FORTIS HEALTHCARE LIMITED

August 2009

AGENDA
Group Overview Healthcare Industry in India Company Overview Recent Acquisition Financials Way Forward
2

GROUP OVERVIEW
Religare SRL Fortis

Incorporate in 1994, Religare Enterprises Limited (REL) is one of the leading integrated financial services group of India controlling a network of more than 5 million customers across three verticals – viz. Retails, Wealth and Institutional Spectrum.

Largest and most trusted pathology laboratory network in India. Services ~ 2,000 hospitals/path labs & over 25,000 doctors. Performs over 34000 tests/day & caters to more than 5 million patients in a year offering a comprehensive range of over 3,500 tests, from the routine to highly specialized tests

Incorporated in 1996. First hospital commenced operations in 2001 in Mohali. One of the largest & internationally recognized chain of hospitals having a network of 28 hospitals in India with a CAGR of 76%

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AGENDA
Group Overview Healthcare Industry in India Company Overview Recent Acquisition Financials Way Forward
4

EVOLUTION OF HEALTHCARE IN INDIA
India: Health Expenditure as a Percentage of GDP

6.0%

5.1%
4.0%

3.8% 2.6% 2.1% 3.0%

4.2%

2.0%

1.3%

0.0% 1950-51 1960-61 1970-71 1980-81 1990-91 2000-01 2005-06
Source: FICCI and Ernst & Young (2008).

66% increase

7% decline

50% growth

33% growth

Pvt. hospitals distribution, 2001 No. of hospitals=45000 <30 beds, 84%

91 55

0.93

0.86 0.6 0.4 0.6

0.9

Persons reporting ailments 1996 2004

Hospital beds

Doctors
1996 2004

Nurses
>200 beds, 1% 100-200 beds, 5%
Source: FICCI and Ernst & Young (2008)

30-100 beds, 10%

5

Source: FICCI and Ernst & Young (2008).

HEALTHCARE IN INDIA (CONTD.)
Beds per '000 population for selected states 0.80 0.51 0.54 0.55 0.35 0.46 0.86 0.70 0.59 0.71

Biha r

J&K

T ripura

UP
2.5 1

H a ryana

Cost of important Procedures (in US$)
Percentage share of India in world health parameters 20%

Source: FICCI and Ernst & Young (2008).

Healthcare distribution across rural and urban areas 7

6%

8%

8%

9%
1

3 0.8

3.3 1

1% Disease burden Beds Doctors Nurses Community & health workers Lab technicians
Urban Ailments ratio Beds per '000 Physicians per '000 Rural Nurses per '000

R a ja stha n

A ssa m

O rissa

India

MP

6

Source: FICCI and Ernst & Young (2008).

Source: FICCI and Ernst & Young (2008).

HOSPITALS: PROXY FOR INDIA’S HEALTHCARE BOOM
The Healthcare Delivery Market in India pegged at around USD 40bn, is approximately five times the size of the Pharmaceuticals Industry and offers a huge growth opportunity India has 16% of the world's population, but one of the poorest healthcare infrastructures among growing economies and the lowest spend on healthcare (~5% of GDP) Demographic changes, improving income levels, changing lifestyles, and rising insurance penetration etc will result in a rise in discretionary spending on healthcare Healthcare is a difficult business with large capital outgo and long payback periods. Hence for larger hospitals (tertiary care) India is dependant on private sector investments Execution of new projects is key and the high cost of retaining skilled doctors remains a constant threat to returns In India, private sector hospital companies are well equipped to take advantage of this large opportunity in tertiary healthcare

7

HEALTHCARE SPEND IS ON THE RISE
As India becomes a more advanced economy the spend on healthcare as a proportion of the total spend is set to rise. With increased life expectancy; the proportion of middle aged population will rise resulting in a larger number of people being subject to lifestyle diseases.
More middle aged people subject to lifestyle ailments

100% 80% 60% 40% 20% 0%

Growing share of urban middle class households
3.3% 5.2% 7.0%
Would opt for mediclaim

