Chairman & MD’s Letter

Max Bupa’s divesture
will provide a cash inflow of over `500 crore to Max India, in addition to freeing up the future capital commitment for the business

Dear Shareholders,

This year has truly been transformative in the journey of Max India, as we embarked upon a corporate restructuring exercise of your company in our two significant businesses, namely Max Healthcare (MHC) and Max Bupa. The key objective behind this restructuring has been to reinvigorate the Max India growth story by seeking new horizons and seeding new businesses with fresh growth potential.

Referring to MHC first, the regulatory landscape has become extremely challenging and inevitably led to shrinking margins and profitability. Further, with advances in medicine and science, the way forward requires huge infusion of capital for updating technology and equipment, thereby putting pressure on capital allocation. Decreasing length of stay in hospitals has also led to stagnating revenues per bed per night, adding to profitability challenges.

To counterbalance and mitigate the impact of the above trends, significant capital infusion will be required for both organic and inorganic growth. Hence, it was prudent to induct a leading private equity firm such as KKR into the fold which, apart from capital, will bring scale through their existing hospital platform of Radiant Life Care.

The transaction, when completed, will create a listed entity that will become one of the top three hospital chains in India, attractively positioned in two large healthcare markets, with well-recognised local brands and a vintage mix of hospitals. In addition, it will lead to significant cost benefits as MHC and Radiant possess complementary set of capabilities in running healthcare establishments while KKR brings its extensive experience and expertise in healthcare investments.

Coming to Max Bupa, our Health Insurance business, we announced the divesture of our majority stake in Max Bupa to the private equity firm True North, as Max Bupa also required significant capital infusion in the immediate future to break-even and sustain its rapid growth in a highly competitive health insurance market. True North has deep knowledge and expertise on Indian markets, having invested in more than 40 businesses over the past 19 years through six funds with a corpus of over US$ 2.8 billion across financial services and healthcare. Max Bupa’s divesture will provide a cash inflow of over ` 500 crore to Max India, in addition to freeing up the future capital commitment for the business.

As a result of the two above mentioned transactions, the current shareholders of Max India Limited will be entitled to corresponding shares in Max Healthcare-Radiant Merged Entity once it becomes listed. Max India will thereafter remain the parent company of Antara Senior Living and Max SkillFirst. The plan thus far is to deploy funds from Max Bupa divesture for growing Max India’s existing businesses as well as for seeding new initiatives which will have adjacencies to the Group’s focus areas of life insurance, real estate, hospitality and senior living. In addition, we also plan to offer an exit opportunity through a capital reduction process to those shareholders who may not be keen about Max India’s investment in such new growth businesses. This will be subject to requisite approvals.

Our other two businesses, Antara and Max SkillFirst, have continued to perform well during the year and our growth focus for these businesses will continue in the future.

Antara has gained valuable institutional learning during the process of operationalising its first community in Dehradun, which as per our belief, is India’s best senior living commune. Antara is now well positioned not just to start additional senior living communities in Delhi-NCR and North India, but also to experiment with innovative service formats to cater to India’s seniors; a segment which will see rapid growth in our otherwise young country.

Max SkillFirst has identified innovative opportunities through its partnership with Cohen Brown, an international leader whose courseware and tools have been utilised in more than 50 countries and translated into 15 languages. The company will also initiate work towards tech-led skilling in the customer-facing sector.

Since the time we went public, our choice of businesses and sharp capital management have resulted in a 23% IRR for Max India investors. As we progress with the beginning of a new era for Max India, we look forward to your unwavering support through this phase of transformation, which will provide a fresh impetus to growth and shareholder returns. We are confident that by the time the above restructuring is complete, it will be an appropriate time to share details about the new business plan that will power the growth in the next decade for Max India.

We thank each and every one of you for your continued belief in the Company and its vision. We are grateful to all our employees across the Group, our business partners, investors as well as the government and its various agencies with whom we engage actively for their support.

With Best Wishes,

Analjit Singh

Founder & Chairman

Mohit Talwar

Managing Director