About Fortis Healthcare Ltd

Fortis Healthcare Limited (FHL) is one of the largest healthcare services providers in India with 27 hospitals, ~4,500 operational beds and over 426 diagnostics centres as of 31 March, 2023. The Company offers a full spectrum of integrated healthcare services ranging from clinics to quaternary care facilities and a wide range of ancillary services to patients in areas such as cardiac care, orthopedics, neurosciences, oncology, renal care, gastroenterology and mother and child care. They are delivering quality healthcare services to patients in modern facilities using advanced technology. It also has presence in Dubai, Mauritius and Sri Lanka. SRL Limited, a subsidiary of FHL is primarily involved in providing diagnostics services and is amongst the leading diagnostics chains in India with a significant market share in the organized diagnostics segment. FHL currently owns a fully diluted stake of 56.6% in SRL. Fortis Healthcare Ltd was incorporated on February 28, 1996. The company commenced their commercial operation by setting up the Fortis Heart Institute and Multi-Speciality Hospital at Mohali in the year 2001. In December 2002, International Hospital Ltd became a board controlled subsidiary of the company. In August 2003, Fortis Hospital in Amristar was inaugurated. In October 2003, the company executed an agreement with Seth Jessa Ram and Bros Charitable Hospital Trust for the operation and management of Jessa Ram Hospital, New Delhi and Fortis Hospital in Noida was commissioned in August 2004. In September 28, 2005, the company acquired 90% interest in Escorts Heart Institute & Research Centre Ltd that owns and operates three hospitals in north India and operates a fourth hospital in collaboration with the Government of Chhattisgarh. In January 2006, the company signed an agreement with Sunrise Medicare Private Ltd for the operation and management of Fortis La Femme, New Delhi. They also signed and agreement with Khalil Public Welfare Trust for the operation and maintenance of Khyber Medical Institute, Srinagar. In March 20, 2006, the company acquired 99.86% interest in International Hospital Ltd and 100% interest Oscar Bio-Tech Private Ltd from the Promoter Group for total consideration of Rs 301.5 million and Rs 30.5 million respectively. In February 14, 2007, the company acquired 100% interest in Hiranandani Healthcare Pvt Ltd for consideration of Rs 10 million. Hiranandani Healthcare Pvt Ltd had an agreement with Navi Mumbai Municipal Corporation to develop a super-specialty hospital in West India. During the year 2007-08, the company successfully completed an initial public offer of 45,996,439 equity share of Rs 10 each at a premium of Rs 96 per share. International Hospital Ltd and Oscar Investments Ltd acquired 48.83% and 13.34% stake respectively in Malar Hospitals Ltd for a total consideration of approx Rs 35 crore. Also, they launched Fortis Escorts Hospital in Jaipur, which focus on Cardiac Sciences, Neuro Sciences, Renal Sciences and Gastrointestinal diseases. During the year 2008-09, Fortis Healthcare International Limited (FHIL) was incorporated as a wholly owned step-down subsidiary of the company. Through this subsidiary, the company acquired 28.89% stake in Medical and Surgical Centre Ltd, a company that owns Mauritius's largest private hospital 'Clinique Darne' which was rechristened as 'Fortis Clinique Darne'. In January 2009, the company became a majority stake holder in Lalitha Healthcare Pvt Ltd, Bangalore consequent to conversion of preference capital and fresh infusion of equity capital and the subsidiary company was renamed as Fortis Hospital, Seshadripuram. In June 18, 2009, the company incorporated a wholly owned subsidiary viz. Fortis Hospitals Ltd. The a main objects the subsidiary includes purchase, lease or otherwise acquire, establish, maintain, operate, run, manage or administer hospitals, medicare, healthcare, diagnostic, health aids and research centre. In August 24, 2009, the company through a wholly owned subsidiary, Fortis Hospitals Ltd entered into a 'Business Transfer Agreement' with Wockhardt Hospitals Ltd for acquisition of 10 Hospitals (including two under construction) for an aggregate sum of Rs. 90,900 lakh. They completed the acquisition of 10 Hospitals (including 2 under construction) together with the acquisition of 10,250 equity shares of Kanishka Housing Development Company Ltd on December 17, 2009 from Wockhardt Hospitals Ltd, on a going concern basis. International Hospital Ltd, a wholly owned subsidiary of the company increased their shareholding from 49.86% to 50.02% in the equity share capital of Malar Hospitals Ltd (MHL) by purchase of 30,000 equity shares of MHL from open market, thereby making MHL as a subsidiary International Hospital Ltd with effect from October 01, 2009. In March 11, 2010, the company entered into a definite agreement with TPG Capital, one of the leading private investment firms for acquiring the 23.9% stake in Parkway Holdings Ltd, Singapore, one of the Asia's healthcare service provider. During the financial year 2012-13, Fortis Healthcare launched two new hospitals in India, one in Kangra, Himachal Pradesh and the other in Dehradun, Uttarakhand. In May 2013, the Issue Committee of the Board of Directors of Fortis Healthcare allotted 34,993,030 equity shares of the company at an issue price of Rs. 92 per equity share, aggregating to Rs. 3,219.4 million, under the institutional placement programme (IPP) undertaken by the company. During the month, Fortis Healthcare International Pte Ltd, a subsidiary of Fortis Healthcare Ltd divested its 64% stake in Dental Corporation Holdings Ltd (DC), Australia, to Bupa, for a consideration of Aus $ 276 million. In June 2013, the Issue Committee of the Board of Directors of the company allotted 18,833,700 equity shares of the company to International Finance Corporation, on a preferential basis, at an issue price of Rs. 99.09 per equity share, aggregating to Rs. 1,866.2 million. Further, in June 2013, the company allotted 550 Foreign Currency Convertible Bonds (FCCBs) of USD 100,000 each to International Finance Corporation (IFC), on a preferential basis, at an issue price of USD 100,000 per FCCB, aggregating to USD 55 million. With the allotment of FCCBs coupled with the preferential allotment of equity shares and its participation in the Institutional Placement Programme (IPP), International Finance Corporation has made a total investment of USD 100 million. In August 2013, the company successfully launched and concluded the issue of its FCCBs amounting USD 30 million, which was listed on Singapore Stock Exchange. The conversion price of the FCCBs is Rs. 99.09 per Equity Share of the company. In September 2013, the company issued 3.74 million equity shares to Standard Chartered Private Equity Limited, for an aggregate consideration of Rs. 37 crore, on a preferential basis. In October 2013, Fortis Healthcare Ltd sold its 100% stake in Altai Investments Limited, the holding company for Quality Healthcare (QH), Hong Kong, to Bupa, for USD 365 million. In March 2015, Fortis Healthcare announced the sale of its Singapore hospital to Concord Medical Services (International) Pte Ltd (CCM), for a consideration of SGD 55 million with the deal being consummated in April 2015. In line with its stated strategy to focus on India, Fortis Healthcare in Q1 of FY 2016 completed the last of its international divestments i.e. RadLink and Fortis Surgical Hospital in Singapore for a sale consideration of SGD 166 million in total. In Q2 FY16, Fortis Healthcare increased its equity stake in SRL Limited taking its stake to 56% from 53.9% previously. It acquired a 3.1% stake from Sabre Partners Trust, Spring Healthcare (P) Limited and Spring Healthcare India Trust. In September 2015, Fortis Healthcare launched La Femme, a comprehensive and distinctive boutique hospital for women offering a holistic range of medical services catering to all stages of a woman's life, at Richmond Road, Bengaluru. Fortis La Femme has been conceptualised keeping in mind contemporary women and the multiple roles they play. During Q3 FY16, Fortis Healthcare acquired a 100% equity stake in Religare Health Trust Trustee Manager Pte Ltd, [a company incorporated in Singapore that acts as Trustee Manager to Religare Health Trust (RHT), of which the company is Sponsor]. Since the majority of the assets owned by RHT are operated by Fortis and its subsidiary(ies), in order to have a more focused approach towards them strategically, it is decided to align the Trustee Manager (RHTTM) of RHT with the Sponsor of RHT. In February 2016, Fortis Healthcare's Board of Directors approved the acquisition of 51% economic rights in Fortis Hospotel Limited (FHTL), a subsidiary of the Religare Health Trust (RHT). The net investment consideration for the transaction is estimated to be approximately Rs. 740 Crore (net of receipt of dividend). As a result of the majority acquisition of FHTL, it will become a subsidiary of Fortis and hence be consolidated with Fortis. The transaction will result in lower service fees .i.e. net business trust fees that Fortis pays to the RHT thereby positively impacting its operating profitability (EBITDA). The company in August 2016 announced the demerger of its diagnostics business and has since received a number of the required regulatory clearances. It filed a Composite Scheme of Arrangement and Amalgamation (demerger of diagnostics business) with the National Company Law Tribunal (NCLT), Chandigarh and has subsequently got approval from all shareholders and creditors of Fortis Healthcare, SRL Limited and Fortis Malar. In October 2016, the company completed the acquisition of 51% economic interest in Fortis Hospotel Limited (FHTL) from RHT Health Trust; resulting in a significant reduction in net BT costs - down 19% during the year. During the financial year 2016-17, Fortis Healthcare issued shares in lieu of the conversion notice received by it from the FCCB holders for its USD 85 million equivalent bonds i.e. USD 30 million bonds listed on the SGX and USD 55 million bonds held by the International Finance Corporation (IFC). The resulting capital post this conversion stands at approx. 