Housing and Infrastructure 1, Money Market Instruments Others 1,681 1, Equity Total 5,180 4,300 3,369 2,599 Note: (i) Others Investment include Investment in Fixed Deposits and Mutual Funds As on December 31, 2015 all of Max Bupa's investments are in fixed income securities only. About 44% of the investment portfolio is invested in long term securities (with more than 18 months residual maturity) and 56% in short term securities (with less than 18 months residual maturity). The average maturity for the long term portfolio is 77 months and that of the short term portfolio is 8 months, whereas for the overall portfolio the average maturity is 36 months. (iii) Senior Living Business Antara is an inspiration of the Max India group to create an active, vibrant residential concept for progressive seniors. Spread over 13.6 lush green acres in Dehradun, Antara is a luxurious, fully-integrated community designed around the safety, wellness and lifestyle requirements of progressive seniors above the age of 60. The promise of a better life at Antara for our residents is built on the pillars of a unique location, thoughtful design, a curated community and holistic well-being approach. Antara, thus, is a luxury continuous care proposition - a comprehensive ecosystem that embraces and encourages the idea that life can be magical post 60. With a fulfilling lifestyle and myriad opportunities to explore, engage and enjoy, Antara is an impeccably designed, rigorously serviced community where life is savoured in the luxury of nature with like-minded people. At Antara, the aspiration is to create a community where our residents feel they belong with each other without truly knowing each other from the past. Common interests, beliefs and enthusiasm tie our residents together in inexplicable threads to build and nurture a community where friends become family. We are building a community that truly allows like-minded people to find each other and thus feel comfortable to call Antara their home. We truly believe there is no age limit on a life of activity and significance. With a growing number of seniors, who are well-travelled and are accustomed to a certain quality of life and infrastructure, Antara is a community which enables them to maintain the lifestyle they are habituated to. Carefully crafted by internationally renowned architects Perkins Eastman from New York and Esteva & Esteva from Spain and under construction by experienced construction partners such as Shapoorjii Pallonji (civil works), Sterling Wilson (plumbing and fire fighting) and Jakson (electricals) Antara is being created with a unique design philosophy to encourage the utmost quality of living. This philosophy has been woven into the fabric of the community through a strict adherence to international standards of senior specific design intervention. With 50,000 square feet of recreational spaces, 200 plus apartments and premium facilities, Antara Senior Living brings a unique dimension to senior living in the Indian 53

54 subcontinent. At Antara Dehradun, residents will wake up to the glorious views of the Mussoorie hills, dig into curated food & beverage options at the restaurant, bar and deli, be pampered at the spa at the 50,000 sq. ft. clubhouse, work out with a personal trainer, exercise at the gym, plan an outing at the nearby natural reserve forests and spend the afternoon indulging in a long list of arts, sports and entertainment options. Flanked by the super specialty MHC s hospital in Dehradun, the Antara community also provides for the complete care of the residents physical health, as well as their minds and spirit. Key Operational Developments of FY FY was focused on the following initiatives: Accelerating construction works for Dehradun; Developing Antara s resident community; Cultivating operational readiness and execution of pre-operations plan; Building our corporate systems, processes and an integrated technology platform to help drive efficiency;and We are pleased to report good progress on all of these fronts. Accelerating Construction Works Antara s project team over the last 30 months has demonstrated its ability to work in a challenging local environment and climatic conditions while focusing on delivery of high quality outputs. At an overall picture, as opposed to a full completion target of December, 2015, the project is expected to be completed by December, However, 50% of the residences will have possession letters handed over from August 2016 and the rest will be handed over in a phased manner over the rest of the year. The project team is working closely with finance, operations and other teams to accelerate project completion. As of March , structural work for all residences are completed and internal finishing works are in advances stages in residence 3, 4, 5 and 6. Engineering & utility works are also in advanced stage of completion. It is expected that the occupancy certificate process will complete by June Developing Antara s Resident Community for Dehradun In May 2013, Antara started bookings for the Dehradun community and has over the last 33 months built a robust engine to develop the Antara brand and engage with potential residents through a highly interactive process. In line with our vision, Antara s signed-on residents today exemplify a genre of seniors who are progressive and passionate for embracing new experiences. Over the past year, Antara has pursued diverse marketing and brand building initiatives, customer acquisition events and activities. The revised lead generation and brand building initiatives include well-planned campaigns over print and digital media in addition to advertorials, and resident and client events. The last year has also seen a renewed focus on data analytics with the successful implementation of an enterprise wide Microsoft Dynamics CRM. Cultivating Operational Readiness The hallmark of successful high quality service delivery is prior planning and preparatory works. Antara s community operations team has completed its hiring of key team members and is spending the pre-operation time in designing its standard operating procedures, establishing operational IT systems and training programs amongst other activities. The operations team is also working very closely with the site projects team to be part of its quality journey, as each space within the community moves from civil to finishing activities. This close synchronization will help the operations team complete a seamless handover from projects over the next three quarters. Building Corporate Systems And Processes 54

55 Antara is pleased to report that it now has a dedicated team of 95 team members catering to a variety of business functions. Majority of the additions in team have been at the project site and are now expected to be in the operations team. The company has also invested significant time and effort in creating necessary processes and systems, and is leveraging IT for productivity gains. FY Outlook Over the course of FY , Antara s focus will be towards successfully launching the Dehradun community, seamlessly migrating from executing the project to taking good care of our residents. The company will continue to build its brand positioning and product awareness amongst the target customers by various public relation initiatives, events and activities to generate customer leads and will create engagement programmes for signed-on residents. The company aims to have over 180 team members on-site once the community is fully functional. Antara will also take steps in FY towards charting a clear roadmap for future communities and other avenues of business growth. 55

56 SUMMARY OF FINANCIAL INFORMATION Max India Standalone Results for Nine month ended Dec 15 STATEMENT OF STANDALONE UNAUDITED FINANCIAL RESULTS FOR THE QUARTER AND NINE MONTHS ENDED DECEMBER 31, 2015 Part-I (Rs. in Million) 3 months Preceding Year to date Previous Particulars ended 3 months figures for Year ended current period ended ended (Unaudited) (Unaudited) (Unaudited) (Unaudited) 1. Income from operations (a) Net sales (net of excise duty) (b) Income from investment activities - Other investment income (c) Income from shared services Total income from operations (net) Expenses (a) Cost of materials consumed (b) Purchases of stock-in-trade (c) Change in inventories of finished goods and work-in-progress (d) Employee benefits expense (e) Depreciation and amortisation expense (f) Legal and professional expenses (g) Other expenses Total expenses Profit/(loss) from operations before other income, finance (0.1) costs and exceptional items (1-2) 4. Other income Profit/(loss) from ordinary activities before finance costs and (0.1) exceptional items (3+4) 6. Finance costs Profit/(loss) from ordinary activities after finance costs but (0.1) before exceptional items (5-6) 8. Exceptional items Profit/(loss) from ordinary activities before tax (7+8) (0.1) 10. Tax expense Net Profit/(loss) from ordinary activities after tax (9-10) (0.1) 12. Extraordinary items (net of tax expense) Net Profit/(loss) for the period (11-12) (0.1) 14. Paid-up equity share capital (Face Value Rs. 2 Per Share) Reserves excluding revaluation reserve as per balance sheet of NA NA NA (0.1) previous accounting year 16. Earnings per share (of Rs.2/- each) (not annualised) a) Basic (Rs.) (0.30) b) Diluted (Rs.) (0.30) The Company was incorporated on January 1, Hence, numbers for corresponding 3 months ended and year to date figures for previous year are not available. Notes to accounts 1. The Hon ble High Court of Punjab and Haryana vide its order dated December 14, 2015, has sanctioned the Composite Scheme of arrangement ( Scheme ) under Sections 391 to 394 read with Sections 100 to 104 of the 1956 Act between MFSL, the Company and MVIL. and their respective shareholders and creditors for transfer of all the assets and liabilities pertaining to each of the demerged undertakings (to the Company and MVIL) with effect from April 1, 2015 (Appointed date). The Scheme is effective from January 15, 2016 i.e. the date of filing of the certified copy of the order of the Hon ble High court of Punjab and Haryana with the Registrar of Companies, Chandigarh and Shimla. In terms of the Scheme, the Company and MVIL are required to issue and allot shares to each member of MFSL, whose name is recorded in the register of members and records of MFSL, as on the Record Date i.e. January 28, 2016 in the following ratio: 56

57 One equity share of INR 2 each in the Company for every one equity share of INR 2 each held by equity shareholders in MFSL; One equity share of INR 10 each in MVIL for every five equity shares of INR 2 each held by equity shareholders in MFSL. 2. The Company is in the process of finalizing the procedures for listing of the shares to be issued pursuant to demerger on NSE and BSE. 3. Tax expense includes both current and deferred tax. 4. Earnings per share (EPS) for the period ending December 31, 2015, has been calculated on the basis of shares issued consequent to the Scheme sanctioned by the Hon ble High court of Punjab and Haryana, post the approval from FIPB. 5. Previous period figures have been regrouped/reclassified to conform to the current period classification. 6. These unaudited standalone financial results for the quarter ended December 31, 2015 have been reviewed by the Audit Committee and approved by the Board of Directors of the Company at its meeting held on February 9,

58 Max India Limited Balance Sheet as at December 31, 2015 As at Dec 31, 2015 (Rs. in Million) Equity and liabilities Shareholders' funds Share capital 0.5 Share pending allotment Reserves and surplus 15, , Current liabilities - Trade payables 67.0 Other current liabilities 6.0 Short-term provisions TOTAL 16,583.9 Assets - Non-current assets - Fixed assets - Tangible assets 20.5 Capital work-in- progress 0.2 Non-current investments 13,288.4 Deferred tax assets 22.4 Loans and advances ,072.1 Current assets - Current investments 1,862.5 Cash and bank balances 18.8 Loans and advances Other current assets ,511.7 TOTAL 16,

59 COMPOSITE SCHEME OF ARRANGEMENT Composite Scheme of Arrangement between MFSL, the Company and MVIL and their respective shareholders and creditors: The salient features of the Scheme are as follows: (a) Demerger of the Demerged Undertaking into the Company ( Part B of the Scheme ) The Appointed Date means April 1, 2015 or such other date as the Hon ble High Court of Punjab & Haryana may direct. Pursuant to the Scheme becoming effective and with effect from the Appointed Date, the Demerged Undertaking of MFSL stands demerged and transferred and vested in the Company, on a going concern basis, without any further act or deed, so as to become, as and from the Appointed Date, the undertaking of the Company, and to vest in the Company, all the rights, title, interest or obligations of the Demerged Undertaking therein. Upon the Scheme coming into effect, and in consideration of the demerger of the Demerged Undertaking in the Company, the Company shall, without any further act or deed and without receipt of any cash, issue and allot equity shares at par on a proportionate basis to each member of MFSL whose name is recorded in the register of members of MFSL as holding equity shares on the Record Date in the ratio of 1:1 i.e. 1 (one) equity share of Rs. 2 each of the Company to be issued for every 1 (one) equity share of Rs. 2 each of MFSL, held by the member. Upon coming into effect of the Scheme, the Articles of Association of MFSL, as at the Effective Date, shall mutatis mutandis become applicable to the Company, without the requirement to do any further act or thing. The approval of the Scheme by the shareholders of the Company shall also be deemed to be the approval by the shareholders for, (a) enabling investment by foreign institutional investors/registered foreign portfolio investors, under the portfolio investment scheme up to 49%, of the paid up share capital of the Company; and (b) enabling investment by NRIs investing under the portfolio investment scheme, up to 24%, of the paid up share capital of the Company. The Company shall, upon the coming into effect of the Scheme, intimate the RBI and comply with such other requirements as mandated by the extant foreign exchange regulations relating thereto. Upon the coming into effect of the Scheme, the Company shall take necessary steps to formulate stock option schemes based on the existing stock option scheme of MFSL. (b) Demerger of the MSF Demerged Undertaking into MVIL ( Part C of the Scheme) The Appointed Date means April 1, 2015 or such other date as the Hon ble High Court of Punjab & Haryana may direct. Upon the Scheme becoming effective and with effect from the Appointed Date, the MSF Demerged Undertaking of MFSL shall stand demerged and transferred and vested in MVIL, on a going concern basis, without any further act or deed, so as to become, as and from the Appointed Date, the undertaking of MVIL, and to vest in MVIL, all the rights, title, interest or obligations of the MSF Demerged Undertaking therein. MVIL shall, without any further act or deed, and without receipt of any cash, issue and allot equity shares at par on a proportionate basis to each member of MFSL whose name is recorded in the register of members of MFSL as holding equity shares on the Record Date in the ratio of 1:5 i.e. 1 (one) equity share of Rs. 10/- each of MVIL to be issued for every 5 (five) equity shares of Rs. 2/- each of MFSL, held by the member. Upon coming into effect of the Scheme, the Articles of Association of MFSL as at the Effective Date, shall mutatis mutandis become applicable to MVIL, without the requirement to do any further act or thing. The approval of the Scheme by the shareholders of MVIL shall also be deemed to be the approval by the shareholders for, (a) enabling investment by foreign institutional investors/registered foreign portfolio investors, under the Portfolio Investment Scheme up to 49%, of the paid up share capital of MVIL; and (b) enabling investment by NRIs investing under the Portfolio Investment Scheme, up to 24%, of the paid up share capital of 59

60 MVIL. MVIL shall, upon the coming into effect of the Scheme, intimate the RBI and comply with such other requirements as mandated by the extant foreign exchange regulations relating thereto Upon the coming into effect of the Scheme, MVIL shall take necessary steps to formulate stock option schemes by adopting the existing stock option scheme of MFSL. (c) (d) All costs, expenses, charges, fees, taxes, duties, levies and all other expenses, if any, arising out of or incurred in carrying out and implementing the terms and conditions or provisions of this Scheme and incidental thereto shall be borne and paid by MFSL. The Scheme is and shall be conditional upon and subject to: (i) (ii) (iii) The Scheme being approved by the requisite majority in number and value of such classes of persons including the respective members and/or creditors of MFSL, the Company and MVIL as may be directed by the Hon ble High Court of Punjab & Haryana. The sanction of the Hon ble High Court of Punjab & Haryana under Sections 391 to 394 of the 1956 Act read with Section 78 and Sections 100 to 103 of the said Act in favour of MFSL, the Company and MVIL under the said provisions and to the necessary Order under Section 394 of the 1956 Act being obtained; and Certified or authenticated copy of the Order of the Hon ble High Court of Punjab & Haryana sanctioning the Scheme being filed with the Registrar of Companies, Chandigarh, Punjab by MFSL, the Company and MVIL, as may be applicable. Each section of the Scheme shall be given effect to as per the chronology in which it has been provided for in the Scheme. Each section is independent of the other section of the Scheme and is severable. The Scheme shall be effective upon the sanction of the Hon ble High Court of Punjab & Haryana and the certified copy of its order being filed with the concerned Registrar of Companies. However, failure of any one part of one section for the lack of necessary approval from the shareholders/creditors/statutory regulatory authorities or for any other reason that the Board of Directors may deem fit shall not result in the whole Scheme failing. It shall be open to the concerned Board of Directors to consent to sever such part(s) of the Scheme and to implement the rest of the Scheme with any required modification. Subject to the provisions of the Scheme and save as provided in the Scheme, there shall be no change in the shareholding pattern or control in the Company, the Record Date and the listing which may affect the status of approvals of the Stock Exchanges. (e) Approval and Sanction of the Scheme The Company has obtained no-objections from the Stock Exchanges to the Scheme vide their letters dated April 7, The Hon ble High Court of Punjab & Haryana had waived the requirement of holding meetings of shareholders of MFSL and the Company as they had given their no objection through individual letters. The Hon ble High Court of Punjab & Haryana, vide its order dated December 14, 2015, has sanctioned the Scheme. A certified copy of the said order was received by the Company on January 6, Pursuant to the Scheme, the Demerged Undertaking of MFSL have been vested with the Company with effect from April 1, 2015 (i.e. the Appointed Date under the Scheme) under Sections 391 to 394, read with Sections 78 and 100 to 103 of the 1956 Act. The Hon ble Competition Commission of India, vide its order dated March 26, 2015, has held that the Scheme is not likely to have an adverse appreciable effect on competition in India, and has therefore approved the same under Section 31(1) of the Competition Act, (f) Activities Post Sanction of the Scheme The aforesaid order of the Hon ble High Court of Punjab & Haryana was filed by the Company with the 60

61 Registrar of Companies, Chandigarh, Punjab on January 15, 2016, which is the Effective Date of the Scheme. As per the Scheme, MFSL transferred all the assets, debts, liabilities, duties and obligations of every kind of the Demerged Undertaking to the Company. Further, the Company has issued and allotted equity shares to every member of MFSL, whose name appears in the register of members of MFSL, on the Record Date, in the following share entitlement ratio: The proposed Scheme will involve issuance to every shareholder of MFSL as on the Record Date, one new equity share of par value of Rs.2/- of Company for every one equity share of par value of Rs. 2/- held in MFSL. The equity shares of Company allotted pursuant to the Scheme, subject to applicable regulations, shall be listed and admitted to trading on the BSE and the NSE. Such listing and admission for trading is not automatic and will be subject to such other terms and conditions as may be prescribed by the Stock Exchanges at the time of application by the Company for listing. The Company has made an application to the SEBI through BSE vide its letter dated January 21, 2016 for relaxation from the strict enforcement of the requirement of Rule 19(2)(b) of the Securities Contract Regulation (Rules), 1957 (SCRR) for the purpose of listing the shares of the Company. This application is being made in accordance with the SEBI Circular. Further, this Information Memorandum will be available on the website of the BSE and the NSE and also on the website of our Company, The Company will publish an advertisement in the newspapers containing details in accordance with the SEBI Circular. The Company also undertakes that all material information about the Company shall be disclosed to the Stock Exchanges on a continuous basis so as to make the same available to the public. The Company has received approval from the Registrar of Companies in relation to change of name from Taurus Ventures Limited to Max India Limited vide issue of a fresh certificate of incorporation on February 12, The Company has received the approval of the FIPB, vide letter dated May 6, 2016, in relation to the foreign shareholding of 37.62% in the share capital of the Company. The Company has received ISIN: INE153U01017 from the Central Depository Services (India) Limited and the National Securities Depository Limited. 61

62 STATEMENT OF TAX BENEFITS ANNEXURE TO THE STATEMENT OF POSSIBLE TAX BENEFITS AVAILABLE TO MAX INDIA AND ITS SHAREHOLDERS Outlined below are the possible benefits available to the Company and its shareholders under the current direct tax laws in India for the FY A. Benefits to the Company under the Income Tax Act 1. Special tax benefits There are no special tax benefits available to the Company. 2. General tax benefits (a) Business income The Company is entitled to claim depreciation on specified tangible and intangible assets owned by it and used for the purpose of its business as per the provisions of Section 32 of the Income Tax Act. Business losses, if any, for an assessment year can be carried forward and set off against business profits for 8 subsequent years. Unabsorbed depreciation, if any, for an assessment year can be carried forward and set off against any source of income in subsequent years as per the provisions of Section 32 of the Income Tax Act. The Company will be entitled to claim against the future taxable profit, balance of carried forward losses, to the extend allocated by MFSL to it upon demerger, in accordance with income tax laws. (b) MAT credit As per the provisions of Section 115JAA of the Income Tax Act, the Company is eligible to claim credit for Minimum Alternate Tax ( MAT ) paid for any assessment year commencing on or after April 1, 2006 against normal income-tax payable in subsequent assessment years. MAT credit shall be allowed for any assessment year to the extent of difference between the tax payable as per the normal provisions of the Income Tax Act and the tax paid on the book profit as computed under Section 115JB of the Income Tax Act for that assessment year. Such MAT credit is available for set-off up to 10 assessment years succeeding the assessment year in which the MAT credit arises. (c) Capital gains (i) Computation and taxability of capital gains Capital assets are to be categorized into short - term capital assets and long term capital assets based on their nature and the period of holding. All capital assets, being a security (other than a unit) listed in a recognized stock exchange in India, or a unit of UTI established under the UTI Act, or a unit of an equity oriented fund (as defined in the Income Tax Act), or a zero coupon bond (as defined in the Income Tax Act), held by an assessee for more than 12 months are considered to be long term capital assets, capital gains arising from the transfer of which are termed as long term capital gains ( LTCG ). LTCG, in respect of an asset being shares of an unlisted company means capital gains arising from the transfer of a share, held by an assessee for more than 24 months 7. In respect of any other capital assets, the holding period should exceed 36 months to be considered as long term capital assets. Short Term Capital Gains ( STCG ) means capital gains arising from the transfer of capital asset being a security (other than a unit) listed in a recognized stock exchange in India, or a unit of UTI established under the UTI Act, or a unit of an equity oriented fund (as defined in the Income Tax Act), or a zero coupon bond (as defined in the Income Tax Act), held by an assessee for 12 months or less. STCG, in respect of an asset being shares of an unlisted company means capital gains arising from the transfer of a share, held by an assessee for 24 months 7 or less. In respect of any other capital assets, STCG means capital gains arising from the transfer of an asset, held by 7 Pending enactment. 62

63 an assessee for 36 months or less. LTCG arising on transfer of equity share in a company, or a unit of an equity oriented fund (as defined in the Income Tax Act), or a unit of a business trust (as defined in the Income Tax Act) is exempt from tax as per the provisions of Section 10(38) of the Income Tax Act, provided the transaction of sale of such shares or units is chargeable to securities transaction tax ( STT ) and subject to conditions specified in that section. However such LTCG shall be taken into account in computing the book profit and income tax payable under section 115JB of the Income Tax Act. As per the provisions of Section 48 of the Income Tax Act, which prescribes the mode of computation of capital gains, provides for deduction of cost of Acquisition/ improvement ( COA/I ) and expenses incurred (other than STT paid) in connection with the transfer of a capital asset, from the sale consideration to arrive at the amounts of capital gains. However in respect of LTCG arising on transfer of capital assets, other than bonds and debentures (excluding capital indexed bonds issued by the Government) and depreciable assets, it offers a benefit by permitting substitution of COA/I with the indexed COA/I computed by applying the cost inflation index as prescribed from time to time. As per the provisions of Section 112 of the Income Tax Act, LTCG not exempt under Section 10(38) of the Income Tax Act are subject to tax at the rate of 20% with indexation benefits. However, if such tax payable on transfer of listed securities (other than a unit), or zero coupon bonds (as defined in the Income Tax Act), exceed 10% of the LTCG (without indexation benefit), the excess tax shall be ignored for the purpose of computing the tax payable by the assessee. As per the provisions of Section 111A of the Income Tax Act, STCG arising on transfer of equity shares, or units of equity oriented mutual fund (as defined in the Income Tax Act), or units if a business trust (as defined in the Income Tax Act) and are subject to tax at the rate of 15% provided the transaction is chargeable to STT. No deduction under Chapter VIA is allowed from such income. STCG arising on transfer of equity shares, or units of equity oriented mutual fund (as defined in the Income Tax Act), or units if a business trust (as defined in the Income Tax Act), where such transaction is not chargeable to STT is taxable at the rate of 30%. The tax rates mentioned above stand increased by surcharge, payable at the rate of 7% of the income- tax where the taxable income of a domestic company exceeds Rs 10 million but does not exceed Rs 100 million. Where the taxable income exceeds Rs 100 million the surcharge shall be 12% of income tax. Further, education cess and secondary and higher education cess at the rate of 2% and 1% respectively of the income-tax is payable by all categories of taxpayers. As per the provisions of Section 71 read with Section 74 of the Income Tax Act, short term capital loss arising during a year is allowed to be set-off against short term as well as long term capital gains. Balance loss, if any, shall be carried forward and set-off against any capital gains arising during subsequent 8 assessment years. As per the provisions of Section 71 read with Section 74 of the Income Tax Act, long term capital loss arising during a year is allowed to be set-off only against long term capital gains. Balance loss, if any, shall be carried forward and set-off against long term capital gains arising during subsequent 8 assessment years. (ii) Exemption of capital gains from income tax Under Section 54EC of the Income Tax Act, capital gains arising from transfer of long term capital assets (other than those exempt under Section 10(38) of the Income Tax Act) shall be exempt from tax, subject to the conditions and to the extent specified therein, if the capital gains are invested within a period of 6 months from the date of transfer in certain notified bonds redeemable after three years and issued by : National Highway Authority of India (NHAI) constituted under Section 3 of National Highway Authority of India Act, 1988; and Rural Electrification Corporation Limited (REC), a company formed and registered under the Companies Act,

64 Where a part of the capital gains is reinvested, the exemption is available on a proportionate basis. The maximum investment in the specified long term asset cannot exceed Rs 5 million per assessee. Where the new bonds are transferred or converted into money within 3 years from the date of their acquisition, the amount so exempted is taxable as capital gains in the year of transfer / conversion. As per the provisions of Section 14A of the Income Tax Act, expenditure incurred to earn an exempt income is not allowed as deduction while determining taxable income. As per a recent circular issued by the Central Board of Direct Taxes, securities held for a period of more than 12 months immediately preceeding the date for transfer, the assessee will be given the flexibility to treat the income arising from the transfer of such securities as business income or capital gain provided that such stand is uniformly applied in each year. The characterization of the gain / losses, arising from sale / transfer of shares as business income or capital gains would depend on the nature of holding and various other factors. (iii) Securities Transaction Tax ( STT ) As per the provisions of Section 36(1)(xv) of the Income Tax Act, STT paid in respect of the taxable securities transactions entered into in the course of the business is allowed as a deduction if the income arising from such taxable securities transactions is included in the income computed under the head Profit and gains of business or profession. Where such deduction is claimed, no further deduction in respect of the said amount is allowed while determining the income chargeable to tax as capital gains. (iv) Dividends As per the provisions of Section 10(34) read with Section 115-O of the Income Tax Act, dividend (both interim and final), if any, received by the Company on its investments in shares of another domestic company is exempt from tax. The Company will be liable to pay dividend distribution tax at an effective rate of 20.36% (inclusive of surcharge of 12% on the dividend distribution tax and education cess and secondary and higher education cess of 2% and 1% respectively on the amount of dividend distribution tax and surcharge thereon) on the total amount distributed as dividend. Further, if the company being a holding company, has received any dividend from its domestic subsidiary company during the financial year on which such dividend distribution tax has been paid by such subsidiary, then company will not be required to pay dividend distribution tax to the extent the same has been paid by such subsidiary company. Where a holding company has received dividend from its foreign subsidiary company, and tax thereon has been paid by the holding company under the provisions of section 115BBD of the Income Tax Act, the holding company shall not be required to pay dividend distribution tax on such dividend. As per the provisions of Section 10(35) of the Income Tax Act, income received in respect of units of a mutual fund specified under Section 10(23D) of the Income Tax Act (other than income arising from transfer of such units) is exempt from tax. As per the provision of Section 115BBD of the Income Tax Act, dividend received by Indian company from a specified foreign company (in which it has shareholding of 26% or more) would be taxable at the concessional rate of 15% on gross basis (excluding surcharge and education cess). However, no deduction shall be allowed in respect of any expenditure incurred in relation to earning such dividend income. Also, section 94(7) of the Income Tax Act provides that loss arising from sale/transfer of shares or units purchased within a period of 3 months prior to the record date and sold/transferred within 3 months or 9 months respectively after such record date, will be disallowed to the extent of divided income, on such shares or units, claimed as exempt from tax. (v) Chapter VIA As per the provisions of Section 80G of the Income Tax Act, the Company is entitled to claim deduction of a specified amount in respect of eligible donations, subject to the fulfilment of the conditions specified in that section. 64

65 B. Benefits to the Resident members / shareholders of the Company under the Income Tax Act (a) Dividends exempt under section 10(34) of the Income Tax Act As per the provisions of Section 10(34) of the Income Tax Act, dividend (both interim and final), if any, received by the resident members / shareholders from the Company is exempt from tax. Finance Bill, 2016 has proposed to levy an additional income tax of 10% in the hands of shareholders, being an individual, firm and Hindu undivided family ( HUF ), being resident in India, in case amount of dividend received exceeds Rs. 10 lakhs on gross basis 8. The Company will be liable to pay dividend distribution tax at an effective rate of 20.36% (inclusive of surcharge of 12% on the dividend distribution tax and education cess and secondary and higher education cess of 2% and 1% respectively on the amount of dividend distribution tax and surcharge thereon) on the total amount distributed as dividend. (b) Capital gains (i) Computation and taxability of capital gains Capital assets are to be categorized into short - term capital assets and long term capital assets based on their nature and the period of holding. All capital assets, being a security (other than a unit) listed in a recognized stock exchange in India, or a unit of the UTI established under the UTI Act, or a unit of an equity oriented fund (as defined in the Income Tax Act), or a zero coupon bond (as defined in the Income Tax Act), held by an assessee for more than 12 months are considered to be long term capital assets, capital gains arising from the transfer of which are termed as LTCG. LTCG, in respect of an asset being shares of an unlisted company means capital gains arising from the transfer of a share, held by an assessee for more than 24 months. In respect of any other capital assets, the holding period should exceed 36 months to be considered as long term capital assets. STCG means capital gains arising from the transfer of capital asset being a security (other than a unit) listed in a recognized stock exchange in India, or a unit of UTI established under the UTI Act, or a unit of an equity oriented fund (as defined in the Income Tax Act), or a zero coupon bond (as defined in the Income Tax Act), held by an assessee for 12 months or less. STCG, in respect of an asset being shares of an unlisted company means capital gains arising from the transfer of a share, held by an assessee for 24 months or less. In respect of any other capital assets, STCG means capital gains arising from the transfer of an asset, held by an assessee for 36 months or less. LTCG arising on transfer of equity share in a company, or a unit of an equity oriented fund (as defined in the Income Tax Act), or a unit of a business trust (as defined in the Income Tax Act) is exempt from tax as per the provisions of Section 10(38) of the Income Tax Act, provided the transaction of sale of such shares or units is chargeable to STT and subject to conditions specified in that section. However such LTCG shall be taken into account in computing the book profit and income tax payable under section 115JB of the Income Tax Act. As per the provisions of Section 48 of the Income Tax Act, which prescribes the mode of computation of capital gains, provides for deduction of COA/I and expenses incurred (other than STT paid) in connection with the transfer of a capital asset, from the sale consideration to arrive at the amounts of capital gains. However in respect of LTCG arising on transfer of capital assets, other than bonds and debentures (excluding capital indexed bonds issued by the Government) and depreciable assets, it offers a benefit by permitting substitution of COA/I with the indexed COA/I computed by applying the cost inflation index as prescribed from time to time. As per the provisions of Section 112 of the Income Tax Act, LTCG not exempt under Section 10(38) of the Income Tax Act are subject to tax at the rate of 20% with indexation benefits. However, if such tax payable on transfer of listed securities (other than a unit), or zero coupon bonds (as defined in the Income Tax Act), exceed 10% of the LTCG (without indexation benefit), the excess tax shall be ignored for the purpose of computing the tax payable by the assessee. In case if individual or HUF, where the total taxable income as reduced by long term capital gains is below the basic exemption limit, the long term capital gains will be reduced to the extent of the shortfall and only the balance long-term capital gains will be subjected to such tax in accordance with the Proviso to sub-section (1) of Section 112 of the Income Tax Act. 8 Pending enactment. 65

66 As per the provisions of Section 111A of the Income Tax Act, STCG arising on transfer of equity shares, or units of equity oriented mutual fund (as defined in the Income Tax Act), or units if a business trust (as defined in the Income Tax Act) and are subject to tax at the rate of 15% provided the transaction is chargeable to STT. No deduction under Chapter VIA is allowed from such income. STCG arising on transfer of equity shares, or units of equity oriented mutual fund (as defined in the Income Tax Act), or units if a business trust (as defined in the Income Tax Act), where such transaction is not chargeable to STT is taxable at the rate of 30%. The tax rates mentioned above stand increased by surcharge as prescribed for various categories of assessees as per the provisions of the Income Tax Act. Further, education cess and secondary and higher education cess on the total income at the rate of 2% and 1% respectively of the Income-Tax is payable by all categories of taxpayers. As per the provisions of Section 71 read with Section 74 of the Income Tax Act, short term capital loss arising during a year is allowed to be set-off against short term as well as long term capital gains. Balance loss, if any, shall be carried forward and set-off against any capital gains arising during subsequent 8 assessment years. As per the provisions of Section 71 read with Section 74 of the Income Tax Act, long term capital loss arising during a year is allowed to be set-off only against long term capital gains. Balance loss, if any, shall be carried forward and set-off against long term capital gains arising during subsequent 8 assessment years. (ii) Exemption of capital gains arising from income tax As per Section 54EC of the Income Tax Act, capital gains arising from the transfer of a long term capital asset are exempt from capital gains tax if such capital gains are invested within a period of 6 months after the date of such transfer in specified bonds issued by NHAI and REC and subject to the conditions specified therein. Where a part of the long term capital gains is reinvested, the exemption is available on a proportionate basis. The maximum investment in the specified long term asset cannot exceed Rs 5 million per assessee during any financial year. Where the new bonds are transferred or converted into money within 3 years from the date of their acquisition, the amount so exempted is taxable as long term capital gains in the year of transfer / conversion. As per the provisions of Section 14A of the Income Tax Act, expenditure incurred to earn an exempt income is not allowed as deduction while determining taxable income. The characterization of the gain / losses, arising from sale / transfer of shares as business income or capital gains would depend on the nature of holding and various other factors. In addition to the same, some benefits are also available to a resident shareholder being an individual or HUF. As per the provisions of Section 54F of the Income Tax Act, LTCG arising from transfer of shares is exempt from tax if the net consideration from such transfer is utilized within a period of 1 year before, or 2 years after the date of transfer, for purchase of a new residential house, or for construction of residential house within 3 years from the date of transfer and subject to conditions and to the extent specified therein. C. Benefits to the Non-resident shareholders of the Company under the Act (a) Dividends exempt under section 10(34) of the Income Tax Act As per the provisions of Section 10(34) of the Income Tax Act, dividend (both interim and final), if any, received by the non-resident members / shareholders from the Company is exempt from tax. The Company will be liable to pay dividend distribution tax at an effective rate of 20.36% (inclusive of surcharge of 12% on the dividend distribution tax and education cess and secondary and higher education cess of 2% and 1% respectively on the amount of dividend distribution tax and surcharge thereon) on the total amount distributed as dividend. (b) Capital gains 66