44.2%

52.5%

58.6%

52.5%

42.3%

34.5%

2001-02 <1,00,000
Source: Crisil

2006-07E 1,00,000-6,00,000

2010-11E >6,00,000

Age demographic shift
100% 80% 20% 60% 27% 40% 20% 0% 2001 0-14 yrs 15-29 yrs 2006 30-44 yrs 2011P 35% 28% 29% 7% 11% 8% 12% 20% 8% 14% 20%

Household spending pattern
100%

9% 15% 21%

80% 60% 40% 20%
Discretionary Healthcare Spend rising

28%

32%

29%

27%

0%
2016P 60+ yrs

45-59 yrs

1995 Food Household prod. Communication

2005E Apparel Personal prod. Education

2015F 2025F Housing, utilities Transportation Healthcare

8

Source: ENAM Research

Source: ENAM Research

LIFESTYLE CHANGE = MORE HOSPITALIZATION
Changing disease profile
Cost of Treatment (20 01)

100% 90%

36,000
Cancer Heart disease Other circulatory
Lifestyle Diseases

Lifestyle diseases: More expensive
(Rs/treatment) 29600

30,000 24,000 18,000 12,000 6,000 0 Acute Infections
Source: NSSO

80% 70%

CNS Disorders Diabetes Asthma

9700 4100 5800

60% 50%

Others Sense organs Muscoloskeletal Accidents Acute Infections
Acute Diseases

Maternity

Injuries

Lifestyle Diseases

Incremental growth driven by in-patients
4,000 3,000 (Rs bn)
CAGR of 10.9% Rs 3,642 bn

40% 30% 20%

Cardiac – A large contributor of the lifestyle segment

10% 0% 2001
Source: CII-McKinsey.

2012

Lifestyle diseases are set to assume a greater share of the healthcare market Lifestyle diseases such as cardiac diseases require hospitalization and are more expensive to treat hence increasing the inpatient revenues

CAGR of 11.6%

Rs 2,172 bn

2,312

2,000
Rs 1,253 bn

1,268 1,329

1,000 0

637 617 2006 OPD 903 2011E IPD

2016E

Source: CRISIL Research ,OPD: Out-patient; IPD: In-patient.

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Trend towards more in-patient treatments

AGENDA
Group Overview Healthcare Industry in India Company Overview Recent Acquisition Financials Way Forward
10

FOUNDER’S VISION
“To create a world-class integrated healthcare delivery system in India, entailing the finest medical skills combined with compassionate patient care”

– Late Dr. Parvinder Singh Founder Chairman, Fortis Healthcare Ltd.

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THE FORTIS EDIFICE…..
Mission: To have a network of more than 40 hospitals and over 6,000 beds by 2012.

Globally respected

“Vision”

healthcare organization known for Clinical excellence and Distinctive Patient care

“Achieved by”

Talented people

Strong value system

Efficient systems

Responsibility towards stakeholders

“Foundation”

12

12

Built on Trust

HOSPITALS: BENEFITS TO ACCRUE IN LONG TERM
Set-up cost

Operating Metrics Indicative Hospital Operating Model

Operating Profit Buildup

(%)
Land Other Equip Book Breakeven

12 10

500 400 300
Revenues

(%)

4x
Cash Breakeven

Year 5

30% 2.8x
EBITDA Breakeven

2.1x

21% 24% 21%

Medical Equip

40

200
1x

1.6x
31% 34% 36% 26% 28% 32% 35% 38% 43%

100 0
Building

25% 29% 28%

22%

Year 4

26

(100)

Year 1
Cash losses

Year 2 Personnel

Year 3

Year 4

Year 5 EBIDTA
85%
14%
Year 3

12

Direct
30%

Other Costs
Occupancy

13
EBITDA Flow

Fixed Cost Structure

KEY DIFFERENTIATORS :
Core Competence
Providing Tertiary and Quaternary care on Centre of Excellence in the areas of:
o o

Strengths
Focus on Medical and service excellence. In-house project execution capabilities on QTC parameters
o