51.7 Crore equity shares (excluding outstanding ESOPs) with a face value of Rs 10 per share. Post the above conversions, there are no further outstanding FCCBs /other convertible instruments. Pursuant to the High Court judgement on the Promoters - Daichi Sankyo case, Mr Malvinder Mohan Singh, Executive Chairman and Dr Shivinder Mohan Singh, Non-Executive Vice Chairman have resigned from the Board. The resignation was accepted by the Board on 13 February 2018. On 27 March 2018, the Board of Directors of Fortis Healthcare (FHL) approved the demerger of its hospitals business (Fortis Hospitals) into Manipal Hospital Enterprises Private Limited. The Board has also approved sale of its 20% stake in SRL Limited (SRL) to Manipal Hospitals. The resultant entity Manipal Hospitals will be a publicly traded company listed on NSE and BSE. The remaining FHL will be an investment holding company with 36.6% stake in SRL. As part of the proposed transaction, Dr. Ranjan Pai and TPG will invest Rs 3900 crore into Manipal Hospitals. The funds will be utilized by Manipal Hospitals to finance the acquisition of 50.9% stake in SRL (20.0% from FHL and 30.9% from other investors for which discussions are currently underway). In addition, the investment will support the proposed acquisition of hospital assets owned by RHT Health Trust (RHT) and the growth of the hospitals and the diagnostics businesses. Manipal Hospitals, part of Manipal Education and Medical Group (MEMG), is owned by Dr. Ranjan Pai and has been backed by TPG, a leading global alternative asset firm and experienced healthcare investor, since 2015. It is the 4th largest hospital chain in the country with a strong presence in South India. On 17 April 2018, Fortis Healthcare received an unsolicited non-binding expression of interest from Fosun Health Holdings Limited, a wholly owned subsidiary of Fosun International Limited (Fosun International), a company listed on the Hong Kong Stock Exchange with a proposal of primary infusion at a price upto Rs 156/share, subject to due diligence to be completed within three weeks, upto a total investment of USD 350 million (including a preliminary investment of upto Rs 100 crore) and further subject to certain conditions as mentioned in the offer letter. On 19 April 2018, Fortis Healthcare received an unsolicited non-binding expression of interest from Radiant Life Care Private Limited with a proposal for making investment and/or re-structuring the company subject to certain conditions as mentioned in the offer letter. On 19 April 2018, Fortis Healthcare announced that the company has received binding offers from Manipal/TPG consortium and Munjal & Burman family offices and has also received non-binding expression of interests from IHH Healthcare Berhad and Fosun Health Holdings Limited. The Board of Directors of Fortis Healthcare Limited have approved the appointment of an expert advisory committee to evaluate binding offers. The Board has over the last many months been involved in deliberations for a potential transaction with the objective of partnering with strong players that would help the company strategically and financially and towards this end has engaged with several potential investors before entering into a transaction with Manipal/TPG consortium on 27 March 2018. In exercise of its fiduciary duties, the Board has decided to evaluate the binding offers and has appointed an advisory committee and also directed Standard Chartered Bank (SCB) to assist the committee. The Board of Directors of Fortis Healthcare at its meeting held on 10 May 2018 decided by majority to recommend the binding offer of the Hero and Burman consortium. The entire exercise involved a process that witnessed deliberation and recommendation by an Independent Expert Advisory Committee (EAC) comprising Mr Deepak Kapoor, Former Chairman of PWC (India) and Mr Lalit Bhasin, Chairman of the Indian Society of Law Firms along with two reputed financial advisors i.e. Standard Chartered Bank and Arpwood Capital and Cyril Amarchand Mangaldas who were the legal advisors. The Board of Directors of Fortis Healthcare Limited received a letter from Hero Enterprise Investment Office and the Burman Family Office (Munjal-Burman Consortium) on 28 May 2018 enabling the Board to initiate a fresh bidding process. As a result, Munjal-Burman Consortium's offer accepted by the Board on 10 May 2018 stands mutually terminated and the Board in its meeting held on 29 May 2018 decided to initiate a fresh, time-bound process to optimize the company's and shareholders' short and long term interests (Process). Based on the suitability of the offers evaluated earlier, the Board decided to invite 3 (three) of the bidders namely Munjal-Burman Consortium, TPG-Manipal Consortium, and IHH Healthcare Berhad (Invited Bidders) to participate in the Process no later than 5 p.m. IST on 31 May 2018. Other interested parties (Other Bidders) were also invited to submit an Expression of Interest (EOI) no later than 5 p.m. IST on 31 May 2018. On 30 May 2018, Fortis Healthcare International Limited, a wholly owned subsidiary of Fortis Healthcare Limited, sold off 18.2 million units of RHT Health Trust, an associate of the company. The Board of Directors of Fortis Healthcare at its meeting held on 13 June 2018 approved withdrawal of Composite Scheme of Arrangement and Amalgamation between the Company, Fortis Malar Hospitals Limited (FMHL), SRL Limited (SRL) and their respective shareholders and creditors. During 2019, Fortis completed the RHT Health Trust transaction in January 2019. With this deal, the Company acquired the entire portfolio of the India assets held by RHT Health Trust, comprising 12 clinical establishments, 2 operating hospitals, 1 clinical establishment under construction as well as 4 greenfield clinical establishments. It launched a State-of-the-art Cancer Institute at Fortis BG Road, a dialysis centre at Fortis Vasant Kunj, inaugurated the department of Physiotherapy at FEHI, a next generation Cath Lab and a comprehensive Mother & Child Care wing at Fortis Faridabad and a day care wing at Fortis Noida. During the year 2019-20, Fortis Healthcare International Limited (FHIL) a wholly owned subsidiary of the Company has consummated sale of the entire shareholding representing 28.89% of the total issued and paid up capital, held by FHIL in The Medical and Surgical Centre Limited on July 8, 2019. In October 2020, the Company commissioned a 250 bedded multispecialty facility at Arcot Road, Chennai. In March 2021, the Company launched a Sports Injury Speciality Clinic, to treat sports or exercise related injuries and conditions. In January 2021, an Endoscopy Unit was inaugurated at Fortis Hospital, Bannerghatta Road, Bengaluru, giving a major ?llip to hospital's Medical Gastroenterology Department. As of March 31, 2020, the Company had a network of 36 healthcare facilities (including projects under development) in India and abroad with approximately 4,000 operational beds including beds under the O&M model. As of March 31, 2021, the Company had a network of 27 healthcare facilities in India with approximately 4,100 operational beds including beds under the O&M model. During the course of FY 2020-21, Company launched new medical programmes and clinical services at its various facilities across the country. A Home Isolation Support Programme for COVID -19 positive patients was launched by Forits Memorial Research Institute (FMRI) Gurugram, Fortis Anandapur, Kolkata, launched the city's only Dual Source Dual Energy Somatom Drive CT scanner, which is 24 times faster than any other CT scan machine. Fortis Hospital, Mulund, introduced Central Mumbai's ?rst Tesla Advanced Biomatrix MRI to ramp up the Radiology offerings. Fortis Hospital, BG Road, Bengaluru installed the ?rst state of the art Biplane Cath lab in the State of Karnataka which will provide advanced care for neurovascular disorders. During the year 2021-22, Sunrise Medicare Private Limited was struck-off from Ministry of Corporate Affairs on August 17, 2021. SRL Limited, subsidiary company, has acquired balance 50% stake in joint venture DDRC SRL Diagnostics Private Limited (DDRC SRL) in terms of Share Purchase Agreement dated March 24, 2021 and thereby DDRC SRL became a stepdown subsidiary of the Company effective on April 5, 2021. As of March 31, 2022, the Company had a network of 26 healthcare facilities in India with approximately 4,300 operational beds including beds under the O&M model. During the year 2021-22, the Company operationalised 127 new beds across units including Vadapalani, Shalimar Bagh, Jaipur, Ludhiana and Amritsar. During the year 2022-23, Company strengthened its prime medical programs in key facilities across India with addition of several eminent clinicians in Cardiac Sciences, Oncology, Neuro-Sciences, Gastroenterology and Orthopedics. During the year 2023, a Hepatology Clinic was launched at Fortis Escorts, Okhla, New Delhi. A High Dose Radiolodine Therapy Isolation Ward and a Preventive Oncology Department came up at Fortis BG Road, Bengaluru. A Lung Transplant Clinic and Pulmonary Medicine Unit was launched at Fortis Escorts, Jaipur, whilst the Fortis Institute of Blood Disorders was commissioned at Fortis Hospital, Mulund. In 2023, the Company acquired a 350-bedded hospital in Manesar, Gurugram. A SOMATOM Drive with Dual Source Technology CT, Mako Robotic Technology for joint replacements, Urology BK Fusion Ultrasound, O-arm surgical imaging system and a high-end Cath Lab were introduced at Fortis BG Road, Bengaluru. CT Simulator Machine for management of Cancer patients was commissioned at Fortis Memorial, Gurugram, while two Heart Lung Machines were acquired for Fortis Escorts, Okhla. Fortis Amritsar received a Stealth StationTM S8 Surgical Navigation System for neurosurgeries while Fortis Shalimar Bagh, New Delhi, acquired a DaVinci Xi robotic System. A 128-slice CT scanner was operationalised at Hiranandani Hospital, Vashi - A Fortis Network Hospital. It launched a 200-bedded multi-specialty hospital in Greater Noida. Further a 12 bedded chemotherapy, Cancer Daycare Centre, was launched at Defence Colony, New Delhi. Fortis Medical Centre was opened in Srinagar, Jammu & Kashmir during March 2023. Fortis Hospitals Limited (FHsL), International Hospital Limited (IHL), Fortis Hospotel Limited (FHTL) and Agilus Diagnostics Limited are considered as Material Subsidiaries as on April 01, 2023.