67 (i) Computation and Taxability of capital gains Capital assets are to be categorized into short - term capital assets and long term capital assets based on their nature and the period of holding. All capital assets, being a security (other than a unit) listed in a recognized stock exchange in India, or a unit of the UTI established under the UTI Act, or a unit of an equity oriented fund (as defined in the Income Tax Act), or a zero coupon bond (as defined in the Income Tax Act), held by an assessee for more than 12 months are considered to be long term capital assets, capital gains arising from the transfer of which are termed as LTCG. LTCG, in respect of an asset being shares of an unlisted company means capital gains arising from the transfer of a share, held by an assessee for more than 24 months. In respect of any other capital assets, the holding period should exceed 36 months to be considered as long term capital assets. STCG means capital gains arising from the transfer of capital asset being a security (other than a unit) listed in a recognized stock exchange in India, or a unit of the UTI established under the UTI Act, or a unit of an equity oriented fund (as defined in the Income Tax Act), or a zero coupon bond (as defined in the Income Tax Act), held by an assessee for 12 months or less. STCG, in respect of an asset being shares of an unlisted company means capital gains arising from the transfer of a share, held by an assessee for 24 months or less. In respect of any other capital assets, STCG means capital gains arising from the transfer of an asset, held by an assessee for 36 months or less. LTCG arising on transfer of equity share in a company, or a unit of an equity oriented fund (as defined in the Income Tax Act), or a unit of a business trust (as defined in the Income Tax Act) is exempt from tax as per the provisions of Section 10(38) of the Income Tax Act, provided the transaction of sale of such shares or units is chargeable to securities transaction tax (STT) and subject to conditions specified in that section. However such LTCG shall be taken into account in computing the book profit and income tax payable under section 115JB of the Income Tax Act. As per first proviso to Section 48 of the Income Tax Act, the capital gains arising on transfer of shares of an Indian company need to be computed by converting the cost of acquisition, expenditure incurred in connection with such transfer and full value of the consideration received or accruing as a result of the transfer, into the same foreign currency in which the shares were originally purchased. The resultant gains thereafter need to be reconverted into Indian currency. The conversion needs to be at the prescribed rates prevailing on dates stipulated. Further, the benefit of indexation as provided in second proviso to Section 48 if the Income Tax Act is not available to nonresident shareholders. As per the provisions of Section 112 of the Income Tax Act, LTCG not exempt under Section 10(38) of the Income Tax Act are subject to tax at the rate of 20% with indexation benefits. However, if such tax payable on transfer of listed securities (other than units), or zero coupon bonds exceed 10% of the LTCG (without indexation benefit), the excess tax shall be ignored for the purpose of computing the tax payable by the assessee. As per the provisions of Section 111A of the Income Tax Act, STCG arising on sale of equity shares or units of equity oriented mutual fund (as defined in the Act), and units of business trust (as defined in the Act), are subject to tax at the rate of 15% provided the transaction is chargeable to STT. No deduction under Chapter VIA is allowed from such income. As per the provisions of Section 71 read with Section 74 of the Income Tax Act Act, short term capital loss arising during a year is allowed to be set-off against short term as well as long term capital gains. Balance loss, if any, shall be carried forward and set-off against any capital gains arising during subsequent 8 assessment years. As per the provisions of Section 71 read with Section 74 of the Income Tax Act, long term capital loss arising during a year is allowed to be set-off only against long term capital gains. Balance loss, if any, shall be carried forward and set-off against long term capital gains arising during subsequent 8 assessment years. The tax rates mentioned above stand increased by surcharge as prescribed for various categories of assessees as per the provisions of the Income Tax Act. Further, education cess and secondary and higher education cess on the total income at the rate of 2% and 1% respectively of the Income-Tax is payable by all categories of taxpayers. (ii) Exemption of capital gains arising from income tax 67

68 As per Section 54EC of the Income Tax Act, capital gains arising from the transfer of a long term capital asset are exempt from capital gains tax if such capital gains are invested within a period of 6 months after the date of such transfer in specified bonds issued by NHAI and REC and subject to the conditions specified therein: Where a part of the capital gains is reinvested, the exemption is available on a proportionate basis. The maximum investment in the specified long term asset cannot exceed Rs 5 million per assessee. Where the new bonds are transferred or converted into money within 3 years from the date of their acquisition, the amount so exempted is taxable as capital gains in the year of transfer / conversion. As per the provisions of Section 14A of the Income Tax Act, expenditure incurred to earn an exempt income is not allowed as deduction while determining taxable income. The characterization of the gain / losses, arising from sale / transfer of shares as business income or capital gains would depend on the nature of holding and various other factors. In addition to the same, some benefits are also available to a non-resident shareholder being an individual or HUF. As per the provisions of Section 54F of the Income Tax Act, LTCG arising from transfer of shares is exempt from tax if the net consideration from such transfer is utilized within a period of 1 year before, or 2 years after the date of transfer, for purchase of a new residential house, or for construction of residential house within 3 years from the date of transfer and subject to conditions and to the extent specified therein. (iii) Tax Treaty benefits As per the provisions of Section 90(2) of the Income Tax Act non-resident shareholders can opt to be taxed in India as per the provisions of the Income Tax Act or the double taxation avoidance agreement entered into by the Government of India with the country of residence of the non-resident shareholder or the Income Tax Act, whichever is more beneficial. The availability of such benefit is subject to the non-resident furnishing the requisite documentation as prescribed under section 90 of the Income Tax Act. (iv) Non-resident taxation Besides the above benefits available to non-residents, Non Resident Indians ( NRI ) have the option if being governed by the provisions of Chapter XII-A of the Income Tax Act which inter-alia entitles the following benefits in respect of income from shares of an Indian company acquired, purchased or subscribed to in foreign convertible exchange. Special provisions in case of NRI in respect of income / LTCG from specified foreign exchange assets under Chapter XII-A of the Income Tax Act are as follows: NRI means a citizen of India or a person of Indian origin who is not a resident. A person is deemed to be of Indian origin if he, or either of his parents or any of his grandparents, were born in undivided India. Specified foreign exchange assets include shares of an Indian company which are acquired / purchased/subscribed by NRI in convertible foreign exchange. As per the provisions of Section 115E of the Income Tax Act LTCG arising to a NRI from transfer of specified foreign exchange assets is taxable at the rate of 10% (plus education cess and secondary & higher education cess of 2% and 1% respectively). As per the provisions of Section 115E of the Income Tax Act, income (other than dividend which is exempt under Section 10(34)) from investments and LTCG (other than gain exempt under Section 10(38)) from assets (other than specified foreign exchange assets) arising to a NRI is taxable at the rate of 20% (education cess and secondary & higher education cess of 2% and 1% respectively). No deduction is allowed from such income in respect of any expenditure or allowance or deductions under Chapter VI- A of the Income Tax Act. As per the provisions of Section 115F of the Income Tax Act, LTCG (other than gain exempt under section 10(38)) 68

69 arising to a NRI on transfer of a foreign exchange asset is exempt from tax if the net consideration from such transfer is invested in the specified assets or savings certificates within 6 months from the date of such transfer, subject to the extent and conditions specified in that section. As per the provisions of Section 115G of the Income Tax Act where the total income of a NRI consists only of investment income/ LTCG from such foreign exchange asset / specified asset and tax thereon has been deducted at source in accordance with the Act, the NRI is not required to file a return of income. As per the provisions of Section 115H of the Income Tax Act, where a person who is a NRI in any previous year, becomes assessable as a resident in India in respect of the total income of any subsequent year, he / she may furnish a declaration in writing to the assessing officer, along with his / her return of income under Section 139 of the Income Tax Act for the assessment year in which he / she is first assessable as a resident, to the effect that the provisions of the Chapter XII-A shall continue to apply to him / her in relation to investment income derived from the specified assets for that year and subsequent years until such assets are transferred or converted into money. As per the provisions of Section 115I of the Income Tax Act, a NRI can opt not to be governed by the provisions of Chapter XII-A for any assessment year by furnishing return of income for that assessment year under Section 139 of the Income Tax Act, declaring therein that the provisions of the chapter shall not apply for that assessment year. In such a situation, the other provisions of the Income Tax Act shall be applicable while determining the taxable income and tax liability arising thereon. D. Benefits available to Foreign Institutional Investors ( FIIs ) under the Income Tax Act. 9 (a) Dividends exempt under section 10(34) of the Income Tax Act As per the provisions of Section 10(34) of the Income Tax Act, dividend (both interim and final), if any, received by the resident members / shareholders from the Company is exempt from tax. The Company will be liable to pay dividend distribution tax at an effective rate of 20.36% (inclusive of surcharge of 12% on the dividend distribution tax and education cess and secondary and higher education cess of 2% and 1% respectively on the amount of dividend distribution tax and surcharge thereon) on the total amount distributed as dividend. (b) Long term capital gains exempt under section 10(38) of the Income Tax Act LTCG arising on sale of equity shares of a company is exempt from tax as per the provisions of Section 10(38) of the Income Tax Act provided the transaction is chargeable to STT and subject to conditions specified in that section. It is pertinent to note that as per the provisions of Section 14A of the Act, expenditure incurred to earn an exempt income is not allowed as deduction while determining taxable income. (c) Capital gains As per the provisions of Section 115AD of the Income Tax Act, income (other than income by way of dividends referred to Section 115-O) received in respect of securities (other than units referred to in Section 115AB) is taxable at the rate of 20% (plus applicable surcharge and education cess and secondary & higher education cess). No deduction is allowed from such income in respect of any expenditure or allowance or deductions under Chapter VI-A of the Income Tax Act. Further, the benefit of indexation or foreign currency conversion under the first and second provisos of section 48 of the Income Tax Act shall not be available while computing capital gains in respect of transfer of securities. As per the provisions of Section 115AD of the Income Tax Act, capital gains arising from transfer of securities is taxable as follows: Nature of income Rate of tax (%) LTCG on sale of equity shares not subjected to STT 10 STCG on sale of equity shares subjected to STT 15 9 Foreign portfolio investors reqistered as per the SEBI (Foreign Portfolio Investors) Regulations, 2014, to be eligible for the tax benefits availableto foreign institutional investors. 69

70 STCG on sale of equity shares not subjected to STT 30 The tax rates mentioned above stand increased by surcharge as prescribed for various categories of assessees as per the provisions of the Act. Further, education cess and secondary and higher education cess on the total income at the rate of 2% and 1% respectively of the Income-Tax is payable by all categories of taxpayers. The benefit of exemption under Section 54EC of the Income Tax Act mentioned above in case of the Company is also available to FIIs. (d) Securities Transaction Tax As per the provisions of Section 36(1)(xv) of the Income Tax Act, STT paid in respect of the taxable securities transactions entered into in the course of the business is allowed as a deduction if the income arising from such taxable securities transactions is included in the income computed under the head profit and gains of business or profession. Where such deduction is claimed, no further deduction in respect of the said amount is allowed while determining the income chargeable to tax as capital gains. (e) Tax Treaty Benefits As per the provisions of Section 90(2) of the Income Tax Act, FIIs can opt to be taxed in India as per the provisions of the Income Tax Act or the double taxation avoidance agreement entered into by the Government of India with the country of residence of the FII, whichever is more beneficial. The availability of such benefit is subject to the non-resident furnishing the requisite documentation as prescribed under section 90 of the Income Tax Act. As per section 2(14) of the Income Tax Act, securities held by an FII which has invested in such securities in accordance with the regulations made under Securities and Exchange Board of India, 1992, shall be treated as capital assets. Accordingly, income of an FII from transfer of securities shall be treated as capital gains. E. Benefits available to Mutual Funds under the Act As per the provisions of Section 10(23D) of the Income Tax Act, any income of mutual funds registered under the Securities and Exchange Board of India, Act, 1992 or Regulations made there under, mutual funds set up by public sector banks or public financial institutions and mutual funds authorized by the Reserve Bank of India, is exempt from income-tax, subject to the prescribed conditions. However, the mutual funds are liable to pay tax on income distributed to unit holders of non-equity oriented mutual funds under Section 115R of the Income Tax Act. F. Benefits available to Venture Capital Companies/Funds As per the provisions of Section 10(23FB) of the Income Tax Act, any income of Venture Capital Companies ( VCC ) / Funds ( VCF ) from investment (which are not covered under the definition of Investment Fund under section 115UB of the Income Tax Act, as referred in Para G below) in a Venture Capital Undertaking is not chargeable to tax in the hands of the VCC/ VCF. Venture Capital Undertaking means a venture capital undertaking referred to in the Securities and Exchange Board of India (Venture Capital Funds) Regulations, 1996 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992). However, the income distributed by the VCC/ VCF to its investors would be taxable in the hands of the recipients prescribed rates. G. Benefits available to Alternative Investment Funds As per the provisions of Sections 10(23FBA), 10(23FBB) and 115 UB of the Income Tax Act, any income of an Investment Fund (other than income chargeable under the head profits and gains from business and profession) shall not be chargeable to tax in the hands of the Investment Fund. Investment Fund means any fund established or incorporated in India in the form of a trust or a company or a 70

71 limited liability partnership or a body corporate which has been granted a certificate of registration as a Category I or a Category II Alternative Investment Fund and is regulated under the Securities and Exchange Board of India (Alternative Investment Fund) Regulations, 2012, made under the Securities and Exchange Board of India Act, However, the income distributed by the Investment Fund to its investors would be taxable in the hands of the recipients prescribed rates. H. Wealth Tax Act, 1957 Wealth tax has been abolished from FY onwards. I. Gift Tax Act, 1958 Gift tax is not leviable in respect of any gifts made on or after October 1, Notes: All the above benefits are as per the current tax laws and will be available only to the sole / first name holder where the shares are held by joint holders. There are no special tax benefits available to the shareholders of the Company. The above statement of possible direct tax benefits sets out the provisions of law in a summary manner only and is not a complete analysis or listing of all potential tax consequences of the purchase ownership and disposal of shares. 71

72 GENERAL INFORMATION Max India Limited was initially incorporated as a public company on January 1, 2015 as Taurus Ventures Limited under the Companies Act, 2013 in the State of Punjab. Pursuant to Clause of the Scheme of Arrangement, the name of the Company has since been changed to Max India Limited on February 12, 2016 upon the Scheme becoming effective. Registered Office: 419, Bhai Mohan Singh Nagar, Railmajra, Tehsil Balachaur, District Nawanshahr, Punjab Corporate Identity Number of our Company : U85100PB2015PLC Registrar of Companies : Registrar of Companies, Chandigarh and Shimla Company Secretary & Compliance Officer : Mr. V. Krishnan Tel.: Fax: id: vkrishnan@maxindia.com Board of Directors The composition of the Board of Directors is as follows: Sl. No. Name of the Director Designation 1. Mr. Rahul Khosla Chairman 2. Mr. Mohit Talwar Managing Director 3. Mrs. Tara Singh Vachani Non Executive Director 4. Mr. Ashwani Windlass Non Executive Director 5. Mr. Sanjeev Mehra Non Executive Director 6. Mr. Ashok Brijmohan Kacker Independent Director 7. Mr. Dipankar Gupta Independent Director 8. Mr. N.C. Singhal Independent Director 9. Ms. Lavanya Ashok Alternate Director to Mr. Sanjeev Mehra For further details of the Board of Directors of our Company, please see the section titled Management. Authority for Listing The Hon ble High Court of Judicature of Punjab & Haryana, vide its order dated December 14, 2015 has approved inter alia the Scheme for the transfer of the Demerged Undertaking into the Company. For more details relating to the Scheme please refer to "Object and Rationale of the Scheme" in Section III. In accordance with the Scheme, the entire Demerged Undertaking of MFSL was transferred to and vested with the Company, with effect from the Appointed Date viz. April 1, 2015 pursuant to Section 391 to 394 of the 1956 Act. In accordance with the said Scheme, the equity shares of our Company to be issued pursuant to the Scheme shall be listed and admitted to trading on the BSE and the NSE. Such listing and admission for trading is not automatic and will be subject to fulfillment of listing criteria by our The Company as permitted by the BSE and the NSE for such issues and also subject to such other terms and conditions as may be prescribed by the BSE and NSE at the time of the application for listing by our Company. 72

73 Eligibility Criterion There being no initial public offering or rights issue of securities, the eligibility criteria in terms of Chapter III of SEBI (ICDR) Regulations, 2009 are not applicable. SEBI has vide the SEBI Circular, has, subject to certain conditions permitted unlisted issuer companies to make an application for relaxing from the strict enforcement of Rule 19 (2) (b) of SCRR, as amended. The Company has submitted the Information Memorandum, containing information to the BSE and the NSE and made such information available to the public through their websites viz. and The Company has made the said Information Memorandum available on its website viz Our Company will publish an advertisement in the newspapers containing details in accordance with the SEBI Circular. The advertisement shall contain specific reference to the availability of this Information Memorandum on the website of our Company. Prohibition by SEBI Our Company, Directors, Promoters, other Companies promoted by our Promoters and companies with which our Company s directors are associated as directors have not been prohibited from accessing the capital markets under any order or direction passed by SEBI. General Disclaimer from our Company Our Company accepts no responsibility for statements made otherwise than in the Information Memorandum, or in the advertisements to be published pursuant to the terms of the SEBI Circular or any other material issued by or at the instance of our Company and anyone placing reliance on any other source of information would be doing so at his or her own risk. All information shall be made available by our Company to the public and investors at large and no selective or additional information would be available for a section of the investors in any manner. Bankers to our Company Yes Bank Limited, Nehru Place, New Delhi Statutory Auditors M/s. SR Batliboi & Co. LLP Chartered Accountants (Firm Registration Number : E), Golf View Corporate Tower Sector 42, Sector Road Gurgaon , Haryana Registrar and share transfer agent Mas Services Limited T-34, 2 nd Floor, Okhla Industrial Area, Phase II New Delhi

74 CAPITAL STRUCTURE Post issue and allotment of equity shares pursuant to the Scheme, the share capital of our Company as at the date of this Information Memorandum is set forth below: Capital Authorised Share Capital (Post Scheme) 300,000,000 equity shares of Rs. 2/- each Issued, Subscribed and Paid-up Share Capital post implementation of the Scheme 266,983,999 equity shares of Rs. 2/- each Aggregate Value at Face Value (in Rs.) 600,000, ,967,998 The initial authorised share capital of the Company at the time of incorporation was Rs.500,000/- (Rupees Five Hundred Thousand only), which was increased to Rs. 200,000,000/- (Rupees Two Hundred Million only) on January 13, 2016 in accordance with the provisions of applicable laws. Further, pursuant to the Scheme of Arrangement becoming effective, the authorised share capital of MFSL, to the extent of Rs. 400,000,000 (Rupees Four Hundred Million only) was transferred to the Company and accordingly, the authorised share capital of the Company was increased to Rs. 600,000,000 (Rupees Sixty Million only). The initial issued, subscribed and paid up share capital was Rs. 500,000/- (Rupees Five Hundred Thousand only) which was subscribed by the Company and its nominees. Notes Forming Part of Capital Structure: 1. The authorized share capital of our Company at the time of incorporation was Rs. 500,000 consisting of 250,000 equity shares of Rs. 2/- each 2. Equity Share Capital History Date of Allotment February 4, 2015 No. of Equity Shares Face Value (Rs.) Issue Price (Rs.) Type of Issue 250, Subscribers to the Memorandum of Association. [ ] 266,983, Issued to the shareholders of MFSL as per scheme of arrangement. Cumulative No. of Shares Cumulative Paid-Up Share Capital (Rs.) 250, , ,983, ,967, Equity Share capital build-up of Promoters in our Company The promoters of our Company, MFSL and its nominees held 250,000 equity shares of Rs. 2/- each of the Company, all of which were subsequently cancelled on the allotment of shares to the shareholders of MFSL on the Schem of Arrangement becoming effective pursuant to clause 7.2 of the Scheme. Once the Scheme of Arrangement became effective, the shareholders of MFSL were allotted one equity share in Max India for each equity share held in MFSL. As a result of this, the promoters of MFSL who will henceforth be the promoters of the Company, were allotted a total of 10,78,72,786 equity shares of Rs. 2/- each in the Company comprising % in the equity capital of the Company. 4. Details of shareholding of the Promoters and the Promoter group as on the date of this Information Memorandum is as under: Serial Name of Shareholder 74 Details of Shares Held*

75 No. No. of shares % Holding 1. Neelu Analjit Singh 1,00, Pivet Finances Ltd 17,58, PVT Investment Ltd 15,47, Medicare Investments Ltd 1,19,68, Maxopp Investments Ltd 1,88,44, Maxpak Investment Ltd 5,58, Mohair Investment & Trading Co Pvt Ltd 80,86, Liquid Investment &Trading Company Pvt.Ltd 2,38,18, Max Ventures Investment Holdings Private Limited 1,75,46, Cheminvest Ltd 99,71, Boom Investments Pvt Ltd 56,04, Tara Singh 1,00, Veer Singh 1,00, Piya Singh 1,10, Analjit Singh 58,76, Pen Investments Ltd 18,81, Total 10,78,72, * As of the Record Date, certain equity shares held by members of the Promoter group in MFSL are pledged in favour of certain lenders. Going forward, equity shares issued by the Company in the ratio of 1:1, as set out in Composite Scheme of Arrangement, may also have to be encumbered pursuant to the terms of loan agreements and discussions between members of the Promoter group and the lenders. 5. Shareholding Pattern of our Company before and after the Scheme (as on date of this Information Memorandum): Shareholding Pattern prior to Scheme of Arrangement (as on December 31, 2015) Category Code Statement Showing Shareholding Pattern as on (as on December 31, 2015) Category of Shareholder No. of Shareholder s Max India Limited Total No. of Shares 75 Total No. of Shares held in Dematerialize d form Total Shareholding as a % of Total No. of Shares As a % of (A+B ) As a % of (A+B +C) Shares pledged or otherwise encumbered No. of shares As a % of Total I II III IV V VI VII VIII IX (A) Shareholding of Promoter and Promoter Group (1) Indian (a) Individuals / Hindu Undivided Family (b) Central Government / State Government(s) (c) Bodies Corporate 1 249, (d) Financial Institutions / Banks (e) Any Others (Specify) (nominee

76 Category Code Statement Showing Shareholding Pattern as on (as on December 31, 2015) Category of Shareholder No. of Shareholder s Max India Limited Total No. of Shares 76 Total No. of Shares held in Dematerialize d form Total Shareholding as a % of Total No. of Shares As a % of (A+B ) As a % of (A+B +C) Shares pledged or otherwise encumbered No. of shares As a % of Total I II III IV V VI VII VIII IX shareholders of MFSL) Sub Total (A)(1) 7 250, (2) Foreign (a) Individuals (Non Resident Individuals / Foreign Individuals) (b) Bodies Corporate (c) Institutions (d) Any Others (Specify) Sub Total (A)(2) Total shareholding of Promoter and Promoter Group (A)=(A)(1)+(A)(2) (B) Public Shareholding (1) Institutions (a) Mutual Funds / UTI (b) Financial Institutions / Banks (c) Central Government / State Government(s) (d) Venture Capital Funds (e) Insurance Companies (f) Foreign Institutional Investors (g) Foreign Venture 7 250, N.A. N.A N.A. N.A N.A. N.A N.A. N.A N.A. N.A N.A. N.A N.A. N.A. Capital Investors (h) FDI N.A. N.A. Sub Total (B)(1) N.A. N.A. (2) Non-Institutions (a) Bodies Corporate N.A. N.A. (b) Individual shareholders N.A. N.A.

77 Category Code Statement Showing Shareholding Pattern as on (as on December 31, 2015) Category of Shareholder No. of Shareholder s Max India Limited Total No. of Shares Total No. of Shares held in Dematerialize d form Total Shareholding as a % of Total No. of Shares As a % of (A+B ) As a % of (A+B +C) Shares pledged or otherwise encumbered No. of shares As a % of Total I II III IV V VI VII VIII IX holding nominal share capital up to Rs. 0.1 million (c) Individual shareholders holding nominal share capital in excess of Rs. 0.1 million N.A. N.A. (d) Non Resident Indians N.A. N.A. (e) Overseas Corporate Bodies N.A. N.A. (f) Clearing Members N.A. N.A. (g) Trusts N.A. N.A. (h) Any Other (Specify) foreign N.A. N.A. bodies corporate (i) Employees N.A. N.A. (j) Any Other (Specify) Pakistani Shareholders N.A. N.A. (k) Directors & their Relatives N.A. N.A. Sub Total (B)(2) N.A. N.A. Total Public Shareholding (B)=(B)(1)+(B)(2) N.A. N.A. Total (A)+(B) 7 250, (C) Shares held by Custodians and against which Depository Receipts have been issued (a) Depository Receipts N.A. N.A. Total Shares held by Custodians and against which Depository Receipts have been issued (C) N.A. N.A. Grand Total (A)+(B)+(C) 7 250, Shareholding Pattern post Scheme of Arrangement (as on January 28, 2016) 77

78 Category Code Statement Showing Shareholding Pattern as on January 28, 2016 Max India Limited Category of Shareholder No. of Total No. Total No. Total Share of Shares of Shares Shareholdi - held in ng as a % holde Dematerializ of Total No. rs of Shares ed form 78 Shares pledged or otherwise encumbered As a % of (A+ B) As a % of (A+ B+C ) No. of shares As a % of Tot al I II III IV V VI VII VIII IX (A) Shareholding of Promoter and Promoter Group (1) Indian (a) Individuals / Hindu Undivided Family 5 6,287,622 6,287, (b) Central Government / State Government(s) (c) Bodies Corporate ,585, ,585, (d) Financial Institutions / Banks (e) Any Others (Specify) Sub Total (A)(1) ,872, ,872, (2) Foreign (a) Individuals (Non Resident Individuals / Foreign Individuals) (b) Bodies Corporate (c) Institutions (d) Any Others (Specify) Sub Total (A)(2) Total shareholding of Promoter and Promoter Group (A)=(A)(1)+(A)(2) ,872, ,872, (B) Public Shareholding (1) Institutions (a) Mutual Funds / UTI N.A. N.A. (b) Financial Institutions / Banks N.A. N.A. (c) Central Government / State Government(s) N.A. N.A. (d) Venture Capital Funds N.A. N.A. (e) Insurance Companies 3 45, N.A. N.A. (f) Foreign Institutional Investors N.A. N.A. (g) Foreign Venture Capital Investors N.A. N.A. (h) FDI 2 32,340,749 32,340, N.A. N.A. (i) Foreign Portfolio Investors N.A. N.A. Sub Total (B)(1) N.A. N.A. (2) Non-Institutions (a) Bodies Corporate N.A. N.A. (b) Individual shareholders holding nominal share capital up to Rs. 0.2 million N.A. N.A.

79 Category Code Statement Showing Shareholding Pattern as on January 28, 2016 Max India Limited Category of Shareholder No. of Total No. Total No. Total Share of Shares of Shares Shareholdi - held in ng as a % holde Dematerializ of Total No. rs of Shares ed form Shares pledged or otherwise encumbered As a % of (A+ B) As a % of (A+ B+C ) No. of shares As a % of Tot al I II III IV V VI VII VIII IX (c) Individual shareholders holding nominal share capital in excess of Rs. 0.2 million N.A. N.A. (d) Non Resident Indians N.A. N.A. (e) Overseas Corporate Bodies N.A. N.A. (f) Clearing Members N.A. N.A. (g) Trusts N.A. N.A. (h) Any Other (Specify) foreign bodies corporate N.A. N.A. (i) Employees N.A. N.A. (j) Any Other (Specify) Pakistani Shareholders N.A. N.A. (k) Directors & their Relatives N.A. N.A. Sub Total (B)(2) N.A. N.A. Total Public Shareholding N.A. N.A. (B)=(B)(1)+(B)(2) Total (A)+(B) (C) Shares held by Custodians and against which Depository Receipts have been issued (a) Depository Receipts N.A. N.A. Total Shares held by Custodians and against which Depository N.A. N.A. Receipts have been issued (C) Grand Total (A)+(B)+(C)

80 7. Top ten shareholders of our Company as on the date of this Information Memorandum as also prior to the date of Information Memorandum are as under: As on Record Date i.e., January 28, 2016 Serial No. Name of Shareholder No. of Equity Shares % of Holding 1. Xenok Limited Liquid Investment & Trading Company Pvt. Ltd Maxopp Investments Limited Max Ventures Investment Holdings Pvt. Ltd GS Mace Holdings Limited Medicare Investments Limited Cheminvest Limited International Finance Corporation Mohair Investment & Trading Co. Pvt. Ltd Mr. Analjit Singh Total As on January 15, 2016 Serial No. Name of Shareholder No. of Equity Shares % of Holding 1. Xenok Limited Liquid Investment & Trading Company Pvt. Ltd Maxopp Investments Limited Max Ventures Investment Holdings Pvt. Ltd GS Mace Holdings Limited Medicare Investments Limited Cheminvest Limited International Finance Corporation Mohair Investment & Trading Co. Pvt. Ltd Mr. Analjit Singh Total Top ten shareholders of our Company prior to the Scheme of Arrangement were as under: Serial No. Name of Shareholder No. of Equity Shares % of Holding 1. Max Financial Services Limited 249, Rahul Ahuja * Pradeep Pal Chadha* Jatin Khanna* Dilbhagh Singh Narang * Venkataraman Krishnan * M.G. Rajagopalan * Total 250, % *shares held as nominees of Max Financial Services Limited The aforesaid 250,000 equity shares were cancelled on May [ ], 2016 simultaneously with the allotment of fresh shares by the Company pursuant to Clause 7.2(a) of the Scheme. 9. Employee Stock Option Plan Pursuant to clause of the Scheme, the approval granted to the Scheme by the shareholders of MFSL and 80

81 the Company shall also be deemed to be approval granted to any modifications made to the Existing Stock Option Scheme required to give effect to the provisions of the Scheme, and the introduction of the new stock option scheme of the Company. No further approval of the shareholders of the Company would be required in this connection. In this regard, the details of the Employee Stock Option Plan 2003 ( Plan ) are furnished hereunder: Background: The shareholders of MFSL in their meeting held on September 30, 2003 approved the Employee Stock Option Plan 2003 (the Plan ) of MFSL with the objective of granting stock options to employees to ensure sustained commitment and highest levels of motivation. The Plan was amended subsequently by shareholders in their Annual General Meeting held on September 27, 2011, wherein the validity of the Plan was extended upto September 30, Thereafter, the Plan was once again amended by the shareholders in their annual general meeting held on September 30, 2014 to increase the aggregate quantum of stock options to 5% of the then present paid-up share capital of MFSL and to provide the power to the nomination and remuneration committee (the NR Committee ) of the board of directors of MFSL to decide on the exercise price per option from time to time in compliance with the applicable provisions of law. SEBI has notified the new SEBI (Share Based Employee Benefits) Regulations, 2014 (the SEBI Regulations ) with effect from October 28, 2014, while repealing the erstwhile SEBI (Employees Stock option Scheme and Employees Stock Purchase Scheme) Guidelines, Under Regulation 31(2)(b) of the SEBI Regulations, all listed companies having existing schemes to which the SEBI Regulations apply, are required to comply with the SEBI Regulations within one year of the same coming into effect. In this regard, the shareholders of MFSL in their 27 th Annual General Meeting held on September 23, 2015 approved variations to the Plan to bring the same in line with the SEBI Regulations. Salient features of the Plan are captured as under: Sr. No. Particulars Details 1. Brief description of the Plan. The Plan is aimed at attracting key employees to the Company and inducing key employees to remain with the Company, and encourage them to increase their efforts to make the Company s business more successful, by rewarding the eligible employees with equity based stock options ( Options ). The Plan provides for grant of Options to eligible employees as identified by the NR Committee from time to time, at a price to be determined by the NR Committee. The NR Committee has the power to formulate the terms and conditions of grant of Options, which are recorded in the agreement ( Option Agreement ) to be executed between the eligible employee and the Company at the time of grant of Options. Depending upon the class of employees, the vesting of Options is either time based or performance based or both. The plan is administered directly by the Company. 2. The total number of options, SARs, shares or benefits, as the case may be, to be granted. Options equivalent to 1,33,14,787 equity shares of the Company, being an aggregate of 5% of the paid-up equity share capital of MFSL as of August 13, 2014, per approval accorded by its shareholders in the AGM held on September 30, Exercise Price per Option. To be determined by the NR Committee from time to time, in accordance with the provisions of the applicable law, provided that the Exercise Price shall not be below the face value of the equity shares of the Company. 4. Identification of classes of employees entitled to participate As identified by the NR Committee from time to time. 81

82 and be beneficiaries in the scheme(s). 5. Requirements of vesting and period of vesting. 6. Maximum period (subject to regulation 18(1) and 24(1) of the SEBI Regulations, as the case may be) within which the options / SARs / benefit shall be vested. 7. Exercise price, SAR price, purchase price or pricing formula. 8. Exercise period and process of exercise. Vesting may be time based or performance based, as determined by the NR Committee, from time to time, under the relevant option agreement. As determined by the NR Committee, from time to time. As determined by the NR Committee under the relevant option agreement. Exercise period: 2 years from the respective vesting dates or such other date as may be determined by the NR Committee from time to time. Process of exercise: 9. The appraisal process for determining the eligibility of employees for the scheme(s). 10. Maximum number of options, SARs, shares, as the case may be, to be issued per employee and in aggregate. 11. Maximum quantum of benefits to be provided per employee under a scheme(s). 12. Whether the scheme(s) is to be implemented and administered directly by the company or through a trust. 13. Whether the scheme(s) involves new issue of shares by the company or secondary acquisition by the trust or both. 14. The amount of loan to be provided for implementation of the scheme(s) by the company to The Optionee is required to provide written notice (the Exercise Notice ) to the Company stating the number of Shares in respect of which the Option is being exercised in terms of the Plan. The NR Committee shall determine the grant size for the employees eligible under the Plan based inter-alia, on number of years of service in the Company, seniority in the management cadre, annual performance appraisal/review, criticality of the function and the significance of contribution to the Company s growth. Aggregate: Options equivalent to 1,33,14,787 equity shares of the Company, being an aggregate of 5% of the paid-up equity share capital of the Company Per employee: As determined by the NR Committee from time to time. As determined by the NR Committee from time to time. Directly by the Company. New issue of shares. Not applicable. The Plan is not administered by a trust. 82

83 the trust, its tenure, utilization, repayment terms, etc. 15. Maximum percentage of secondary acquisition (subject to limits specified under the regulations) that can be made by the trust for the purposes of the scheme(s). 16. The method which the company shall use to value its options or SARs. Not applicable. The Plan is not administered by a trust. In case the Company opts for expensing of share based employee benefits using the intrinsic value, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value, will be disclosed in the Directors report and the impact of this difference on profits and on earnings per share of the company will also be disclosed in the Directors' report Other provisions of the Plan which were approved by the shareholders of MFSL: Clause of the Scheme, approved by the Hon ble High Court of Punjab & Haryana at Chandigarh, inter alia provides the following: (a) (b) (c) (d) (e) With respect to the stock options granted by MFSL to its employees (irrespective of whether they continue to be employees of MFSL or become employees of Max India pursuant to the Scheme) under the existing stock option scheme; and upon the Scheme becoming effective, the said employees shall issued one stock option by Max India under the new scheme(s) for every stock option held in MFSL, whether the same are vested or not, on terms and conditions similar to the relevant Existing Stock Option Scheme. Having regard to compensatory nature of grant of stock options by Max India and MVIL and to facilitate issuance of shares upon exercise of option, the employee stock option outstanding as on Effective Date in MFSL shall be allocated between MFSL, Max India and MVIL. The stock options granted by MFSL under the existing stock option scheme would continue to be held by the employees concerned (irrespective of whether they continue to be employees of MFSL or become employees of Max India or MVIL). Upon coming into effect of the Scheme, and as an integral part of the Scheme, MFSL shall take necessary steps to modify the existing stock option scheme in a manner considered appropriate, in order to enable the continuance of the same in the hands of the employees who become employees of Max India or MVIL. The existing exercise price of the stock options of MFSL shall stand suitably adjusted in an appropriate manner as determined by the NR Committee of MFSL and balance of the exercise price shall become the exercise price of the stock options payable by the option holders to Max India. In any case, exercise price for such stock options for both MFSL and Max India would not be lower than the face value of such equity shares of the respective companies. While granting stock options, Max India shall take into account the period for which the employees held stock options granted by MFSL prior to the issuance of the stock options by Max India, for determining the minimum vesting period required for stock options granted by Max India, subject to applicable laws. Approval granted to the Scheme by the shareholders of MFSL and Max India shall also be deemed to be approval granted to any modifications made to the existing stock option scheme required to give effect to the provisions of the Scheme, and the introduction of the new stock option scheme of Max India. No further approval of the shareholders of MFSL and Max India would be required in this connection. Subsisting options granted by MFSL which are not yet exercised by the option-holders as of the Effective Date of the Scheme: (A) Details of options for Mr. Rahul Khosla: 83