Cardiac Sciences Neurological Sciences Orthopedics Gastroenterology Renal Sciences Boutique facility for women and child care State of the art accredited facilities. Highly trained medical and Para-medical staff. Strong IT systems and infrastructure Cost effective business model

Pan India presence Hub and Spoke Model Management expertise and bandwidth Proven abilities to acquire and integrate. Experienced, dedicated and financially sound promoter group.

o

o

o

o

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KEY DIFFERENTIATORS - OPERATING SYSTEMS
FIELD: 1. Building employee capability to drive operations efficiency 2. Developing distinctive capabilities at various levels 3. Generating talent pipeline to support growing business needs FOS: 1. To minimize lead time in patient related operations 2. To embed best practices in operations to yield bottom line impact 3. High level of patient care; and 4. To create next generation leaders

Patient Centricity
TRM: 1. Increase revenue through systematic intervention and create a sustainable platform going forward 2. Enabling cross sharing of information across different units 3. Develop a common approach for revenue management PSM: 1. Consolidate and optimize purchase and supply chain operations 2. Achieve internal process efficiencies 3. Standardization of items 4. Price equalisation 15

KEY DIFFERENTIATOR - ACCREDITATIONS, FACILITIES AND DOCTORS
JCI •Mohali hospital is the first hospital in the country to be JCI and NABH accredited •Banerghatta Road and Mulund Hospital also JCI Accredited NABH – Hospital, Blood Banks and Labs •Largest chain of accredited hospitals in the country – Delhi, Mohali, Jaipur and NOIDA •NOIDA, Vasant Kunj and EHIRC’s Blood Bank accredited by NABH ISO – 9001 and 14001 •ISO 9001:2000 – EHIRC, NOIDA and Faridabad •ISO 14001:2004 - NOIDA

JCI

ISO NABH – Hospitals and Blood Banks

4 more hospitals to be filed for accreditations this year
Greenfield Brownfield

Doctors on Rolls
O&M

• On Payrolls of the company • Center of Excellence under Super Specialty

Retainers
Fortis

• On fee for service model • OPD and Multi Specialty

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FINANCIALS: A SNAPSHOT: NETWORK REVENUES
Rs. In Crores

900 800 700 600 500
308 772

CAGR: 76%
567

649

113 659

101 548

42 525

400 300 200 100 0
81

12 296 6 75 FY05 FY06 Owned FY07 FY08 Managed FY09E
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STRATEGIC PLAN – MISSION 2012
Fortis aspires to . . .
. . . exceed revenues of USD 1 billion . . . Domestic leadership in Cardiac, Ortho, Neuro, Renal and Gastro

. . . globally recognized in Cardiac & Ortho

Pan India presence with 35-40 Hospitals ~ 6000 Beds

3,500 Doctors 15,000 Nurses . . . Employees

. . . have an International presence

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AGENDA
Group Overview Healthcare Industry in India Company Overview Recent Acquisition Financials Way Forward
19

ABOUT WOCKHARDT
Incorporated in 1991, WHL is one of the leading healthcare providers in India Proven track record in setting up green field hospitals and delivering compassionate and quality healthcare in a cost effective manner Widespread presence - 17 super speciality hospitals in metros and tier-II cities Mumbai, Kolkata, Bengaluru, Hyderabad, Rajkot, Surat & Bhavnagar Provide super speciality care in Cardiac, Neuro, Ortho, and, Minimal Access Surgery and Women Care Hospitals in Bengaluru and Mumbai have received the highly coveted JCI accreditation Came up with IPO @ Market Capt of Rs. 2,850 – 3,150 Crore ( $ 600 – 675 million) – Reduced size to Rs. 2,300 – 2,600 Crore ($ 475 – 550 million) after lukewarm response from market
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THE DEAL
Executed Business Transfer Agreement (BTA), few conditions precedents to be completed. Business purchased as a going concern, a pool of 1902 expanded bed capacity as ‘Going Concern’ for ~ Rs. 909 Cr (~ $ 190 Millions). Well established & equipped hospitals at premium locations in metro cities – Mumbai, Kolkata and Bengaluru. 8 running hospitals (bed capacity of 1368) with 856 operational beds 2 new hospitals at Yeshwantpur, Bengaluru (120 beds) and Anandpur, Kolkata (414 beds), under construction, to be operational in next 12-15 months. Includes 3 nursing colleges (total – 450 candidates) linked to operating hospitals, for availability of trained nursing staff
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HOSPITALS UNDER ACQUISITION
Nos. 1 2 3 4 5 6 7 8 Greenfield 9 10 Bengaluru Kolkata
Yeshwantpura Anandpur