Fortis Healthcare Ltd Chairman Speech

Dear Shareholders,

I am pleased to present the Annual Report 2022-23 of your Company. Over the last two years, the Company has displayed resilience in addressing challenges and agility in adapting to a rapidly transforming healthcare ecosystem, driven by emerging technologies. We have consciously revisited our processes and systems to ensure that the organisation creates sustainable growth and delivers value to stakeholders. A high standard of corporate governance and transparency has been the cornerstone of our success.

Our hospital business performed exceedingly well across all financial and operating parameters. It now contributes to more than 75% of our overall earnings (EBITDA). The hospital business is well-positioned and has demonstrated healthy operational efficiency with occupancy touching 67.1%. In FY 23, hospital business revenue rose 19.8% and margins expanded to 17.6% from 15.8% in FY 22. Cash flow from operations for FY 23 stood at Rs. 583 Crores and our net debt to equity ratio stood at a healthy 0.04x. Our finance cost for the year declined by 12.1% due to lower borrowing costs as well as reduction in borrowings.

Our commitment to patient care and safety, strong emphasis on clinical excellence and harnessing updated medical technologies for improved outcomes remain steadfast. The Company's strategic focus on core specialties (Oncology, Neurosciences, Cardiac Sciences, Renal Sciences, Orthopaedics and Gastroenterology) resulted in a healthy growth of over 31% YoY, contributing over 61% to overall revenue. The Company also invested in developing clinical talent across specialties, inducting 159 senior clinicians across the country with a healthy 8% increase.

We continued to strengthen the business and make growth investment by adding beds, expanding medical programs, and pursuing a brownfield expansion strategy, which will add over 1,400 beds within the next 2 to 3 years across Gurgaon, Mohali, Shalimar Bagh, BG Road and Noida among others. Your Company's capex for the year was approximately Rs. 300 Crores, which went towards funding growth and expansion projects, including investments in medical equipment and bed addition.

Our proposed acquisition of Medeor Hospital in Haryana's Manesar in the National Capital Region with a potential bed capacity of 350 beds is an outcome of our strategic commitment to identify opportunities and enhance our geographic presence. Fortis also launched a 200-bedded multi-speciality hospital in Greater Noida, under an O&M agreement, during the year. The facility has modular OTs, advanced ICUs with NICU, advanced imaging services (MRI and CT), high-precision radiation oncology, an updated nuclear medicine unit and latest cardiac and interventional Cath Labs. The Company also extended its comprehensive cancer care program by commissioning the Fortis Cancer Institute at Defence Colony, New Delhi, during the last fiscal. As part of our ongoing portfolio rationalization strategy, in June 2023, we have signed definitive agreements for sale of our hospital at Vadapalani, Chennai, to Sri Kauvery Medical Care (India) Limited. Notably, we have invested approximately Rs. 1,302 crores in the hospital business since 2019, of which Rs. 790 cores went into replacing ageing equipment and Rs. 144 crores went into modernisation (i.e. fresh purchase of medical equipment such as MR Linac, Gamma Knife, Surgical and Ortho Robots and CT Simulators among others). Rs 368 crores was spent on bed expansion.

We remain keen to participate in the consolidation opportunities in the healthcare landscape. While our balance sheet allows us comfortable leveraging capacity, we may also look at raising capital so as to not miss out on larger growth opportunities that may present themselves. We are well positioned for our next phase of growth in order to create larger format facilities. This would enable us to draw higher operating leverage from the business. We are also progressing well on our portfolio optimisation strategy allowing us to reallocate capital from our non-core or underperforming assets to assets in our key geographic clusters.

We are working on an Electronic Medical Record (EMR) system, to be deployed across Fortis. This would enable us to streamline information flow, increase accessibility to healthcare records and provide a superior patient experience, which has been our constant focus. We have also revamped your Company's website and MyFortis app to enable a seamless interface between hospitals and our diagnostics arm, enabling a one-touch point for patients for appointments, billing, medical history, follow-up, etc. Revenues from digital channels including website, mobile application and digital campaigns witnessed robust growth of 35% in FY 23. These contributed 23% to overall hospital revenues in FY 23 versus 21% in FY 22.