84 Sl. No. Date of grant by the company (Max Financial Services Ltd) No. Of Options (balance) Vesting Date Exercise Price per Option Proportionat e Options in the Company arising from the Scheme of Arrangement 1. October 8, ,450 49,450 Options on August 18, August 18, ,900 49,450 Options on August 18, ,450 Options on August 18, November 8, ,668 18,334 Options on August 18, ,334 Options on August 18, August 19, ,87,800 62,600 Options on August 18, ,600 Options on August 18, ,600 Options on August 18, August 19, ,43,840 35,960 Options on August 18, ,960 Options on August 18, ,960 Options on August 18, ,960 Options on August 18, December 12, ,30,000 Bullet vesting on March 31, 2020, except the vesting date for such options (calculated on a proportionate basis). 7. August 19, ,620 19,924 Options on August 19, ,924 Options on August 18, ,924 Options on August 18, ,924 Options on August 18, ,924 Options on August 18, 2020 Rs.2/- 49,450 Rs.2/- 98,900 Rs.2/- 36,668 Rs.2/- 1,87,800 Rs.2/- 1,43,840 Rs.77.80/ - 13,30,000 Rs.2/- 99,620 19,46,278 19,46,278 (B) Details of options for Mr. Mohit Talwar: Sl. No. Date of grant by the company (Max Financial Services Ltd) No. Of Options (balance) Vesting Date Exercise Price per Option Proportionat e Options in the Company arising from the Scheme of Arrangement 84

85 1. August 18, ,432 11,432 Options on August 18, 2016 Rs.2/- 11, April 1, ,000 9,500 Options on April 1, ,500 Options on April 1, April 1, ,250 8,750 Options on April 1, ,750 Options on April 1, ,750 Options on April 1, December 12, ,43,000 Bullet vesting on March 31, 2020, except the vesting date for such options (calculated on a proportionate basis). 5. March 27, ,600 5,650 Options on March 27, ,650 Options on March 27, ,650 Options on March 27, ,650 Options on March 27, 2019 Rs.2/- 19,000 Rs.2/- 26,250 Rs.77.80/ - 4,43,000 Rs.2/- 22,600 5,22,282 5,22,282 (C) Details of options for Mr. Prashant Hoskote: Sl. No. Date of grant by the company (Max Financial Services Ltd) No. Of Options (balance) Vesting Date Exercise Price per Option Proportionat e Options in the Company arising from the Scheme of Arrangement 1. May 1, ,000 5,000 Options on February 1, 2016 Rs.2/- 5,000 5,000 5,000 (D) Details of options for Mr. V. Krishnan: Sl. No. Date of grant by the company (Max Financial Services Ltd) No. Of Options (balance) Vesting Date 85 Exercise Price per Option Proportionat e Options in the Company arising from the Scheme of Arrangement 1. April 1, ,000 5,000 Options on April 1, Rs.2/- 15, ,000 Options on April 1, ,000 Options on April 1, ,000 15,000

86 (E) Details of options for Mr. Jatin Khanna: Sl. No. Date of grant by the company (Max Financial Services Ltd) No. Of Options (balance) Vesting Date Exercise Price per Option Proportionat e Options in the Company arising from the Scheme of Arrangement 1. April 1, ,000 5,000 Options on April 1, Rs.2/- 15, ,000 Options on April 1, ,000 Options on April 1, ,000 15,000 The aforesaid entitlement of options will be granted by the Nomination and Remuneration Committee of the Company to the option-holders of MFSL after the listing of the shares of the Company covered under this Information Memorandum pursuant to clause (b) of the Scheme. 86

87 Background and Rationale for the Scheme OBJECTS AND RATIONALE OF THE SCHEME A. MFSL is a multi-business corporate that is focused on people and service-oriented businesses. MFSL is engaged in the activity of making, holding and nurturing its investments in various businesses/ activities and has also, with effect from FY , started providing corporate management services to its group companies. Traditionally, MFSL had also been engaged in the business of manufacturing and marketing BoPP films, a speciality flexible packaging material and leather finishing foil, and this business has been transferred to MSF. B. As per the Scheme of Arrangement, a brief summary of some of the investments which MFSL has made and has been nurturing over the past years is set out below: (i) (ii) (iii) (iv) (v) Max Speciality Films Limited ( MSF Limited ) is engaged in the business of manufacture and sale of BoPP metallised films, BoPP unmetallised films, thermal lamination films and leather finishing foils. This business was set-up in 1989 as a division of MFSL and was transferred to MSF Limited on April 1, The business has been consistently profitable, with revenues of Rs billion and profits of Rs. 140 million in financial year In the year 2000, MFSL entered into a joint venture with New York Life Insurance ( NYLI ) for setting up a life insurance company in India. The joint venture company (now known as Max Life Insurance Company Limited ( MLIC ), after the exit by NYLI, and introduction of a new joint venture partner), has gross premium income of Rs billion and a profit of Rs billion for the financial year MLIC has been profitable since financial year and has been consistently paying dividends since financial year MFSL currently holds 72.1% of the paid up share capital of MLIC. MLIC is a relatively mature cash generating business, and does not have any requirement for additional capital investment for organic growth for the foreseeable future. In the year 2008, MFSL entered into a joint venture with Bupa for the setting up of a health insurance company in India. The joint venture company Max Bupa has a gross written premium of Rs billion in the financial year MFSL currently holds 74% of the paid up share capital of Max Bupa. The health insurance joint venture is at a nascent stage and has incurred a loss of Rs billion in the financial year Further, joint venture partners have contributed an additional capital of Rs billion to the business in the financial year taking their total capital investment in the business to Rs billion as at the end of the financial year The joint-venture partners are committed to nurture and develop the business and have plans for investing further capital of approximately Rs. 3 billion over next few years (including capital invested during the financial year ) in the business as per their last approved business plan before the business starts generating profits and can further its growth objectives. MFSL has invested in MHC (and its subsidiaries) which is an equal joint venture between MFSL and Life Healthcare and is engaged in the business of owning, constructing, establishing, managing, operating and/or developing hospitals, clinics, nursing homes, etc. MHC across its network of hospitals generated gross revenues of Rs billion and incurred a loss of Rs. 450 million in the financial year MFSL and Life Healthcare, each currently holds 46% of the paid up share capital of MHC. The healthcare business has been growing at a stupendous pace and has doubled its bed capacity to around 2,000 beds over last few years and has attracted close to Rs. 10 billion of fresh equity infusion over last 3 years to pursue this expansion and further growth opportunities that it has identified in the underserved and underpenetrated healthcare sector in India. In the year 2012, MFSL acquired Antara, which (directly and through its subsidiaries) is engaged in the business of developing senior living projects. Antara is developing its first community in Dehradun with 212 units, which are being designed to cater to lifestyle and life care needs of the seniors in the community. 87

88 (vi) Further, MFSL has a presence in the clinical research business which is being conducted by its wholly owned subsidiary(ies) including Max Neeman Medical International Limited and Neeman Medical International B.V. (and their subsidiaries). Max Neeman Medical International Limited had revenues of Rs. 210 million and incurred a loss of Rs. 20 million in the financial year It may be relevant to note that the board of directors of the MFSL at its meeting on January 27, 2015 has also approved the sale of its clinical research business, subject to completion of due diligence and execution of definitive agreements. In addition to the above, MFSL also holds investments in other group companies engaged in ancillary and other activities. C. The aforementioned businesses housed in separate entities have been nurtured and developed from a nascent stage and are currently at different stages of maturity, and have differing capital and operating requirements. The activity of making, holding and nurturing investments in health and allied activities represented by companies including those set out in Paragraph B (iii) to B (vi) above along with related employees, contracts, assets and liabilities, coupled with MFSL s corporate management services are collectively referred to as Health and Allied Activities. The activity of making, holding and nurturing investment by MFSL in the manufacturing activities currently represented by its investment in MSF Limited, along with related employees, contracts, assets and liabilities is referred to as the Speciality Films Activities. D. The Health and Allied Activities need sharpened focus to ensure appropriate nurturing and development. For instance, the healthcare business is proposing to add significant additional capacity in the coming years, health insurance and senior living are relatively new businesses and need significant capital and operating focus to grow. For the above reasons, MFSL believes that it would be beneficial to demerge the Health and Allied Activities and Speciality Films Activities to create 3 separate and distinct companies. E. Further, MFSL believes its investors may prefer to have a choice of whether they would want to be associated with all the businesses through a single listed entity, or specifically with the relatively matured business of life insurance, and/or have a separate access to the mature manufacturing business of speciality films, and/or in the health and allied businesses which are in their relative growth phase or nascent stage of development and have higher capital requirements. To this effect and to ensure adequate sharpened focus, MFSL proposes to (i) demerge Health and Allied Activities into Max India; and (ii) demerge the Speciality Films Activities into MVIL. MFSL would retain the remaining activities, including investment in MLIC. F. It is expected that such restructuring will be beneficial for MFSL and its shareholders as it should result in a sharper focus on underlying businesses and also unlock value for the shareholders. G. The proposed Scheme will involve issuance to every shareholder of MFSL as on the Record Date, (i) one new equity share of par value of Rs. 2/- of the Company for every one equity share of par value of Rs. 2/- held in MFSL; and (ii) one new equity share of par value of Rs. 10/- of MVIL, for every five equity shares of par value of Rs. 2/- held in MFSL, as on the Record Date. Accordingly, equity shareholders of MFSL would continue to remain its shareholders, and also become shareholders of the Company and MVIL. Hence, shareholders will get an opportunity to continue to remain invested in MFSL and the Company and MVIL, or select the investment portfolio, which best suits their investment strategies and risk profiles. 88

89 SECTION IV - ABOUT US INDUSTRY OVERVIEW A. Overview of the Healthcare Sector in India The hospitals segment of the Indian healthcare sector was estimated at USD 78.4 billion 1 in terms of revenue for the FY It has almost doubled in size from a level of USD 40.0 billion 10 over 5 years ago exhibiting a CAGR of 14.4%. However, the per capita expenditure on healthcare of USD 58 (in 2012) despite having grown at a CAGR of 9.3% over the last 12 years is still amongst the lowest when compared to other developing countries and the South East Asia region. Per Capita Expenditure on Healthcare (U.S.$) Year Brazil 265 1,078 China India U.S.A. 4,818 8,845 U.K. 1,761 3,595 European Region* 933 2,270 South East Asia Region* Global 487 1,025 Source: World Health Organization 11 The total expenditure on healthcare as a % of GDP was also amongst the lowest at 3.8% in vis-à-vis 5.4% for China, 9.5% for Brazil, 17.0% for U.S.A and 8.6% globally. Despite significant investments in the sector in recent years, India has just 0.7 hospital beds per 1,000 3 people (this number has improved to 1.3 hospital beds per 1,000 people for India in 2015) vis-à-vis 3.8 in China, 2.3 in Brazil, 2.9 in U.S.A and 2.7 globally)- and 7.0 doctors per 10,000 people vis-à-vis 14.9 in China, 18.9 in Brazil, 24.5 in U.S.A and 13.9 globally for the period , India continues to require sizeable investments in healthcare. Public and Private Healthcare In India, there are 3 main mechanisms for delivery of healthcare services, namely public, private and public-private partnership The public healthcare system consists of hospitals, primary health centers, clinics, community health centers and other healthcare facilities run by government / semi-government organizations who offer healthcare services at zero or minimal price. The Government allocated USD 55 billion to Ministry of Health & Welfare in the current 5 year plan (12 th plan ) which is three times more than the amount allocated in the previous plan. The primary focus of this plan is providing universal healthcare, strengthening healthcare infrastructure, promoting research & development and enacting strong regulations. It has also been proposed to establish a system of universal health coverage through which each individual would have assured access to a defined essential range of medicines and treatment at an affordable price, which should 10 Source: Dun & Bradstreet Report on Hospitals, June 2015, revenue for 2015 is expected revenue 2 Source: World Health Organisation 3 Source: World Bank 2011 statistics 89

90 be entirely free for a large percentage of the population. The Government is also encouraging the public-private partnership (PPP) model to improve availability of heathcare services and provide healthcare financing. Till 2015, a total of 5 projects under the PPP model have been completed and become operational. Private healthcare providers comprising privately owned hospital chains, standalone hospitals, clinics and health centers are the primary providers of quality healthcare in India and own and operate a majority of the secondary and tertiary facilities. Over the last few years, the majority of investment in building new healthcare infrastructure has been in this area with a significant proportion incurred by private hospital chains into building multi-disciplinary speciality and super-speciality centres. India also has one of the highest proportion of private healthcare expenditure to total healthcare expenditure which stood at 69.5% in (vis-à-vis 44.0% in China, 52.5% in Brazil, 53.0% in U.S.A and 42.3% globally) 2012 Private Expenditure on Heathcare / Total Expenditure on Healthcare % Government Expenditure on Heathcare / Total Expenditure on Healthcare % Brazil China India U.S.A. U.K. European Region* South East Asia Region* Global Source: World Health Organization 12 *South East Asian Region includes: Bangladesh, Bhutan, Democratic People s Republic of Korea, India, Indonesia, Maldives, Myanmar, Nepal, Sri Lanka, Thailand, Timor-Leste European Region includes: Albania, Andorra, Armenia, Austria, Azerbaijan, Belarus, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Luxembourg, Malta, Monaco, Montenegro, Netherlands, Norway, Poland, Portugal, Republic of Moldova, Romania, Russian Federation, San Marino, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Tajikistan, The former Yugoslav Republic of Macedonia, Turkey, Turkmenistan, Ukraine, United Kingdom, Uzbekistan. Increasing internet penetration and mobility has led to heightened awareness for quality healthcare and demand for preventive care and superior healthcare services amongst the growing middle and upper middle class. This segment with increasing disposable income forms the largest segment of private healthcare spending in the country and is the primary consumer of the services offered by private healthcare institutions. Leading players in the private healthcare sectors include the following: Hospital Chain Bed Capacity Hospitals Location / Presence Apollo Healthcare 9, Pan India 90

91 Fortis Group 5,100* 54 Pan India Manipal Hospitals 5, # South India CARE Hospitals 2, South, South East and Western India Max Healthcare 1, North India Sterling Hospitals 1,103 7 Western India Seven Hill Hospitals 1,500 2 Western India Wockhardt Hospitals N.A. 9 Western India Medanta Hospital 1,250 1 Gurgaon Source: Dun & Bradstreet Report on Hospitals, June 2015 * Beds include owned, operated, leased and managed # Includes 5 medical colleges Most of the above players have announced significant planned investments and additions to capacity to be implemented over the next few years. Key Trends: Private Healthcare Providers With high capital requirements for setting up hospitals, there has been a move towards the hub and spoke model and private healthcare operators are focusing on setting up more primary healthcare facilities which require lower capital investment and provide referral business to their tertiary and quaternary hospitals. There is also an increasing number of hospital chains entering into operations and maintenance contracts, their primary area of expertise without making significant investments in owning the assets and infrastructure. Technological advancements and the need to utilize existing infrastructure more efficiently has also led to the emergence of day care surgery centres which minimize the time that patients have to spend in the hospital. Private hospital chains are increasingly moving beyond Tier I cities and setting up secondary and tertiary centres in Tier II and Tier III cities. Leading hospital chains are also using advanced IT and communication systems to advance their reach through telemedicine. Growth Drivers Changing Demographics The number of people over 60 is expected to increase from 8.3% of the population in 2011 to 9.3% or 118 million people in 2016 and to 10.7% or 143 million people by 2021 which is expected to contribute to the rise in demand for healthcare services, especially tertiary and quaternary care services. Moreover, changing demographics will also contribute to greater healthcare spending; this is likely to continue with the size of the elderly population set to rise from the current 98.9 million to about 168 million by Increasing Urbanization and Rising Income Levels With an increase in the proportion of urban population as a percentage of total population, both awareness levels and disposable incomes have risen contributing to an increase in demand and affordability of quality and specialized healthcare. Per capita income is expected to increase at a CAGR of 7.6 % over Per capita expenditure on healthcare in India is USD 68.6 billion. Increased Incidence of Lifestyle Diseases The incidence of lifestyle diseases like heart disease, cancer and diabetes has increased and continues to do so with a shift towards sedentary lifestyles and high consumption of high fat and junk food and therefore increased demand for healthcare facilities offering specialized treatment and preventive checks for these. CAGR of hospitalised cases from : 91

92 (i) Cardiac 18%; (ii) Oncology 16 %; and (iii) Diabetes 19 %. Private players are key contributors to growth in number of hospitals A major portion of secondary, tertiary and quaternary healthcare institutions comes from private sector with aconcentration in metros, Tier II and Tier III cities. The private hospital market in India is estimated at USD 81.0 billion at the end-of During , the market size of private hospitals is estimated to have a CAGR of 24.2 %. Increase in number of hospitals in Tier II and Tier III cities has fuelled the growth of private sector. Increased penetration of Health Insurance Proportion of private expenditure on healthcare in India is one of the largest globally. Personal healthcare penetration remains low at single digit figures (sub 10%). However, healthcare insurance market continues to grow at faster rate of 23% (gross written premium CAGR over period ) than healthcare delivery thus promising increasing penetration. This growth and spread of healthcare insurance is therefore contributing to the demand for healthcare services by making it affordable and within reach of the masses. Growth in Medical value travel Health tourism in India has emerged strongly over the last few years and is expected to grow due to its strong value proposition on cost, quality and service. India has a significant advantage with the cost of several specialized medical procedures like cardiac procedures, orthopaedic surgeries, organ transplants etc. being available at world class medical facilities with skilled medical professionals at a fraction of the cost of developed countries. Treatment for major surgeries in India costs ~ 20 % of that in developed countries. Medical value travel market is estimated to be around USD3 billion in 2015 and is expected to reach USD8 billion in India medical value travel is growing at a CAGR of 20 %. Growing In-Patient / Out-Patient and diagnostic market Over , the in-patient market is expected to grow at a CAGR of 13 % and out-patient market is expected to grow at CAGR of 10 %. Over , diagnostic market is expected to grow at a CAGR of 20.4 % to USD 32 billion from USD 5 billion in Key Challenges Challenges faced in healthcare market penetration in Tier I cities: Highly competitive market; High capital expenditure/ operating expenditure for healthcare providers; Government price capping of medical implants and consumables; and Regulatory mechanisms are time consuming and exhaustive. Challenges faced in healthcare market penetration in Tier II/ III cities: Price-sensitive market; Infrastructure constraints; Deep economic divide; pricing strategy cannot be uniform across various Tier II and Tier III cities; Local players have strong market positioning; Lack of physician awareness and availability; Lack of skilled human resources, especially nurses and technicians; Service network inadequate for medical instruments; and Rudimentary Distributor network. B. Brief History & Overview of Health Insurance sector in India 92

93 The non-life Insurance market in India consists of 22 private sector and 4 public sector companies. Of the 22 private sector companies, 5 are SAHI Max Bupa Health Insurance Company, Star Health & Allied Insurance Company, Apollo Munich Health Insurance Company, Religare Health Insurance Company and Cigna TTK Health Insurance Company. In India, the life insurance sector with its much longer history is far more developed than the non-life insurance sector and was ranked 11 th in the world with a market share of 2.08% during 2014 by Swiss Re compared to the non-life insurance sector (consisting of fire, marine, motor, health and other segments) which was ranked 20 th with a market share of 0.69% of global non-life insurance premium. During 2014, the Indian non-life insurance sector witnessed an inflation adjusted growth of 4.8% compared to a growth of 2.9% globally in terms of non-life insurance premium. Non-life insurance penetration which is the percentage of insurance premium to GDP has increased from 0.56% in 2001 to 0.70% in 2014 while non-life insurance density which is per capita premium in USD has increased from USD 2.4 to USD 11.0 for the same period. The health insurance sector continued to be the fastest growing segment in non-life insurance industry over the last 5 years. The total health insurance premium in FY (period Apr 14-Mar 15) reached Rs 200,960 million from Rs. 174,950 million in FY (Period Apr 13-Mar 14), registering a growth of 15% for the year and a four-year CAGR of 16.2%. Health Insurance Premium GWP in Rs Million Source: General Insurance Council The health insurance industry witnessed a growth of 15% in with total premiums increasing from Rs. 174,950 million in to Rs. 200,960 million in In the last four years, health insurance premiums have grown at a CAGR of 16.2%. Within the segment, the share of participants has remained largely stable over the last 4 years with the public sector insurance providers contributing Rs. 128,820 million or 64% in , the private sector insurance companies excluding standalone health insurers contributing Rs. 43,860 million or 22% and standalone health insurers contributing Rs. 28,280 million which translates into a 14% share of the segment. Health Insurance Segment GWP in Rs. Million Government 21,980 22,250 23,470 20,820 24,250 Group Insurance 49,520 59,480 71,860 80,580 88,990 Individual 38,810 48,970 59,190 73,550 87,720 93

94 Total 110, , , , ,960 Segment Growth (%) Year CAGR Government 1.2% 5.5% -11.3% 16.4% 2% Group Insurance 20.1% 20.8% 12.1% 10.4% 16% Individual 26.2% 20.9% 24.3% 19.3% 23% Source: IRDAI Annual Report Health insurance on the buyer or demand side can be classified as government sponsored health insurance, group health insurance (other than government sponsored) and individual health insurance. Over the four year period starting from FY till , the share of individual health insurance has grown steeply starting from 35% to reach 44% or Rs. 87,720 million for the year ended At the same time the share of government sponsored health insurance has declined from 20% to 12% in the same period while the share of group health insurance has remained stable and was 44% for the year ended Demand for individual health insurance followed by group health insurance have been the key drivers for health insurance and exhibited a CAGR of 22.6% and 15% in premiums respectively for the 4 year period ending in financial year Regulatory Overview IRDAI, the key regulatory body for the insurance sector was established in 1999 as an autonomous body to regulate and develop the industry. IRDAI is responsible for regulating, promoting and ensuring orderly growth of the insurance and re-insurance business in India. The insurance sector was opened up for foreign participation in the year 2000 with an FDI limit of 26% which led to the entry of several international companies with an inflow of capital and technical expertise in the sector. Further in 2006, the entry of standalone health insurers was allowed in the sector which has led to several Joint venture partnerships in the sub-segment between Indian and foreign players. In December 2014, the Government approved an ordinance increasing FDI limit in the Insurance sector from 26% to 49% which is expected to bring in a significant amount of investment in the industry. Over the last 1-2 years, the industry has seen significant action related to policy as well as regulatory developments by the Government of India (insurance bill) and the IRDAI (guidelines as well as draft proposals) affecting multiple facets of the insurance industry. These regulations & guidelines may have an impact on the business activities of the companies operating in the sector. The amendments in the Insurance Act have had and will have a significant impact on the development of this industry. In addition to other amendments, the Insurance Laws (Amendment) Act, 2015 has relaxed the cap of FDI in insurance and introduced the definition of Health Insurance Business recognizing the health insurance as a separate business which was earlier forming part of the general insurance business. These changes will attract more players including foreign players in health insurance space and provide more regulatory focus in health insurance space. To provide better healthcare services to all, the Government through its national health assurance mission plans to reduce out-of-pocket expenditure on health expenses for the common man. These changes in the Insurance Act and resulting changes in Regulations will have long term impact on the eco-system in which standalone health insurance companies operate. Growth Drivers Rising healthcare costs and high level of out of pocket expenses Increase in lifestyle diseases, an increased number of people over 60 years of age, advances in medical technology and healthcare inflation are all contributing to increase in healthcare costs and thereby an increase in amount of health insurance coverage required. Rising healthcare costs alongwith very high level of out-of-pocket expenses in India as a % of private expenditure (86% in India v/s 76% in China, 59% in Brazil and a global average of 76% )., is expected to significantly contribute to the growth of health insurance in India 94

95 Low health insurance penetration & coverage In India, health insurance penetration (as a % of GDP) is less than 0.2% (as compared to ~4% for life insurance). The segment has high potential with only ~5 % of the population being covered under private health insurance as compared to 12% in UK, 13% in Spain and ~45% in Australia. It continues to be one of the most rapidly growing sectors in the Indian insurance industry with an expected growth CAGR of above 15% over next 3-5 years Increase in proportion of individuals buying health insurance Absence of a government-funded health program and a high proportion of out-of-pocket expense on healthcare combined with increased customer awareness, disposable income and demand for high-quality healthcare has contributed to the rapid growth in the proportion of individuals as buyers of health insurance. With declining government expenditure on health insurance, growth in individuals buying health insurance is expected to continue to remain at high levels. New channels are increasing distribution reach and penetration Opening up of Bancassurance which allowed banks to sell insurance products, increasing online distribution, and increased selling of insurance products by NBFCs has widened the reach and led to an increase in the penetration of insurance products than what could be achieved through the traditional distribution channels. Some companies have also tied up with local non-governmental organisations to target rural markets. Customer friendly regulation and increased product offerings IRDAI has introduced several initiatives and policy changes for the protection of consumer interests including features like lifelong renewability, portability, no claims loading and increased transparency and service levels by insurers which is expected to continue contributing to the growth of the sector. Insurers have been focusing on developing and offering a diverse range of products which meet diverse needs and offer flexibility and customization options. Further, several companies have launched innovative products with unique features to differentiate themselves offering a wide variety of choices to the consumer and are contributing to growth of the sector. Government Initiatives and Tax Incentives Government initiatives like National Health Assurance Mission, Rashtriya Swasthya Bima Yojana, a cashless hospitalisation scheme and Pradhan Mantri Suraksha Bima Yojna, an accident insurance schemeare expected to increase penetration of health insurance. In the Union Budget, tax deduction for buying health insurance has been increased to Rs. 25,000 (from Rs. 15,000) and to Rs. 30,000 for senior citizens which is further expected to incentivize individuals to buy / enhance health insurance coverage and contribute to the growth of the sector. Key Challenges Increased regulatory activism Some regulatory requirements may pose a threat to the sustainability of health insurers. These include the current cap on management expenses that may force SAHIs to curtail investment on innovation, infrastructure, service and distribution, the regulator s three year ban on price increases for new products, approvals for product price increases and time for new product approvals. The increasing frequency of notifications implying fundamental process changes also impacts the business. Lack of unified data There is general lack of reliable morbidity and claims experience trends at an industry level. There is no industry wide effort to consolidate and utilize the claims paid out data like in the case of credit industry resulting in multiple operational challenges such as potential of under/over pricing of products and limiting the ability to manage frauds. Fragmented provider market The health delivery environment in India is fragmented and unregulated. There is lack of standardization of health quality standards and clinical governance standards. In the provider space, there are weak clinical governance protocol and quality benchmarks, leading to over-billing to customers on selective basis (particularly people with insurance 95

96 coverage), lack of proper treatment protocol being followed and inadequate medical examination records. Hospitals do not conform to ICD or PCS codification guidelines while billing patients, and primary care physician quality and coverage is inconsistent. Many Indian hospitals do not have reliable hospital information systems. This presents an impediment for the insurance company to be able to effectively calibrate its systems. High cost of activation for distribution channels The stiff competition among the insurers has escalated the commissions and incentives paid out to the distribution partners (agents, third party distribution) resulting in higher cost of activation and thinning margins. As a result of this, industry has witnessed early signs of emergence of alternate distribution channels like affinity partners, digitally enabled platforms etc. The regulator has also taken some steps in this regard like introduction of banca open architecture, Insurance marketing firms, point of sale, etc. With severe price competition by large public sector undertakings, B2B business is at unsustainable levels across the market. Similar trend has been observed in the B2G segment. While RSBY business has traditionally been the most viable way to meet the rural obligations, the exclusion of private insurers in the scheme has made meeting the target significantly more difficult. High incurred claims ratio A key concern for the health insurance sector has been a very high proportion of claims incurred. The incurred claims ratio which is the ratio of net claims incurred to net earned premium stood at 101% in the financial year ended and has been consistently over 90% in the three years prior to that. This has had a significant negative impact on the profitability of the sector. The high claims cost has been driven by a combination of factors which include increase in non-communicable diseases led by rise in incidence of diabetes, cardiac ailments and cancer, improvement in quality of care and a high proportion of fraudulent claims in the segment. Common sources of fraud at the consumer end include concealment of pre-existing diseases, providing false information regarding the purpose of hospitalization, fake hospital bills and exaggerated claims and fraudulent pathology laboratory reports. Average claims costs are also increasing continuously due to improvement in quality of care and increase in procedure costs.. C. Overview of the Senior Living Industry Senior living is a relatively new but promising and rapidly growing sector in India. The sector has seen a significant and increasing level of activity in the past few years with the entry of several specialized real-estate as well as corporate players and the launch, progression and completion of number senior living projects. Compared to developed markets like the USA, UK and Canada, where senior living has a long history and a sizeable, well-developed infrastructure, several aspects of the industry in India including type of service offerings, products, sub-segments, business model, regulations etc. are still evolving. A significant increase in the number of seniors or people over the age of 60 driven by increasing life expectancy, decreasing fertility rate, lower mortality and an overall increase in the standard of living is the key driver for growth in the segment. 96

97 Population by Age Group (000's) 1,705,333 1,311, ,553 1,388, ,376 1,527, , , , , ,901 1,048, , , , , E 2030E 2050E 0-14 years years Over 60 years Source: United Nations World Population Prospects 2015 Report In India, currently people over 60 constitute 8.9% of the population. As per the UNWPP 2015 report, this proportion is projected to increase to 10.0% in 2020, 12.5% in 2030 and to 19.4% by This translates into the number of seniors almost tripling from the current level of million to reach million in While the total population is expected to grow at a CAGR of 0.8% over the next 35 years till 2050, the senior population will grow at a CAGR of 3.0% compared to the population in the age group years which is projected to grow at a rate of 0.7% and the population in the age group 0-14 years which is expected to exhibit a negative CAGR of 0.4%. This presents a sizeable opportunity for the senior living industry. Other favorable factors for the industry include changing social values wherein traditional family based care is becoming less the norm and an increasing trend towards nuclear families is leading to an increase in the number of seniors who live independently. For this segment, Senior Living fulfills critical need gaps in terms of providing a safe and secure environment, an emergency response system, assistance with day-to-day needs, on-call services, recreation infrastructure and a social support system among others. Further, many seniors today are increasingly more independent, financially stable, well-travelled and socially connected and with a clearer idea of the kind of lifestyle they would like to have post retirement. This sub-segment is driving demand for the higher end offerings of the senior living sector. Competitive Environment There are currently 50 players: including real estate developers and corporate houses in the segment with multiple projects consisting of over 8,000 units at various stages of progression. These units range from studios to 1 3 bedroom apartments to villas, across a wide price range and size ranging from 600 sq. ft. to over 2,000 sq. ft. of saleable area per unit. A large number of projects are located in Southern India - however, there have been an increased number of launches in Northern and Western India. Recently, the trend has shifted towards upgraded offerings with enhanced features and infrastructure targeted at higher end segments. The average project size is also increasing, and more new launches are in the range of units in a complex compared to an average of units earlier. Globally, there are several business models including outright sale which involves transfer of title, lease deposit which comprises a sizeable upfront payment and recurring payments thereafter and a pure rental model. However, in India, the sale model is currently the most prevalent while others are still evolving. The sector is expected to continue to witness several more projects with significant investment and the entry of specialized service sector players including from the healthcare, hospitality and insurance sectors to cater to the large untapped opportunity. Growth Drivers 97

98 Demographic A joint report published by United Nations Population Fund (UNFPA) and Help Age International says that India has over 100 million elderly population at present which is expected to increase to 323 million by 2050, constituting 20% of the total population of the country. Another study by National Commission on Population suggest that the elderly population, which was 5.6% of total population in 1961, grew to 8.3% of the total population as per the 2011 census because of increase in quality of life and better medical services and is slated to incrase to 10.7% by 2021 and 12.4% by On the other hand, the urban population which was 32% in 2014 is expected to increase to 40% of the total population in These two demographic data suggest that the urban elderly population will grow at much faster rate. Lifestyle With increased income and changing lifestyles, the urban senior has become more independent, progressive, and looks forward to a much more active and enriched life than the previous generation. A senior who is in his/her 60s, has seen and witnessed the growth of the country post-independence and is open to try new ideas and concepts. Mobility As the young generation is becoming more and more mobile and shifting their base to look for employment and career growth opportunities, India is witnessing an overall increase in empty nesters. Being concerned with the overall drop in safety and security, rising crime, unsafe public transport, inaccessible healthcare, lack of emergency facilities and services, and increased hassles of day to day lifestyle, there is an increasing number of both the parents and their children who are openly evaluating senior living communities as one stop solution to all of these concerns.. Drop in sales of traditional real estate and need felt for differentiated asset class With large land supplies and massive unsold inventory, developers are increasingly conscious of the need for differentiated residential real estate variants which can help them increase absorption. Challenges Lack of awareness for category differentiation Although the senior living sector is a mix of real-estate, healthcare and hospitality and caters to the needs and requirements of aging population, there is a general lack of awareness amongst the Indian population, including the urban educated class, and many still perceive it either as a real-estate product or a healthcare product and start drawing comparisons from service providers of these two sectors, their services and price points. Lack of Government policies Unlike healthcare, insurance or the latest addition of real-estate, there is no law, policy, guidelines or regulations specific to the senior living sector in India. Service tax and other tax benefits For most of the senior living communities operating out of India, the pricing model is a combination of a one-time payment in the form of security deposit/lease rent/buy-out and a monthly charge for providing a number of services and facilities such as maintenance, housekeeping, laundry, food and beverages, day to day healthcare, etc. Unlike other retirement products such as life insurance and health insurance for seniors or healthcare services such as hospitals, there is no service tax exemption for seniors for availing services of senior living communities. Lack of structured financial products for seniors Unlike in the USA and other western countries, there is no structured financial product or social security scheme from the Government for retiring people where one can subscribe at an early age and ripe the benefit at a later stage when the need for moving to such senior living community arises. 98

99 BUSINESS OVERVIEW Max India, is a multi-business corporation focusing on the core businesses of (i) healthcare, through MHC; (ii) health insurance, through Max Bupa; and (iii) senior living, through Antara. Max India also has interests in learning and skill development, through Max Skill First. Max India will be listed on the BSE and the NSE. Max India is the holding company and also started providing corporate management services to its group companies, with effect from FY The corporate management group provides services to the subsidiaries/ joint ventures in matters relating to the function such as treasury, finance, taxation, legal & regulatory, secretarial, investor relations, governance, corporate communication and branding, quality & service excellence, business performance & strategy, fund raising and other management advisory services CORE BUSINESSES (i) Healthcare MHC, together with its operating subsidiaries comprises the healthcare business. MHC is currently a joint venture of the Max group wherein, it holds 46.28% equity shareholding. Life Healthcare, the joint venture partners also hold 46.28% equity shareholding in MHC, while the remaining equity shareholding is held by financial investors and certain employees. MHC is one of the largest private healthcare companies in India. As of December 31, 2015, MHC had a network of 9 quaternary/ tertiary care hospitals, four secondary care hospitals, and one primary care centres, that are either owned or are provided healthcare services pursuant to medical service agreements across northern India. The network comprises 2,563 beds served by over 2, 955 physicians, 4,092 nurses, 1,458 paramedics and 2,010 support staff. For the financial year ended March 31, 2015, the combined revenue of network hospitals in MHC was Rs 17,400 million with an EBITDA of Rs 1,700 million 13. During the nine months ended December 31, 2015, MHC turned profitable despite 2 large acquisitions. MHC s network of hospitals reported revenue of Rs 15,810 million and EBITDA of Rs 1,517 million during the nine months ended December 31, (ii) Health Insurance Max Bupa is one of the leading standalone private health insurance companies in India. Max Bupa is a joint venture between Max India, which holds 74% of the equity share capital, and Bupa, which holds the balance 26% of the equity share capital, of max Bupa. In terms of the Max Bupa JVA, both Max India and Bupa have agreed that Bupa would increase its shareholding in Max Bupa from the current level of 26% to 49%. As on December 31, 2015, Max Bupa had approximately 949,063 urban lives in force under various policies (under different product proposition) with an infrastructure consisting of an agent network of ~12,000 agents, 26 offices, 3,500 network hospitals and four bancassurance partner tie-ups. For the year ended March 31, 2015, Max Bupa had gross written premium of Rs. 3,727 million. During the nine months ended December 31, 2015, Max Bupa had a gross written premium of Rs 3,253 million, a growth of 30% over the corresponding previous period. (iii) Senior Living Antara, a wholly owned subsidiary of Max India is engaged in the development, management and operation of senior living communities. 13 The above results are for MHC Network of hospitals and includes results for Max Super Specialty Hospital, Saket, unit of DDF and Max Super Speciality Hospital, Patparganj, unit of BMDRC. Only management fee from services provided to FSF for Max Multispecialty Hospital, Greater Noida is included. 99