City Mumbai Mumbai Bengaluru Bengaluru Bengaluru Bengaluru Kolkata Kolkata

Location
Mulund Kalyan BG Road Cunningam Road Chord Road NagarBhavi Rashbehari Avenue Sarat Bose Road

Total Beds 567 60 451 128 40 55 67 1,368 120 414 1,902

Start Year 2002 2008 2006 1991 2007 2007 1993 1990

Remarks JCI accredited

JCI accredited

Daycare centre

-

New Project New Project

Quality assets at premium locations, with clinical competence and strong reputation Total beds include expansion opportunity in 2 facilities

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STRATEGIC RATIONALE
Centre of Excellence in Cardiac, Neuro, and Ortho, further strengthens dominant position : 3 top specialities account for 54% - 58% of total revenue Largest cardiac care and Joint replacement programs across India Improved Purchase and Supply Management : Expect a significant reduction in cost of Bought-out Items resulting in benefits in combined network Integrated marketing and customer acquisition Synergize regions for more efficient play and management efficiencies Significant savings in the employee costs Mumbai, Bengaluru allow leveraging combined network for Doctor productivity maximization

Wockhardt
MAS/Renal 10% Neuro 6% Ortho 10% Other 18% Cardiac 38%

Critical Care/Other 18%

OPD 15% Pharma 3%

23 % Revenues

STRATEGIC RATIONALE
Geographical Complementarities Supports ‘Deep’ strategy for each region, with hospitals located in metros (Mumbai, Bengaluru, and Kolkata) Shared Value system Enhances depth and width of talent and medical competence of the group for supporting future growth plans Adds talent pool of 650+ doctors, ~1300 Nurses/Para-medics, +650 other staff.
Bed Capacity North Zone
(NCR, Punjab, Rajasthan)

West & Central
(Maharashtra, Gujarat, Chhattisgarh)

South Zone
(AP, TN, Karnataka, Kerala)

East Zone
(West Bengal)

Nos

Beds

Nos

Beds

Nos

Beds

Nos

Beds

Fortis New Acq. Total =

13 13

2312 2312

3 2 5

480 627 1107

2 5 7

350 794 1144

3 3

481 481 24

Fortis Network shall have a Total of ~5200 Beds

COMBINED TALENT POOL
4500 4000 3500 3000 2500 2000 998

4,121

2,472
725

1,586
1500 674 1000 500 0 Doctors Nurses Fortis Paramedical Wockhardt Executives & Staff 912 3123

1,064
295 769 1747

25

A total employee pool of ~ 9,250 employees

CLINICAL LEADERSHIP
6,000 5,000 4,000 3,000 2,000 1,000 0 Neuro 768 4,604 60,000 50,000 40,000 30,000 20,000 10,000 0 Others
2,195 2,200 2,100

52,040 31,917

35,000 30,000 25,000 20,000 15,000 10,000 5,000 0

28,649

2,300

9,934

2,000 1,900 1,800

1,933

Cardiac

Ortho

Fortis

Wockhardt

26

Over 39000 Cardiac Procedures, 4000 Ortho, 5300 Neuro and 84000 Multispecialty

COMBINED BUSINESS PRESENCE – PAN INDIA
Kamayani, Agra (2006) Escorts, Amritsar (2006) Sadbhavna Medical & Heart Institute, Patiala (2006) Fortis City Centre (2006) Fortis Mohali (2001) Kalyani, Gurgaon (2006) Escorts, Faridabad Ravindera Cath Lab, Hisar Fortis Escorts Jaipur (2006) Saraswati Heart Care, Allahabad (2006) Fortis Noida (2004) Jessa Ram (2003) La Femme (2005) Vasant Kunj (2006) ISIC, Vasant Kunj (2006) Yashoda Hospital, Ghaziabad (2006) Escorts-Delhi (2006) Fortis Shalimar Bagh (2010) Fortis Gurgaon (2010)