As far as the legal case about IHH's open offer to Fortis' shareholders is concerned, vide judgment dated September 22, 2022, the Hon'ble Supreme Court of India disposed of all petitions before it with certain directions including that the Hon'ble High Court of Delhi may consider issuing appropriate process and appointing forensic auditor(s) to analyse the transactions entered into between Fortis, RHT Health Trust and other related transactions. Fortis is opposing the application filed in the High Court for appointment of forensic auditor. Based on legal advice, we believe that the Status Quo Order dated December 14, 2018 of the Supreme Court no longer exists and we are pursuing the implications of this with the concerned authorities.

As part of our avowed brand transformation journey, the flagship entity of our diagnostic chain w.e.f May 31, 2023 is named ‘Agilus Diagnostics Limited'. Agilus is a portmanteau of ‘Agile' and ‘Us' and is inspired from the Latin term ‘agilis' which means ‘agility'. The new brand name is in consonance with our commitment to deliver exceptional diagnostic services with speed and accuracy. The focus areas for Agilus Diagnostics Limited include growth and geographic penetration with strategic acquisitions. It is already the largest lab network in the country. As part of the network expansion strategy and improving reach and access for patients, Agilus Diagnostics added 1,100 plus customer touch points (CTPs) during the year, taking the total network to 3,700 plus CTPs.

On the financial performance front, FY 23 total revenue from the diagnostics business understandably declined, largely because of the COVID revenue (as a percentage of total revenue) declining from 28% in FY 22 to only 4% in FY 23. But non-COVID business grew 12% in FY 23. The revenue from the preventive business portfolio grew 29% in FY 23, and revenue from genomics, which is a thrust area of Agilus Diagnostics, rose 41% in FY 23 compared to FY 22.

I am pleased to state that for the first time since the Company was listed, the Board has recommended a dividend of 10% of the face value. Of course, this is subject to shareholders' approval. This reflects the significant improvement in our performance and underscores the transformational journey of the Company in the last few years. Agilus Diagnostics Limited, has also proposed a dividend to its shareholders, for the second year in a row.

I take this opportunity to inform you regarding the changes in the Board of Directors. As you may be aware, Dr Kelvin Loh relinquished his position on the Board post his resignation as IHH Healthcare's Managing Director and CEO. Mr. Farid Bin Mohamed Sani and Mr. Takeshi Saito have also resigned from the Board. I express my heartfelt appreciation for the support received from these individuals and wish them all the best. I also extend a warm welcome to the new Non-Executive Directors, Mr. Tomo Nagahiro, Mr. Mehmet Ali Aydinlar and Mr. Lim Tsin Lin. There is no change in the Board of Agilus.

In Conclusion

We look to the future with confidence. The lessons learnt over the last couple of years provide the wisdom for us to chart the roadmap ahead. The industry is poised for growth, government policies are supportive and we would like to play an active part in healthcare public policy formulation. I thank the Members of the Board, our clinicians, the Fortis and Agilus management, staff, and all frontline workers whose commitment to our vision and dedication to their roles has boosted the Company's performance. Above all, I thank all our shareholders for their continuing support and confidence on the Board and Management of the Company. Thank you!

Ravi Rajagopal

Chairperson

Dear Members,

Your Directors have pleasure in presenting herewith the Twenty Seventh Annual Report of your Company along with the Audited Standalone and Consolidated Financial Statements and the Auditors' Report thereon for the Year ended March 31, 2023.

The highlights of Consolidated Financial performance of your Company and its Subsidiaries are as follows:

The highlights of standalone financial performance are as follows:

(Rs. in Lakhs)

For the FY 23, the Company reported a consolidated revenue from operations of Rs. 6,298 Crores compared to Rs. 5,718 Crores reported for FY 22. Revenue from Hospital business stood at Rs. 5,107 Crores compared to Rs. 4,264 Crores reported during the corresponding year. Agilus Diagnostics Limited ("Agilus"), the diagnostic business of the Company, reported gross revenues of Rs. 1,347 Crores compared to Rs. 1,605 Crores in the previous financial year. Considering elimination of inter-company revenue (within the group), net revenue of Agilus was at Rs. 1,190 Crores compared to Rs. 1,453 Crores in FY 22.

The growth in hospital business was led by higher occupancy at 67% versus 63% in FY 22 and also due to 11.5% growth in ARPOB at Rs. 2.01 Crores compared to Rs. 1.80 Crores. The Company's focus specialties comprising oncology, gastroenterology, neurosciences, renal sciences, orthopaedics and cardiac sciences grew 31.5% YoY. Revenue from International business recorded growth of 97.9% in FY 23 to reach Rs. 425 Crores compared to Rs. 215 Crores in FY 22. Decline in diagnostics business revenue in FY 23 was primarily due to significant drop in covid volumes and associated revenues. Covid business revenues contributed 4% to overall diagnostic revenues in FY 23 compared to 28% in FY 22. However, Non Covid revenue witnessed 12% growth over FY 22.

The consolidated EBITDA of the Company stood at Rs. 1,163 Crores compared to Rs. 1,096 Crores for the previous corresponding year. EBITDA margin of the Company stood at 18.5% versus 19.2% in FY 22. Hospital business EBITDA for FY 23 was at Rs. 900 Crores (excluding the dividend income of 21.9 Crores) compared to Rs. 672 Crores reported for FY 22. EBITDA margin of the hospital business stood at 17.6% versus 15.8% in FY 22.

The diagnostic business of the Company reported EBITDA of

Rs. 263 Crores compared to Rs. 425 Crores reported in the previous corresponding year. EBITDA margin of the diagnostic business stood at 19.5% versus 26.5% (basis gross revenue) for the year FY 22. The decline in EBITDA was primarily due to higher covid mix in 2021-22 and significantly lower contribution of Covid revenues in 2022-23.

Profit after tax for FY 23 stood at Rs. 633 Crores compared to Rs. 790 Crores in FY 22. PAT of Rs. 633 Crores include exceptional gain of Rs. 74 Crores which pertains to reversal of impairment in an associate Company while PAT of Rs. 790 Crores in FY 22 includes an exceptional gain of Rs. 306 Crores on remeasurement of the previously held equity interest of Agilus in the DDRC SRL Diagnostics Limited*- JV, at its fair value post acquisition of the balance 50% stake in the said JV in April 2021.

The Company maintained a comfortable liquidity position with net debt of Rs. 330 Crores as on March 31, 2023 compared to Rs. 549 Crores as on March 31, 2022 (net debt to equity of 0.04x vs 0.08x, respectively). Gross debt of the Company stood at Rs. 703 Crores as on March 31, 2023 versus Rs. 966 Crores as of March 31, 2022.

All decisions at your Company are taken keeping in mind the patient at the center. Fortis' primary objective is to become the most trusted healthcare provider in India. Accordingly, your Company makes efforts to consistently improve the quality of all its services. Your Company has put together ultra-modern healthcare facilities equipped with best-in-class diagnostic and therapeutic technology and a competent team comprising of some of the finest clinical and paramedical talent available in the country. All the Fortis facilities, whether owned or operated by your Company follow globally accepted medical protocols and procedures and are focused on delivering the best possible clinical outcomes. Your Company's healthcare facilities provide high standards of secondary, tertiary and quaternary healthcare services in the specialties of Cardiac Sciences, Orthopaedics, Neurosciences, Oncology Sciences, Renal Sciences, Gastro Sciences and Mother and Child care.

During the year 2022-23, your Company further strengthened its prime medical programs in key facilities across India with addition of several eminent clinicians in Cardiac Sciences, Oncology, Neuro-Sciences, Gastroenterology and Orthopedics. The organisation invested heavily in high-end medical infrastructure and equipment including LINAC, PET CT, Gamma Knife, Da Vinci Surgical Robot, Cath Labs, Neuro-Navigation Systems and Ortho Robot.