100 Currently, the construction of Antara s first senior living community, a 200 unit luxurious, fully integrated facility spread over 13.6 acres located at Purukul, Dehradun is nearing completion and is expected to be fully functional by December, The project is housed in Antara s fully owned subsidiary, Antara Purukul Senior Living Limited. Post completion of the project, Antara Senior Living Limited will be responsible for the operation and management of the community. As of December 31, 2015, Antara had completed signing of long term lease contracts for 81 or 40% of its senior living units at its Dehradun project and raised an amount close to Rs. 923 million as advance payment on long term lease rentals contracts which Antara will sign with its residents on completion of the project. (iv) Other Businesses Max India s other businesses include Max Skill First which is a shared service centre for providing learning and development solutions and training services to companies in the Max group. Strengths and strategies of our individual businesses (i) Healthcare Business Strengths Comprehensive, integrated and world-class healthcare services with state-of-the-art infrastructure and facilities MHC is a comprehensive, integrated, world-class healthcare organization with diverse healthcare capabilities, enabling it to provide end-to-end services to its patients. MHC offers seamless delivery of services at every level of care from primary to secondary to tertiary care. MHC has invested heavily in obtaining state-of-the art infrastructure for all of its hospitals, which has helped build MHC s reputation among patients, doctors and healthcare professionals as one of the most advanced healthcare companies in India. Well established brand name Since MHC commenced operations in 2001, it has focused on the provision of high quality healthcare service. MHC s quality consciousness and patient-centric approach has improved its operational and clinical efficiency and led to numerous accolades including accreditations by the NABH, NABL and LEED certifications for several hospitals in its network. MHC has implemented clinical governance measures that ensure the quality of clinical care at all levels of its hospitals. Leveraging the MAX brand strength, MHC has expanded the geographic spread of its operations and has extended the range of services it offers to include primary, secondary and tertiary healthcare services including 9 hospitals that now provide super speciality quaternary/ tertiary care facilities. MHC s strong brand recognition also puts it in an excellent position to expand further taking advantage of the increasing need for high quality healthcare services across India. Network of highly respected doctors As of December 31, 2015, MHC s network hospitals had a team of 2,955 physicians (including 1,741 full-time employees) at its network of hospitals complemented by 4,092 nurses, 1,458 paramedics and 2,010 support staff. MHC adheres to standard clinical protocols in patient handling, operating theatres, intensive care unit management and emergency care set by leading international hospitals and accreditation bodies. Many of MHC s doctors have received qualifications or received training in the United Kingdom, Australia or the United States. In addition, MHC s doctors are dedicated to clinical research and have published numerous studies on topics including cardiology, cardiac surgery, oncology, orthopaedics, renal sciences, neurosurgery, diabetes, infectious diseases, and neuro-surgery. Some of MHC s doctors have also pioneered innovative techniques for patient treatment, such as minimally invasive cardiac surgery, both in India and, in some cases, on a global basis. Strong management structures and processes driven by a patient centric approach MHC s governance and management structures ensure involvement of clinicians in strategic decision making through doctor s governing bodies both at the corporate and the hospital management level. MHC also makes significant 100

101 investments in IT in core processes not only to drive operational efficiency, but also to deliver high quality services to patients. In the past, it has made significant IT driven investments in its CRM, EHR and ERP systems, which it counts as one of the fundamental cornerstones of its operating philosophy. To improve its focus on service excellence and medical quality, MHC has engaged with an independent external agency, IMRB for monitoring patient satisfaction, and has developed strong processes in this area. MHC counts these aspects fundamental to its operations, and believes that these would be a source of strong competitive advantages in the long term. Our joint venture relationship Life Healthcare, a leading private hospital operator in South Africa, is a joint venture partner in MHC. Life Healthcare, an approximately USD 2.7 billion enterprise, currently operates 50 facilities with around 8,000 beds in a comprehensive geographic spread over seven South African provinces and Botswana. It is also a leading provider of acute rehabilitation and mental health services in the country. Life Healthcare s considerable experience in managing a large and widespread network of hospitals will be extremely beneficial for MHC as it prepares itself for the next wave of growth Strategies MHC continuously strives to improve the quality of its healthcare services provided by its owned and serviced hospitals, while at the same time improving its financial results. Below are the key strategies MHC is employing to achieve these goals: Deliver world-class healthcare by creating institutions committed to the highest standards of medical and service excellence, patient care, scientific knowledge and medical education; Expand and invest in select and complex clinical capabilities, and launch new programs around the same (eg. organ transplants, robotic surgery, stem cell therapy, experimental medicine) Strengthen existing advantages in identified specialities around which centres of excellence have been built in the network hospitals (i.e. cardiac sciences, neuro sciences, orthopaedics, oncology, MAMBS, and renal sciences), and also drive premium revenue based on these advantages; Increase share of revenues from quaternary/ tertiary care and surgeries, based on the network s expertize in specialities; Increasing share of international and walk-in business relative to institutional business with a view to improve margins, through focused marketing initiatives; Drive personnel cost efficiencies through initiatives like network-wide sharing of medical and managerial personnel, setting up of shared service centres, and developing better organizational structures; Reducing percentage of cost of materials by harnessing economies of scale through centralized sourcing, identifying substitution opportunities with low cost high quality materials, and working on re-usages; Continue to expand capacity with a flexible expansion program, with a near term focus on expansion of capacity at existing hospitals and select greenfield and brownfield expansion opportunities; Attract and retain prominent, skilled doctors who have established reputations for clinical excellence in their communities by offering a well-respected brand and state-of-the-art facilities; Seeding alternate models e.g., pathology, cancer day care centre and to leverage technology to provide health services outside of hospital; and Seamlessly integrating recently acquired hospitals with significant growth potential in chosen geographies like the acquisition of CRL, which operates Pushpanjali Hospital (renamed as Max Super Speciality Hospital, Vaishali) in the NCR region with a potential to grow from 260 beds to 460 beds, which along with its existing network hospital in Patparganj will give it a capacity of over 1000 beds in that region and the acquisition of SCHPL, which provides medical services to Saket City Hospital (renamed as Max Smart Super Speciality Hospital) offers the opportunity to create one of Asia s largest medical facility in the heart of South Delhi. The acquisition of SCHPL gives MHC an opportunity to expand its network in Saket to around 2000 beds over time 101

102 making this facility, one of the largest single location facilities in Asia with 7 centres of excellence, including beds dedicated to Oncology, state-of-the-art transplant centre and India's first international patient centre (ii) Health Insurance Business Strengths One of India s leading standalone health insurance providers with a well recognized brand name Max Bupa is the 4 th largest standalone health insurance company in India in terms of gross written premium. Max Bupa has enjoyed rapid growth over the past 3 years, with gross written premium growing by approximately 21%, 49% and 109% for the financial years ended March 31, 2015, 2014 and 2013 respectively. Max Bupa has also developed an extensive customer base in India with around 1,994,601 health insurance customers as of December 31, 2015 with one of the most recognized brands in the Indian health insurance industry. Its initiatives like Walk for Health which has completed 3 seasons has seen the participation of over 60,000 people and helped strengthen Max Bupa s brand presence. Moreover, Max Bupa has focused its business primarily on the urban B2C segments with its products primarily positioned in the premium sector for high net worth, affluent and mass affluent population in the top towns and cities in India. As a result of Max Bupa s focused approach, it has established a leading market position in one of the most competitive health insurance segments in India. Max Bupa has also been the recipient of several awards and recognitions for its brand, products, services and processes over the years. Strong and extensive distribution channels Max Bupa has developed a large multi-channel health insurance distribution network in India, consisting of close to 12,000 agents, 26 offices, 4 bancassurance partner tie-ups, corporate agents like Bajaj Finserv and Muthoot, and a strong Direct to Customer channel (DST, Telesales, Digital). These channels, especially agency and bancassurance have made a significant contribution in recent years to the high growth in gross written premium achieved by Max Bupa. Innovative products and several industry firsts Max Bupa was the first to launch several industry innovations by introducing products with the highest sum insured options, no age restrictions for enrolment, no claim loading, guaranteed renewability and without any 2 year waiting period for specified illnesses such as cataract, hernia etc. while such restrictions commonly exist across most of the Indian health insurance products. Other first of its kind features introduced by Max Bupa include worldwide cashless treatment for 9 critical illnesses and emergency medical evacuation through Bupa International network in 190 countries and 30-minute cashless approvals. As a result, it has won several awards and recognitions for its products and practices and has been able to build a strong brand image and reputation in its target segment. One of the highest renewal rates in the industry Max Bupa enjoys one of the highest renewal rates (i.e. premium renewed for the present year as a percentage of last year s premium that is eligible for renewal in value terms) in the industry for its B2C segment which contributed 95% to its gross written premium in the year The renewal rates for this segment continued to increase to reach 90% for the year up from 85% in and 81% in Some of the initiatives that contributed to the increasing renewal rates include a robust predictive analytics framework which studies several parameters, classifies customers based on likely propensity of renewal and guides customer calling strategy; investment in technology to increase efficiency; proactive engagement with sales team and continuing effort towards treating customers fairly by supporting and enabling them to make informed decisions on policy renewals with a focus on high service standards. Superior and innovative customer support network Customer service is a key focus area for Max Bupa. It currently offers new, existing and prospective customers access through 25 sales and services branches and 17 application collection locations, a 24x7 helpdesk and customer care and chat services There are currently ~100 customer service representatives who directly interact with customers to resolve their issues, take service requests and answer queries. In addition to this, Max Bupa s website provides a platform for self service options and sharing of feedback. Feedback and queries are also catered through a dedicated toll-free number 102

103 and address. Max Bupa s complaints management system is ISO To enhance customer satisfaction and experience, Max Bupa has introduced innovative industry first standards which include 30 minutes cashless processing promise which is currently the best in the industry, invested in 100% in-house processing of claims compared to competitors who outsource this function to third party administrators and made substantial investments in IT and infrastructure to enhance business processes and customer relationship management systems. With these initiatives and a continued focus on customer service, Max Bupa has won several awards which include Claim Service Leader of the Year' award at the 5th Indian Insurance Awards 2015, Leader in Service Excellence award at the Healthcare Leadership Awards 2014 and a honorary mention for Best in Class Customer Experience at Customer Experience Management Asia Summit Strategies Max Bupa s vision is to be India s most admired health insurance company with a mission to help our customers live healthier, more successful lives. To realize its goals, Max Bupa is following the strategy given below. Be the provider of choice in the affluent segment in urban India. Broad base the franchise - by leveraging existing and building new partnerships. Build a customer centric, compliant & cost conscious culture. Digitally enable end to end customer journey. There are 6 key priorities for the year FY to drive the organization strategy: Portfolio management approach to managing our existing customer base and building new business for profitable growth; Compelling product proposition to drive customer preference and loyalty; Building digital capabilities to address customer needs across life stages and change the way we attract, connect, engage, fulfill and deepen relationships with our customers; Optimize expenses to convert fat to muscle and build a robust claims management framework; Strengthen processes & technology for building scale; and Enable the workforce through talent development, engagement and reinforcing our values. (iii) Senior Living Business Strengths One of the very few luxury senior living players in the industry Antara s Dehradun project is one of the very few in the sector that caters exclusively to the luxury senior living segment targeted at high net worth seniors. The facility is designed as a spacious and luxurious community with a density of 16 apartments to an acre and a 50,000 sq. ft. clubhouse. The lifestyle common areas and expansive clubhouse are 6 to 8 times larger while the apartment density per acre is one of the lowest when compared to similar existing / upcoming senior living projects across India. This offers Antara a unique first-mover advantage in the luxury senior living subsegment. Unique business model enables selection of target audience enhancing resident experience Antara has designed an innovative lifetime lease model under which the customers pay advance rental for a period of

104 years and are given a leasehold title deed that entitles them to live in the apartment for the rest of their lives (lease term of 60 years). It is one of the few players operating on a long term lease model vis-à-vis other senior living players in the industry who operate on a sales model under which the objective of achieving a target resident profile is difficult to achieve. Moreover, in a sales model involving transfer of title, resales cannot be restricted to seniors only. This unique model enables Antara to carefully select its residents based on its desired target resident profile which is a high net worth graduate / professional over 55 years of age living independently, keeping general good health and progressive, well travelled and socially active which is expected to enhance resident experience at its communities. Strong brand name and presence of Max Group in Health and Allied Services sector enhances credibility and gives rise to synergies Being part of the Max group which has a significant presence in the healthcare, health and life insurance sectors with a strong brand recognition offers several advantages to Antara including enhanced credibility and synergies from tie-ups with group companies. The strong brand presence of the Max group in the health and allied sectors gives Antara a significant advantage over other senior living players, especially since a large number of them are primarily real estate developers with no presence in the services / health sectors. Tie-up with MHC offers unique advantages One of the attractive features of Antara s Dehradun project is the presence of a state-of-the-art MHC hospital 5 kilometres away. The project also has a lifecare centre as part of the main community which includes a day care facility with consultation rooms, specialist visits, a small dental clinic, a rehabilitation clinic to cater therapeutic needs of the residents and a 24x7 ALS ambulance and would be run in partnership with MHC. Strategies Antara aspires to be the leading player in the luxury sub-segment of the senior living sector in India. To achieve this, it plans to employ the following strategies: Operate and manage Antara s Dehradun senior living community post completion of construction as a world class senior living facility offering state-of-the-art facilities and high standards of service. Continue to design luxurious continuous care propositions for seniors by creating vibrant residential communities with comprehensive services that enrich the lives of the residents and offer easy access to outstanding facilities and exceptional service delivery. Expand its reach by developing and operating new senior living communities based on evaluation of new opportunities and a careful assessment of demand and other market dynamics. Continue to focus on ensuring that its resident profile consists of high net worth graduate / professionals over 55 years of age living independently, keeping general good health and progressive, well-travelled and socially active seniors through its unique business model. CORE BUSINESSES OF MAX INDIA (i) Healthcare Business Overview Our healthcare business is conducted through MHC, which is a joint venture between ourselves and Life Healthcare of South Africa, where both partners hold 46.28% equity shareholding, with the remaining held by financial investors and certain employees. MHC is one of the leading private healthcare companies in India based on the number of patient beds across its network. MHC currently has a network of 9 quaternary/ tertiary care hospitals, 4 secondary hospitals, and 1 primary care centre located across 5 states in Northern India. The super-speciality centres of excellence provide healthcare to patients in key speciality areas such as cardiac care, orthopaedics, oncology, renal sciences, neuro-sciences, obstetrics and gynaecology and paediatrics. MHC s hospital and medical centre network provides an integrated range of healthcare services, from outpatient services to tertiary care services. 104

105 MHC has continuously invested in capacity creation over the years and as of December 31, 2015, it services approximately 2,074 patient beds (including 726 patient beds in hospitals serviced by MHC pursuant to medical services agreement(s) with DDF, BMDRC, GMHRC and FSF). Since then, 485 beds have been added to the network via acquisition of certain stake in CRL, which operates Pushpanjali Crosslay Hospital (renamed as Max Super Specialty Hospital Vaishali) located in the East Delhi-Ghaziabad-Noida corridor in the NCR region and SCHPL which provides medical services to Saket City Hospital (renamed as Max Smart Super Speciality Hospital) in South Delhi taking the total capacity to 2,563. MHC remains committed to delivering quality healthcare services to its patients in modern facilities using advanced technology and its team of doctors, nurses and other healthcare professionals, who follow international protocols. The network of MHC s hospitals is either owned by MHC and its subsidiaries or is provided healthcare services pursuant to medical service agreements entered into by MHC and its subsidiaries. Currently, Max Super Specialty Hospital (unit of DDF), Max Super Specialty Hospital Patparganj (unit of BMDRC), Max Smart Super Speciality Hospital (unit of GMHRC) and Max Multi Specialty Hospital Greater Noida (unit of FSF) are provided medical services pursuant to such agreements. MHC hospitals and speciality medical centres network currently includes 9 super-speciality and multi-speciality hospitals (focused on quaternary and tertiary care) located in Delhi, Punjab, Haryana, Uttar Pradesh and Uttarakhand. As of December 31, 2015, the combined capacity at these establishments comprised 2,563 beds (including approximately 812 critical care beds). MHC network also includes hospitals in Gurgaon, Noida and Pitampura (Delhi), which are secondary healthcare establishments, with capacities of 64, 46 and 70 beds respectively. In addition, MHC also operates one specialty medical centre at Panchsheel Park in South Delhi, which provides outpatient and primary healthcare services, specialty clinics for eye care and dental care, as well as daycare facilities. NABH certification have been accredited to 8 hospitals in MHC s network, for patient care and 7 hospitals have accreditation from NABL. 5, of MHC network hospitals are also LEED certified. MSSH Saket has also been awarded the Green OT certification from Bureau Veritas (BV), a European Standards organization and is the first hospital ever in the country to receive this prestigious accolade. As of December 31, 2015, MHC network had approximately 2,955 physicians, of which approximately 1,741 were fulltime employees, including several doctors of international repute. MHC follows a model aimed towards healthcare excellence based on focused management and leadership, established systems and protocols, professional development for its healthcare professionals through continuing medical education and training courses, superior infection control and patient safety measures, stringent audit measures, continuous monitoring of patient feedback as well as quality patient care. MHC undertook a significant capacity expansion during the period , where the network capacity almost doubled, from 662 beds to 1311 beds. The last 2 financial years were a period of consolidation, where MHC saw the financial performance of the new capacity steadily improving and the establishments moving towards being profitable. MHC has a long term vision to expand its network bed capacity from 2,563 to over 5,000 beds organically has the land available for these expansions. In the near term, MHC will focus on expanding capacity at its existing networks (approximately 1200 beds across locations). In July, 2015, MHC completed the acquisition of 77.95% equity shareholding (on a fully diluted basis) in CRL, pursuant to the share purchase cum subscription agreement dated May 28, 2015, as amended ( CRL SSPA ). CRL owns and operates a 260 bed establishment (expandable to 460 beds) Pushpanjali Crosslay Hospital (renamed as Max Super Speciality Hospital, Vaishali), located in the East Delhi-Ghaziabad-Noida corridor. In terms of the CRL SSPA, after the expiry of 4 years from the completion date i.e. July 10, 2015 (i) MHC has a call option right to acquire 31,038,143 shares held by the existing shareholders of CRL at fair market value subject to a floor price of Rs per equity share; and (ii) the existing shareholders of CRL also have a put option right to sell such shares held by the existing shareholders of CRL to MHC at fair market value subject to a floor price of Rs per equity share. In November 2015, MHC completed the acquisition of 51% equity shareholding (on a fully diluted basis) in SCHPL, pursuant to the share purchase agreement dated November 27, 2015 ( SCHPL SPA ). SCHPL provides medical services to Saket City Hospital (renamed as Max Smart Super Speciality Hospital), a 225 bed establishment (expandable to 1200 beds) operated by GMHRC located in South Delhi. MHC has an obligation to acquire balance 49% stake in SCHPL for a pre-agreed consideration of Rs billion, subject to receipt of regulatory approvals, which will increase at 12% compounded interest till such acquisition. In terms of the SCHPL SPA, MHC has a call option right to acquire all 105

106 the remaining shares held by the existing shareholders of SCHPL in accordance with the terms of the SCHPL SPA. Further, after the (i) expiry of 3 years from the completion date i.e. November 27, 2015 or (ii) receipt by the GMHRC of all the approvals required from Governmental authority(ies) as may be required for commencement of the construction of 900 additional beds (taking the total number of beds in the hospital to around 1200 beds), whichever is later, the existing shareholders of SCHPL have a put option right to sell all remaining shares held by them to MHC in accordance with the terms of the SCHPL SPA. During the financial year ended March 31, 2015, the combined revenue of network hospitals in MHC was Rs 17,400 million with an EBITDA of Rs 1,700 million 14. During the 9 months ended December 31, 2015, MHC turned profitable despite 2 large acquisitions. MHC s network of hospitals reported revenue of Rs 15,810 million and EBITDA of Rs 1,517 million during the 9 months ended December 31, The improved financial performance is on the back of steady growth of newer hospitals towards breaking even at the EBITDA level as also margin improvements at existing hospitals, driven by revenue growth, improvement in business mix, and cost reduction initiatives. The network derives approximately 65% of its revenue from tertiary care and surgical procedures, which are complex services with superior gross margins. For the year ended March 31, 2015, the average occupancy rate for MHC s network of hospitals was approximately 74% of the operational beds, despite capacity additions and reduction in average length of stay. Improved business mix resulted in average revenue per operating bed of close to Rs 30,000 per day. MHC derives competitive advantage from its network presence in Delhi and positive brand image. MHC intends to leverage its brand to grow organically in these locations, add advanced quaternary care services and evolve its offerings to serve upcoming diseases burdens lifestyle diseases, non-communicable diseases etc. Simultaneously MHC is exploring avenues to further expand its reach and provide quality care to people at large, outside of its hospital campuses through technology and focused daycare centres. Operations The table below provides certain information about MHC s network of hospitals and healthcare facilities: S.No. Hospital Location Ownership/ Service agreements Commencement of Operations Existing Bed Capacity Peak Bed Capacity Existing Hospitals and Medical Centers 1 Max Super Speciality Hospital West Block, Saket, New Delhi Owned May Max Super Speciality Hospital Shalimar Bagh, New Delhi Owned November Max Super Speciality Hospital Mohali, Punjab Owned* September Max Super Speciality Hospital Bhathinda, Punjab Owned* September Max Super Speciality Hospital Dehradun, Uttarakhand Owned May Max Super Speciality Hospital Ghaziabad, Uttar Pradesh Owned July 2015** Max Hospital Pitampura, New Delhi Leased February Max Hospital Noida, Uttar Pradesh Leased August Max Hospital Gurgaon, Haryana Owned July Max Multi Specialty Centre Panchsheel Park (North), New Delhi Leased January Max Super Speciality Hospital (unit of Devki East Block, Saket, New Delhi Medical Service Agreement December Devi Foundation) 12 Max Super Speciality Hospital Patparganj, New Delhi Medical Service Agreement May (unit of Balaji Medical and Diganostic Research Centre) 13 Max Smart Super Speciality Hospital Saket, New Delhi Medical Service Agreement November 2015*** 225 1,210 (unit of GMHRC) 14 Max Multispeciality Hospital Greater Noida, Uttar Pradesh Service Agreement July Proposed Hospitals 15 Max Super Speciality Hospital Greater Noida, Uttar Pradesh Owned To be decided Max Super Speciality Hospital Mullanpur Owned To be decided ,563 5,123 *Hospitals set up under the Public Partnership Model with the Government of Punjab, wherein MHC s subsidiaries have been granted a concession to build and operate the hospital for a period of 50 years, subject to payment of concession fee as per the concession agreement. Land has been provided by the Government of Punjab. **Acquired majority stake of 77.95% (on a fully diluted basis). 14 The above results are for MHC Network of hospitals and includes results for Max Super Specialty Hospital, Saket, unit of Devki Devi Foundation and Max Super Speciality Hospital, Patparganj, unit of Balaji Medical and Diagnostic Research Centre. Only management fee from services provided to FSF for Max Multispecialty Hospital, Greater Noida is included. 106

107 *** Acquired majority stake of 51% (on a fully diluted basis) in SCHPL, which provides medical services to Saket City Hospital (renamed as Max Smart Super Speciality Hospital), a unit of GMHRC. The proposed expansion plans and the anticipated dates for commencement of operation of new hospitals are based on MHC s current plans and estimates. While development of certain of these proposed new and/or expanded properties is currently under progress, there can be no assurance that these hospitals will commence operations within such anticipated time frames or at all. Specialties Through its network of hospitals, MHC provides a broad range of specialties, including advanced cardiac care, orthopedics, oncology, renal sciences, neuro-sciences, MAMBS (specialties for which Centers of Excellence have been created in the MHC network hospitals), and other services including, obstetrics and gynecology, pediatrics, nephrology, and general surgery as well as diagnostic and emergency services. MHC s hospitals also provide outpatient services, including consultation for a range of ailments, preventive health screening, and laboratory services as well as radiology and imaging services.. Going forward focus would be on to buliding key specialities such as oncology, neuro sciences, transplant medicine, orthopedics, cardiac sciences, diabetes & bariatric surgeries. MHC has established centers of excellence in a variety of medical disciplines. Certain of these disciplines are described below: Cardiology: MHC provides a comprehensive range of cardiology services ranging from preventive measures to complicated surgeries. It provides a range of diagnostic and therapeutic services as well as interventional cardiac procedures. In addition, it has a department of thoracic and cardiovascular surgery, which performs a large number of cardiac surgeries with success rates comparable to international standards. New technologies such as the 64 slice CT angio scan and a modern nuclear medicine department enables early detection and management of cardiac disorders for its patients. Orthopedics: MHC offers a range of orthopedic treatments, including complicated joint replacement, microsurgeries, spine surgeries and deformity correction, and has doctors trained in minimal invasive surgical procedures. MHC also provides pre-operative care and rehabilitation programs. Max Institute of Orthopedics and Joint Replacement is located at Max Super Specialty Hospital, Saket and offers sophisticated joint replacement surgery, knee and hip replacement surgery, high-flex knee procedures, particular surface replacement hip surgery, as well as spine surgery, arthroscopic surgery and orthopedic trauma management. Neurosciences: Max Institute of Neuro Sciences was established in Max Super Specialty Hospital, Saket to service the increasing demand for neuroscience related healthcare services. It provides a comprehensive range of neurosurgery related procedures, including brain surgery, spine surgery, pediatric neurosurgery, interventional neuro-radiology and endovascular neurosurgery. MHC facilities include the state of the art brain-suite, an advanced platform for brain tumor and spinal tumor surgeries. Oncology: MHC offers a range of oncology treatments, including medical oncology (both conventional and aggressive chemotherapy), surgical oncology (tumor removal), radiotherapy and bone marrow transplantation. Its Centre of Excellence is located at Saket. Oncology services have significant demand in India and MHC is well positioned to become a leading oncology service provider in the private sector in India. Renal sciences: Renal sciences at MHC comprise departments of urology, nephrology and kidney transplant, with the Centre of Excellence located at Saket. The department of urology at MHC offers comprehensive diagnostic and treatment services for adult and paediatric urological conditions. Our nephrology & dialysis services department integrates advanced equipment and medical expertise to provide care and treatments pertaining to general nephrology, dialysis and kidney transplants. Max Department of Kidney Transplant strives to provide the patients with expert treatment and care by overcoming blood barriers to give patients a new lease of life. The department specializes in ABO incompatible kidney transplant, which is an advanced procedure that allows transplant of a kidney even from a donor whose blood type does not match that of the patient. The department also specializes in online hemodiafiltration, a dialytic therapy which combines conventional haemodialysis with advanced diafiltration for better blood purification thus ensuring better long term 107

108 results and freedom from nagging symptoms for patients with kidney failure. MAMBS: MAMBS is a centre of excellence in endo-surgery. It is the first of its kind globally and has been awarded the Founder title and accredited as International Centre of Excellence for Bariatric Surgery (ICE) by the Surgical Review Corporation (SRC), USA and Centre of Excellence in Endo-hernia Surgery by Asia Pacific Hernia Society. The aforesaid institute is dedicated to performing surgical procedures with a special emphasis on utilization of minimal access techniques (laparoscopy surgery), so that patients reap the benefits of faster recovery, lesser post-operative pain and minimal post-surgical complications. One of the thrust areas of the Institute is the metabolic and bariatric surgery performed by minimal access techniques and is one of the leading bariatric centers in India and Asia Pacific region, with serious focus on managing morbid obesity. The institute offers laparoscopic surgeries for gall bladder, hernia, appendix, ano-rectal conditions, obesity and diabetes, reflux, thyroid and parathyroid, liver and pancreas and video assisted thoraco-scopic surgeries. MHC believes that it is able to deliver quality specialty healthcare services at a significantly lower cost to patients than the cost of equivalent services in developed countries such as the United States and the United Kingdom. At its multispecialty facilities, MHC offers comprehensive medical services to its patients in their local communities, which it complements with sophisticated, advanced procedures and quaternary care at its super-specialty institutes. Hospitals The following table describes certain key statistics for MHC s network of hospitals: 108

109 MHC network of hospitals financial and operational performance as on December 31, month period ended 31-Dec-15 March 31, month period ended March 31, 2014 March 31, 2013 Number of operational beds (average for the period) 2,272 1,680 1,472 1,310 Number of procedures # Cardiac care 13,577 16,655 13,660 11,932 Oncology 3,051 4,237 2,575 1,960 Orthopaedics 8,416 8,915 6,338 4,395 Neurosciences 2,969 4,166 3,288 2,099 Renal sciences 4,914 5,689 3,737 2,613 MAMBS 3,447 4,201 4,029 3,898 Others 20,525 23,617 21,464 17,973 Medical admissions 63,746 64,276 57,581 50,244 Outpatient registrations * 4,064,316 4,503,955 3,826,194 3,636,303 Occupancy rate 71.65% 73.50% 74.31% 69.72% Average length of stay (ALOS) (days) Average realization per OBD (Rs.) 30,296 28,814 26,208 25,129 Inpatient income (Rs. Millions) 12, , , ,704.7 Outpatient income (Rs. Millions) 3, , , ,671.1 Other income (Rs. Millions) Income from SBUs Gross Revenue 15, , , ,488.4 Net Revenue 15, , , ,180.8 Contribution (%) 65.0% 64.1% 63.7% 62.8% EBITDAR [Hospital level] (%) 17.03% 17.06% 15.84% 14.29% EBITDAR [Hospital level] (Rs Millions) 2, , , ,597.2 EBITDA [Hospital level] (%) 15.26% 15.14% 13.91% 12.63% EBITDA [Hospital level] (Rs Millions) 2, , , ,412.5 EBITDA after central cost (%) 10.0% 10.1% 8.3% 6.4% EBITDA after central cost (Rs Millions) 1, , , PBT (%) 0.5% -0.3% -3.3% -5.9% PBT (Rs Millions) Net Worth (Rs Millions) 10, , , ,055.4 Net Debt (Rs Millions) 10, , , ,301.4 Tangible Fixed Asset (Gross Block) (Rs Millions) 19, , , ,223.8 * Outpatient Volumes # Surgical Procedures Notes: Average realization per OBD is based on Inpatient Department (IPD) revenues only EBITDAR figure exclude lease rental amounts EBITDA (Hospital level) exclude central cost EBITDA margin is calculated on net revenue basis 109

110 For hospitals operational for more than 5 years as on December 31, month period ended December 31, 2015 March 31, month period ended March 31, 2014 March 31, 2013 Number of operational beds (average for the period) 1,095 1,084 1, Number of procedures # Cardiac care 6,814 9,083 8,322 9,124 Oncology 1,777 2,397 1,961 1,766 Orthopaedics 3,450 4,197 3,800 3,523 Neurosciences 1,722 2,256 1,759 1,540 Renal sciences 3,132 4,010 2,686 2,309 MAMBS 3,294 4,148 3,918 3,824 Others 13,085 17,269 16,920 15,209 Medical admissions 35,896 44,215 43,110 41,853 Outpatient registrations * 2,883,443 3,432,706 3,033,785 3,218,811 Occupancy rate 75.23% 75.52% 75.95% 76.23% Average length of stay (ALOS) (days) Average realization per OBD (Rs.) 33,203 30,767 27,304 25,742 Inpatient income (Rs. Millions) 7, , , ,497.4 Outpatient income (Rs. Millions) 2, , , ,419.5 Other income (Rs. Millions) Gross Revenue 10, , , ,023.0 Net Revenue 10, , , ,733.6 Contribution (%) 65.84% 64.87% 63.60% 62.34% EBITDAR [Hospital level] (%) 20.34% 19.60% 19.10% 18.96% EBITDAR [Hospital level] (Rs Millions) 2, , , ,845.7 EBITDA [Hospital level] (%) 19.46% 18.71% 18.13% 18.10% EBITDA [Hospital level] (Rs Millions) 1, , , ,761.3 EBITDA after central cost (%) 13.7% 13.5% 12.1% 11.6% EBITDA after central cost (Rs Millions) 1, , , ,128.6 PBT (%) 5.6% 4.3% 1.6% 2.6% PBT (Rs Millions) * Outpatient Volumes # Surgical Procedures Notes: Average realization per OBD is based on Inpatient Department (IPD) revenues only EBITDAR figure exclude lease rental amounts EBITDA (Hospital level) exclude central cost EBITDA margin is calculated on net revenue basis Return on capital employed of the matured units for FY is at 16%. 15 The above results are for MHC Network of hospitals and includes results for Max Super Specialty Hospital, Saket, unit of DDF and Max Super Speciality Hospital, Patparganj, unit of BMDRC. 110

111 For hospitals operational for less than 5 years as on December 31, month period ended December 31, 2015 March 31, month period ended March 31, 2014 March 31, 2013 Number of operational beds (average for the period) Number of procedures # Cardiac care 6,265 7,572 5,338 2,808 Oncology 1,055 1, Orthopaedics 4,444 4,718 2, Neurosciences 1,179 1,910 1, Renal sciences 1,543 1,679 1, MAMBS Others 5,456 6,348 4,544 2,764 Medical admissions 21,491 20,061 14,471 8,391 Outpatient registrations * 9,32,993 10,71,249 7,92,409 4,17,492 Occupancy rate 67.46% 69.84% 70.36% 48.37% Average length of stay (ALOS) (days) Average realization per OBD (Rs.) 27,336 24,967 23,374 21,960 Inpatient income (Rs. Millions) 3, , , ,207.3 Outpatient income (Rs. Millions) Other income (Rs. Millions) Gross Revenue 4, , , ,465.4 Net Revenue 4, , , ,447.2 Contribution (%) 63.11% 62.67% 64.32% 66.18% EBITDAR [Hospital level] (%) 11.52% 10.44% 5.23% % EBITDAR [Hospital level] (Rs Millions) EBITDA [Hospital level] (%) 7.13% 5.66% 0.00% % EBITDA [Hospital level] (Rs Millions) EBITDA after central cost (%) 2.7% 1.5% -4.4% -29.9% EBITDA after central cost (Rs Millions) PBT (%) -7.4% -7.8% -19.8% -63.0% PBT (Rs Millions) * Outpatient Volumes # Surgical Procedures Notes: Average realization per OBD is based on Inpatient Department (IPD) revenues only EBITDAR figure exclude lease rental amounts EBITDA (Hospital level) exclude central cost EBITDA margin is calculated on net revenue basis Key operating details of our individual hospitals are provided below: 1. Max Super Specialty Hospital, (West Block) Saket ( MSSH Saket ) MSSH Saket is located in South Delhi and offers various super-specialty facilities in addition to a wide range of tertiary and secondary healthcare facilities. MSSH Saket houses Max Institute of Orthopedics & Joint Replacement, Max Institute of Neurosciences, Max Institute of Obstetrics and Gynecology and Max Institute of Pediatrics. MSSH Saket offers one of the highest standards of neuroscience related healthcare procedures to patients in Asia. The neuroscience facility is equipped with advanced neuroscience facilities capable of performing a wide range of investigative tests including the state of the art Brain-SUITE IMRI. It has many other sophisticated equipment(s) including a flat panel DSA laboratory with three-dimensional technology and Zeiss Pentero microscopes. MSSH Saket is currently equipped with 7 operating theatres (including a brain laboratory), a neo-natal intensive care unit, a pediatric intensive care unit and 211 patient (census) beds. MSSH Saket commenced operations on May 23, MSSH Saket is owned and operated by MHC. The following 16 New hospitals comprise hospitals at Mohali, Bathinda, Dehradun, Shalimar Bagh, Vaishali and Saket. 111

