Max India Limited Investor Presentation February 2017 www.maxindia.com Max Group Vision “To be the most admired corporate for service excellence” • Positive social impact • Culture of Service Sevabhav • Helpfulness • Mindfulness • Expertise • Entrepreneurship Excellence • Dependability • Business performance • Transparency • Respect Credibility • Integrity • Governance 1 Evolution of Max Group—Strong history of entrepreneurship and nurturing successful businesses (1/2) Enters telecom in JV with Hutchison Hutchison Raises Rs. 1,000 Enters next phase of JV with Gist Brocades Paradigm shift from Crore through QIP growth in healthcare and becomes Asia’s B2B to B2C model – placement to fund - 4 new facilities largest manufacturer of enters healthcare, life continued planned in the NCR drug intermediaries insurance and expansion; Raises and nearby regions clinical research Rs 300 Cr from IFC over the course of for MHC expansion next few years 1985 1993 1995 2000 2005 2007 2008 2009… Entry into bulk Warburg Pincus JV with BUPA JV with Comsat to launch pharma business; invests Rs. 200 Crore Finance Plc, UK to satellite communication commenced and Rs. 140 Crore in enter health services operations with Max India and Max insurance business production of Healthcare COMSAT penicillin based drug JV with Atotech BV for intermediary manufacturing printed circuit board plating ATOTECH 2 Evolution of Max Group—Strong history of entrepreneurship and nurturing successful businesses (2/2) Mitsui Sumitomo, a part of Life Healthcare Max India concluded a mega corporate MHC doubles bed the Japan’s largest equalized stake in restructuring by demerging into 3 capacity, added 4 insurance group, MS&AD, Max Healthcare with holding companies new hospitals i.e. acquired 26% stake in Max India, MHC • Max Financial Service (Life Insurance) Shalimar Bagh in Max Life from New York valued at Rs 3650 Delhi NCR, Mohali Life in cash transaction of Cr; IFC Washington • Max India Limited (Healthcare & Allied & Bathinda in Rs 2,731 Cr, valuing Max maintained their businesses) Punjab (set up Life at Rs. 10,500 Cr stake at 7.5% • Max Ventures and Industries Limited under PPP model) (Manufacturing & new businesses) and Dehradun 2010 2011 2012 2013 2014 2015 2016… Life Healthcare, South Goldman Sachs Max India entered 2 landmark acquisitions by MHC; invests Rs. 522 Cr Africa’s healthcare major, Senior Living with through CCDs, acquired 26% stake in MHC Antara Senior Living, • First in Ghaziabad, 3 km from Max representing a for Rs. 517 Cr, MHC valued with the first Patparganj, acquired 78% stake in 340 9.1% equity stake at Rs 2,300 Cr, making it community in bedded Pushpanjali hospital post conversion the largest FDI transaction Dehradun, spread expandable upto 540 beds; in the Indian healthcare over 13 acres with • Second facility adjacent to Max space 200 resident Saket, acquired 51% stake in 230 apartments bedded Saket City Hospital, expandable upto 1200 beds 3 Max Group – Corporate Structure Max Group (in the business of Life) 30.4% 40.9% 45.1% Life Insurance Health & Allied Manufacturing & Holding Companies Business* Business Other businesses 46% 99%^ 70% 100% 51% 100% Operating Companies 100% 100% Group CSR Arm Promoter holdings in Max Group holding companies * MFS Board has approved the 3 way merger of Max Life into MFS, demerger of life insurance undertaking from MFS and merger of the said undertaking with HDFC Life and merger of residual MFS entity into Max India ^ Toppan Printing inducted as JV partner in MSF, will acquire 49% stake in MSF (on fully diluted basis) 4 Max Group Overview 1 INR 142 billion+ Revenues… 9.5 Mn Customers*… 22,000 Employees*… ~67,000 Agents*… 2,700 Doctors*… 2 Strong growth trajectory even in challenging times; a resilient & diversified business model 3 Steady revenue growth and cost rationalization leads to strong financial performance 4 Well established board governance….internationally acclaimed domain experts inducted 5 Diversified ownership…..marquee investor base 6 Superior brand recall with a proven track record of service excellence 7 Strong history of entrepreneurship and nurturing successful business partnerships * Based on Dec’16 numbers 5 Max Group : Continues to grow from strength to strength FY 2016 Summary: • Group Revenues: Rs 14,237 Cr up 12% • EBITDA: Rs 717 Cr up 16%. PBT at Rs 420 Cr up 27% • Asset Under Management: Rs 36,390 Cr up 15% • 9 Million Customers; 22,500 employees; 58,000 Agents; 240 offices FY 2016 Summary: FY 2016 Summary: FY 2016 Summary: • Revenue at Rs 10,875 Cr, up 14%, • MHC network turn profitable. • PBT at Rs 28 Cr, up 46% PBT at Rs 465 Cr, up 9% EBITDA grows 26% to Rs 215 Cr. • Investment vertical kick started • MCEV at Rs 5,617 Cr, up 17%; • 2 acquisitions give MHC a platform with