Your Company continued to work on cluster synergies and focused its efforts towards developing synergies in Sales and Marketing, Supply Chain and Human resources. Also, several eminent clinicians were engaged with multiple units in a cluster, providing synergy to medical programs. The focus on cost transformation continued through our efforts on implementing a comprehensive program that aims to rationalise drugs and consumables cost and bring in capex efficiencies. Additionally, your Company endeavors to commission over 1,400 new beds over the next 2 to 3 years in existing facilities to leverage economies of scale – majority of bed additions are planned in Noida, BG Road, Anandapur, Mulund, Shalimar Bagh, FMRI, and Mohali.

The healthcare vertical of the Company primarily comprise day care specialty, diagnostics and tertiary and quaternary care. As of March 31, 2023, the Company had a network of 27 healthcare facilities in India with approximately 4,500 operational beds including beds under the O&M model. In addition, its Indian diagnostics business has a presence in over 1000+ cities and towns, with an established strength of over 410+ laboratories, 43+ Accreditations (NABL/NABH/CAP) and a footprint spanning 3700+ customer touch points. There has been no change in the nature of business of the Company during the year under review. The Company continues its endeavor to provide quality healthcare services with an emphasis on high degree of clinical outcomes and an unparalleled patient experience.

Further information on Company performance is detailed in the Company section of the "Management Discussion and Analysis" in the Annual Report.

The Company strategically reviewed and prioritized key areas to drive revenues and operational performance. These include aspects related to evaluating the current portfolio of the Company's facilities and planned bed expansion, initiating cost optimisation measures across the network, investing in technology and medical equipment and further strengthening its clinical excellence program. Details about which are mentioned in the Business Strategy section of the Management Discussion and Analysis Report (‘MDA').

Further, the Board has from time to time during the year under review updated its stakeholders regarding the key developments that took place by disseminating necessary information to the stock exchanges and through various means of communications to the investors. Some of key matters are mentioned below: Post a successful bid, your Company had entered into share subscription Agreement dated July 13, 2018, for issuance of 235,294,117 Shares at a price of INR 170 per share for an aggregate consideration upto INR 4,000 Crores (Rupees Four Thousand Crores only) to Northern TK Venture Pte Limited ("NTK"), an indirect wholly owned subsidiary of IHH Berhad (‘IHH'). Consequently, after obtaining regulatory and statutory approvals such as from Securities and Exchange Board of India,

Competition Commission of India and in terms of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, IHH made Mandatory Open Offer for acquisition of upto 197,025,660 Equity Shares representing additional 26% of the expanded voting share capital of your Company ("Fortis Open Offer") and another Mandatory Open Offer for acquisition of up to 4,894,308 fully paid up equity shares of face value of INR 10 each, representing 26% of the fully diluted voting equity share capital of Fortis Malar Hospitals Limited ("Fortis Malar Open Offer").

After the Preferential Allotment on November 13, 2018, public announcement was made on December 07, 2018 regarding Fortis Open Offer and Fortis Malar Open Offer, thereafter the Hon'ble Supreme Court of India had on December 14, 2018 passed an order ("Status Quo Order") directing "status quo with regard to sale of the controlling stake in Fortis Healthcare to Malaysian IHH Healthcare Berhad be maintained". In light of the Status Quo Order, Fortis Open Offer and Fortis Malar Open Offer were put on hold until further order(s)/ clarification(s)/ direction(s) issued by the Hon'ble Supreme Court of India. Vide its order dated November 15, 2019, the Hon'ble Supreme Court had issued suo-moto contempt notice to, among others, your Company, and directed its Registry to register a fresh contempt petition in regard to alleged violation of the Status Quo Order ("Contempt Petition"). Petitions before the Hon'ble Supreme Court including the suo-moto contempt have been disposed of vide judgement dated September 22, 2022 ("Judgement"). No finding of contempt has been made against either your Company, or its independent directors. Based on legal advice, the Company is of the clear view that the Status Quo Order dated 14^th December 2018 no longer exists. Therefore, your Company is continuing to pursue actions which are in the best interest of its shareholders and itself. Our promoter is simultaneously seeking legal counsel for pursuing and securing the Open Offer. In the Judgement, it has been stated by the Hon'ble Supreme Court that RHT Transaction appeared prima facie to be an acquisition of proprietary interest to subserve the business structure of the Company. It also passed certain directions inter alia, that the High Court of Delhi may consider issuing appropriate process and appointing forensic auditor(s) to analyze the transactions entered into between FHL and RHT and other related transactions. Your Company plans to strenuously object to any contemplation of a forensic given that in the Judgment, no wrongdoing by the Company had even been alluded to. The Company's stated position is that these transactions were done in compliance with applicable laws, post requisite corporate and regulatory approvals and necessary disclosures/ announcements. Currently, Your Company, is vehemently opposing the application filed by Daiichi before the High court for appointment of forensic auditor.

Based on complaint filed by your Company with the Economic Offences Wing ("EOW") in November 2020 against the erstwhile promoters/ erstwhile promoters group company in respect of certain transactions, First Information Report (FIR) was registered on July 3, 2021, against them. EOW is investigating the matter. The said Complaint is also being investigated by the Enforcement Directorate and the Company is co-operating and providing requisitioned documents/information to it. Further, pursuant to the order dated 17^th February 2018 of MCA, SFIO has been investigating into the affairs of your Company/ its subsidiaries. The Company is co-operating in the said investigation.

Fortis Hospitals Limited had filed a civil suit for recovery of Rupees 52,019 lacs before Hon'ble Delhi High Court against the ex-promoters and certain entities which is sub-judice.

The Board of Directors has recommended a final dividend Rs. 1 (One) per equity share at the rate of 10% of the face value of the shares of the Company for the year ended March 31, 2023, be paid subject to the approval of the shareholders, to those shareholders whose names appear in the register of members as on the record date in proportion to the paid up value of the equity shares.

Refer the Company's policy on Dividend Distribution available on the website of the Company at https://www.fortishealthcare.com/ drupal-data/investors/Policy%2Bon%2BDividend%2BDistribution. pdf.

There are no material changes and commitments, affecting the financial position of your Company which have occurred between the end of the FY 23 and the date of this report.

Post closure of the financial year, as part of our inorganic growth strategy, your Company pursuant to the approval of the Board of Directors signed definitive agreements with the VPS Group for the acquisition of Medeor Hospital in Manesar, Gurugram, Haryana which will add 350 beds to your Company's network. The acquisition fits well within your Company's strategic approach of expanding its presence in focus geographic clusters, including Delhi NCR.

Statutory Auditors in their report to the Board of Directors on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("The Act") have given the opinion that the Company and such companies incorporated in India which are its subsidiary companies and joint venture companies (jointly controlled company), have, in all material respects, adequate internal financial controls with reference to consolidated financial statements and the financial statements of the Company and such internal financial controls were operating effectively as at March 31, 2023, based on the internal financial controls with reference to consolidated financial statements and the financial statements of the Company, criteria established considering the essential components of such internal controls stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India. The Auditor's opinion on adequacy and operating effectiveness of internal control is self-explanatory.

During the year under review there has been no change in the subsidiaries / joint venture and associate Companies.

Further note that your Board of Directors have adopted a policy for determining "material subsidiary" pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The said policy is available at https:// w w w . f o r t i s h e a l t h c a re . c o m / d r u p a l - d a t a / i n v e s t o r s / Policy%2BOn%2BMaterial%2BSubsidiary.pdf In terms of the said policy, as on April 01, 2023, Fortis Hospitals Limited (FHsL), International Hospital Limited (IHL), Fortis Hospotel Limited (FHTL) and Agilus Diagnostics Limited are considered as Material Subsidiary(ies). Necessary compliances w.r.t. material subsidiaries have been duly carried out. The copies of the Secretarial Audit Reports of the material subsidiaries issued by the Company Secretary in Practice forms part of this report.