112 table sets forth certain key operating information of MSSH Saket: 9 month period ended December 31, 2015 March 31, month period ended March 31, 2014 March 31, 2013 Number of operational beds (average for the period) Number of procedures # Cardiac care Oncology Orthopaedics Neurosciences Renal sciences MAMBS Others Medical admissions Outpatient registrations * 3,31,826 4,25,214 4,02,358 3,89,480 Occupancy rate 68.04% 71.18% 74.82% 75.39% Average length of stay (ALOS) (days) Average realization per OBD (Rs.) 42,367 40,195 33,388 30,302 Inpatient income (Rs. Millions) 1, , , ,710.6 Outpatient income (Rs. Millions) Other income (Rs. Millions) Gross Revenue 2, , , ,180.7 Net Revenue 2, , , ,161.3 Contribution (%) 74.59% 72.97% 70.50% 70.64% EBITDAR [Hospital level] (%) 17.34% 17.00% 15.85% 16.86% EBITDAR [Hospital level] (Rs Millions) EBITDA [Hospital level] (%) 17.34% 17.00% 15.85% 16.86% EBITDA [Hospital level] (Rs Millions) * Outpatient Volumes # Surgical Procedures Notes: Average realization per OBD is based on Inpatient Department (IPD) revenues only EBITDAR figure exclude lease rental amounts EBITDA (Hospital level) exclude central cost EBITDA margin is calculated on net revenue basis 2. Max Hospital, Gurgaon ( MHG ) MHG is a multi-specialty hospital located in Gurgaon, a suburb of Delhi. This 64 bedded hospital offers care in all major medical disciplines with a focus on convenience, quality medical care and affordability. Cardiac sciences, orthopedics and neuro-sciences are the key tertiary care specialties at the hospital, with obstetrics and gynecology, IVF and internal medicine being the key secondary care specialties. The hospital houses state-of-the-art Cath Lab, OTs with HEPA and the most advanced MRI and CT scan machines for providing a holistic care to patients. MHG was established in MHG is owned and operated by Alps Hospital Limited, in which the entire equity shareholding is held by MHC directly, and through its wholly owned subsidiary, Max Medical. The company has in its favor a sub-lease for a plot of land in Gurgaon, for an initial period of 97 years, which can be further renewed for two terms of 97 years each. 112

113 The following table sets forth certain key operating information of MHG: 9 month period ended December 31, 2015 March 31, month period ended March 31, 2014 March 31, 2013 Number of operational beds (average for the period) Number of procedures # Cardiac care Oncology Orthopaedics Neurosciences Renal sciences MAMBS Others 1,677 2,014 1,944 1,815 Medical admissions Outpatient registrations * 3,35,499 4,14,084 3,99,243 4,45,016 Occupancy rate 83.30% 73.35% 72.68% 78.60% Average length of stay (ALOS) (days) Average realization per OBD (Rs.) 33,889 30,858 26,187 22,563 Inpatient income (Rs. Millions) Outpatient income (Rs. Millions) Other income (Rs. Millions) Gross Revenue Net Revenue Contribution (%) 58.37% 59.80% 57.82% 57.89% EBITDAR [Hospital level] (%) 21.45% 17.04% 16.91% 16.90% EBITDAR [Hospital level] (Rs Millions) EBITDA [Hospital level] (%) 21.45% 17.04% 16.91% 16.90% EBITDA [Hospital level] (Rs Millions) * Outpatient Volumes # Surgical Procedures Notes: Average realization per OBD is based on Inpatient Department (IPD) revenues only EBITDAR figure exclude lease rental amounts EBITDA (Hospital level) exclude central cost EBITDA margin is calculated on net revenue basis 3. Max Multi Speciality Hospital, Noida ( MHN ) MHN is a multi-specialty hospital located on a leased property in Noida, a prominent suburb of Delhi, and offers a wide range of multi-specialty services. Key specializations offered at the hospital are internal medicine, obstetrics and gynecology and pediatrics. MHN is currently equipped with 2 operating theatres, one labour room, physiotherapy facilities, dentistry, radiology and pathology units as well as critical care ICU and a neonatal ICU. The hospital offers 46 patient beds. MHN was established in August 2002 and is operated by MHC on a leased property. The following table sets forth certain key operating information of MHN: 113

114 9 month period ended December 31, 2015 March 31, month period ended March 31, 2014 March 31, 2013 Number of operational beds (average for the period) Number of procedures # Cardiac care Oncology Orthopaedics Neurosciences Renal sciences MAMBS Others 1,438 2,027 1,441 1,272 Medical admissions Outpatient registrations * 1,70,005 2,23,006 2,14,767 2,14,236 Occupancy rate 71.96% 70.49% 75.91% 80.03% Average length of stay (ALOS) (days) Average realization per OBD (Rs.) 22,972 23,075 20,929 19,634 Inpatient income (Rs. Millions) Outpatient income (Rs. Millions) Other income (Rs. Millions) Gross Revenue Net Revenue Contribution (%) 64.35% 65.57% 59.64% 58.19% EBITDAR [Hospital level] (%) 23.36% 25.52% 26.34% 22.61% EBITDAR [Hospital level] (Rs Millions) EBITDA [Hospital level] (%) 19.28% 21.18% 21.76% 18.27% EBITDA [Hospital level] (Rs Millions) * Outpatient Volumes # Surgical Procedures Notes: Average realization per OBD is based on Inpatient Department (IPD) revenues only EBITDAR figure exclude lease rental amounts EBITDA (Hospital level) exclude central cost EBITDA margin is calculated on net revenue basis 4. Max Hospital, Pitampura ( MHP ) MHP is a multi-specialty hospital located on a leased property in Pitampura in West Delhi and offers a wide range of services. MHP is currently equipped with 3 operating theatres, one labor room, a non-invasive cardiology unit, physiotherapy facilities, dentistry, radiology and pathology units as well as critical care ICU and a neonatal ICU. The hospital offers 70 patient beds. MHP was established in February MHP is operated by MHC on a leased property. As of date, a new strategy is being formulated to restructure Pitampura into a daycare and OPD centre acting a referral center to MSSH Shalimar Bagh. Post restructuring, Pitampura standalone and in conjunction with Shalimar Bagh is expected to deliver superior financial returns for MHC. The following table sets forth certain key operating information of MHP: 114

115 9 month period ended December 31, 2015 March 31, month period ended March 31, 2014 March 31, 2013 Number of operational beds (average for the period) Number of procedures # Cardiac care Oncology Orthopaedics Neurosciences Renal sciences MAMBS Others Medical admissions Outpatient registrations * 1,77,161 2,36,538 1,58,773 2,88,478 Occupancy rate 75.15% 74.56% 72.31% 68.47% Average length of stay (ALOS) (days) Average realization per OBD (Rs.) 21,348 22,000 18,994 16,219 Inpatient income (Rs. Millions) Outpatient income (Rs. Millions) Other income (Rs. Millions) Gross Revenue Net Revenue Contribution (%) 55.49% 57.92% 61.16% 58.35% EBITDAR [Hospital level] (%) 12.94% 14.16% 14.47% 10.17% EBITDAR [Hospital level] (Rs Millions) EBITDA [Hospital level] (%) 3.60% 4.92% 2.60% -1.49% EBITDA [Hospital level] (Rs Millions) * Outpatient Volumes # Surgical Procedures Notes: Average realization per OBD is based on Inpatient Department (IPD) revenues only EBITDAR figure exclude lease rental amounts EBITDA (Hospital level) exclude central cost EBITDA margin is calculated on net revenue basis 5. Max Multi Specialty Centre, Panchsheel Park The specialty medical centre at Panchsheel Park, located on a leased property, is a specialty OPD centre offering specialist consultancies across all departments. It offers comprehensive pathology diagnostic services, several preventive health programs, ante-natal clinics and modern physiotherapy facilities. The following table sets forth certain key operating information of Max Multispecialty Centre, Panchsheel Park: 115

116 9 month period ended December 31, 2015 March 31, month period ended March 31, 2014 March 31, 2013 Number of operational beds (average for the period) Number of procedures # Cardiac care Oncology Orthopaedics Neurosciences Renal sciences MAMBS Others Medical admissions Outpatient registrations * 2,96,024 3,56,909 3,25,054 3,94,842 Occupancy rate Average length of stay (ALOS) (days) Average realization per OBD (Rs.) Inpatient income (Rs. Millions) Outpatient income (Rs. Millions) Other income (Rs. Millions) Gross Revenue Net Revenue Contribution (%) 53.50% 52.07% 51.81% 51.46% EBITDAR [Hospital level] (%) 26.07% 24.50% 21.12% 22.77% EBITDAR [Hospital level] (Rs Millions) EBITDA [Hospital level] (%) 18.34% 15.41% 10.95% 15.65% EBITDA [Hospital level] (Rs Millions) * Outpatient Volumes # Surgical Procedures Notes: Average realization per OBD is based on Inpatient Department (IPD) revenues only EBITDAR figure exclude lease rental amounts EBITDA (Hospital level) exclude central cost EBITDA margin is calculated on net revenue basis 6. Max Super Specialty Hospital, Mohali ( MSSH Mohali ) MSSH Mohali is located in the state of Punjab in North India, near its capital city of Chandigarh. The hospital, with installed capacity of 218 beds, provides high end medical care to the residents of tri-city of Chandigarh, Mohali and Panchkula. The hospital has been set up as Public Private Partnership project with the Government of Punjab. Cardiac sciences, oncology and orthopedics are the key super specialities at the hospital The hospital houses state-of-the-art Cath Lab, OTs with HEPA, EHR, Nuclear Medicine and Gama Camera. It is also equipped with the most advanced oncology equipment like LINAC for Radiotherapy, MRI and CT scan machines for providing holistic care to Cancer patients. MSSH Mohali commenced operations on September MSSH Mohali has been set up as set up as a Public Private Partnership project with the Government of Punjab, where under Hometrail Estate Private Limited (a wholly owned subsidiary of MHC) has been granted a concession to build and operate the hospital through a long term lease of land provided by the Government of Punjab. The concession agreement contemplates payment of a pre-defined concession fee to the Government of Punjab. 116

117 The following table sets forth certain key operating information of MSSH Mohali: 9 month period ended December 31, 2015 March 31, month period ended March 31, 2014 March 31, 2013 Number of operational beds (average for the period) Number of procedures # Cardiac care Oncology Orthopaedics Neurosciences Renal sciences MAMBS Others Medical admissions Outpatient registrations * 2,98,082 3,80,907 2,80,031 1,63,104 Occupancy rate 64.45% 65.75% 70.81% 50.20% Average length of stay (ALOS) (days) Average realization per OBD (Rs.) 34,267 32,011 29,466 25,043 Inpatient income (Rs. Millions) 1, , , Outpatient income (Rs. Millions) Other income (Rs. Millions) Gross Revenue 1, , , Net Revenue 1, , , Contribution (%) 59.60% 59.55% 61.27% 66.10% EBITDAR [Hospital level] (%) 20.65% 20.12% 13.24% 0.52% EBITDAR [Hospital level] (Rs Millions) EBITDA [Hospital level] (%) 15.69% 15.13% 8.28% -4.37% EBITDA [Hospital level] (Rs Millions) * Outpatient Volumes # Surgical Procedures Notes: Average realization per OBD is based on Inpatient Department (IPD) revenues only EBITDAR figure exclude lease rental amounts EBITDA (Hospital level) exclude central cost EBITDA margin is calculated on net revenue basis 7. Max Super Specialty Hospital, Shalimar Bagh ( MSSH Shalimar Bagh ) MSSH Shalimar Bagh is located in West Delhi. It is a 275 bedded facility, and a leading multi-super specialty hospital providing the highest level of professional expertise and world-class care across various specialties. It offers high end tertiary care services in the medical specialties of cardiology, orthopedics, neurosciences, mother and child care, urology, ENT, dialysis, plastic / reconstructive surgery, dentistry, and ophthalmology. It houses state-of theart equipment and facilities such as Cath Labs, OTs with HEPA filters, EHRs, Nuclear Medicine and Gama Camera. MSSH Shalimar Bagh commenced operations in November MSSH Shalimar Bagh is owned and operated by MHC. Land for the hospital has been provided on concessional rates by DDA. The following table sets forth certain key operating information of MSSH Shalimar Bagh Hospital 117

118 9 month period ended December 31, 2015 March 31, month period ended March 31, 2014 March 31, 2013 Number of operational beds (average for the period) Number of procedures # Cardiac care Oncology Orthopaedics Neurosciences Renal sciences MAMBS Others Medical admissions Outpatient registrations * 2,86,462 2,66,412 1,96,710 81,678 Occupancy rate 74.69% 76.13% 76.52% 59.28% Average length of stay (ALOS) (days) Average realization per OBD (Rs.) 25,545 24,351 22,646 23,010 Inpatient income (Rs. Millions) 1, , Outpatient income (Rs. Millions) Other income (Rs. Millions) Gross Revenue 1, , , Net Revenue 1, , Contribution (%) 66.29% 65.19% 64.92% 64.99% EBITDAR [Hospital level] (%) 11.24% 7.37% 6.80% % EBITDAR [Hospital level] (Rs Millions) EBITDA [Hospital level] (%) 11.24% 7.37% 6.80% % EBITDA [Hospital level] (Rs Millions) * Outpatient Volumes # Surgical Procedures Notes: Average realization per OBD is based on Inpatient Department (IPD) revenues only EBITDAR figure exclude lease rental amounts EBITDA (Hospital level) exclude central cost EBITDA margin is calculated on net revenue basis 8. Max Super Specialty Hospital, Dehradun ( MSSH Dehradun ) MSSH Dehradun is located in Dehradun, the capital city of the state of Uttarakhand in North India. The hospital, with installed capacity of 168 beds is MHC s first hospital in the Uttarakhand region and aspires to be the leader in providing tertiary care to people of Uttarakhand and surrounding regions. Key specializations offered at the hospital are emergency and trauma care, non-invasive cardiology, joint replacement and orthopedics, minimally invasive surgery and related support facilities. MSSH Dehradun commenced operations in May MSSH Dehradun is owned and operated by MHC on a land taken on lease. 118

119 The following table sets forth certain key operating information of MSSH Dehradun: 9 month period ended December 31, 2015 March 31, month period ended March 31, 2014 March 31, 2013 Number of operational beds (average for the period) Number of procedures # Cardiac care Oncology Orthopaedics Neurosciences Renal sciences MAMBS Others Medical admissions Outpatient registrations * 1,66,612 1,78,520 1,34,153 60,674 Occupancy rate 67.34% 67.98% 68.76% 49.91% Average length of stay (ALOS) (days) Average realization per OBD (Rs.) 23,217 19,663 19,920 20,938 Inpatient income (Rs. Millions) Outpatient income (Rs. Millions) Other income (Rs. Millions) Gross Revenue Net Revenue Contribution (%) 64.62% 64.97% 71.54% 69.37% EBITDAR [Hospital level] (%) 3.15% -0.09% 5.35% % EBITDAR [Hospital level] (Rs Millions) EBITDA [Hospital level] (%) -8.85% % % % EBITDA [Hospital level] (Rs Millions) * Outpatient Volumes # Surgical Procedures Notes: Average realization per OBD is based on Inpatient Department (IPD) revenues only EBITDAR figure exclude lease rental amounts EBITDA (Hospital level) exclude central cost EBITDA margin is calculated on net revenue basis 9. Max Super Specialty Hospital, Bhathinda ( MSSH Bhathinda ) MSSH Bhathinda is located in the state of Punjab in North India. The hospital, with installed capacity of 186 beds provides high end medical care to the residents of the industrial town and its nearby areas. The hospital has been set up as a Public Private Partnership project with Government of Punjab. Cardiac sciences, oncology, orthopedics and neuro sciences are the key super specialties at the hospital. The hospital houses state-of-the-art Cath Lab, OTs with HEPA, EHR, Nuclear Medicine and Gama Camera. It is also equipped with the most advanced oncology equipment like LINAC for Radiotherapy, MRI and CT scan machines for providing holistic care to Cancer patients. MSSH Bhathinda commenced operations in September MSSH Bhathinda has been set up as set up as a Public Private Partnership project with Government of Punjab, where under Hometrail Buildtech Private Limited (a wholly owned subsidiary of MHC) has been granted a concession to build and operate the hospital through a long term lease of land provided by the Government of Punjab. The concession agreement contemplates payment of a pre-defined concession fee to the Government of Punjab. 119

120 The following table sets forth certain key operating information of MSSH Bhathinda: 9 month period ended December 31, 2015 March 31, month period ended March 31, 2014 March 31, 2013 Number of operational beds (average for the period) Number of procedures # Cardiac care Oncology Orthopaedics Neurosciences Renal sciences MAMBS Others Medical admissions Outpatient registrations * 1,81,837 2,45,410 1,81,515 1,12,036 Occupancy rate 50.26% 67.52% 56.88% 31.99% Average length of stay (ALOS) (days) Average realization per OBD (Rs.) 20,343 17,262 15,047 14,380 Inpatient income (Rs. Millions) Outpatient income (Rs. Millions) Other income (Rs. Millions) Total income Contribution (%) 45.31% 50.74% 46.46% 49.74% EBITDAR(%) % -3.52% % % EBITDAR (Rs Millions) EBITDA (%) % -8.51% % % EBITDA (Rs Millions) * Outpatient Volumes # Surgical Procedures Notes: Average realization per OBD is based on Inpatient Department (IPD) revenues only EBITDAR figure exclude lease rental amounts EBITDA margin is calculated on net revenue basis Currently, a restructuring program is underway at the hospital to rationalize costs which is expected to lead to cost savings of approximately Rs. 30 to 40 million annually 10. Max Super Specialty Hospital Vaishali (earlier known as Pushpanjali Crosslay Hospital ( PCH )) In July, 2015, MHC completed the acquisition of 77.95% equity shareholding (on a fully diluted basis) in CRL, pursuant to the share purchase cum subscription agreement dated May 28, 2015, as amended ( CRL SSPA ). CRL owns and operates a 260 bed establishment (expandable to 460 beds) Pushpanjali Crosslay Hospital (renamed as Max Super Speciality Hospital, Vaishali), located in the East Delhi-Ghaziabad-Noida corridor. In terms of the CRL SSPA, after the expiry of 4 years from the completion date i.e. July 10, 2015 (i) MHC has a call option right to acquire 31,038,143 shares held by the existing shareholders of CRL at fair market value subject to a floor price of Rs per equity share; and (ii) the existing shareholders of CRL also have a put option right to sell such shares held by the existing shareholders of CRL to MHC at fair market value subject to a floor price of Rs per equity It provides a spectrum of preventive, diagnostic and treatment alternatives with follow-up care in all medical specialties. The hospital has established Centres of Excellence in fields like orthopaedics & joint replacement, nephrology & kidney transplant, Crosslay Wellness Centre, cancer institute, cardiology & cardiac surgery, IVF & infertility institute, plastic & aesthetic surgery which provide care at par with international benchmarks. The hospital is expected to benefit from clinical, management and financial synergies with MHC s network in general and Max Super Specialty Hospital, Patparganj in particular. The hospital generated revenues of ~Rs. 826 million with an EBITDA margin of 8% in Jul to Dec 15. Integration of PCH with Max network is ongoing and tracking as per plan. MHC intends to kick off multiple initiatives post integration to increase profitability by optimizing channel mix, improving specialty mix while rationalising costs. 120

121 11. Max Super Specialty Hospital, East Block (a unit of DDF, referred here in as MDDH ) MDDH is a super specialty hospital located in South Delhi, dedicated to heart and vascular diseases. It offers highest standards of cardiac care to patients. It specializes in surgery for high-risk patients and has introduced innovative techniques for minimally invasive surgeries. The facility is equipped with advanced cardiac care facilities and laboratories capable of performing a wide range of investigative tests in the fields of nuclear medicine, radiology, biochemistry, hematology, transfusion medicine and microbiology. The facility is currently equipped with 12 operating theatres, 2 cardiac catheterization laboratories and has a capacity of 324 patient beds. MDDH was established in December 2004, with the second phase of expansion completed in MHC operates this hospital under a service agreement with the DDF, a society registered under the Societies Registration Act, 1860, as amended. The plot of land was allotted to DDF by the Government of Delhi for the purposes of operating a hospital and the land and the hospital constructed thereon are assets of the DDF. In terms of its agreement with MDDH, MHC provides certain services to DDF, which include, medical services, other medical advisory services and the like, for which MHC receives a service fee and reimbursement of actual expenses from DDF. The term of this agreement is for a period of thirty years and is renewable at the option of MHC for two successive periods of ten years each. The consideration is a specified amount based on certain specified quantum of services provided. MHC also provides supply chain management of medicines and consumables for the hospital through its centralised purchase operations. In addition to this arrangement, DDF has also entered into agreements with MHC and Max Medical (a wholly owned subsidiary of MHC). The details of these agreements are as follows: (i) Agreement dated June 30, 2004 between DDF and MHC, as amended from time to time, pursuant to which, MHC has agreed to provide various services to DDF including inter alia services relating to medical advisory, motion and other studies, management program and training and marketing. The term of this contract is for a period of 30 years; and (ii) Agreement dated December 10, 2001 between DDF and Max Medical for completion of the construction of its hospital building by Max Medical for which DDF is obligated to pay to Max Medical. As on December 31, 2015, DDF owed total of Rs. 1,197 million to MHC and its subsidiary Max Medical. The following table sets forth certain key operating information of MDDH for the periods indicated: 121

122 9 month period ended December 31, 2015 March 31, month period ended March 31, 2014 March 31, 2013 Number of operational beds (average for the period) Number of procedures # Cardiac care Oncology Orthopaedics Neurosciences Renal sciences MAMBS Others Medical admissions Outpatient registrations * 5,73,147 6,47,788 6,16,129 5,86,035 Occupancy rate 72.12% 73.49% 74.82% 78.95% Average length of stay (ALOS) (days) Average realization per OBD (Rs.) 36,554 33,387 31,935 31,266 Inpatient income (Rs. Millions) 2, , , ,806.3 Outpatient income (Rs. Millions) Other income (Rs. Millions) Gross Revenue 3, , , ,497.6 Net Revenue 3, , , ,342.4 Contribution (%) 64.76% 64.30% 62.39% 59.80% EBITDAR [Hospital level] (%) 22.45% 21.63% 20.79% 19.88% EBITDAR [Hospital level] (Rs Millions) EBITDA [Hospital level] (%) 22.42% 21.63% 20.79% 19.88% EBITDA [Hospital level] (Rs Millions) * Outpatient Volumes # Surgical Procedures Notes: Average realization per OBD is based on Inpatient Department (IPD) revenues only EBITDAR figure exclude lease rental amounts EBITDA (Hospital level) exclude central cost EBITDA margin is calculated on net revenue basis 12. Max Super Specialty Hospital, Patparganj (Unit of BMDRC, referred herein as MBH ) MBH is a super-specialty hospital located in Patparganj in East Delhi and offers a wide range of healthcare facilities. It has a dedicated super-specialty oncology department, cardiac department, as well as orthopedics and joint replacement, and a neuroscience department. It also provides advanced diagnostic services and emergency medicine units. MBH is currently equipped with 11 operating theatres, a cath laboratory, a non-invasive cardiology unit and 402 patient beds. MBH was established in May The plot of land on which MBH is located was allotted to BMDRC, a society registered under the Indian Societies Registration Act, 1860, as amended, by the Government of Delhi for the purposes of operating a hospital and the land and the hospital constructed thereon are owned by BMDRC. MHC provides medical services to MBH pursuant to a medical service agreement (as amended) with BMDRC. In terms of this agreement, MHC provides certain medical services to BMDRC for which MHC receives a service fee from BMDRC. The term of this agreement is for a period of 30 years commencing May 12, 2005 and is renewable at the option of MHC for three successive periods of ten years each. The following table sets forth certain key operating information of MBH: 122

123 9 month period ended December 31, 2015 March 31, month period ended March 31, 2014 March 31, 2013 Number of operational beds (average for the period) Number of procedures # Cardiac care Oncology Orthopaedics Neurosciences Renal sciences MAMBS Others Medical admissions Outpatient registrations * 9,99,781 11,29,167 9,17,461 9,00,725 Occupancy rate 80.94% 80.71% 78.68% 75.34% Average length of stay (ALOS) (days) Average realization per OBD (Rs.) 29,387 26,466 22,737 21,196 Inpatient income (Rs. Millions) 2, , , ,112.4 Outpatient income (Rs. Millions) Other income (Rs. Millions) Gross Revenue 3, , , ,595.5 Net Revenue 2, , , ,482.5 Contribution (%) 65.97% 63.58% 63.27% 62.51% EBITDAR [Hospital level] (%) 19.91% 19.31% 19.70% 20.49% EBITDAR [Hospital level] (Rs Millions) EBITDA [Hospital level] (%) 19.66% 19.17% 19.65% 20.49% EBITDA [Hospital level] (Rs Millions) * Outpatient Volumes # Surgical Procedures Notes: Average realization per OBD is based on Inpatient Department (IPD) revenues only EBITDAR figure exclude lease rental amounts EBITDA (Hospital level) exclude central cost EBITDA margin is calculated on net revenue basis 13. Max Smart Super Speciality Hospital, Saket (Earlier known as Saket City Hospital ( MSSSH ) a unit of GMHRC) In November 2015, MHC completed the acquisition of 51% equity shareholding (on a fully diluted basis) in SCHPL, pursuant to the share purchase agreement dated November 27, 2015 ( SCHPL SPA ). SCHPL provides medical services to Saket City Hospital (renamed as Max Smart Super Speciality Hospital), a 225 bed establishment (expandable to 1200 beds) operated by GMHRC located in South Delhi. MHC has an obligation to acquire balance 49% stake in SCHPL for a pre-agreed consideration of Rs billion, subject to receipt of regulatory approvals, which will increase at 12% compounded interest till such acquisition. In terms of the SCHPL SPA, MHC has a call option right to acquire all the remaining shares held by the existing shareholders of SCHPL in accordance with the terms of the SCHPL SPA. Further, after the (i) expiry of 3 years from the completion date i.e. November 27, 2015 or (ii) receipt by the GMHRC of all the approvals required from Governmental authority(ies) as may be required for commencement of the construction of 900 additional beds (taking the total number of beds in the hospital to around 1200 beds), whichever is later, the existing shareholders of SCHPL have a put option right to sell all remaining shares held by them to MHC in accordance with the terms of the SCHPL SPA. Cardiac sciences, orthopedics and neuro-sciences are the key tertiary care specialties at the hospital, with obstetrics & gynecology, IVF and internal medicine being the key secondary care specialties. The hospital houses state-of-the-art Cath Lab, OTs with HEPA and the most advanced MRI and CT scan machines for providing a holistic care to patients. The hospital generated revenues of Rs. 136 million with an EBITDA loss of Rs.8 million for the month of December 2015, the first month following the acquisition of SCHPL by MHC. The hospital is expected to benefit from clinical synergies with MHC s network in general and Max Super Specialty Hospital, Saket in particular. 123

124 Integration of MSSSH with Max network is ongoing. 14. Max Multi Specialty Hospital, Greater Noida ( MMSH GN ) MMSH GN is a multi-speciality hospital located on a leased property in Greater Noida, a suburb of Delhi. This 114 bedded hospital offers secondary care in all major medical disciplines internal medicine, orthopedics, obstetrics and gynecology etc. with focus on convenience, quality medical care and affordability. It has a 24x7 emergency facility and is equipped with X-ray, ultrasound machine and laboratory to perform independent diagnostics. As per the terms with the lessor, free OPD service is offered for 2 hours in the morning and evening for the welfare and convenience of the local population. MMSH GN was established in MMSH GN hospital and land is owned by FSF and MHC has a medical services contract with FSF. MHC receives service fees towards medical and allied services rendered from FSF. Expansion plans Expansion in existing and new locations is an important part of MHC s growth strategy. It is continuously evaluating existing and established external hospitals or other healthcare service companies for acquisition/management/medical service contract opportunities, as well as greenfield sites for new hospitals. When evaluating the viability of a new opportunity, MHC examines the location, including the population base in the area, the available talent pool at that location and the cost. For existing facilities, MHC examines the quality of the infrastructure, specialties at the facility, existing team and the work culture of the institution. MHC has a long term vision to expand its network bed capacity from 2,563 to over 5,000 beds organically as the land available for these expansions. In the near term, MHC will focus on expanding capacity at its existing networks (approximately 1200 beds across locations). Supplies and sourcing MHC maintains a centralized store and purchase function for its pharmacy and medical supplies, i.e., the requirements of all the hospitals in its network are procured centrally to achieve economies of scale. Each hospital location has a local specialty store for pharmacy and medical supplies and requisition are made by them based on their own needs and requirements. Certain categories of pharmacy and medical supplies are analysed with full details of pricing, inventory and substitutes aimed at reducing procurement costs. These categories of products are specifically monitored and controlled by the head of medical supplies and pharmacy. The lower value supplies are procured as commodities with a focus on negotiating lower prices through economies of scale. MHC s supply and sourcing strategy is focused on improving margins by achieving economies of scale by way of centralised purchases and gradually increase sourcing directly from distributors and manufacturers rather than retailers Accreditation and certification NABH: 7, quaternary/ tertiary care hospitals (MSSH Saket, MSSH Shalimar Bagh, MSSH Mohali, MSSH Dehradun, MSSH Vaishali, MDDH Saket, MBH Patparganj) in the MHC network have received accreditation from NABH, an autonomous body established in 2005 under the Quality Council of India for setting benchmarks in the healthcare industry in India. Other than above, Max Hospital Gurgaon, which is a secondary care hospital, also has accreditation for NABH. MSSH Greater Noida and Max Noida are under preparatory phase for NABH and expect to get accredited in the next 6 months. NABL: The quaternary/tertiary care hospitals along with Max Hospital Gurgaon also have accreditation from NABL for their respective laboratories. MSSH Dehradun underwent NABL inspection in September and is expected to receive accreditation soon. LEED: 5, of MHC hospitals are also LEED certified MSSH Patparganj, Shalimar Bagh, Mohali, Bhathinda, & Dehradun. MSSH Saket has also been awarded the Green OT certification from Bureau Veritas (BV), a European Standards 124

125 organization. MSSH Saket is the first hospital ever in the country to receive this prestigious accolade. The certificate recognizes its adherence to the highest quality and safety parameters for patients and healthcare workers in operation theatres (highest infection-prone zone in a hospital). Competition Although India faces a significant supply gap in terms of healthcare facilities, the healthcare industry is highly competitive. MHC competes with other hospitals and healthcare providers for, among other things, patients, doctors, nurses and strategic expansion opportunities. Factors that influence competitive advantage of hospitals include the number and quality of doctors and other healthcare personnel, the number of satisfied patients, the location and quality of facilities, equipment, support staff as well as brand equity. MHC competes with other private hospitals, smaller clinics as well as hospitals owned or operated by non-profit and charitable organizations. It will also have to compete with any healthcare facilities that may become operational in the future in the region in which it operates or will operate in the future. Some of these competitors may be more established and have greater financial, personnel and other resources than MHC s hospitals.in particular, its competitors include hospitals owned or managed by government agencies and trusts, which may be able to obtain financing or incur expenditures on more favorable terms than private hospitals, such as MHC. In addition, even in situations where one of its hospitals is the dominant provider of healthcare in a particular locality, patients may yet favor other hospitals. New or existing competitors may price their services at a significant discount to prices charged by MHC or offer greater convenience or better services or amenities than MHC provides. An increase in the number of comparable healthcare facilities may exert pricing pressures on some or all of MHC s services. Some of MHC s competitors also have plans to expand their hospital networks, which may exert further pricing and recruiting pressure on it. MHC covers the NCR and surrounding region in Northern India through its super-specialty and multi-specialty hospitals. In this area, the demand and supply of healthcare facilities vary from region to region. For example, in East Delhi the supply gap is significantly higher, leading to lesser competition. On the other hand, South Delhi facilities face intense competition due to the presence of key specialty hospitals. MHC competes with other hospitals and healthcare providers that have a presence in this region. Its main competitors are Fortis Healthcare, Indraprastha Apollo Hospitals, as well as certain other regional, single-unit, smaller hospitals. MHC differentiates itself from others through its extensive bed network in NCR, strong brand presence, enviable reputation built on delivering superior patient care, and lastly but the most important of all - creating institutes of medical excellence with best clinical talent whose orientations are aligned to MHC s ethos of Sevabhav. Intellectual property Over a period of time, MHC has built a strong reputation in the healthcare industry and has acquired domain expertise in managing a network of hospitals. MHC has been able to establish a strong brand recall and recognition of its logo. In order to prevent unauthorized use and to retain the commercial rights developed in the brand, MHC has registered these names and brands as service marks. Information technology MHC believes that IT deployment in its key processes are essential to drive operational and cost efficiency, while ensuring improved clinical outcomes for its patients. Over the years, MHC has invested significantly in setting up IT led processes around the core pillars of its business. MHC has a hospital information system for its network of hospitals which is based on a centralized data recording platform installed across all hospital locations. This information system has been designed with the following modules: out patient module facilitating patient registration, scheduling of consults and investigations; in patient module facilitating admission, physician orders, discharge and billing; material management module helps in procuring, recording, utilization of inventory and drug management; laboratory information system caters to reporting of radiology, cardiology, pathology departments; operation theatre management helps in capturing the surgery details with physician notes on pre and post operation procedure; and 125