Kolkata – 3 Hospitals
Goyal Hospital, Jodhpur (2006) Escorts-Raipur (2006) Birla Institute MRC, Gwalior (2006)

Mumbai – 2 Hospitals
Fortis Modi Hospital, Kota (2006) SL Raheja (Mumbai) (2010) HHPL (Mumbai) (2007) Arneja Hospital, Nagpur(2006) Fortis, Bengaluru (2009) Fortis Malar (Chennai) 2008

Bengaluru – 5 Hospitals

27
Fortis Network Hospitals Acquired Hospitals

COMBINED FINANCIALS (FY 2008-09)
Heads FHL Consolidated Rs. in Crores INCOME Operating Income Other Income TOTAL Materials Consumed Personnel Expenses Operating Expenses Selling, General and Admin Expenses Total Expenses EBIDTA Financial Expenses Depreciation Taxes Net Profit after taxes Earning Per Share 631 28 658 190 148 143 65 546 113 44 48 3 21 0.92 (%) Wockhardt Rs. in Crores 312 1 313 86 41 97 24 248 65 36 19 2 9 1.84 (%) Total Rs. in Crores 943 29 971 276 188 241 89 794 178 80 68 4 30 1.09

(%)

30% 23% 23% 10% 87% 17%

28% 13% 31% 8% 80% 21%

29% 20% 26% 9% 84% 18%
Improved operating margins

0.14%

0.59%

0.11%

28

EPS Accretive from the 1st year

AGENDA
Group Overview Healthcare Industry in India Company Overview Recent Acquisition Financials Way Forward
29

FY 2009

30

SNAPSHOT – EXECUTIVE SUMMARY FY-2009
Key Performance Indices:
Revenue across network crosses more than Rs. 200 Crores mark for Quarter – IV Two new Heart Command Centers Vashi hospital gets operational Management bandwidth enhanced Fortis Malar launched the “Malar Heart Institute” in December Revenue growth at Escorts’ @ 22% Mohali and Amritsar EBIDTA @ 24% and 23% respectively Jaipur Break even on EBIDTA in 14th month of operation 31

CONSOLIDATED P&L – FY09
Particulars Operating Revenue Other Income Total Income Direct Costs Employee Costs Other Costs EBITDA Finance Costs Depreciation & Amortization PAT EPS FY09 (Rs. Crores) 631 28 659 190 147 208 114 44 49 21 (2.49) 30% 23% 33% 18% 7% 8% 3% % 100% 4% FY08 (Rs. Crores) 507 41 548 162 139 186 62 55 47 (55) 0.92 32% 27% 37% 12% 11% 9% -11% % 100% 8% Y-o-Y Growth 24% -32% 20% 17% 6% 12% 86% -20% 4% 138%
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TURNS PAT POSITIVE
700.00
20%

659.00

600.00

548.00

500.00
Rs. Crores

400.00

300.00

Maiden profits for the company 85%

200.00

114.25 100.00 61.75 20.82 0.00 Operating Revenue (100.00) FY08 FY09E EBIDTA PAT (55.48)

33

Q1FY-2010

34

Snapshot – Executive Summary

Q1 FY 10 - Consolidated
Rs. in Crores
+45%

Operating Revenue - Rs. 185 Cr EBITDA - Rs. 31 Cr - Rs. 7.6 Cr Q1 FY 09 Occupancy ALoS ARPOB 62% 4.02 Rs. 6.9 Mn