The consolidated financial statements of your Company and its subsidiaries, prepared in accordance with applicable accounting standards, issued by the Institute of Chartered Accountants of India, forms part of the Annual Report. In terms of the Section 136 of the Companies Act, 2013, financial statements of the subsidiary companies are not required to be sent to the members of the Company. Your Company will provide a copy of separate annual accounts in respect of each of its subsidiary to any shareholder of the Company who asks for it and said annual accounts will be available for inspection and are also available on the website of the Company. Performance and financial position of each of Subsidiaries, Associates and Joint Ventures included in the Consolidated Financial Statements of your Company is enclosed herewith as "Annexure - I" in the prescribed format (Form AOC-1).

The contribution of the subsidiary/associates/joint venture companies to the overall performance of your Company is outlined in Note No. 26 of the Consolidated Financial Statements for the year ended March 31, 2023.

Particulars of Loans / Advances / Investments /guarantees given and outstanding during the FY 23 forms part of the Notes to the Financial Statements.

During the financial year under review, your Company has not invited or accepted any deposits from the public, pursuant to the provisions of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014 and therefore, no amount of principal or interest was outstanding in respect of deposits from the Public as of the date of Balance Sheet.

The details of utilisation of funds earlier raised through preferential allotment are mentioned in Notes to Financial Statements. During the year under review, no preferential allotment was made by the Company.

M/s B S R & Co. LLP, (Registration No. 101248W/W- 100022), Chartered Accountants, were appointed as Statutory Auditors of your Company for a period of five years i.e. up to the conclusion of the Annual General Meeting to be held in the year 2024.

The statutory auditors have, in their report to the Board of Directors on the consolidated financial statements of the Company made the following comments which are self- explanatory and are categorised as "Emphasis of Matter", hence no comments in this regard have been offered by your Board of Directors: a) Note 27 and 28 of the consolidated financial statements which deals with various matters including the ongoing investigation by Serious Fraud Investigation Office ("SFIO on Fortis Healthcare Limited and its subsidiaries regarding alleged improper transactions and non-compliances with laws and regulations including Companies Act, 2013 (including matters relating to remuneration paid to managerial personnel). These transactions and non- compliances relate to or originated prior to take over of control by reconstituted board of directors of Fortis in the year ended March 31, 2018. As mentioned in the note, the Group has been submitting information required by SFIO and is also cooperating in the regulatory investigations. As explained in the said note, the Group had recorded significant adjustments/ provisions in its books of account during the year ended March 31, 2018. The Company has launched legal proceedings and has also filed a complaint with the Economic Offences Wing (‘EOW') against erstwhile promoters and their related entities based on the findings of the investigation conducted by the Group. Further, based on management's detailed analysis and consultation with external legal counsel, a further provision has been made and recognised in the year ended March 31, 2021 for any contingency that may arise from the aforesaid issues. As per the management, any further Financial impact, to the extent it can be reliably estimated as at present, is not expected to be material. b) Note 29 of the consolidated financial statements relating to the order dated September 22, 2022 of the Hon'ble Supreme Court, whereby it has directed the Hon'ble High Court of Delhi inter alia that it may also consider issuing appropriate process and appointing forensic auditor(s) to analyse the transactions entered into between the Company and RHT Health Trust and other related transactions. The above-mentioned Note also states that the Hon'ble Supreme Court has observed that prima facie, it appears to be acquisition of proprietary interest of RHT Health Trust by the Holding Company are to subserve the business structure of the Holding Company.

Further, as per the requirement of Companies Auditor Report Order (CARO), Rules, 2016, there was no fraud other than as disclosed pertaining to earlier years reported by the above stated auditors during the year under review.

• Cost Auditor

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the cost audit records maintained by your Company in respect of its hospital activity is required to be audited. Your Directors had, on the recommendation of the Audit Committee, appointed M/s. Jitender, Navneet & Co., Cost Accountants to audit the cost accounts of your Company for the FY 23 at a remuneration of

Rs. 3.5 Lakhs (plus out of pocket expenses and taxes). As required under the Companies Act, 2013, the remuneration payable to the Cost Auditors is required to be placed before the Members in a general meeting for ratification. Accordingly, a resolution seeking Member's ratification for the remuneration payable to M/s Jitender, Navneet

& Co., Cost Auditors is included in the Notice convening the ensuing Annual General Meeting. Further, in terms of the Companies (Accounts) Rules, 2014, it is confirmed that maintenance of cost records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, is applicable on your Company and accordingly such accounts and records are properly made and maintained.

• Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. Sanjay Grover & Associates, Practicing Company Secretary, to undertake the Secretarial Audit of the Company. The Company has complied with the provisions of Secretarial Standards. The Secretarial Audit Report is enclosed herewith as "Annexure - II".

Further, pursuant to the provisions of Regulation 24A, the secretarial audit reports of material subsidiaries are attached as Annexure- II(A).

• Internal Auditors

Upon the recommendation of the Audit Committee, the Board of Directors has appointed Mr. Rajiv Puri, Head Risk and Internal Audit as the Chief Internal Auditor of your Company and authorised him to engage independent firm(s), if needed, for conducting the internal audit for the FY 23 to enable him to extend adequate coverage of internal audit checks.

For FY 23, Internal Audit(s) were performed in accordance with the Internal Audit plan approved by the Audit Committee. In addition to the internal IA team conducting audit(s) covering key business processes as per approved plan, Deloitte was engaged as an external service provider to perform Internal Audit for specific processes.

During FY 2017-18 the Company, the Securities and Exchange Board of India (SEBI), initiated investigation w.r.t. siphoning of approx. INR 5 billion by its ex-promoters. Post investigation, SEBI had issued two Show Cause Notices i.e., dated November 12, 2020 (SCN 1) and April 9, 2021 (SCN 2), respectively. A Show-Cause Notice (SCN- 1) was issued by SEBI to various entities including the Company and FHsL on November 20, 2020. In the SCN- 1, it was inter-alia alleged that the consolidated financials of the Company at the relevant period were untrue and misleading for the shareholders of the Company and the Company had circumvented certain provisions of the SEBI Act, Securities Contracts (Regulation) Act, 1956, and certain SEBI regulations. In response, a joint representation/reply was filed by the Company and FHsL on December 28, 2020 praying for quashing of the SCN- 1 by inter alia reiterating that the Company and FHsL, were in fact victims of the schemes of the Erstwhile Promoters (Malvinder Mohan Singh and Shivinder Mohan Singh) and justice, equity and fairness demands that the victim ought not be punished for the offences of the wrongdoers. All acts impugned in the SCN- 1 relate to the period when the Erstwhile Promoters controlled the affairs of Company and FHsL and the erstwhile Promoters are no longer involved in the affairs of the Company and FHsL. The Erstwhile Promoters were responsible for financial misrepresentation and not the Company and FHsL. Post resignation of the Erstwhile Promoters in February 2018, the Board of Directors of the Company, solely comprising independent Directors looked after its welfare. The new promoter of the Company (i.e. NTK Venture Pte. Ltd.) assumed control of the Company pursuant to a preferential allotment, which was approved by both Competition Commission of India and SEBI, which approved the open offer that had got triggered pursuant to such preferential allotment. Any adverse orders against the Company and FHsL would harm their existing shareholders, employees and creditors. The Company and FHsL have taken substantial legal actions against the Erstwhile Promoters and significant steps to recover the diverted amounts. SEBI passed an order dated 19.04.2022 w.r.t SCN -1 directing the Company & FHsL to pursue the measures taken to recover the amount of INR 397.12 Crores (approx.) along with the interest from Erstwhile Promoters; & Audit Committee to regularly monitor the progress of such measures and report the same to board of directors at regular intervals. SEBI had imposed a penalty of Rs. 50 lakh and Rs. 1 Crore on FHsL and the Company respectively. On April 09, 2021, SEBI issued another Show cause notice (SCN - 2) to various noticees including Escorts Heart Institute and Research Centre Limited ("EHIRCL"). In the said show cause notice, with respect to EHIRCL, it was alleged that INR 567 crore was lent by the Company to EHIRCL in 2011, which was subsequently transferred by EHIRCL to Lowe Infra and Wellness Private Limited ("Lowe") in multiple transactions for the purchase of a land parcel. This land parcel, which was allegedly indirectly to be acquired by the Company through its subsidiary EHIRCL and another entity Lowe, was then transferred to RHC Holdings Private Limited ("RHC Holdings"). It was stated in the said Show cause notice that a structured rotation of funds was carried out to portray that the loan extended by the Company for the purchase of land had been paid back with interest in the year 2011. It is alleged that the Company was actually paid back by RHC Holding over a period of four years ending on July 31, 2015. In this respect, the Company and FHsL funds were allegedly routed through various layers in order to camouflage the transactions, and to circumvent legal provisions with respect to related party transactions.