126 business intelligence module helps in revenue analysis, material consumption and physician performance. The hospital information system architecture enables integration with other healthcare service delivery requirements such as telemedicine, i.e., diagnostic facilities extended to remote locations and a picture archival communication system which provides a scope to store and access at a later stage digitized images from various radiology and other medical equipment. Maintenance of electronics health records ( EHR") is running successfully in all the network hospitals barring a few. MHC has been awarded Health Information Management System Society (HIMSS Stage-6) certification for EHR implementation. Given the stage of EHR implementation, the Clinicians are now being provided with analytics to improve the medical quality and also provide holistic care to the patients. MHC launched Mobile Health (mhealth) services for remote patient monitoring thereby giving increased medical care to its patients. This is a step towards providing more digitalized medical care through home sensors to monitor and measure vital patient parameters remotely. MHC launched Project Aarohan a CRM Platform which in long run will help MHC cater to the needs of doctors, patients, general public, sales and marketing personnel and other stakeholders in an effective manner. It will also help improve the productivity of sales and marketing efforts and provide MHC with analytics to target its offerings in a more effective manner. MHC shall continue to invest in Information Technology in the coming years, and is committed to make this as one of the key differentiator. Service standards MHC continues to have a strong commitment towards excellence in patient care. Medical and service excellence forms a key part of the strategic vision of MHC. Quality has been the key differentiator for MHC, resulting in increased trust and satisfaction of its patients, professionals and stakeholders. There is a continuous emphasis on operational efficiencies and reduced wastage as well as reducing professional and organizational risks and providing a competitive edge. While all departments are involved, strong emphasis is placed on medical quality by engaging quality physicians and other healthcare personnel. Among the strategies for achieving medical and service excellence, MHC utilizes explicit credentialing and clinical privilege systems for the selection of physicians, as also engaging and retaining top talent. Nurses are also selected based on proficiency testing and emphasis is provided to their continuous training. The organization has defined and laid down systems, processes and standards of care. The infrastructural support and sophisticated equipment enables it to provide the latest medical facilities. In addition, MHC has several clinical centres of excellence with the highest calibre of clinical leaders, who are at the cutting edge of their specialties. Patient safety, infection control and clinical audit are high priority areas for minimizing clinical risk. In its endeavor to excel in Sevabhav and provide world class experience to patients MHC significantly strengthened the patient feedback mechanism by moving the feedback measure to a reputed external agency, IMRB International. This ensured completely independent and unbiased feedback from the customer which helped in developing an actionable priority matrix. The Customer feedback scores are now part of MHC and units goals. All the units have been following the monthly scores that IMRB shares. This has helped to collate actionable information that can be linked directly back to operational process and practices. It would be worthwhile to mention that MHC focused approach towards improving Patient Satisfaction through specific initiatives has resulted into improving the overall satisfaction ratings. Ethics and compliance programs; At MHC, the highest importance is given to professional ethics. The organization has stringent policies and published codes of conduct to ensure the same. Employment is conditional to compliance to ethical and statutory requirements. Its ethics policies and procedures are in compliance with the Code of Medical Ethics published by the Delhi Medical Council and the Medical Council of India. These address issues of professional behaviour, billing practices, patient rights especially with respect to human dignity, informed consent, confidentiality, medical records and ethical research practices. In a similar manner other ethical codes such as Code of Ethics for the nursing profession are also adapted into organizational functioning. There are several statutory requirements that govern the organization, addressing building norms, fire safety, patient care (such as relating to pre-natal sex determination, medical termination of 126

127 pregnancy and epidemic diseases legislation), personnel practices, financial aspects as well as research and several statutory requirements relating to operation of hospitals. The applicable laws and requisite processes and procedures to meet such legal requirements have been brought into effect. Individual and departmental responsibilities with respect to these requirements have been clearly defined. Regular audits are conducted to ensure compliance against these requirements. These are also checked through external audits as part of the regulatory framework and quality accreditations such as ISO and NABH. MHC has been unable to contribute to corporate social responsibility ( CSR ) activities for past two years since it was burdened with carried forward and current losses which exempted it from undertaking any CSR activity as per CSR Policy of 2013 Act. Training and professional development MHC places strong emphasis on training, which includes induction, on the job functional training and continuing medical education programs. Max Institute of Medical Excellence ( MIME ), an educational division MHC, is a dedicated centre for education and training of doctors, nurses and allied staff. MIME has been conceived as an institution where patient care is at the forefront driven by excellence in healthcare delivery by a committed and highly skilled workforce. MIME has provided MHC ready access to highly skilled talent, translating to superior patient care, fuelled a traction plus retention strategy for all cadres of healthcare talent, and last but not least enabled future expansion plans. Continuing the process of development MIME ventured out beyond MHC to provide education and training programs to Corporates, Embassies, Multinational Companies and other Medical Institutions across India. In FY , MIME has trained total of 2,938 healthcare and non-healthcare professionals. Key programs run at MIME include: Max Emergency Life Support training courses in partnership with American Heart Association (AHA) and DNB (Diplomat of National Board) Courses offered at DNB-Emergency Medicine (MSSH, Saket & MSSH, Shalimar Bagh), DNB-Nephrology (MSSH, Saket) and DNB-Anesthesia (MSSH, Patparganj). In addition to this, MIME is involved with student internship / residency programs with foreign universities and also hosts international medical student delegations. Research MHC accepts limited research projects dealing with patient care, and if acceptable, to certain of its consultants leading the same as principle investigators. MHC has an ethics committee ( Ethics Committee ) formed under the Indian Council of Medical Research guidelines. The Ethics Committee oversees and approves all clinical trials to ensure that the rights, dignity, safety and well-being of participants in the research are safeguarded. Complete documentation, informed consent, adverse event reports and project management is conducted as per Good Clinical Practice (GCP) guidelines and ICMR requirements. MHC has built a strong foundation in managing several sponsored global Clinical trials and Investigator Initiated trials/ studies in all major therapeutic areas like cardiology, vascular surgery, oncology, neurology, endocrinology, intensive care, internal medicine, pulmonology, psychiatry, pathology, anesthesia, minimal access metabolic and bariatric surgery, radiology, nephrology & kidney transplant, obstetrics & gynecology, urology, physiotherapy & rehabilitation and emergency medicine covering the areas of drugs, devices and post marketing surveillance studies. Key features of the research program managed by MHC are shown below: Clinical trials: Clinical research program was initiated several years back and till date, more than 114 sponsored clinical trials have been undertaken, with 93 successfully closed and 19 currently ongoing. Research studies: Under the current Educational programs, MHC currently has 309 research studies i.e. intra mural research including 57 investigator initiated studies and 252 thesis studies designed as part of the post graduate thesis of which research is an integral part. Collaborations with the following Research Institutes: 127

128 o o Imperial Research (UK): Collaboration objective is to address major unmet clinical needs common to India and UK and providing a research base and legacy for future research to MHC. The genetics (Epi- Migrant study) funded by FP7 programme by European Commission has been completed. Grants of 3,000 were received by MHC for the completed Epi-Migrant study. Currently, through the collaboration a grant of 247,000 Euros for a new study i.e Prevention of Type 2 Diabetes among South Asians has been initiated under the EU Framework Programme for Research and Innovation Horizon CSIR - Institute of Genetics and Integrative Biology (IGIB): For basic and translation research in the areas of pulmonology. Three investigator studies have been designed in collaboration with IGIB under the DSIR program of which two have been initiated and are ongoing. MHC received recognition from the Department of Scientific Industrial Research as a Research Institution by the Govt of India in the year Researchers have initiated the process for application to funding agencies, both national - international funding agencies. Ethics committee: Regulation amendments for clinical trials in India as approved by the ethics committee of Max Hospitals in Delhi & NCR, Mohali have been registered with Drugs Controller General of India (DCGI). Future Plan of action: MHC plans to conduct various training programmes on research areas like medical writing, statistics through collaborations with the academic institutions in clinical research and renowned pharmaceutical companies to enhance the research skills of researchers. Research activity in the area of stem cells research is being explored. Keeping in view the current regulations in India, a stem cell committee has been constituted and registration with the apex body i.e., National apex committee for stem cell research and therapy (NAC- SCRT) is in process. A total of 12 national and global clinical trials are in the pipeline for year and would be commenced post receipt of the requisite regulatory approvals. Insurance The healthcare industry is subject to legal proceedings and claims by patients. To protect MHC s interest, it has obtained professional indemnity policy underwritten by reputed insurers. It has also obtained a policy covering its assets including owned buildings, civil and interior improvements, equipment, inventory, medical equipment and vehicles against operations risks such as fire, riots, flood, strike, earthquake and other natural and accidental risks including burglary and theft. In addition, a breakdown policy has also been obtained on select critical medical equipment to obviate machine breakdown costs. Group policies have been obtained to cover personal accident of the employees and medical cover covering hospitalization of the employees and dependants. It has also obtained a general public liability policy to cover third party risks within hospital premises. Personnel The following is the staff strength across the network of hospitals as on December 31, 2015: Physicians : 1,741 Nursing staff : 4,092 Paramedics : 1,458 Front Office : 560 Support staff : 2,010 The physicians on MHC s rolls are generally on a fixed compensation model with a few on a fixed cum for fee model. In addition, the network of hospitals has approximately 1214 visiting consultants who are compensated based on a fee for service model. Financial Information of MHIL and its subsidiaries 128

129 Unaudited Consolidated Balance Sheet as at December 31, 2015 December 31, 2015 March 31, 2015 Rs. in millions Rs. in millions Equity and liabilities Shareholders' funds Share capital 5,334 4,888 Reserves and surplus 5,832 3,427 11,166 8,315 Minority Interest 93 - Non-current liabilities Long-term borrowings 6,507 3,317 Other long term liabilities Long-term provisions ,654 3,391 Current liabilities Short-term borrowings 1, Trade payables 2,146 1,551 Other current liabilities Short-term provisions ,069 2,821 TOTAL 21,982 14,527 Assets Non-current assets Goodwill on Consolidation 5, Fixed assets Tangible assets 8,767 7,054 Intangible assets Capital work-in- progress Intangible assets under development Loans and advances 2,620 2,720 Trade receivables 1, Other non-current assets ,692 10,694 Current assets Current investments - 1,430 Inventories Trade receivables 2,426 1,735 Cash and bank balances Loans and advances Other current assets ,290 3,833 TOTAL 21,982 14,

130 Unaudited Consolidated Statement of profit and loss for the year ended December 31, 2015 For nine months For nine months ended ended December 31, 2015 December 31, 2014 Rs. in millions Rs. in millions Income Revenue from operations (net) 10,544 8,361 Other income Total revenue (I) 10,761 8,554 Expenses Purchase of pharmacy,drugs,consumables and implants 2,998 2,589 (Increase)/decrease in inventory of pharmacy,drugs and (20) (39) consumables Employee benefit expenses 2,195 1,702 Depreciation and amortisation expense Finance costs Other expenses 4,616 3,492 Total expenses (II) 10,911 8,799 Loss before tax (I-II) (150) (245) Tax expenses - - Loss for the year (150) (245) (ii) Health Insurance Business Max Bupa is one of the leading standalone private health insurance companies in India. As on December 31, 2015, Max Bupa had approximately 949,063 urban lives in force under various policies (under different product proposition) with an infrastructure consisting of an agent network of ~12,000 agents, 26 offices, 3,500 network hospitals and 4bancassurance partner tie-ups. Max Bupa commenced operations in 2010 pursuant to the joint venture agreement executed between MFSL (and now Max India pursuant to the Scheme of Arrangement) and the UK-based Bupa Finance Plc. The partnership envisaged Max Bupa becoming India's most admired B2C health insurer through offering comprehensive products, exemplar customer service and bringing global best practices and innovations to the Indian market. Bupa has a rich experience in providing health and care to over 32 million customers in more than 190 countries while Max group brings on board local expertise and excellence in the delivery of healthcare and insurance services. The aforesaid joint venture agreement regulated the relationship of MFSL (and now Max India pursuant to the Scheme of Arrangement) and Bupa as shareholders of Max Bupa as well as the manner and conduct of business of Max Bupa. As of December 31, 2015, Max Bupa had a paid up equity capital of Rs. 8,760 million of which, Max India holds 74% while Bupa holds 26% of the equity share capital of Max Bupa. Pursuant to the agreement dated April 29, 2016 ( Max Bupa JVA ), both Max India and Bupa have agreed for Bupa to increase its shareholding in Max Bupa from the current level of 26% to 49%. Strategy Max Bupa is focused on the urban business-to consumer segment (B2C) of the health insurance market with limited play in the business to business (B2B) and business to government segments (B2G). It aims to be the most admired health insurer offering comprehensive products and exemplar service through superior execution, built on its market leading 130

131 health risk management capabilities. The following drivers support the strategy of Max Bupa: Continue to be the provider of choice for the affluent segment and at the same time broad base the franchise to tap into the emerging affluent segment. Max Bupa s products are largely positioned in the premium sector for high net worth, affluent and mass affluent population in the top towns and cities in India. For the year ended March 31, 2015, its B2C market share amongst private health insurers increased to 9.3% vis-à-vis 7.5% in the previous year ended March 31, Further, the share of the B2C segment in Max Bupa s Gross Written Premium increased to 95% during the year vis-à-vis 79% in the previous year with increased focus on the segment. During the year, it continued to enjoy a high B2C renewal rate of ~90%, one of the highest in the industry Refresh the existing product portfolio - both indemnity & fixed benefit as well as add multiple new products to its portfolio. It's long term goal is to address every life stage need of the customer from young individuals, to young couples, to families and to retirees. Further we find that close to 20% of the buyers are digitally influenced and we are keen to build products that address this growing segment. Scale the bancassurance channel and continue to build new partnerships along the way and continue to focus on driving efficiencies in the agency channel. Max Bupa s distribution model is focused on growing through its traditionally strong agency segment while continuing to focus on the high growth bancassurance and corporate agent partnerships, direct sales channels and new technological advancements via digital platforms to optimise business performance. Push forward on digital would include web based sales, Tele- assist model, partnerships with web aggregators as well as technology solutions such as tab based sales apps & microsites to support its existing distribution partners. Continue to control operating cost and improve operational efficiencies across the business. Products Max Bupa has also undertaken some recent cost management initiatives which have led to expense ratios (expense ratios include fixed and variable expenses including management expenses and depreciation as a percentage of declining to 73% for the financial year compared to 83% and 92% for previous financial years and FY respectively. Max Bupa plans to continue to focus on managing costs and additionally, with a growth in size and scale, it expects its profitability to improve with enhanced operating leverage. Max Bupa s business rests on six values - Caring, Respectful, Ethical, Accountable, Trustworthy and Enabling (CREATE). This value system is instrumental in making Max Bupa as one of the most trusted and admired health insurance players in India. Max Bupa continues to innovate and expand its product portfolio, to provide its customers with a wider choice of products and services. Max Bupa was the first to launch several industry innovations by introducing products with the highest sum insured options, no age restrictions for enrolment, no claim loading, guaranteed renewability and without any 2 year waiting period for specified illnesses such as cataract, hernia etc. while such restrictions commonly exist across most of the Indian health insurance products. Rs. Million 9 Month ended Year ended March 31, December 31, First Year Premium 1, Renewal Premium 1,

132 Total Gross Written Premium (GWP) 3,253 3,727 3,089 2,072 Growth in GWP (%) 30% 21% 49% 109% Total Number of Policies 181, , , ,311 Renewal Rate - B2C Segment 87% 90% 85% 81% Average Premium per life - Overall (Rs.) 4,981 4,818 4,542 4,334 Average Premium per life - B2C Segment (Rs.) 6,794 6,363 5,393 5,121 The decline in the first year premiums for is primarily due to a reduction in the B2B business from Rs 402 million in FY to Rs 47 million in FY as a result of Max Bupa s conscious strategy to reduce exposure to this segment and a decline in the rural business from Rs 79 million in FY to Rs 13 million in FY On the other hand, first year premiums in the B2C business segment, Max Bupa s chosen area of focus have grown by 21% from Rs 1145 million in FY to Rs 1388 million in FY The renewal premiums have grown as a result of a larger book to renew, price increases, and increased focus on the B2C segment, apart from a robust predictive analytics framework enabling focus on customers with higher propensity to renew, enhanced system efficiencies; and implementation of several customer service initiatives. Max Bupa had a gross written premium of Rs. 3,727 million for the year ended March 31, 2015, a growth of 21% over the previous financial year. The growth was driven both by an increase in the number of new and renewed policies during the year from 204,546 (in the year ended March 31, 2014) to 231,821 (in the year ended March 31, 2015) and an increase in average premium realization per life from Rs. 4,542 to Rs. 4,818 for the year ended March 31, 2014 and March 31, 2015 respectively. During the nine months ended December 31, 2015, Max Bupa had a gross written premium of Rs 3,253 million, a growth of 30% over the corresponding previous period Max Bupa enjoys one of the highest renewal rates in the industry for its B2C segment which contributed 95% to its gross written premium in the year The renewal rates for this segment continued to increase to reach 90% for the year up from 85% in and 81% in Some of the initiatives that contributed to the increasing renewal rates include a robust predictive analytics framework which studies several parameters, classifies customers based on likely propensity of renewal and guides customer calling strategy; investment in technology to increase efficiency; proactive engagement with sales team and continuing effort towards treating customers fairly by supporting and enabling them to make informed decisions on policy renewals with a focus on high service standards. Max Bupa offers health insurance and personal accident insurance products to four segments: 1. Urban Retail B2C With its focus on the Urban Retail B2C segment, the company s products are largely positioned in the premium sector for high net worth, affluent and mass affluent population in the top towns and cities in India. (i) Heartbeat: Heartbeat is Max Bupa s flagship product for retail customers, offering comprehensive health Insurance cover ranging from Rs. 200,000 to Rs. 10,000,000 for both individuals and families. It offers comprehensive coverage and has been extended to include international medical treatment and assistance. Heartbeat has created a niche for itself through its focus on healthcare and its unique service offering. Max Bupa Heartbeat Health Insurance plan distinguishes itself from other plans available in the market with the introduction of many first of its kind features like worldwide cashless treatment for 9 critical illnesses and emergency medical evacuation through Bupa s international network in 190 countries, wide flexibility in sum insured for individuals, ranging from Rs. 200,000 to Rs. 10,000,000, enhanced family coverage upto 14 relations in a single policy and option to enhance upto 50% sum assured on renewal, irrespective of claim history. The plan was recognised as Innovation of the Year at the Golden Peacock Awards

133 (ii) (iii) Health Companion: Health Companion complements Hearbeat by targeting the mass affluent segment with a continuing focus on comprehensive product features. It is an affordable health plan which offers features like no room rent capping, refill benefit (a unique benefit which refills sum insured back to 100% if the insured exhausts the base sum insured and acquired bonus), pre and post hospitalisation expenses, Ayush Treatment (hospitalisation expenses cover for Ayurvedic, Homeopathic, Unani and Siddha treatments), all day care treatments with guaranteed renewability for lifetime amongst other features. Health Assurance (Fixed Benefit): Health Assurance is a unique fixed benefit plan that provides flexibilities to cover any sudden eventualities like accidents, critical illnesses and incidences of hospitalisation. The plan offers a cover for expenses as per the lump-sum benefit of the policy. The plan provides an option to choose benefits which can be bought individually or clubbed together including critical illness cover, hospital cash cover and personal accident cover. 2. Urban Group B2B (i) (ii) (iii) Group Health Insurance: Comprehensive suite of health insurance that includes hospitalization, OPD treatment, critical illness, health checkup, hospital cash cover and named illnesses. The plan is customizable and offers a choice of upto 32 combinations of base benefits to fit an organization s needs and budget. Employee First: Offered under 2 variants: (a) Employee first is a comprehensive health scheme, which is ideally suited for small and large corporate and institutions which look for high sum insured (ranging from Rs. 1 lakhs to Rs. 50 lakhs) and quality coverage with added maternity benefits and wellness initiatives and (b) Employee first classic accommodates the small and medium enterprises which provide high flexibility and quality coverage. This plan provides an insured sum of Rs, 50,000 to 5 lakhs. Group Personal Accident (Fixed Benefit): Group Personal Accident is a comprehensive personal accident cover for large as well as smaller-sized groups, which provides flexibility to design a cover suited to the requirements of group members with a choice of basic benefits and optional benefits. It also offers the choice to receive additional benefits for all or select members in the group, enabling need-based customisation. 3. Rural Retail B2C (i) Swasth Parivar: A health indemnity plan designed to meet the healthcare financing needs of the Indian rural population. It offers an affordable cover with sum insured options of Rs. 50 thousand and Rs. 1 lakh and provides for basic coverage like hospitalisation expenses, medicine and drugs, IVF, blood transfusion, operation theatre charges, diagnostic tests and procedures and surface ambulance. 4. Rural Group B2B (i) (ii) Swasthya Pratham: A group health micro insurance cover intended to cater to the group healthcare needs of NGO s and SHG s. The sum insured options ranges from Rs. 5,000 to Rs. 30,000 for individuals and Rs 10,000 to Rs 30,000 for family floater policies. Group Personal Accident (Fixed Benefit): Offers cover for basic benefits like accidental death, permanent total disability, permanent partial disability and temporary total disability plus and flexibility for additional benefits and for extending coverage to dependents. GWP by Segment Rs. Million 9 months ended Dec' Year ended March 31,

134 Urban Retail (B2C) Growth in Urban Retail (B2C) 35% 45% 52% 110% % of Urban Retail (B2C) in Total GWP 97% 95% 79% 78% Urban Group (B2B) Growth in Urban Group (B2B) -71% -69% 45% 77% % of Urban Group (B2B) in Total GWP 1% 5% 18% 18.50% Other - Rural & Social Growth in Rural & Social 376% -84% 8% 1287% % of Rural & Social in Total GWP 1% 0% 3% 4% The urban group (B2B market) faces challenges in terms of profitability and intensive price competition. Intensive price competition has also led to market conduct issues, and a circular was issued by the Regulator to ensure that excessive price competition leading to irrational pricing in the Group business is discouraged. Post a detailed strategic review conducted in 2014, Max Bupa decided to focus largely on its core area of expertise, the B2C segment and limit its exposure to the B2B segment. High growth in urban retail (B2C) segment has been driven by several factors which include: Expansion in bancassurance led by partnerships with four banks. Productivity improvements in the Agency channel. Best in class renewal persistency rates. Max Bupa is committed to reaching out to the rural and social sector sections of the population and meeting the compliance requirements as a part of its business operations. However change in insurer participation guidelines for key national rural insurance schemes and intense pressure on sustainable pricing owing to heavy price undercutting in the Group business by competitors, especially in the Government originated schemes, has limited Max Bupa s participation in this segment in the past year. Distribution Max Bupa distributes its health and personal accident insurance products throughout India through multiple channels including individual agents, bancassurance partnerships, corporate agents, brokers, and the direct to customer channel (Digital, DST and Tele-sales).The current focus is on agency and bancassurance as primary channels and the key growth drivers complemented by investments in and strengthening of the Digital platform. Number of Policies by Business Acquisition Channel 9 Month Ended Year ended March 31, 31-Dec Individual Agents 100, , ,131 80,992 Direct Business 45,607 57,316 52,720 47,459 Corporate Agents Banks 17,592 18,692 2,046 Brokers 17,687 27,130 29,237 18,979 Corporate Agents Others Others ,12-2,881 Total 181, , , ,

135 GWP by Business Acquisition Channel Rs. Million 9 Month Ended Year ended March31, 31-Dec Individual Agents 1,629 1,891 1, Direct Business Corporate Agents Banks Brokers Corporate Agents Others Others Total 3,253 3,727 3,088 2,072 % of GWP by Business Acquisition Channel 9 month Ended Year ended March 31, 31-Dec Individual Agents 50% 51% 44% 42% Direct Business 23% 23% 22% 27% Corporate Agents Banks 9% 7% 1% 0% Brokers 9% 11% 12% 11% Corporate Agents Others Others 7% 3% 3% 5% 0% 21% 0% 20% Total 100% 100% 100% 100% Agent Network Max Bupa had a network of close to 12,000 agents and 26 offices spanning 17 cities across India as on December 31, 2015 forming its largest distribution channel. Gross written premium of Rs. 1,891 million and Rs. 1,365 million generated by the channel contributed 51% and 44% to the Total Gross Written Premium for Max Bupa for the years ended March 31, 2015 and March 31, 2014 respectively. Number of policies from the channel also increased from 118,131 to 128,035 for the same period. Max Bupa is focused on enhancing performance of this channel through continuous agent recruitment, retaining existing agent force and efficiency improvements through robust governance practices, clear linkage of goals to rewards and an intensive focus on training. It has dedicated training programs for on-boarding and continuous development of agents and agency managers. Training programs are designed using a segmented approach to identify the development needs of agents based on stage and skill of the agent. Customized technology platforms enable tracking and analysis of daily sales activity. Further the agency sales force is empowered with technology solutions such as over the counter issuance (OTC) & mobile based premium calculators to enable fast and efficient sales. Bancassurance and Alliance partnerships (Corporate Agents Banks/Others and Brokers) Max Bupa s has bancassurance partnerships with 4 banks - Standard Chartered Bank (SCB), Federal Bank, Deutsche Bank (DB) and Ratnakar Bank Ltd (RBL) and two non-banking finance company (NBFC) - Bajaj Finance and Muthoot. Max Bupa has recently tied-up with Bank of Baroda, the second largest public sector bank (in terms of market capitalization) with a branch network of 5,400 branches and customer base over 60 million. Since the channel was opened up for standalone health insurers by the regulatory authorities in 2013, it has been the fastest growing channel for Max Bupa. The channel contributed 7% to total gross written premium for the year ended March 31, 2015 vis-à-vis 1% for the year ended March 31, Since the opening up of the channel, Max Bupa has created new product propositions under the group health insurance platform to cater to its partners specific customer segments and invested in training close to ~250 internal sales personnel and over 5,000 partner employees across ~1,700 bank branches. It has also invested in an upgradation of its internal IT systems to include its banking partners requirements of processing business in addition to creation of IT enabled applications like over the counter (OTC) issuance as well as online micro sites for online policy issuance by its partners. 135

136 The tie-up with various Banks and large NBFC s enhanced Max Bupa s reach across the country through their branch network, access to their large base of customers and expansion of sales through their trained staff. Recent industry guidelines, now allow a bank to enter into distribution arrangements with 3 partners each in the Life, General and Health Insurance segments against 1 allowed earlier and this is expected to further enhance growth in health insurance distributed through this channel. Max Bupa has also partnered with large brokers like NJ Insurance Brokers, Loyal Insurance etc. Direct to Customer Business Max Bupa s direct business contributed Rs. 864 million or 23% of gross written premium in the year ended March 31, 2015, up from Rs. 675 million or 22% of gross written premium in the year ended March 31, The direct business is generated through 4 modes - in-house telemarketing operations, Max Bupa s website, online web aggregators and a dedicated direct sales force of 70 people focused on high net worth individuals across the top 4 metropolitan regions. Telesales: Max Bupa has one of the largest captive tele-sales set-up in the health insurance industry, with ~140 dedicated out-bound tele-callers and a state-of-the-art technology infrastructure. Facilities include 60 seconds call-back turnaround time for customers who request for information on Max Bupa s website, chat support and 3-way tele-underwriting through which the prospect and the underwriting team virtually come face-to-face which facilitate speedy decisions and enhance transparency. Direct Sales Force: Max Bupa s dedicated direct sales force consists of ~70 people and focuses on high net worth individuals across the Top 4 metropolitan regions (Delhi, Mumbai, Bangalore and Hyderabad). The sales force generates its leads through information desks set up in Max hospitals, promotions and marketing campaigns and a strong self references generation model. A highly experienced and motivated team then closes the leads by personally meeting the prospective customers. Website: Max Bupa provides a comprehensive website including an end-to-end ecommerce platform and services for its existing customers. Users can get product recommendations based on their requirements, calculate premiums and buy the products. Customers can also access a wide array of services including renewal of their policies and download claim forms and other important documents. Max Bupa continues to focus on improving and enhancing customer experience and the buying process through its website. Digital: Max Bupa has partnered with 3 web aggregators and ebrokers including Policy Bazaar, Coverfox and BankBazaar. Max Bupa has created a differential product offering for its brokers and developed specific digital strategies suited to its digital partners and e-brokers. It plans to enhance focus on the digital channel and enable its brokers with IT platforms to drive e-commerce volumes and continue offering differentiated product propositions under the group health insurance umbrella. Network Hospitals Max Bupa provides high quality customer centric clinical care through a network of ~3,500 healthcare providers spread across 475 cities including a strong network in the Tier II, III IV cities capable of catering to its expanding member base. In-house network empanelment and a meticulous selection process has helped Max Bupa scale up its network from 1,500 providers in 2013 to ~3,500 providers currently. Regular audits and mystery shopping of providers are conducted for managing risk with the network of providers. Max Bupa also has in-house capabilities to perform case management and case reviews for high risk claims and cost control. Marketing, Advertising and Brand Building Max Bupa has successfully differentiated itself by positioning itself as a family health insurer that caters to the need of all Indian families, big or small. Max Bupa has been leveraging mass media including television, print, digital, outdoor, and radio, as well as ground level events, to build mass awareness about its product and service offerings. The campaigns focus on promoting the company s differentiated products for the family and creating customer awareness about health insurance. Max Bupa has undertaken health and well-being initiatives like Walk for Health which completed its fourth season in February 2016 and had participation from ~30,000 families. Over ~100,000 people have participated in the event over the last four years which encourages people to inculcate active habits for a healthier life. Max Bupa also initiated a unique customer awareness campaign, All Fact No Myth, to create greater understanding and acceptance of health 136

137 insurance amongst consumers across all groups. Max Bupa is also one of the most visible brands on social media. According to a third party study by Eikona TAM agency, Max Bupa was the most visible standalone health insurer in the media in FY Max Bupa also enjoyed the highest share of voice in media across all health and general insurance players with a total brand awareness of 88%, the highest amongst standalone health insurers as per a brand track research study conducted by TNS India in the 4 th quarter of 2014). External Recognition received by Max Bupa as a brand includes the following: First Health Insurer in India to be listed as a Superbrand. Chosen as the most preferred brand in the health insurance segment by an independent consumer study conducted among 17,000 people and across 2000 brands. Emerged as the Most Trusted Health Insurance brand in the Brand Trust Report This was the second time that Max Bupa emerged as the # 1 Health Insurance Brand in the study, conducted in 6 top cities in India by TRA, a Global research and advisory firm. Max Bupa Walk for Health recognized as Best CSR Campaign of the Year Linked to Loyalty at the 8th Loyalty Awards The initiative was recognized for strengthening Max Bupa s healthcare agenda and significantly enhancing brand loyalty. Regulatory Compliance Max Bupa, being a health insurance company, is regulated by IRDAI. In India health insurance industry has undergone transformational changes over the years and this has led to a significant development of the industry. Over recent years as the health insurance segment experienced high growth and saw the entry of a number of players, IRDAI, the key regulatory body for Insurance in India realised the need to treat health insurance as a separate line of business (vis-a-vis as part of general insurance earlier) and issued health insurance regulations in the year Since then, to bring in greater transparency and promote customer fairness, the regulator has issued several regulations and guidelines across business functions which the insurers are expected to comply with. These regulations relate to product design and structure, pricing guidelines, outsourcing norms, rural and social guidelines, expenses of management, distribution open architecture, agency guidelines, caps on distributor commissions, etc. The regulator has also implemented the standardization of procedures and nomenclatures used in the health insurance industry and introduced key features like any age enrolment, no claims bound loading, and lifelong renewability which were already built into Max Bupa s offerings since its inception. Keeping in view the need for popularizing health insurance, government has also provided incentives to individuals by way of tax benefits for purchase of health insurance. Max Bupa has a robust regulatory and compliance framework and processes to ensure that the business is done in a compliant manner in the interest of the customers and in accordance with the regulatory framework, backed by an experienced and competent team of professionals. Employees As on December 31, 2015, Max Bupa had 1,408 full-time employees with 1,019 in sales & marketing, 217 in Operations and quality, 60 in Risk management and actuarial functions, 10 in product strategy and the remaining in human resources, IT, finance, legal and administration and other functions. Competition Though the health insurance penetration is very low in the country (<1% of GDP), the health insurance sector continues to be the fastest growing segment in non-life insurance industry. The total health insurance premium in FY grew to Rs 200,960 million from Rs. 174,950 million in FY , reflecting a growth of 15%. The industry is dominated by 4 public sector companies that together command a 64% market share. The rest of the market is divided between 22 private sector players, of which 5, including Max Bupa, are standalone health insurance players. Industrywide, the insurance market may be divided into 3 customer segments viz retail (B2C), group (B2B) and government business (B2G). The contributions of each of these segments were 44%, 44% and 12% respectively for FY The health insurance industry has grown at a CAGR of 16.2% for the 4 year period ending March 31, Over the 137

138 years, B2C segment has been growing faster than the other 2 segments and Max Bupa too has chosen to focus on the retail segment. For the year ended March 31, 2015, its B2C market share amongst private health insurers increased to 9.3% vis-à-vis 7.5% in the previous year ended March 31, (Figures are based on the internal analysis based on the data released by IRDAI.) Customer Support Management Max Bupa has in-house 24X7 customer contact centre offering support for issuance of policies, policy servicing, claims servicing and policy renewal through telephone and online chat services and a specialised helpline for senior citizens. It conducts regular call quality and resolution audit to ensure quality of service. Max Bupa also offers self service options to customers through various modes including its website, apps and IVR (interactive voice response) systems. Max Bupa s complaints management system is ISO certified. Actuarial Processes Max Bupa has robust actuarial processes for pricing, reserving and experience analysis. It has a strong six member team led by the Appointed Actuary. The team is divided into three separate verticals for pricing, reserving/reporting and actuarial analytics. The team is adequately staffed for the nature and size of business. The actuarial processes are reviewed by experienced actuaries from Max India and Bupa. The team is responsible to fulfil all regulatory requirements and provide insightful inputs to management on actuarial matters. There is an actuarial committee at the board level for review and approval of pricing of each product, reserving on quarterly basis, reinsurance arrangements and financial condition report. Pricing process: Pricing activity starts after the product or product revision is approved by the senior management team and actuarial committee at the Board level. Pricing levels are set so as to provide attractive proposition for customers and balancing shareholder interests. The details of the product, customer segments, proposition, pricing methodology and profit testing are documented in the pricing report for future reference. The pricing report is reviewed and approved by the actuarial committee. Actual experience compared to pricing assumption for key metrics are tracked on a quarterly basis. Reserving process: There is a robust process of monthly reserve analysis to ensure true and fair policyholder liabilities are reflected in the accounts. The reserving process is documented and internally approved by various functions and stakeholders. The reserve report is presented to the actuarial committee on quarterly basis and is also submitted to IRDAI annually. The reserving method and assumptions are also peer reviewed annually by an external actuary. Experience analysis: The actuarial function also analyzes the actual claim experience on a monthly basis to monitor the trend compared to plan and pricing assumptions. Claim incidence rate and average severity are analyzed by the rating factors and various risk factors to identify areas of adverse trends and root causes. The actuarial function works closely with the Health Benefits Management team to identify clinical causes for adverse deviations. Reserves As per regulation Max Bupa is required to hold prudent reserves for policyholder s liabilities at all times. This includes reserve for claims incurred as on the valuation date (both reported and yet to be reported claims) and reserve for unexpired portion of the risk in force. Max Bupa follows the regulations and actuarial professional standards laid out for determining the various items under the policyholder reserves. The assumptions used for reserving are based on the past trends for claim reporting and development. A prudence margin is added on top of the best estimate of the claim reserves. The reserve estimation method and results are also reviewed by Max India and Bupa actuaries annually. The reserve estimation method and assumptions are also submitted to IRDAI annually for their review as a regulatory requirement Solvency An indicator of solvency, the solvency ratio is calculated as available solvency margin to required solvency margin (as required by IRDAI, the key regulatory authority for the industry). The required and available solvency margins is calculated based on gross and net premiums realized and gross and net claims incurred during the period. Max Bupa s 138