proposed investment in • New Business Margin at 18.3% to double bed strength to over Azure Hospitality, which runs • Long term renewal of partnership 5,000 pan-Asian restaurant chains with Axis Bank • MAX Bupa GWP grows 28%. • New Bopp line being set-up to • #1 in claims settlement and Distribution alliance with Bank of expand capacity to 75,000 TPA Premium Conservation Baroda • Antara all set to commence Dehradun operations next quarter 6 Max India: High pedigree investor base Shareholding concentrated with Marquee Investors Shareholding Pattern . Goldman Sachs as on Dec, 2016 . Reliance Mutual Fund Others 7.7% . Ward Ferry . International Finance Corporation Mutual Funds . Government of Singapore 17.8% Promoters . New York Life Insurance 40.9% . Nomura Singapore . Mirae Mutual Fund FII/ FPI . DSP Black Rock Mutual Fund 18.5% Goldman Sachs . Invesco Mutual Fund 12.0% IFC . Target Asset management 3.1% . Temasek Holdings Number of outstanding shares : 26.73 Cr. 7 MAX INDIA LIMITED MAX HEALTHCARE www.maxhealthcare.in www.maxindia.com 8 Indian healthcare industry is expected to reach ~$400 billion fuelled by multiple demand drivers Indian healthcare sector* Estimated size, Bn USD CAGR 14.6% 350 - 450 CAGR 11.2% 280 102 60 79 2010 2012 2015 2020 2025^ ^ Depending upon public spending levels, insurance proliferation, and success of public-private partnerships by 2025 Demand drivers for growth ~500 mn ~134 mn ~320 mn additional middle population > 60 at risk of dying due class by 2025 years by 2020 to NCDs by 2020 ~45% ~$8 bn ~2 mn Insurance medical tourism beds required by penetration by 2020 market size by 2020 2025 * Healthcare sector includes hospitals, pharmaceuticals, and medical technology sub-sectors Sources: India Brand Equity Foundation – Healthcare report, 2012; BofA Merrill Lynch Global Research, IBEF Mar'15 9 Hospitals constitute ~70% of Indian healthcare market with increasingly dominant role of private sector Indian healthcare sector* Private players have established a dominating presence in tertiary / Market share % quaternary care 22% 20% 30% 37% 40% 78% 80% 10% 70% 63% 60% 20% Market Share Beds Inpatients Outpatients Doctors Private sector Public sector 70% Market size of private hospitals is expected to reach ~$ 120 bn by 2020 Private sector hospitals 120 Estimated size, Bn USD CAGR ~19.2% CAGR Hospitals ~14.7% 50 36 Pharmaceuticals 22 Medical technology / Others 2009 2012 2015 2020 * Includes hospitals, pharmaceuticals & medical technology / other companies Sources: BofA Merrill Lynch Global Research, IBEF Mar'15 10 Competition is intensifying with scale-up of well funded incumbents & availability of capital for new players The surge of VC/ PE investments in recent years has eased funding constraints on growth Annual VC/ PE investment’s in India’s Healthcare ($ Million) 2x 1262 1359 835 580 485 2010 2011 2012 2013 2014 (H1) No. of deals 35 29 45 71 43 Scale up of well funded incumbents CURRENT SCALE FUNDING (RS. CR.) CURRENT SCALE FUNDING (RS. CR.) 8,600 550, (2013 - KKR) 6,500 290, (2014 - CDC) 4,800 820, (2013 - Stan Chart, IFC) 4,900 900, (2015 - TPG Capital) 700, (2015 - Temasek/Punj 1,300 2,500 (2012) 560, (2012 - Advent) Lloyd) Slide sourced from Bain and Company Note: Fortis and NH operational beds not split between owned and managed; Manipal’s # of managed beds assumed to be same for 2010 and 2013; assumed exchange rate of 1$=INR60 11 Source: Crisil research, company websites and presentations, secondary sources MHC vision To become an admirable institution known for service excellence, medical excellence, scientific research, and medical education WHAT WILL WE BE KNOWN FOR KEY ENABLERS WHERE DO WE WANT TO BE • Integrated care • Strong talent pool of • #1 in selected specialties in clinicians, nurses and chosen geographies • Clinical excellence healthcare leaders • Focus on Tertiary and • Transparency • Technology and Quaternary care analytics enabled • Speed clinical outcomes and • Physical infrastructure in customer experience North India; however • Tech enabled serving more than 300 continued care towns in India and 30+ countries 12 MHC has a strong focus on North India NCR OUTSIDE NCR 2400+ available beds across the network 275 70 224 Shalimar Bagh 260 Pitampura Mohali 402 186 Vaishali Patparganj Bathinda 535 215 46 168 Saket City Noida Dehradun 64 Saket Gurgaon 13 MHC has invested in state of the art equipment to achieve clinical excellence (1/2) LINAC Novalis Robotics Advanced robotics provides high precision, and High dose radiation with extreme minimum invasive surgery across multiple precision (~ 0.5 mm accuracy) specialities such as Oncology, Neurology CT - PET Brain suite Brain Advanced image guided surgery - Provides precise correlation and facilitates provides real-time views