In the Show cause Notice dated April 9, 2021 EHIRCL had been clubbed along with the other noticees, and had been painted with the same brush as the other noticees in alleging that certain noticees, including EHIRCL, were part of a fraudulent and deceptive device wherein they acted in fraudulent manner which led to the misuse and/or diversion of funds from a listed company i.e. FHL, amounting to approximately Rupees 397.12 crore for the ultimate benefit of RHC Holdings and the erstwhile promoters. Thereby, it is alleged that EHIRCL has aided and abetted the routing of funds from the Company, ultimately to RHC Holdings, for the benefit of the promoter entities.

Further, after adjudicating the Show Cause Notice dated April 9, 2021, SEBI passed an order dated 18.5.2022 wherein it held that EHIRCL is responsible for fraudulent scheme perpetrated at the behest of the then management of FHL/FHsL for the benefit of their then promoters and therefore has violated the relevant provisions of SEBI (PFUTP) Regulations. SEBI acknowledged the fact that EHIRCL working under a completely new management presently and the said revamped management has already taken steps against the erstwhile promoters for the fraud perpetrated under their watch, shall serve as a mitigating factor while computing the penalty under section 15HA of the SEBI Act. Having said this, SEBI vide order dated 18.5.2022 imposed a penalty of INR 1 crore on EHIRCL for violation of certain provisions of SEBI laws. The reasoning that was adopted for imposition of penalty on EHIRCL appears to be exactly on the same lines as the reasoning in the case of FHL and FHsL. SEBI vide order dated May 18, 2022, passed in the Show Cause Notice dated April 9, 2021, imposed a penalty of INR 1 (one) Crore on EHIRCL after finding that there has been violation of certain provisions of SEBI laws. While imposing the said penalty, SEBI acknowledged that EHIRCL working under a completely new management presently and the said revamped management have already initiated civil and criminal actions against the erstwhile promoters for the fraud perpetrated under their watch. Both the orders dated 19.4.2022 and 18.5.2022 passed by SEBI have been appealed against by the Company, FHsL and EHIRCL before Securities Appellate Tribunal, Mumbai ("SAT"). Pursuant thereto, SAT has stayed both the SEBI Orders dated 19.4.2022 and 18.5.2022 respectively subject to deposit of 50% of the penalty amount with SEBI, which has been deposited in compliance of SAT orders. Appeals are pending adjudication.

During the year under review, there is no change in the capital structure of the Company.

The Company currently manages its stock options through "Employee Stock Option Plan 2007" and "Employee Stock Option Plan 2011" ("Schemes") as approved by the shareholders. The Nomination and Remuneration Committee of the Board of Directors of the Company, inter alia, administers and monitors the Schemes of the Company. Each option when exercised would be converted into one fully paid up equity share of Rs. 10 each of the Company. During the year under review, no option was granted by the Company. Disclosure pursuant to the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 for the year ended March 31, 2023 is available at the website of the Company at https://www.fortishealthcare.com/investors- Annual Report / ESOP Disclosure 2022-23.

During the year under review, "no stock options were granted or exercised under the terms of the "Employee Stock Option Plan 2007 and "Employee Stock Option Scheme 2011". The certificate from the Secretarial Auditors of the Company stating that the Schemes have been implemented in accordance with the SEBI Regulations would be placed at the ensuing Annual General Meeting for inspection by members.

The Company has not made any provision of money for purchase of, or subscription for, its own shares or of its holding Company.

Details pertaining to shares in suspense account are specified in the report of Corporate Governance forming part of the Board Report.

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on March 31, 2023 is available on the Company's website at https://www.fortishealthcare.com/ drupal-data/2023-07/Annual%20Return%20MGT-7%20 2022-23Rs.0.pdf.

The particulars required under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014, regarding Conservation of Energy and Technology Absorption, is given in "Annexure – III", forming part of the Board's Report. Further, details pertaining to Foreign Exchange Earnings and Outgo is as given below:

( Rs. in Crores)

Note: Earning and expenditure in foreign currency is on accrual basis.

The Board of Director has approved the CSR policy for the Company. The said policy approaches this area under the philosophy that the Company efforts should strive towards building and sustaining a healthier humanity. The policy elucidates the concep t of growing our business in a socially and environmentally responsible manner through an active role in empowering communities and driving social development and positive change.

With the above in mind the policy seeks as an objective to bring focus, leveraging its inherent skills, experience and knowledge. The policy holds itself out as a forward-looking aspirational charter which recommends liberal interpretation, promotes activity under the spirit of partnership and recommends that initiatives be targeted to the needs of the disadvantaged, vulnerable and marginalised sections of society. While the underlying guidance is to bring alignment of varied activities under the focus umbrella, it recognises the need to record presence and contribution in such weak links in society where its mere presence and support could drive significant social benefit. In keeping with such themes, program/s such as supporting charitable healthcare infrastructure, disaster relief, preventive healthcare awareness through different channels of communication, remain well within the range of the policy objectives.

The policy as approved by the Board is available on the Company's web site at https://www.fortishealthcare.com/drupal-data/investors/ Corporate%2BSocial%2BResponsibility%2BPolicy%2B2022.pdf During the year, the Company has engaged Sattva Media and Consulting Private Limited ("Sattva Consulting") as an external agency/ advisor for undertaking CSR activities of the Company and its subsidiaries for the financial year 2022-23 to 2023-2024. Further, Sattva Consulting is engaged in the business of, inter alia, providing consultancy services in the social impact sector and implementation of corporate social responsibility programmes/initiatives.

This year Company and its subsidiaries contributed their CSR Fund to ICMR, Yova Unstoppable, IIT Madras as detailed hereinbelow:

Note: ¹ The new name of the said companies has been reserved by Registrar of Companies (‘RoC') as Agilus Pathlabs Private Limited vide letter dated June 08, 2023. The said company is in the process of making application to the RoC for seeking approval of the new name.

Report pursuant to Clause O of Sub-Section 3 of Section 134 of the Companies Act, 2013 read with Rule 9 of Companies (Corporate Social Responsibility) Rules, 2014 is given in "Annexure IV".

The Board of Directors of your Company as on date of this report comprises Eleven (11) directors, of which one (1) is a Managing Director and CEO (Executive Director), four (4) are Independent Directors and rest of the six (6) directors are Non-Executive & Non-Independent Directors. Pursuant to Sections 152 of the Companies Act, 2013, Mr. Joerg Ayrle and Mr. Heng Joo Joe Sim are liable to retire by rotation and being eligible offers themselves for re-appointment at the forthcoming Annual General Meeting of your Company.