139 solvency ratio has consistently been higher than the required ratio of 1.50 with this ratio being 2.11 and 2.10 as on December 31, 2015 and as on March 31, 2015 respectively. This indicates a high degree of preparedness to meet unforeseen exigencies and financial strength. 9 Month Ended Year ended March 31, 31-Dec Solvency Ratio Operations / Business Management Health Risk Management (HRM) Max Bupa has invested extensively in building its HRM capabilities which form the basis for guiding key operating decisions relating to design of product features and benefits configuration, underwriting philosophy, choice of target segments for marketing and sales effort, product and geographical mix for sales and distribution, renewal focus, claims philosophy enabling best-in-class customer services. Health Risk Management, as a philosophy, aims to strike a balance between treating customers fairly, product profitability and affordability of comprehensive health insurance products for the customers i.e. ensuring access to most appropriate care, in the most appropriate setting at the most appropriate time and at the most affordable price to the customers. Max Bupa has invested extensively in its HRM capabilities that form the basis of key business decisions relating to selection, assessment and management of health risk. Key operating decisions related to product design, underwriting & claims philosophy, choice of market segments as well product and geographical mix are guided by HRM principles and are enabled by strong health and clinical data analytics. It also includes partnering with health service providers (especially hospitals) to not just enhance the access but also the quality of healthcare to Max Bupa customers. Max Bupa has also made significant progress in enhancing payment integrity, reducing overcharging by providers, fraud detection and control to ensure that only genuine claims are paid by mobilizing claims leakage control measures and thereby maintaining affordable premiums for its suite of health insurance products. Claims Management Since its inception, Max Bupa has been undertaking in-house processing of claims in a market that primarily relies on third party administration of claims. Max Bupa believes that this enhances the customer experience significantly since at the time of incurring a claim, the customer is able to deal directly with Max Bupa instead of a third party. Max Bupa promises 30 minutes processing TAT for cashless claims at the time of admission which is currently one of the best in the industry whereas all reimbursement claims are processed with an internal TAT of 15 days compared to the IRDAI recommendation of 30 days. The workflow and document management system automation enables Max Bupa to keep the customer aware about the claims status at all times though system generated s, SMS and fax to the providers. Max Bupa s claims philosophy is transparent and customer centric. In order to be completely transparent, any medical condition which seems to be in the grey area is discussed with a specialized medical advisory team, before taking any decision. This team consists of senior doctors to help refine the adjudication decisions, in favour of the policy holder if no clear decision can be made. Underwriting and Pricing Max Bupa s underwriting philosophy states that each application is unique and must be evaluated completely based on customer disclosures and pre medical test results. The philosophy guides it underwriting process which includes a grid based decision making along with applying exclusions and waiting periods wherever necessary. Max Bupa sales and service team advise the policyholders to declare any pre-existing diseases and any declarations are evaluated by the underwriting team. To ensure that Max Bupa takes decisions which are fair, it conducts pre-policy medical check-ups wherever required to support its underwriting policies. The premedical tests if required are conducted through top of the line diagnostic centres spread across the country. Max Bupa s has a consistent, transparent and a standard operating procedures driven approach while underwriting 139

140 applications to maintain a healthy portfolio. Its underwriting team consists of professional doctors who are well trained and have a deep knowledge of underwriting principles. Max Bupa tries to ensure that lives are underwritten based on its pre-defined guidelines and every customer is treated fairly. A technical audit is conducted every 6 months by Milliman, which is among the world's largest providers of actuarial and related products and services. Investments As on December 31, 2015, Max Bupa had Rs. 5,180 million in investment assets. Investments Rs. Million 9 Month Ended Year ended March 31, 31-Dec Debt Government Securities and Bonds 1,292 1, Corporate Housing and Infrastructure 1, Money Market Instruments Others 1,681 1, Equity Mutual Funds Other Approved Investments Others Total 5,180 4,300 3,369 2,599 Note:- (i) Others Investment include Investment in Fixed Deposits and Mutual Funds As on December 31, 2015 all of Max Bupa's investments are in fixed income securities only. About 44% of the investment portfolio is invested in long term securities (with more than 18 months residual maturity) and 56% in short term securities (with less than 18 months residual maturity). The average maturity for the long term portfolio is 77 months and that of the short term portfolio is 8 months, whereas for the overall portfolio the average maturity is 36 months. Risk Management Max Bupa has adopted robust and well-defined risk management architecture. The board and other stakeholders of Max Bupa get assurance on risk management processes and its effectiveness from external audit, internal audit, risk management function and compliance and fraud control units. The risk management function consists of three levels: the first level consisting of executive leadership team and functional heads is involved in day to day risk management, in accordance with agreed risk policies, appetite and controls, at the operational level. The second level consisting of the risk management, compliance & fraud control teams is responsible for risk oversight, risk guidance and risk reporting while the third level consisting of internal and external auditors provides independent assurance to the board and senior management of the effectiveness of risk management processes. Max Bupa has adopted a robust, consistent and proportionate approach towards the identification, analysis and control of the key risks that could threaten the assets, solvency, earning capacity, business objectives or reputation of the organization through a formally documented and approved enterprise risk management policy. Key risks are identified and mitigation plans are reviewed, improved and implemented on a quarterly basis by the risk management team. To help define the level of risk that Max Bupa is willing to take, a set of risk appetite statements have been defined which state in both quantitative and qualitative terms the Max Bupa Board s desired risk profile. The statements are reviewed and approved by the board on annual basis. There is also a quarterly risk assessment exercise which is reviewed by risk committee of the board and includes a summary of key risks, bottoms up assessment of key risks within each category of risks with residual risk rating, summarized view of risk ratings across all risk categories and risk appetite status which includes confirmation and state of Max Bupa business results against risk appetite statements approved by the board. Information Technology Max Bupa focuses on utilizing technology to automate business processes and deliver high standards of service to its customers, partners and employees. It has had made significant investment in its technology capabilities, including an in- 140

141 house development and support team which ensures agility and responsiveness for evolving business needs and top of the line Dialler, CRM and mobility applications which are customer centric while ensuring that Max Bupa systems are future ready. Max Bupa IT systems are based on the latest technology, have a very robust architecture, are highly scalable and are hosted in state of the art ISO compliant data centres. Max Bupa management works towards ensuring that the Max Bupa s technological processes and systems maintain their competitive edge at all times and that business continuity is planned for and tested on a regular basis. Some of the industry accolades and recognitions which Max Bupa s IT initiatives have received include: Best solution for data management at the E- Governance BFSI (Banking, Financial Services and Insurance) Leadership Awards Celent Model Insurer of Asia 2014 for effective and innovative use of technology. IT Leadership Award at the Asia Insurance Awards Maturity in Technology Award at the Indian Insurance Awards Intellectual Property Intellectual property right of Max Bupa is well protected at the company as well as the group level. Max Bupa is a joint venture between Max India and the British United Provident Association Limited (Bupa UK). Max Bupa uses the name and the mark under the license from Max India and Bupa UK, the name and marks are trademarks registered in the name of Max India and Bupa. Applications for other marks like Health Promise and Walk for Health that have been created and used by Max Bupa are already filed with the relevant trademark authorities for registration. Max Bupa also uses other trademarks and logos including Heartbeat that have been created and is owned by Bupa Singapore Holdings Pte. Ltd under a license agreement between Bupa Singapore Holdings Pte. Ltd. and Max Bupa. Awards and Recognition Right from inception, Max Bupa has been at the forefront of innovation and introduction of industry first products and practices. It has received several awards and recognitions over the years, some of which include: Flagship product, Heartbeat Version 3, won Golden Peacock Innovative Product/Service Award for the year 2015 SuperBrand, Consumer choice award, 2015 Best data management solution (WDMS Workflow Data Management Solution), egovernance BFSI Awards, 2015 Technology leadership Award, Celent Asia Insurance Award, 2015 'Claims Service Leader of the Year' award for Health Insurance at the 5th Indian Insurance Awards Technology Maturity Award, India Insurance Summit, 2014 General Insurer of the Year, ABP News Banking (BFSI) 2014 for exponential growth and differentiated strategy Most trusted Health Insurance provider, Brand Trust report 2014 Model Insurer Asia of the year 2014 award by CELENT Recognised as the most trusted health insurance brand in the India Brand Trust Report 2014 Innovation in Quality of Service Delivery 2014 by Healthcare award 2014 (part of world Brand Congress) Financial Information for Max Bupa Health Insurance AUDITED BALANCE SHEET AS AT DECEMBER 31, 2015 As at As at Particulars Dec 31, 2015 Mar 31, 2015 Rs. in millions Rs. in millions Sources of Funds Share Capital Fair Value Change Account 8,760 7,

142 Total Application of Funds Investments Fixed Assets Current Assets: Cash and Bank Balances Advances and Other Assets Sub-total (A) Current Liabilities Provisions Sub-total (B) Net Current Assets (C) = (A - B) Debit Balance in Profit and Loss Account Total 1 1 8,761 7,906 5,180 4, ,587 1,307 2,311 2,074 3,898 3,380 (3,379) (2,924) 6,700 6,208 8,761 7,906 AUDITED REVENUE ACCOUNT FOR THE NINE MONTHS PERIOD ENDED DECEMBER 31, 2015 For the nine months period ended For the nine months period ended Particulars Dec 31, 2015 Dec 31, 2014 Rs. in millions Rs. in millions 1 Premiums earned (Net) 2,862 2,345 2 Profit/ Loss on sale/redemption of Investments Others Interest, Dividend & Rent Gross Total (A) 3,021 2,474 1 Claims Incurred (Net) 1,698 1,318 2 Commission Operating Expenses related to Insurance Business 1,663 1,746 4 Premium Deficiency - (6) Total (B) 3,659 3,260 Operating Profit/(Loss) [C= (A - 142

143 B)] (638) (786) Appropriations Transfer to Shareholders Account Transfer to Catastrophe Reserve Transfer to Other Reserves Total (C) (638) (786) (638) (786) AUDITED PROFIT AND LOSS ACCOUNT FOR THE NINE MONTHS PERIOD ENDED DECEMBER 31, 2015 For the nine months period ended For the nine months period ended Particulars Dec 31, 2015 Dec 31, 2014 Rs. in millions Rs. in millions 1 Operating Profit/(Loss) I Miscellaneous Insurance (638) (786) 2 Income From Investments I II Interest, Dividend and Rent Gross Profit on sale of investments Other Income I II III Gain on Foreign Exchange Fluctuation Interest Income Liabilities no longer required written back Total (A) (482) (668) 4 Provisions (Other than Taxation) I For diminution in the value of investments

144 II For doubtful debts Other Expenses I Expenses other than those related to Insurance Business 1 8 II III Bad debts written off Others Total (B) 9 9 Profit/(Loss) Before Tax Provision for Taxation Profit/(Loss) After Tax (492) (677) - - (492) (677) Appropriations Balance of Profit/(Loss) brought forward from last year (6,208) (5,275) Balance carried forward to Balance Sheet (6,700) (5,952) (iii) Senior Living Business Overview Antara, a wholly owned subsidiary of Max India is engaged in the development, management and operation of senior living communities. Currently, the construction of Antara s first senior living community, 200 apartments, fully integrated facility spread over 13.6 acres located at Purukul, Dehradun is nearing completion and is expected to be fully functional by December, Post the completion of Antara s first community in Dehradun, Antara will look to demand its continuing care retirement community offering in other Indian cities. Post completion of construction, Antara will be responsible for the operation and management of these communities. 144

145 As of December 31, 2015, Antara had completed signing of long term lease contracts for 81 or 40% of its senior living apartments at its Dehradun project and raised an amount of Rs. 923 million as advance amount for signing long term lease contracts post completion of construction. Business Model and Strategy Antara s offering: Antara s senior living communities are envisaged as continuous care propositions are designed around the safety, wellness and lifestyle requirements of progressive seniors above the age of 60. They are built on the pillars of a unique location, thoughtful design, a curated community and holistic well-being. Antara s target resident profile: Antara s target resident profile is a high net worth graduate / professional over 55 years of age living independently, keeping general good health and progressive, well-travelled and socially active. In the relatively new but rapidly growing Senior Living sector in India, Antara targets the upmarket, high net worth seniors segment and is one of the few players operating on a long term lease model vis-à-vis other senior living players in the industry who operate on a sales model under which the objective of achieving a target resident profile is difficult to achieve. Why a Leasehold model: Antara wishes to ensure that the senior living community that is being created remains a senior living community in the long term. Hence, Antara cannot follow a typical real estate apartment disposal model whereby the apartments are sold with a freehold title deed, enabling the resident to freely re-sell the apartment to anyone and the sale cannot be restricted to seniors only. Hence, an innovative leasehold title deed model has been created and developed as a mechanism that also enables the appreciation in property prices to go to the customer. Antara s revenue model: Antara generates revenue by: (a) Total consideration paid by the customers towards the lifetime lease of the apartment unit. The total consideration paid by the customers is expected to finance the costs incurred towards constructing and designing the community; and (b) Operational revenues will be generated by the community on a perpetual basis towards the day to day operations and maintenance of the community. Antara s Comprehensive Benefit, the fixed monthly charges collected by Antara finances the operational expenditures on an ongoing basis. Antara s Leasehold Model Introduction to the leasehold model: Antara has created an innovative leasehold structure for its residents. Essentially, the customers pay for the fair market value of the apartment at the time that they move in. The customers are given a leasehold title deed which entitles them to live in the apartment for the rest of their lives (lease term of 60 years). Exit from the community: If a resident wishes to leave the community, Antara will then market the apartment to new eligible lessees (current residents can also recommend interested eligible lessees). Before marketing, Antara will estimate the new fair market value of the apartment through industry experts. This fair market value will take into account appreciation in underlying real estate. Antara will use this fair market value as a guide price, and conduct sales proceedings accordingly to ascertain the next lessee. The new lessee will then pay the amount that has been offered. That amount will be then given to the exiting residents, minus Antara s marketing charges (either 3% of the sale price or 10-20% of the appreciation in property value). Nomination: A resident can nominate a close relative, who meets the eligibility criteria, to live in the apartment after the passing of an existing resident. Antara will then issue a fresh lease deed in his/her name. In case no close relative is nominated, or the close relative is not eligible, Antara will market the apartment to new lessees. Once sold, the proceeds will go to the nominee(s) of the resident, minus Antara s marketing fees. There are 3 payment plans offered to the customers: 1. Pre-Payment Plan 2. Time linked plan 3. Post Payment Plan Antara, Dehradun Location 145

146 Dehradun is nestled between the Himalayas to the North and the Shivaliks to the South, is renowned for its serene beauty, panoramic mountain views and comfortable weather throughout the year and therefore is ideal as a retirement destination. It is well connected by air, road and rail to Delhi and other major cities in India. It is also in proximity to the spiritual towns of Haridwar and Rishikesh, and popular mountain destinations like Mussoorie and Dhanaulti. Dehradun, the capital of Uttarakhand, is also an upcoming growth center. Within Dehradun, Purukul, where Antara s senior living community is located is zoned as per the master plan of Dehradun as a wellness and tourism zone and is in the vicinity of city facilities with a state-of-the-art MHC hospital located five kilometers away. The Community Background on the Community: The senior living community currently under construction at Purukul, Dehradun will have 200 apartments ranging from a super area of 1,400 sq. ft. to over 6,000 sq. ft., a few penthouses and a 50,000 sq. ft. clubhouse. The facility is designed as a spacious community with a density of approximately 16 apartments to an acre. The lifestyle common areas and expansive clubhouse are 6 to 8 times larger while the apartment density per acre is one of the lowest when compared to similar existing / upcoming senior living projects across India. Background on the Clubhouse: The central idea of the clubhouse at Antara is to function as a community living space for the residents and their visitors. It also serves as a facility for the residents to interact with people from outside the Antara community. The 50,000 sq. ft. integrated clubhouse facility accommodates dining spaces, a bar, library, arts and craft workshop, card rooms, indoor games room, theatre and a wellness facility. The clubhouse also has an attached grocery store, ATM, and business centre. The complete campus is wifi enabled and has state of the art audio visual systems. The facility is zoned to function as a buffer between private and public space. From the more private spa, library and card rooms to the most public lobby café and Art workshop, the spaces have been planned in a manner that allow both for solitude and quiet or shared activities and celebrations. Design and Construction Design philosophy: Antara has been designed to align itself with the physical, spiritual and mental well-being needs of its residents. It has been laid out in such a manner that the building blocks create interesting gardens and movement spaces, which are pedestrian friendly and ADA compliant. The master plan has been designed to create interesting meditation and resting spaces, and the movement axis is intentionally manipulated to create a varying spatial experience at each corner and at each turn, revealing interesting landscape each time. Design of the Community: Antara is a combination of vibrant yet subtle design nuances, hidden design features to ensure safety, security and comfort and an overall sense of space and landscape, a space of character and personality. The project organizes 9 building blocks such that each block optimally exploits the views of the hills, sunlight and the wind breeze. The large concierge lobbies sport weather protected drop offs with senior friendly access, and 24-hour security assistance with easy access to utilities like wheel chairs, umbrellas etc. The elevators are designed for complete turnaround access by wheel-chair dependent resident. Each apartment is laid out to ensure easy wheel chair movement. All major spaces are ADA compliant. The design approach is born of a synergy between state-of-the art engineering and local materials. All areas in the facility have the option of being temperature controlled or naturally ventilated depending on the weather and use. Most areas have attached veranda spaces for indoor/ outdoor use. All amenities are designed to the highest global senior living norms with a focus on physical and visual comfort, access, ergonomics and circulation. Special attention has been given to materials, colours and furniture to support residents with physical challenges and age related needs. Some of our key design partners are as under: 146

147 KEY DESIGN PARTNERS Perkins Eastman, New York: Principal Architects Esteva I Esteva Arquitectura, Spain: Principal Architects Arcop Associates Private Limited, New Delhi: Project Architects Founded in 1981 Perkins Eastman is today one of the largest and most respected design and architecture firms in the world. They are credited with building award winning senior living communities across the globe. An international architecture and interior design firm, based on the island of Mallorca, Spain is known for its artistry and its ability to work at many different scales from high rise commercial development, luxury hospitality design, art galleries, senior living communities and large mixed-use developments. Arcop Group is an architectural practice with offices located in Montreal, Toronto, Boston, New Delhi and Muscat. Founded in India in 1985, Arcop Associates offers a full range of architectural services, engineering services, planning and urban design, interior design, project planning and control. The firm has specific expertise in most building types including commercial, industrial and office buildings, hotels, cultural, as well as high technology facilities and major multi-use developments. Project Cost The total project cost till the completion of the community, expected by 2017, is estimated to be Rs. 6,370 million funded by equity contribution from MFSL (and now Max India) and supported by external debt and customer advances. As of December 31, 2015, an amount of Rs million and Rs. 425 million had been invested in the project as equity and debt, respectively, by MFSL (and now Max India) and external debt balances and customer advances stood at Rs million and Rs.923 million respectively. Current Status of the Project Antara is constructing 8 residences that will have a total of 200 apartments ranging from 1400 sq. ft. to over 6000 sq. ft. in super built-up area and has awarded all major work tenders ranging from civil structural work to interior design. The tendering for the interior design of the Club House and landscape work for the entire community is under the final stages of technical negotiation. Antara will start giving possession notices from August 2016 onwards to the customers. The sequence of structure >> block work >> MEP >> interiors is expected to continue through calendar year 2015 and 2016 in respective residences. External development works and high side utilities will be done in parallel. Complete structural and finishing work for different residences are expected to be completed by end of 2016 in phases. Antara has already started working towards filing for the occupancy certificate and is expected to receive the occupancy certificate by mid Employees The total team member at Antara is 96 across all functions. Antara is expected to employ an onsite team of 187 once the Dehradun community is fully functional. The breakdown of the operational team is the following: 1. General Manager and the Management Team 11 team members. 2. Engineering and Maintenance 18 team members. 3. Housekeeping and Landscaping 42 team members. 4. Security and Safety 56 team members. 5. Food and Beverage 35 team members. 6. Club House and Well Being 25 team members. 147

148 Financial information of Antara and its subsidiaries Antara Senior Living Limited Unaudited Balance sheet as at Dec 31, 2015 EQUITY AND LIABILITIES Shareholders' funds As at As at Dec 31, 2015 March 31, 2015 (Rs. in Millions) (Rs. in Millions) Share capital 1, , Reserves and surplus (210.94) (175.08) 1, , Non-current liabilities Long-term borrowings Long-term provisions Current liabilities Trade payables Other current liabilities Short-term provisions TOTAL 1, , ASSETS Non-current assets Fixed assets Tangible assets Intangible assets Capital work-in- progress Intangible assets under development Non-current investments Long-term loans and advances 1, Current assets 1, , Current investments Trade receivables

149 Cash and bank balances Short-term loans and advances Other current assets TOTAL 1, , Unaudited Statement of Profit and Loss for the period ended on Dec 31, 2015 For the nine months ended For the nine months ended Dec 31, 2015 Dec 31, 2014 Income (Rs. in Millions) (Rs. in Millions) Revenue from operations Other income Total Expenses Employee benefits Others Depreciation and amortisation Finance cost Prior Period Items Total Profit/(Loss) before tax (35.86) (50.64) 149

150 Antara Purukul Senior Living Limited Unaudited Balance sheet as at Dec 31, 2015 EQUITY AND LIABILITIES Shareholders' funds As at As at Dec 31, 2015 March 31, 2015 (Rs. in Millions) (Rs. in Millions) Share capital Reserves and surplus (859.66) (759.22) (777.47) (677.03) Non-current liabilities Long-term borrowings 2, , Other long term liabilities Long-term provisions Current liabilities 3, , Trade payables Other current liabilities Short-term provisions TOTAL 3, , ASSETS Non-current assets Fixed assets Tangible assets Intangible assets Capital work-in- progress Intangible assets under development Long-term loans and advances Other non current assets Current assets Current investments Inventories 150

151 2, , Cash and bank balances Short-term loans and advances Other current assets , , TOTAL 3, , Unaudited Statement of Profit and Loss for the period ended on Dec 31, 2015 For the nine month ended For the nine month ended Dec 31, 2015 Dec 31, 2014 (Rs. in Millions) (Rs. in Millions) Income Other income Total revenue Expenses Employee benefits Others Depreciation and amortisation Finance cost Prior Period Items Less: Transferred to Inventories (308.76) (177.75) Total expenses Profit/(Loss) before tax (100.43) (753.12) (iv) Max Skill Max Skill First is a shared service centre for providing learning and development solutions and training services to companies in the Max Group. It is also engaged in the business of distribution of life and health insurance products through its subsidiary, Max One Distribution Services Limited. Max Skill First is a wholly owned subsidiary of Max India. The current business of skilling and development services was initially established as an internal SBU and Centre of Excellence under Max Life Insurance Company Limited in April 2013 and was subsequently transferred to the existing subsidiary of Max India. The name of the Company was changed to Max Skill First in April, Max Skill First is currently developing and implementing training programs for companies in the Max Group which include: Max Life Insurance Company Limited: Agent advisor learning roadmap with integrated need based training programs, induction training for new agent advisors, skilling development programs for Agency Development Managers (employees of Max Life), content development and levering technology for effective training delivery. MHC: Leadership & Capability Development, Induction Programs for Doctors, Service Excellence training for front line staff (front desk, nurses etc.) and vendors and structured on-the-job training for nursing staff 151

152 The company currently provides its services to only two group companies: Max Life and MHC. The company employs over 250 people that include the management team and trainers deployed across various locations of Max Life and MHC. Max Skill First also plans to offer its services to Max Bupa in the near future. 152

153 REGULATIONS AND POLICIES The following description is of various sector-specific laws and regulations in India, which are applicable to our Company. The information below has been obtained from publications in the public domain. It may not be exhaustive, and is intended only to provide general information and is neither designed nor intended to substitute for professional legal advice. Foreign Investment India's current FDI policy issued by the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India ( DIPP ), with effect from May 12, 2015 ( FDI Policy ), consolidates and supersedes all previous press notes, press releases and clarifications on FDI issued by the DIPP. Para of the FDI Policy stipulates as follows: Foreign investment into an Indian company, engaged only in the activity of investing in the capital of other Indian company/ies, will require prior Government/FIPB approval, regardless of the amount or extent of foreign investment. Foreign investment into Non-Banking Finance Companies (NBFCs), carrying on activities approved for FDI, will be subject to the conditions specified in paragraph of this Circular. However, given that our Company is not engaged only in the activity of investing in the capital of other Indian company(ies) since it also provides management services to its group companies, in our opinion, foreign investment in our Company will not require prior Government/FIPB approval. In any case, by way of abundant caution, we have procured the approval of the FIPB dated May 6, 2016 for the Scheme. Insurance Regulations In terms of the Insurance Act every person carrying on any insurance business in India is required to obtain a certificate of registration from the IRDAI for the particular class of insurance business it proposes to carry. A pre-condition for registration of an insurer exclusively carrying on the business of health insurance is the requirement of having a paid up equity capital of Rs. 1 billion. In India, the IRDAI is a statutory body constituted under the Insurance Regulatory and Development Authority Act, 1999 ( IRDAI Act ) to regulate, promote and ensure the growth of the insurance sector as well as to protect the interests of the policy holders. The powers and functions of the IRDAI include, inter alia, the following: granting/modifying/cancelling registration of insurers; implementing compliance with capital structure requirements and solvency margin requirement; issuing licenses to insurance intermediaries or agents; control over management of insurers; protection of policy holders interests; promotion and regulation of professional organisations conducting business in the insurance sector; regulation of investment of funds by insurance companies; adjudication of disputes between insurers and insurance intermediaries; and promulgating regulations to carry out the purposes of the Insurance Act. Pursuant to the powers granted under the IRDAI Act, the IRDAI has promulgated various regulations to govern and regulate the insurance sector in India. These regulations, which are important constituents of the regulatory regime, regulate and govern, among other things the: registration of insurance companies; preparation of financial statements and auditor s report of insurance companies; licensing of insurance agents; protection of policyholders interests; licensing of corporate agents; and assets, liabilities and solvency margin of insurers. 153

154 Reserve Bank of India Guidelines In terms of the Reserve Bank of India Act, 1934 ( RBI Act ) read with the Master Circular on Core-Investment Companies ( CIC ) dated July 1, 2015 ( CIC Master Circular ), every Systemically Important CIC is required to apply to the RBI for grant of certificate of registration. Further, in terms of the CIC Master Circular, a Systemically Important CIC is defined as follows: a CIC having total assets of not less than Rs.1 billion either individually or in aggregate along with other CICs in the Group and which raises or holds public fund. Given that our Company does not raise or hold deposits from the public, our Company does not fall under the definition of a Systemically Important CIC and therefore will not require registration with the RBI for the purposes of the RBI Act and the CIC Master Circular. 154

155 HISTORY OF OUR COMPANY AND CERTAIN CORPORATE MATTERS (1) Incorporation The Company was incorporated on January 1, 2015 within the jurisdiction of the Registrar of Companies, Chandigarh and Shimla, under the name and style as Taurus Ventures Limited. (2) Main objects of our Company 1. To establish, maintain, run, manage, develop, own, acquire, take on rent, purchase, undertake, improve, equip, promote, initiate, encourage, subsidise and organize, in India or elsewhere and educational institutions, hospitals, polyclinics, pathology laboratories, operation theaters, chemist shops, blood banks, eye banks, kidney banks, nursing homes, physiotherapy centres, investigation centres, research centres, and other similar establishments for providing treatment and medical reliefs in all its branches by all available means to public at large. 2. To champion quality of life of senior citizens by encouraging independence, preserving dignity, enabling freedom of choice and protecting privacy of life by providing independent living, assisted living, skilled nursing and all other kinds of human care services associated therewith and by conducting a range of social, educational, devotional and recreational programmes for the senior citizens and purchase or otherwise acquire lands, houses, buildings, sheds and improve, manage, construct, erect, control, sell, enter into arrangements and/or lease out flats, houses, apartments, commercial complexes and to otherwise deal with properties of all kinds, for the purpose of providing entire range of services to senior citizens. 3. To buy, set up, manufacture, operate, run, finance, sell, acquire, construct, manage, improve, maintain, take on lease or promote the establishment of health clinics, healthcare centers, scan centers, centers for medical and/or all other kinds of care viz. lifestyle retirement resort, beauty saloon including manicure, pedicure and facial treatment centers and any other center rendering services of the like nature and to act as consultants and advisors to provide technical knowhow for establishment and operation of beauty and health clinics, healthcare and other centers in India or elsewhere for the purpose of ensuring quality of life of senior citizens. 4. To carry on the business of an investment company and to buy, underwrite, invest in movable and immovable property, acquire, hold, shares, stocks, debentures, debenture-stock, bonds, negotiable instruments, obligations and securities of any kind issued or guaranteed by any Company constituted or carrying on business in India or elsewhere and debentures, debenture-stock, bonds, obligations and securities issued or guaranteed by any Government, State, dominions, sovereign, rulers, commissioners, public body or authority, supreme, municipal, local or otherwise, firm or person whether in India or elsewhere. 5. To acquire and hold by way of investment, shares, stock, debenture- stocks, bonds, obligations or securities by original subscription, participation in syndicates, tender, purchase, exchange or otherwise and to subscribe for the same or to guarantee the subscription thereof and to exercise and enforce all rights and powers conferred by or incidental to the ownership thereof. 6. To carry on the business of providing management and consultancy services, shared services, nurturing the learning and development objectives for acquisition of skills and knowledge, including recruitment personnel management in the Company, its affiliates, subsidiaries, associates, joint venture companies and other companies with similar objects as that of the Company. 7. To promote, hold and nurture investments in companies, including companies engaged in health insurance business, and having similar objects as that of the Company and carrying on any business (including through associates, subsidiaries and joint ventures) whether in India or elsewhere. 155

156 (3) Registered Office The registered office of our Company is situated at 419, Bhai Mohan Singh Nagar, Village Railmajra, Tehsil Balachaur, District Nawanshahr, Punjab (4) Shareholders Agreement There is no agreement executed between any of our shareholders and our Company. (5) Strategic / Financial Partners and Other Material Contracts (i) MHC Joint Venture Agreement We operate our healthcare business as a joint venture between ourselves and our joint venture partner, Life Healthcare. We have entered into a joint venture agreement dated August 31, 2014 (the MHC JVA ) with Life Healthcare, pursuant to which we and Life Healthcare each hold 46.28% shareholding in MHC. (ii) Max Bupa Joint Venture Agreement We operate our health insurance business as a joint venture between ourselves and our joint venture partner Bupa. We have entered into a joint venture agreement dated April 29, 2016 (the Max Bupa JVA ) with Bupa. In terms of the Max Bupa JVA, both Max India and Bupa have agreed that Bupa would increase its shareholding in Max Bupa from the current level of 26% to 49%. 156

157 OUR MANAGEMENT (1) Board of Directors The following table sets forth details regarding our Board of Directors: Name of Directors, DIN, Age in Years, Designation, Occupation, Father s Name and Address Mr. Rahul Khosla Date of appointment Other Directorships 15/01/2016 Please refer to Note 3 below. DIN: Address: N-31, First Floor, Panchsheel Park, New Delhi Occupation: Service Father s Name: Mr. Gautam Khosla Mr. Mohit Talwar 15/01/2016 Please refer to Note 3 below. DIN: Address: Flat No B, Building No. - 4, Tower - 15, The Magnolias, DLF Golf Links, Golf Course Road, Gurgaon, , Haryana Occupation: Service Father s Name: Mr. Jagdish Talwar Ms. Tara Singh Vachani 15/01/2016 Please refer to Note 3 below. DIN: Address: 15, Aurangzeb Raod, New Delhi Occupation: Service Father s Name: Mr. Anlajit Singh 157

158 Mr. Ashwani Windlass 15/01/2016 Please refer to Note 3 below. DIN: Address: N-53, Panchsheel Park New Delhi Occupation : Non Executive Director Father s Name Mr. L.R. Gupta Mr. Sanjeev Kishen Mehra 15/01/2016 Please refer to Note 3 below. DIN: Address: 44 Mayfair Lane, Greenwich ,, United States of America Occupation: Banker Father s Name: Mr. Kawal Kishen Mehra Mr. Ashok Brijmohan Kacker 15/01/2016 Please refer to Note 3 below. DIN: Address: B-602/702, Beaumonde, A M Marg, Prabhadevi, Mumbai, , Maharashtra, Occupation: Independent Director Father s Name: Mr. Brij Mohan Kacker Mr. Dipankar Gupta 15/01/2016 Please refer to Note 3 below. DIN: Address: 1, Palam Marg, Vasant Vihar, Delhi Occupation: Independent Director Father s Name : Mr. Diptiman Gupta 158

159 Mr. N C Singhal 15/01/2016 Please refer to Note 3 below. DIN: Address: D107,Poornima, 23 Pedder Road, Mumbai , Maharashtra Occupation: Independent Director Father s Name: Late Sh. Chatar Sain Singhal Ms. Lavanya Ashok 01/04/2016 Please refer to Note 3 below. DIN : Address :139/6-2, Domlur Layout,Bangalore Occupation : Service Father s Name : Mr. Doraiswami Ashok Notes: (1) Brief Profile of the Directors 1. MR. RAHUL KHOSLA Mr. Rahul Khosla is a seasoned business leader with deep management experience, broad leadership skills and wide business perspectives developed over the last 30 years of working in India and globally. He is currently President, Max Group and the Executive President of Max Financial Services. In addition, he is the Chairman of the boards of Max India, Max Life Insurance and MHC. He also serves on the Boards of Max Bupa Health Insurance and Antara Senior Living. As President, Mr. Khosla is the senior most executive in the Group. He is responsible for Group strategy, and the overall management of Group capital, performance, people, partnerships, governance, policies, brand, reputation and external representation, while enhancing the Group s framework of core values. Till January 15, 2016, Mr. Khosla was the Managing Director of the erstwhile consolidated Max India Limited. Under his leadership over the past four years, the Max Group has successfully delivered superior financial performance, significantly grown market capitalization, built organizational depth and concluded seminal corporate transactions across its businesses. He has formulated and is leading the implementation of a comprehensive strategic framework across the Group to deliver long-term value. Before joining Max, Mr. Khosla spent 11 years based in Singapore as the Group Head of Products for Visa across Asia Pacific, Central Europe, Middle East and Africa, following his role as Chief Operating Officer for the Asia Pacific region. He held several senior roles prior to this - as Country Head for ANZ Grindlays consumer banking businesses in India; Head of Retail Assets, Strategy, Finance and Legal at Bank of America and as CFO for the American Express TRS businesses for India and South Asia, eventually going on to set up a pioneering in-house global processing facility for American Express. 2. MR. MOHIT TALWAR Mr. Mohit Talwar is the managing director of MFSL and Max India. In addition, he is the vice chairman of MVIL, chairman of MSF and serves on the board of directors of Max Life Insurance Company Limited, Max Healthcare Institute Limited, Max Bupa Health Insurance Company Limited and Antara Senior Living Limited. 159

160 Till January 14, 2016, Mr. Talwar was the deputy managing director of MFSL, prior to its demerger. In this role, Mr. Talwar led on multiple fronts including effective shareholder alignment especially with Max group s valued joint venture partners, progressing new business opportunities both organically and inorganically, ensuring appropriate funding arrangements for the group, optimizing capital management and treasury, managing investor and analyst relations and advising management and shareholders on capital market implications. In his tenure with the Max group, he has successfully leveraged his strong relationships with institutional investors, hedge funds, banks and private equity firms, and led several complex corporate finance and financial structuring deals to ensure adequate investment and liquidity for the group s operations. He spearheaded the setting up of Max Bupa Health Insurance, the health insurance joint venture of Max India with Bupa Plc. Mr. Talwar is also responsible for driving synergies across the Max group and has played a central role in executing key transactions across group companies. These include, among others, bringing on board MS&AD Insurance Group Holdings, a Japan-headquartered global insurance company, as the new joint venture partner for the group s life insurance business, Life Healthcare s investment of 26% in Max Healthcare, and later the equalization of its stake in the business, and most recently, the mega-restructuring of the erstwhile Max India into three new listed companies. Mr. Talwar has a wealth of experience in corporate finance and investment banking, and spent 24 years in wholesale banking in Standard Chartered, ANZ Grindlays and Bank of Nova Scotia. 3. MS. TARA SINGH VACHANI The chief executive officer and managing director of Antara Senior Living, Tara Singh Vachani holds a thorough understanding of senior living. She is driven by the passion to create an enriching and fulfilling lifestyle for seniors that is unique to India. Her knowledge is backed by over three years of extensive research of senior living communities in India and Internationally. Before venturing into senior living, she worked with the corporate development team at MFSL, prior to its demerger. She has also been actively engaged in philanthropy through her involvement with Max India Foundation, the corporate social responsibility arm of the Max group. She has a diverse academic background and learning. She majored in politics and South Asian studies at the National University of Singapore followed by courses in strategy management at the London School of Economics and hospitality business strategy and management at Ecole hotelier de Lausanne, Switzerland. Tara Singh Vachani is the youngest child of Mr. Analjit Singh, a well-known business leader and visionary. The idea of caring is close to her heart and Antara for her is the altruistic coming together of enterprise and the joy of doing something meaningful for the seniors of our country. 4. MR. ASHWANI WINDLASS Mr. Ashwani Windlass was part of the founding team at MFSL, having served the Max Group in different capacities including as its Joint MD as well as MD, Hutchison Max Telecom from 1994 until He has continued as a Board member of the Company ever since. He has been the Chairman, MGRM (Asia-Pac) and Vice Chairman, and the MD of Reliance Telecom. He serves on leading advisory and statutory Boards, including Antara Senior Living Limited, Max Ventures Pvt. Ltd, MGRM Holdings Inc., USA, Vodafone India Ltd. and Hindustan Media Ventures Ltd. and Faculty of Management Studies, Delhi University. He holds degrees in B.Com (Gold Medal), Bachelor of Journalism and MBA. 5. MR. SANJEEV MEHRA Mr. Sanjeev Mehra is Managing Director and Vice Chairman of global private equity investing at Goldman, Sachs & Co. He serves on the Board of ARAMARK Corporation, Interline Brands, Inc., Sigma Electric, SunGard Data Systems, TVS Logistics, Neovia Holdings and as a Trustee of Oakham School Foundation, Friends of the Doon School and as Chairman of Brunswick School, Greenwich, CT. He holds a BA in Economics from Harvard College and an MBA from Harvard Business School. 6. MR. ASHOK KACKER 160

161 Mr. Kacker, M. Sc. (Physics), University of Allahabad (Topper of the 1972 batch), has more than three decades of experience in the Government as an Indian Revenue Service (IRS) Officer. He has served as Chief Commissioner of Income Tax and held senior positions both in executive capacities and policy formulation roles. He has also served as Executive Director with Securities Exchange Board of India (SEBI) and in various capacities in committees set up by SEBI. He is the Founder and Managing Partner of A.K. Advisors and Consultants, an Advisory Company in the area of financial services and Group Advisor with the India Bulls Group of Companies. 7. MR. DIPANKAR GUPTA Professor Gupta has spent 3 decades at JNU as faculty and is considered among India s foremost authority on Indian Sociology. He is a member of the Board of the RBI, NABARD, National Standards Broadcasting Authority, and the Doon School. He started the Business Ethics and Integrity Division of KPMG, India, which he led until 2003 and then served as its Senior Advisor. He is the author and editor of 18 books including, The Caged Phoenix: Can India Fly? re-published by Stanford University Press. His most recent book is titled Revolution from Above: India s Future and the Citizen Elite. He was awarded Chevalier De L Ordre des Arts et des Lettres (Knight of the Order of Arts and Letters) by the French Government. Professor Gupta is currently a distinguished professor of Shiv Nadar University. 8. MR. N.C. SINGHAL Mr. N.C. Singhal has an experience of over three decades in the banking industry and was the founder CEO, designated as the Vice-Chairman & Managing Director, of erstwhile SCICI Limited. He has also been associated with ICICI Ltd., ONGC, ADB, Manila and was deputed by the Government of India to the Industrial Development Bank of Afghanistan, Kabul. Mr. Singhal holds degrees in M.A. (Economics), M.Sc. (Statistics) and PGDPA. 9. MS. LAVANYA ASHOK Ms. Lavanya Ashok is an Executive Director in the Principal Investment Area (private equity investing effort) of Goldman, Sachs & Co. She joined the firm as an analyst in 2004 in New York and re-joined the firm in Mumbai in Lavanya serves on Goldman Sachs s India Diversity Committee. Suspension of Trading / Delisting of company None of the Directors is or was a director of any listed company whose shares have been/were suspended from being traded on the Bombay Stock Exchange Ltd. National Stock Exchange of India Ltd. (2) Compensation of Managing Director/Whole time Directors The remuneration payable to Mr. Mohit Talwar, the Managing Director of the Company for the initial period of three years, i.e., from January 15, 2016 until January 14, 2019 shall not exceed Rs. 2,40,00,000/- per annum or the limits as set out hereunder, whichever is higher: (i) (ii) Salary (including Basic, House Rent Allowance/Company owned or leased Accommodation, Retrials like Provident Fund and Gratuity, perquisites and allowances viz., leave travel allowance, car lease rentals, fuel reimbursements, vehicle maintenance, driving services, children education allowance, management allowance and medical reimbursements not exceeding Rs. 100,00,000/- per annum with the authority to the Nomination and Remuneration Committee to determine and regulate the remuneration within aforesaid limit, from time to time; and Variable compensation/performance incentive not exceeding 65% of Fixed Pay depending upon individual performance rating and company performance and with the authority to the Board to determine and pay the variable compensation within aforesaid limit. 161

162 In addition to the remuneration and perquisites to be paid as aforesaid, Mr. Mohit Talwar shall be entitled to encashment of leave, travel insurance, and any other perquisite as per the policy/rules of the Company in force and/or as may be approved by the Board/Committee, from time to time. Mr. Mohit Talwar will also be eligible to participate in long term incentive plan or any other employee incentive plan as may be introduced by the Company from time to time as may be approved by the Board (which includes its Committee) from time to time. Mr. Mohit Talwar, has also been granted stock options for a value not exceeding Rs. 65,00,000/- (Rupees Sixty Five Lakhs) per annum, under the employee stock option plan of the Company and that the Nomination and Remuneration Committee will determine and regulate grant of stock options within aforesaid limit. If in any financial year, during the term of office of Mr. Mohit Talwar as Managing Director, the Company has in-adequate profits as computed under the applicable provisions of the 2013 Act, he shall be entitled to receive the aforementioned remuneration as the minimum remuneration as provided under the 2013 Act. The Company or Mr. Mohit Talwar shall be entitled at any time to terminate this appointment by giving three months written notice or payment of fixed pay in lieu thereof. (2) Board of directors Sl. No. Name of the Director Designation 1. Mr. Rahul Khosla Chairman 2. Mr. Mohit Talwar Managing Director 3. Mrs. Tara Singh Vachani Non-Executive Director 4. Mr. Ashwani Windlass Non-Executive Director 5. Mr. Sanjeev Mehra Non-Executive Director 6. Mr. Ashok Brijmohan Kacker Independent Director 7. Prof.Dipankar Gupta Independent Director 8. Mr. N.C. Singhal Independent Director 9. Ms. Lavanya Ashok Alternate Director to Mr. Sanjeev Mehra (3) Interest of directors 1. Mr. Rahul Khosla SI No. Names of the Companies /bodies corporate/ firms/ association of individuals Nature of interest or concern 1. Max India Limited Chairman 2. Max Healthcare Institute Limited Chairman 3. Max Life Insurance Company Limited Chairman 4. Antara Senior Living Limited Director 5. Max Bupa Health Insurance Company Limited Director and Vice Chairman 6. Indian School of Business Director 7. RTD Investments Pte. Ltd., Singapore Member 2. Mr. Mohit Talwar Sl. No. Name of the Companies/ Bodies Corporate/Firms/ Association of individuals Nature of Interest or concern 1. Max India Limited Managing Director 2. Antara Senior Living Limited Director 162

163 3. Max Bupa Health Insurance Co. Ltd Director 4. Max Speciality Films Limited Chairman 5. Max Healthcare Institute Limited Director 6. Max Financial Services Limited Managing Director and Member 7. Max Ventures and Industries Limited Vice Chairman & Member 3. Mr. Tara Singh Vachani Sl No. Names of the Companies/bodies corporate/ firms/ association of individuals Nature of Interest or concern 1. Pivet Finances Limited Director 2. Antara Gurgaon Senior Living Limited Director 3. P V T Investment Limited Director 4. Maxpak Investment Limited Director 5. Moav Investment Limited Director 6. Trophy Holdings Private Limited Director 7. Antara Senior Living Limited Managing Director 8. Seven Heaven Buildmart Private Limited Director 9. Siva Reality Ventures Private Limited Director & Member 10. Siva Enterprises Private Limited Director 11. Max Estates Limited Director 12. Max India Limited Additional Director 13. Antara Purukul Senior Limited Director 14. Vana Retreats Private Limited Member 15. Malsi Hotels Limited Member 16. ABK Consultants Private Limited Member 17. Vana Hospitality Private Limited Member 18. Vana Lifestyle Private Limited Member 19. Vana Hotels Private Limited Member 20. Vana Resorts and Hotels Private Limited Member 21. Vanaveda Lifestyle Private Limited Member 22. Max Financial Services Limited Member 4. Mr. Ashwani Windlass: Sl No. Names of the Companies/bodies corporate/ firms/ association of individuals Nature of Interest or concern 1. Max Financial Services Limited Member & Director 2. Max Ventures Private Ltd Director & Vice Chairman 3. Hindustan Media Ventures Ltd. Director 4. Vodafone India Limited Director 5. Antara Senior Limited Director 6. The Faculty of Management Studies (FMS), University Of Delhi As a member (implying Board) 7. LRG Foundation(family Trust) Trustee 8. Neeman Family Foundation Trustee 9. Neeman Family PVT Foundation Trustee 10. Max India Limited Director 163

164 5. Mr. Sanjeev Mehra Sl. Name of the Companies/ Bodies Corporate/Firms/ Nature of Interest or concern No. Association of individuals 1. Max India Limited Director 2. TVS Logistics Services Limited Director 3. Aramark Corporation, USA Director 4. Neovia Logistics Director 5. Sigma Electric Inc., USA Director 6. Friends of The Doon School, India Director 7. Suja Juice Director 8. Max Ventures and Industries Limited Director 9. Max Financial Services Limited Director 6. Mr. Ashok Brijmohan Kacker Sl. No. Name of the Companies/ Bodies Corporate/Firms/ Association of individuals Indiabulls Industrial Infrastructure Limited Indiabulls Venture Capital Management Company Limited Salins Commodities Private Limited Golden Greens Golf and Resorts Ltd Max India Limited Inventive Green Technology Solutions Private Limited Indiabulls Real Estate Limited Max Speciality Films Limited AK Advisors & Consultants Max Ventures and Industries Limited Nature of Interest or concern Director Director Director Director Director Director Director Director Partner Director 7. Mr. Dipankar Gupta Sl No. Names of the Companies/bodies corporate/ firms/ association of individuals Nature of Interest or concern 1. Max India Limited Director 2. Reserve Bank of India Director 3. National Bank for Rural Development Director 4. Fight Hunger Foundation Director 5. Bali Housing Private Limited Director 8. Mr. N.C. Singhal Sl. No. Name of the Companies/ Bodies Corporate/Firms/ Association of individuals 164 Nature of Interest or concern 1. Deepak Fertilisers & Petrochemicals Corporation Limited Director 2. Max India Limited Director 3. Samalpatti Power Company Pvt. Ltd Chairman 4. Birla Sun Life Asset Management Company Limited Director 5. Tolani Shipping Company Limited Director 6. Capital First Limited Director 7. Ceenaar Advisory Services LLP Designated Partner

165 8. Shapoorji Pallonji Forbes Shipping Limited Director 9. Max Ventures and Industries Limited Director & Member 10. Max Financial Services Limited Member 9. Ms. Ashok Lavanya Sl. Name of the Companies/ Bodies Corporate/Firms/ Nature of Interest or concern No. Association of individuals 1. Global Consumer Products Private Limited Nominee Director 2. Max India Limited Alternate Director 3. Azure Hospitality Private Limited Nominee Director 4. Nova Medical Centres Private Limited Nominee Director (4) Change, if any, in the directors during the last 3 years, and reasons thereof S. Name of Director Appointment/Resignation Date Reason No. 1. Mr. Kuldeep Singh Bisht Appointment First Director First Director 2. Mr. Kanhaiya Prasad Appointment First Director First Director 3. Mr. Harish Bhardwaj Appointment First Director First Director 4. Mr. Rahul Ahuja Appointment February 7, Mr. Jatin Khanna Appointment February 7, Mr. Venkatraman Krishnan Appointment February 7, Mr. Kuldeep Singh Bisht Resignation February 7, Mr. Kanhaiya Prasad Resignation February 7, Mr. Harish Bhardwaj Resignation February 7, Mr. Analjit Singh Appointment January 15, Mr. Rahul Khosla Appointment January 15, Mr. Mohit Talwar Appointment January 15, Mrs. Tara Singh Vachani Appointment January 15, Mr. Ashwani Windlass Appointment January 15, Mr. Sanjeev Mehra Appointment January 15, Mr. Ashok Brijmohan Kacker Appointment January 15, Mr. Dipankar Gupta Appointment January 15, Professional Professional Professional Personal Personal Personal Promoter Professional Managing Director Promoter Professional Professional Independent Director Independent Director

166 18. Mr. N C Singhal Appointment January 15, Independent Director Mr. Rahul Ahuja Resignation Resigned w.e.f Professional February 5, 2016 _ 20. Mr. Jatin Khanna Resignation January 15, Professional Mr. Venkatraman Krishnan Resignation January 15, Professional Mr. Analjit Singh Resignation January 18, Promoter Ms. Lavanya Ashok (Alternate Director to Mr. Sanjeev Mehra) Appointment April 1, 2016 Professional (5) Management Organization Structure Corporate Governance A. Scope of Committees: Arising from the approval of the Scheme between MFSL, MVIL and the Company and their respective shareholders and creditors, the shares of the Company proposed to be allotted to the shareholders of MFSL will be listed at BSE and NSE. Keeping in mind the applicable listing regulations and applicable provisions of the 2013 Act, the mandates for the committees have been approved by the Board, the details of which are furnished hereunder: (i) Audit Committee: This committee inter alia, recommends appointment of statutory auditors; reviews the Company s financial reporting processes and systems; reviews financial and risk management policies; the Company s financial statements, including annual and quarterly financial results; reviews/approves related party transactions, if any, 166

167 and financial accounting practices & policies. The scope of this committee has been defined by the Board of Directors in accordance with the Listing Regulations and applicable provisions of the 2013 Act. (ii) Nomination and Remuneration Committee: This committee has been constituted to evaluate compensations and benefits for executive Directors and senior executives at one level below the Board, recruitment of key managerial personnel and finalise their compensation, induction of executive and non-executive Directors and fix the method, criteria and quantum of compensation to be paid to the non-executive Directors and vested with powers to frame and administer the ESOP scheme of the Company including allotment of equity shares arising from exercise of stock options. The scope of this committee has been defined by the Board of Directors in accordance with the Listing Regulations and applicable provisions of the 2013 Act. (iii) Stakeholders Relationship Committee : Key responsibilities of this committee are formulation of procedures in line with the statutory guidelines to ensure speedy disposal of various requests received from shareholders from time to time, redressal of shareholders and investor complaints/grievances. The Committee has authority to approve the transfer and transmission of securities; issuance of duplicate certificates, etc. (iv) Investment & Finance Committee (Non mandatory): The responsibilities of this committee are to review financial performance of businesses carried on by the Company and its subsidiaries, review and recommend revenue and capital budgets of the Company and its subsidiaries, review and recommend various fund raising options and financial resources allocation to Company s divisions and subsidiaries and to review proposals on business restructuring, mergers, consolidations acquisitions, investments, establishment of joint ventures and divestments of any businesses, etc. B. Composition of Committees: (i) Audit Committee The Audit Committee was constituted by our Directors at their Board meeting held on January 15, The Audit Committee comprises: 1. Mr. N.C. Singhal ( Chairman) 2. Mr. Ashok Kacker 3. Mr. Dipankar Gupta 4. Mr. Mohit Talwar 5. Mrs. Tara Singh Vachani (permanent invitee) (ii) Nomination and Remuneration Committee The Nomination and Remuneration Committee was constituted by our Directors at their Board meeting held on January 15, The Nomination and Remuneration Committee comprises: 1. Mr. Ashok Kacker (Chairman ) 2. Mr. Dipankar Gupta 3. Mr. Rahul Khosla 4. Mr. Mohit Talwar (By invitation) (iii) Stakeholder Relationship Committee The Stakeholder Relationship Committee was constituted by our Directors at their Board meeting held on January 15, The Stakeholder Relationship Committee comprises: 1. Mr. Ashwani Windlass (Chairman ) 2. Mr. Ashok Kacker 167

168 3. Mr. Mohit Talwar (iv) Investment & Finance Committee The Investment & Finance Committee was constituted by our Directors at their Board meeting held on January 15, The Investment & Finance Committee comprises: 1. Mr. Ashwani Windlass ( Chairman ) 2. Mr. Rahul Khosla 3. Mr. Sanjeev Mehra 4. Mr. Mohit Talwar 5. Mrs. Tara Singh Vachani 6. Mr. Ashok Kacker (6) Key Management Personnel A. Max India Limited (i) Mr. Mohit Talwar Managing Director Mr. Mohit Talwar is the managing director of MFSL and Max India. In addition, he is the vice chairman of MVIL, chairman of MSF and serves on the board of directors of Max Life Insurance Company Limited, Max Healthcare Institute Limited, Max Bupa Health Insurance Company Limited and Antara Senior Living Limited. Till January 14, 2016, Mr. Talwar was the deputy managing director of MFSL, prior to its demerger. In this role, Mr. Talwar led on multiple fronts including effective shareholder alignment especially with Max group s valued joint venture partners, progressing new business opportunities both organically and inorganically, ensuring appropriate funding arrangements for the group, optimizing capital management and treasury, managing investor and analyst relations and advising management and shareholders on capital market implications. In his tenure with the Max group, he has successfully leveraged his strong relationships with institutional investors, hedge funds, banks and private equity firms, and led several complex corporate finance and financial structuring deals to ensure adequate investment and liquidity for the group s operations. He spearheaded the setting up of Max Bupa Health Insurance, the health insurance joint venture of Max India with Bupa Plc. Mr. Talwar is also responsible for driving synergies across the Max group and has played a central role in executing key transactions across group companies. These include, among others, bringing on board MS&AD Insurance Group Holdings, a Japan-headquartered global insurance company, as the new joint venture partner for the group s life insurance business, Life Healthcare s investment of 26% in Max Healthcare, and later the equalization of its stake in the business, and most recently, the mega-restructuring of MFSL into three new listed companies. Mr. Talwar has a wealth of experience in corporate finance and investment banking, and spent 24 years in wholesale banking in Standard Chartered, ANZ Grindlays and Bank of Nova Scotia. (ii) Mr. Jatin Khanna Chief Financial Officer Mr. Jatin Khanna is the Chief Financial Officer of the Company and is involved in fund raising, mergers and acquisitions, corporate restructuring, investor relations and financial controlling & reporting. He also contributes actively to formulation of corporate and business strategy for the group. He has been with Max group for over 11 years. Mr. Khanna has over 15 years of experience in the field of raising equity and structured financing, acquisitions, divestitures, investor relations, corporate restructuring, financial planning & analysis and financial & management reporting. Prior to joining the Max group, he worked with HCL Infosystems Ltd. At Max, he has been felicitated with the Chairman s award in recognition of his outstanding contribution and has 168

169 also been recognized as an exemplar for upholding Max Values in the area of Capital Management for many seminal transactions, which continues with the recently implemented demerger, the acquisition of two hospitals in NCR, reset of joint-venture arrangements with partners and many more. Mr. Khanna is a Chartered Accountant and holds a Bachelor s degree in Commerce. The Company also sponsored a Post Graduate Program in Management for Senior Executives from Indian School of Business, Hyderabad (ISB) for him. (iii) Mr. V Krishnan Company Secretary Mr. V. Krishnan has more than 25 years of rich experience in company secretarial, compliance and corporate governance matters. He is associated with the Max group since June 1, He has made significant contributions in establishing joint ventures, mergers & acquisitions and business restructuring of the Max group. He is a fellow member of the Institute of Company Secretaries of India. B. Max Healthcare Institute Limited (i) Mr. Rajit Mehta Managing Director & CEO Mr. Rajit Mehta, is the Managing Director & CEO of MHC, a leading private healthcare company in India and is a member of its board of directors. He is also a non-executive director at Max Life Insurance Company Limited and is a trustee of the Max India Foundation the CSR arm for the Max group of companies. As the Managing Director & CEO of MHC, Mr. Mehta provides strong leadership in helping MHC in achieving its vision of being the most admired healthcare company in India known for clinical and service excellence. Besides leading the operations of the company, he is also currently engaged in leading an important transformation journey at MHC, including critical growth projects, enabling MHC to become a preferred nursing employer, optimization of processes and establishing a strong culture of clinical excellence and patient centricity. Mr. Mehta was a founder member of Max Life Insurance Company Limited ( MLIC ), since October 2000 and has been instrumental in helping it become an admired, profitable and well run company. During his tenure in MLIC, he undertook additional responsibilities as the Chief Transformation Officer which provided oversight on execution of key initiatives; designing and implementing new work systems; aligning key stakeholders; rationalising the cost structure to improve profitability; and laying down a comprehensive change management agenda. During this period, MLIC not only doubled its market share but also seamlessly transited to a new brand identity. Mr. Mehta was also instrumental in building a strong cadre and ethos of human capital as the founder HR director of MLIC by recruiting and retaining a strong management team, creating a positive work environment and culture and ushering "best-in-class" HR practices. Under his leadership, MLIC also progressed it's Quality & Service Excellence journey. This included putting a service blueprint in place, implementing a comprehensive outsourcing strategy to impact customer experience and cost and embedding the MPEF framework in the business. As per the latest customer experience survey, MLIC is now ranked no. 2 in terms of overall customer loyalty, amongst all insurance companies. Mr. Mehta has also mentored the setting up of the Learning & Development Centre of Excellence. Mr. Rajit Mehta has played a strategic role in helping MLC expand its distribution footprint across India including facilitating a project to "Revamp Sales processes". The project culminated in Mr. Mehta co-authoring a book titled "Growth Leadership Practices at Max Life". Prior to Max Life Insurance, Mr. Mehta was the Director Personnel at Bank of America and has also worked with HCL. His total experience spans nearly 3 decades. Mr. Mehta is a graduate in Commerce, post graduate in human resources and has also attended an advanced management program at INSEAD France. He is the recipient of the Chairman's Award for Excellence at MLIC. (ii) Mr. Yogesh Sareen 169

170 Senior Director and Chief Financial Officer Mr. Yogesh Sareen, member of the Institute of Chartered Accountants of India, started his career in the industry with Ranbaxy Laboratories in 1988 and had a 19 year long stint across various positions in various countries. He was involved in almost every facet in finance - right from operational finance to corporate finance, treasury, strategy, financial planning and so on. Mr. Yogesh Sareen joined MHC in January 2012 as the Chief Financial Officer. Before joining MHC, he was with Fortis Healthcare as CFO, where he built a robust Finance and Accounting Function in his stint of 3 and half years. As a member of senior leadership team he has been directly involved in guiding the strategy and execution of the group's business plans in the healthcare domain. (iii) Ms. Ruchi Mahajan Vice President Secretarial Ms. Ruchi Mahajan a Fellow Member of the Institute of Company Secretaries of India with more than 15 years of rich and diversified experience in secretarial functions, legal affairs, compliance management and liaisoning assignments. She joined MHC in March, Prior to this, she was leading the secretarial function for Fortis Healthcare Limited and she has also worked with companies like Panacea Biotec Limited, IEC Softwares Limited and DCM Limited. She is a keen analyst with professional and practical approach and exceptional relationship management skills. She has been fairly successful in setting up secretarial function in various organizations as well as establishing its credibility. She has in-depth knowledge of compliances relating to corporate laws, listing, corporate governance norms, foreign exchange management, SEBI related regulations, various capital raising processes like rights issue, euro issues and various compliances related to conducting board meetings and annual general meetings and compliances of companies incorporated outside India. She proactively works along with the business to ensure compliance. She was pivotal in successfully completing various landmark acquisitions in the healthcare domain including the finalization of funding model for acquisition. C. Max Bupa Health Insurance Company Limited (i) Mr. Ashish Mehrotra Managing Director & Chief Executive Officer Mr. Mehrotra is the Managing Director and Chief Executive Officer (MD&CEO) of Max Bupa. He is responsible for fortifying its portfolio, and creating long-term value in a high potential health insurance market. Mr. Mehrotra has over two decades of extensive banking experience, where his last role was of Managing Director and Head for the Retail division of Citibank in India. In his previous assignment at Citibank, Ashish played a pivotal role in enabling the bank to gain a leadership position in the wealth management business in India. Mr. Mehrotra started his career with Citibank and led several key portfolios in the company including Consumer Assets Head, Business Banking Head and Head for Mortgage Business. Under his leadership, Citibank entered into several productive strategic partnerships to complete the insurance product strategy and digitization of sales processes. He also reengineered Citi at Work and emerging affluent segment businesses to attain higher profitability and operating efficiency. He has several accolades to his credit. Under his leadership, Citibank was awarded the Best Retail Foreign Bank by Dun & Bradstreet in 2013 and He also led the creation of unique distribution architecture for consumer banking that was adapted by Asian and Middle East and recognized by The Asian Banker. Mr. Mehrotra holds a Bachelor s degree in business management and an MBA. 170

171 (ii) Mr. Rahul Ahuja Chief Financial Officer Mr. Rahul Ahuja moved to Max Bupa in June 2015 from Max India. He joined Max India in March 2012 as Group Financial Controller and became its CFO in August 2014, he has made significant contributions towards building a strong controllership and finance function at Max India. He brings diverse experience and wide domain expertise built over 19 years in Corporate Banking, Financial Services and Telecom. Prior to joining Max India, he was the Chief Financial Officer at Tulip Telecom Limited where he was responsible for Funding, Treasury & Banking, Revenue Assurance, Payments, Internal Audit, Investor Relations and Compliance. Rahul has had diverse experience in the Financial Services sector; having worked at Barclays Securities, Standard Chartered Bank and GE Capital. He holds a graduate degree in Commerce and is a qualified Chartered Accountant. (iii) Rajat Sharma Company Sectary Rajat holds MBA degree from MDI and is also an associate member of the Institute of Company Secretaries of India, with over 11 years of diverse experience in the areas of legal, corporate law and company management services. He has worked across organizations like Emerald Lands, Vatika limited etc. D. Antara Senior Living Limited (i) Ms. Tara Singh Vachani MD & CEO The MD & CEO of Antara Senior Living, Tara Singh Vachani holds a thorough understanding of senior living. She is driven by the passion to create an enriching and fulfilling lifestyle for seniors that is unique to India. Her knowledge is backed by over three years of extensive research of senior living communities in India and Internationally. Before venturing into senior living, she worked with the corporate development team at MFSL, prior to its demerger. She has also been actively engaged in philanthropy through her involvement with Max India Foundation, the corporate social responsibility arm of the Max group. She has a diverse academic background and learning. She majored in politics and South Asian studies at the National University of Singapore followed by courses in strategy management at the London School of Economics and hospitality business strategy and management at Ecole hotelier de Lausanne, Switzerland. Tara Singh Vachani is the youngest child of Mr. Analjit Singh, a well-known business leader and visionary. The idea of caring is close to her heart and Antara for her is the altruistic coming together of enterprise and the joy of doing something meaningful for the seniors of our country. (ii) Mr. AVK Rao Director, Finance & Accounts Mr. AVK Rao is a qualified Chartered accountant with over 20 years of experience in a finance role. He has earlier worked for DCL Polyesters, Mattel Toys, Ballarpur Industries, Daksh and Taj Hotels. His last venture was with Premier Inn India Private Limited as the Chief Financial Officer. In his assigned role, Mr. AVK Rao is responsible for all the Finance aspects of Antara - Financial planning, Funding, Operational finance, Business Modeling and Accounting. He plays a key role in the growth and strategy of Antara as a whole. (iii) Ms. Deepa Sood 171

172 Legal Counsel - Antara Senior Living Limited Ms. Deepa Sood spearheads legal compliance and secretarial at Antara. An LLB from Delhi University, Associate Company Secretary from ICSI & Bachelor of Commerce, she has over 15 years of experience in the area of Compliances and Legal. In her last assignment, she was associated with Akme Projects Limited and in this role she was working as Head Legal and compliance. Prior to this she was associated with Hemant Sahai Associates, Dua Associates, DSK Legal, Chatterji Associates and Hindustan Lever. She is a daring futurist who can see beyond words and always finds loopholes that no one can see. E. Max Skill First Limited (i) Rajender Sud Chief Executive Officer Rajender Sud, Chief Executive Officer is a founder team member of Max Life Insurance Co. Ltd. In this role, he has been instrumental in setting up the Max Skill First to transform sales and service training at Max Group. Max Skill First was created to deliver distinctive and lasting improvement in frontline sales and service through best in class content and methodology, delivered by high-quality trainers and subject matter experts using technology to personalize learning at high effectiveness. In his last role, he was the Director & Head New Initiatives, heading the Learning & Development (L&D) CoE at Max Life. Prior to this, he was heading Agency work-force at Max Life of 4200 plus employees and 30,000 Agents-Advisors, generating a revenue of Rs 1400 Crore annually, across 125 cities in India until transitioning to his new role. Rajender is credited with co-creating the agency strategy including sales processes, governance framework, organization design and relevant compensation system. His significant contributions include customizing and developing appropriate Branch Office Leadership Development (BOLD) model to produce superior outcome. These efforts culminated him in helping capture & standardize best sales leadership practices required to run a world class Agency Channel in India. He has also made significant contribution in building the human capital in the organization and has developed strong collaboration and partnership with Human Resource function to institutionalize assessment, development, coaching and skilling practices aimed at strengthening the talent pool of the Agency work-force by partnering with Consulting Companies such as SHL, Gallup, Erewhon Consulting & McKinsey. Prior to joining Max Life Insurance, he gained diversified sales experience at Eureka Forbes Ltd, Chelsea Products, Atco Products and ION Exchange Ltd. Rajender is a Graduate with B.A. (Hons) in Economics from Delhi University and has also completed a Business Leaders Program from IIM, Kolkata. He is a Chairman Award winner and the Leading Manager Award winner of year 2002, New York Life Insurance Sales Conference held in New York, USA. (ii) Sanket Srivastava Deputy Manager- Legal & Company Secretary - Max Skill First Limited Mr. Sanket Srivastava spearheads legal compliance and secretarial at Max Skill First. He holds LLB from Dewan Law School, Associate member of Institute of Company Secretaries of India, Master s Degree in Business Law from National Law School of India University & Bachelor of Commerce from Delhi University. He has 5 years of experience in the area of Compliances and Legal. In his last role, he was associated with Axtria India Pvt. Ltd. and has prior experience of working as a company secretary with Sperry Plast Ltd and HFCL Group. Prior to this he was Management Consultant with HCL ltd. He has strong analytical skills and sound knowledge of legal and secretarial procedures. (7) Employees 172

173 With effect from the Effective Date of the Scheme of Arrangement: i. All employees of the Demerged Undertaking have become employees of Max India, without any interruption of service and on the basis of continuity of service and on the same terms and conditions as those applicable to them with reference to MFSL, on the Effective Date. The services of such employees with MFSL up to the Effective Date shall be taken into account for the purposes of all benefits to which the said employees may be eligible, including for the purpose of payment of any retrenchment compensation, gratuity and other terminal benefits. ii. iii. With regard to provident fund, employee state insurance contribution, gratuity fund, superannuation fund, staff welfare scheme or any other special schemes or benefits created or existing for the benefit of such employees of the Demerged Undertaking, Max India shall stand substituted for MFSL for all purposes whatsoever, including with regard to the obligation to make contributions to the said funds and schemes, in accordance with the provisions of such schemes or funds in the respective trust deeds or other documents. The existing provident fund, employee state insurance contribution, gratuity fund, superannuation fund, the staff welfare scheme and any other schemes or benefits created by MFSL for such employees of the Demerged Undertaking shall be continued on the same terms and conditions or be transferred to the existing provident fund, employee state insurance contribution, gratuity fund, superannuation fund, staff welfare scheme, etc., being maintained by Max India without any separate act or deed/ approval. Pending such transfer, the contributions required to be made in respect of such employees shall continue to be made by Max India to the existing funds maintained by MFSL. 173

174 PROMOTERS The details of our Promoters are given below: 1. Mr. Analjit Singh Mr. Analjit Singh is the founder and chairman emeritus of the Max group, chairman of MVIL and chairman of Antara. As founder and chairman emeritus, Mr. Analjit Singh provides guidance and vision to the group and its executive management. An industry statesman, he was awarded the Padma Bhushan, one of India s top civilian honours in He is also the chairman of Vodafone India, and is on the board of directors of Tata Global Beverages and Sofina NV/SA, Belgium. He has significant interests in real estate in India and lifestyle related ventures in the Western Cape, South Africa, pertaining to viticulture, wine making and hospitality. Mr. Analjit Singh is a member of the founder, executive board of the Indian School of Business (ISB), India s top ranked B-School, and has served as chairman of board of governors of the Indian Institute of Technology (IIT), Roorkee, India s most prestigious engineering college. He was awarded the Ernst and Young Entrepreneur of the Year Award (Service Category) in 2012 and the US India Business Council Leadership Award in In 2014, he was awarded with Spain s second highest civilian honour, the Knight Commander of the Order of Queen Isabella. He is an alumnus of Doon School and Shri Ram College of Commerce (SRCC), Delhi University, and holds an MBA from Boston University. In 2015, he was conferred the degree of Honorary Doctorate by Amity University in recognition of his unique achievements in the fields of business, governance and education. He also serves as the Honorary Consul General of the Republic of San Marino in India. 2. Mrs. Neelu Analjit Singh Mrs. Neelu Analjit Singh is the wife of well known industrialist Mr. Analjit Singh, promoter of Max India group. She is the chief executive officer of New Delhi House Services Limited since September, She holds directorships in various companies belonging to Mr. Analjit Singh. Mrs. Neelu Analjit Singh did her schooling from Welham Girls School, Dehradun and graduation in political science from Lady Shriram College, New Delhi. She has an eye for art and has an extensive medical knowledge. 174

175 3. Ms. Piya Singh Ms. Piya Singh has completed her schooling from Vasant Valley School, New Delhi, one of Delhi s premier high schools in the year In 2003, she completed a diploma in childcare education from Royal Masonic School for Girls, Rickmansworth, UK and also completed a fortnight trainingpprogram at Singapore Health Services Pte. Ltd., Singapore. Ms. Piya Singh started her career in 2003 from Max Medcentre, Panchsheel Park and joined Max Super Speciality Hospital, Saket in Aug Since 2003 till date, Ms. Piya Singh is associated in the functioning of various departments, including, pediatric department, orthopedics, cardiology/ cath recovery/ctvs ICU, neurology/ NSICU - neuro stroke ICU, accident and emergency, obstetrics and gynecology and OT/surgical ICU. 4. Mrs. Tara Singh Vachani The chief executive officer and managing director of Antara. Tara Singh Vachani holds a thorough understanding of senior living. She is driven by the passion to create an enriching and fulfilling lifestyle for seniors that is unique to India. Her knowledge is backed by over three years of extensive research of senior living communities in India and internationally. Before venturing into senior living, she worked with the corporate development team at MFSL, prior to its demerger. She has also been actively engaged in philanthropy through her involvement with Max India Foundation, the corporate social responsibility arm of the Max group. She has a diverse academic background and learning. She majored in politics and South Asian studies at the National University of Singapore followed by courses in strategy management at the London School of Economics and hospitality business strategy and management at Ecole hotelier de Lausanne, Switzerland. Tara Singh Vachani is the youngest child of Mr. Analjit Singh, a well-known business leader and visionary. The idea of caring is close to her heart and Antara for her is the altruistic coming together of enterprise and the joy of doing something meaningful for the seniors of our country. 5. Mr. Veer Singh Veer is the founder of Vana Retreats. Veer studied at St. Columbas School. He went to Harrow School in England for his 175