During the year under review, Dr. Kelvin Loh resigned from the directorship w.e.f. February 22, 2023; and Mr. Takeshi Saito and Dr. Farid Bin Mohamed Sani resigned from the directorships of the Company w.e.f. March 28, 2023. The Board expressed its gratitude for the service provided by the aforementioned Directors and acknowledged that they took their Board duties with dedication, grace and seriousness. It may be noted that, pursuant to Shareholder Subscription Agreement ("SSA") with Northern TK Venture Pte. Ltd. ("NTK") dated July 13, 2018, NTK has a right to appoint 2/3rd of the Directors on the Board of the Company and accordingly, to fill the aforesaid vacancies, NTK nominated new candidates on the Board of the Company. The Board appointed, pursuant to the recommendation of the Nomination & Remuneration Committee, Mr. Mehmet Ali Aydinlar and Mr. Tomo Nagahiro, as Additional Non-Executive Directors, of the Company w.e.f. March 28, 2023. Further, pursuant to Regulation 17(1C) of SEBI LODR, the Company obtained approval of shareholders for confirming the appointment of Mr. Mehmet Ali Aydinlar and Mr. Tomo Nagahiro as Non-Executive Directors of the Company vide a postal ballot on May 10, 2023.

Post closure of the financial year, the Board of Directors has also appointed Mr. Lim Tsin-Lin as Additional Non-Executive Director on the Board w.e.f May 04, 2023. As per regulation 17(1C) of SEBI LODR, the Company is seeking approval of shareholders for confirming the appointment of Mr. Lim Tsin-Lin on the Board of the Company by way of postal ballot dated May 23, 2023. All Independent Directors have submitted declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. During the FY 23, Six (6) meetings were held by the Board of Directors. The details of board/committee meetings and the attendance of Directors are provided in the Corporate Governance Report.

Disclosures regarding the following are mentioned in report on Corporate Governance forming part of this report.

1. Composition of Committee(s) of the Board of Director and other details;

2. Details of establishment of Vigil Mechanism;

3. Details of remuneration paid to all the Directors including Stock options; and

4. Commission received by Independent Director; if any.

Pursuant to the provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board and the respective committees are required to carry out performance evaluation of the Board as a body, the Directors individually, Chairman as well as that of its Committees.

The Nomination of Remuneration Committee ("NRC") and the Board have laid down the manner in which formal annual evaluation of the performance of the Board, it's committees and individual directors is required to be made.

The following process of evaluation was approved by the Nomination and Remuneration Committee and the Board of Directors:

Disclosures pursuant to Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are as under:

# The Non-Executive/Independent Directors are paid sitting fees & commission on the basis of their attendance at the Board/ Committee Meetings. Any variation highlighted above in remuneration of these Directors is on account of number of meetings held or attended during the year.

@ Dr. Kelvin Loh Chi Keon resigned w.e.f. February 22, 2023

*Resigned w.e.f April 04, 2022. **Appointed w.e.f April 05, 2022.

(c) The percentage increase in the median remuneration of employees in the financial year- 9%

Increases in annual CTC of the employees between the current and last financial year are considered. (d) The number of permanent employees on the rolls of the Company is 2975 as on March 31, 2023.

(e) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and any exceptional circumstances for increase in the managerial remuneration **

** Salary increases % (percentage) considered in comparison between salary as on 31/3/2022 and 31/3/2023 of the active employees as on 31/3/2023 *** KMP Salary revision- only one member had a salary increase hence the increment rate applied with the same rate.

(f) Duringthefinancialyear2022-23,Rs.2,85,95,850.00variable pay was paid to Dr. Ashutosh Raghuvanshi, MD and CEO, Rs. 93,20,000.00 to Mr. Vivek Kumar Goyal, Chief Financial Officer, and Rs. 11,18,218.00 to Mr. Sumit Goel, erstwhile Company Secretary, and Rs. 5,00,000.00 to Mr. Murlee Manohar Jain, Company Secretary for year 2022-23. ****** ******Variable pay includes Annual Variable Payments and Leave balance encashments.

(g) Remuneration paid to Directors and KMPs is as per the Remuneration Policy of the Company.

The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration including criteria for determining qualifications, positive attributes, independence of a Director etc. Details of Remuneration Policy and changes, if any, are stated in the Corporate Governance Report.

Your Company has from time to time familiarised the Board of Directors with the Company's operations, their roles, rights, responsibilities in your Company, nature of the industry in which your Company operates, business model of your Company, etc. The same is governed by a template viz Board of Directors Governance Standard and it is available on the website of the Company at https://www.fortishealthcare.com/drupal-data/investors/ Board%2Bof%2BDirectors%2BGovernance%2BStandards.pdf

The information required pursuant to Section 197 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of your Company, will be provided upon request. In terms of Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the Members.

Disclosures as required under Section 134(3)(h) read with Rule 8(2) of the Companies (Accounts) Rules, 2014, are given in "Annexure - V" in Form AOC- 2 as specified under the Companies Act, 2013.

The Related Party Transactions are placed before the Audit Committee for approval as required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseeable and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee for their review on a quarterly basis. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website at https://www.fortishealthcare.com/drupal-data/investors/ Policy%2Bon%2BRelated%2BParty%2BTransactions.pdf None of the current Directors has any pecuniary relationship or transaction vis-?-vis your Company, except to the extent of sitting fees and remuneration/commission approved by the Board of Directors and/or shareholders of your Company and as disclosed in this Annual Report.

Your Company has designed a risk management policy and framework for risk identification, assessment, mitigation plan development and monitoring of action to mitigate the risks. The key objective of the Enterprise Risk Management Policy ("ERM Policy") policy is to provide a formalised framework to enable judicious allocation of resources on the critical areas which can adversely impact your Company's ability to achieve its objectives. The policy is applicable to the Company and its subsidiaries. This framework enables the management to develop and sustain a risk-conscious culture, wherein, there is a high degree of organisation-wide awareness and understanding of external and internal risks associated with the business. The policy defines an architecture and oversight structure to assist effective implementation. By clearly defining terms and outlining roles and responsibilities, ERM promotes risk ownership, accountability, self-assessment and continuous improvement to minimise adverse impact on achievement of business objectives and enhance your Company's competitive advantage. Your company has also defined quantitative key risk indicators (KRIs) to monitor the effectiveness of actions take to mitigate the identified risks. The details thereof are covered under the Management and Discussion Analysis Report which forms part of the Annual Report.

Your Company has adopted a Policy for Prevention, Prohibition and Redressal of Sexual Harassment. As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and Rules made thereunder, your Company has constituted Internal Complaints Committees (ICC). During the year, your Company has received 5 complaints on sexual harassment and all 5 complaints have been resolved with appropriate action taken and no complaint was pending as on March 31, 2023. The same may also be read in terms of Companies (Accounts) Rules, 2014.

As per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Corporate Governance Report with Auditors' certificate thereon and Management Discussion and Analysis Report are attached, which form part of this report.

Declaration by Dr. Ashutosh Raghuvanshi, Managing Director and Chief Executive Officer confirming compliance with the ‘Fortis Code of Conduct' is enclosed with Corporate Governance Report.

A certificate from the Statutory Auditors of your Company stating that your Company has duly complied with the requirements of downstream investment made by your Company to second level entities in accordance with Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 would be available at the Annual General Meeting for inspection by members.

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013: (a) in the preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures therefrom, if any; (b) The selection and application of accounting policies were assessed for their consistent application and judgements and estimates were made that are reasonable and prudent so as to give a true and fair view of the state of the affairs of your Company at the end of the financial year and of the profit of your Company for the Financial Year ended March 31, 2023; (c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities; (d) the Statements have been prepared on a going concern basis; (e) Proper internal financial controls have been laid down and that such internal financial controls are adequate and are operating effectively; and (f) There are proper systems in place to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Your Directors place on record their gratitude to the Central Government, State Governments and all other Government agencies for the assistance, co-operation and encouragement they have extended to the Company. Your Directors also take this opportunity to extend a special thanks to the medical fraternity and patients for their continued cooperation, patronage and trust in the Company. Your Directors are glad to place on record that your Company has posted a strong financial performance during the year and greatly appreciate the commitment and dedication of all the employees, that has contributed to the growth and success of the Company. Your Directors also thank all the strategic partners, business associates, Banks, financial institutions for their assistance, co-operation and encouragement to the Company during the year. Last but not the least your Directors thank the Shareholders of the Company for their continued faith in the Company.