33% 34% 7x

+27%

Net Profit

Q1 FY 10 69% 3.62 Rs. 8.0 Mn

Network Income - Rs. 243 Cr
Total Income

45%

35

EBITDA & PAT (CONSOLIDATED)
Q1 FY 09 Q1 FY 10
Rs. in Crores

+7x +34%

36
Operating EBITDA as a percentage of Operating income grows 490 bps over corresponding period last year

CONSOLIDATED PROFIT AND LOSS – Q1FY10
Particulars Operating Revenue Other Income Total Income Direct Costs Employee Costs Other Costs EBITDA Finance Costs Depreciation & Amortization PAT Q1FY10 (Rs. Crores) 185.4 3.1 188.5 54.3 42.5 60.6 31.2 10.4 11.4 7.6 0.33 29% 23% 33% 17% 6% 6% 4% % 100% 2% Q1FY09 (Rs. Crores) 139.4 9.0 148.4 41.9 36.0 47.3 23.2 10.9 11.7 0.9 0.04 30% 26% 34% 17% 8% 8% 1% 30% 18% 28% 35% -5% -3% 7x 37 % 100% 6% Q-o-Q Growth 33% -66%

EPS for the quarter

Other income includes interest income, foreign exchange fluctuations and other miscellaneous income

INVESTORS
Foreign Holding 8.16% Mutual Funds / FI's 1.42% FI and Banks 1.00% Indian Corporates 9.65% Promoters 68.46%

Directors and Others 0.18% Retail Investors 11.13%

As on 31st July 09

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AGENDA
Group Overview Healthcare Industry in India Company Overview Recent Acquisition Financials Way Forward
39

AGGRESSIVE GROWTH PLAN
Pan India Rollout plan:

Geographical:
Northern India NCR Western Southern Eastern

Metros & Tier-2 towns
DEEP strategy Mix of Greenfield, O&M and Acquisitions
Super Religare

By FY 2012, Fortis plans to reach 40 Hospitals 6000 Beds Global Presence

Fortis Clinical Research Religare Technova

Fortis Healthworld Fortis Healthcare $ 575 Million

Religare Enterprises

40

Business under discussion

CURRENT PROJECTS
Shalimar Bagh Construction started in August ’07. Expected commissioning in Q IV – 2009 Gurgaon Excavation completed, shell of the building expected to be completed soon Expect commissioning by early Q – I, 2011 – 350 beds. NOIDA Oncology Block – Q – III, FY10 Other Projects Expansion of Mulund Hospital, Mumbai Expansion of Bengaluru Hospital 2 Greenfields at Bengaluru and Kolkata – 316 beds – 196 beds – 534 beds
41

PEERS REVIEW

42

APOLLO AND MAX
Apollo 3000 18.0% 2535 2500 16.0%

Max 700 601 600 20%

17%
484 423 15%

28%
2094 2000 12.0% 14.0%

500

Rs. Crores

1614 1500 1214 1000 10.0% 8.0% 6.0%

400

372 10%

300

200
4.0% 500 2.0% 0 FY08 FY09 FY10E EBIDTA FY11E PAT 0.0%

5%

100

0 FY08 FY09 Revenues FY10E FY11E EBIDTA

0%

Revenues

43

Centrum Broking Estimates

B&K Estimates

KEY DIFFERENTIATOR – SUCCESS DRIVERS :
Strong IT system

Pan India Presence, leveraging costs Revenue and Capital
Business Model

Differential Model – Doctor engagement, Deep penetration Strategy

Bandwidth for

future Growth, managed through team of Professionals
Stress on Quality, Patient Centricity

Operational Synergies – FOS, TRM, PSM

44

SAFE HARBOR
Except for the historical information contained herein, statements in this presentation and the subsequent discussions, which include words or phrases such as “will”, “aim”, “will likely result”, “would”, “believe”, “may”, “expect”, “will continue”, “anticipate”, “estimate”, “intend”, “plan”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “likely”, “project”, “should”, “potential”, “will pursue” and similar expressions or variations of such expressions may constitute "forward-looking statements". These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to our ability to successfully implement our strategy, our growth and expansion plans, obtain regulatory approvals, our provisioning policies, technological changes, investment and business income, cash flow projections, our exposure to market risks as well as other risks. Fortis does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date thereof. “Fortis Healthcare Limited is proposing, subject to receipt of requisite approvals, market conditions and other considerations, a rights issue of its equity shares with warrants and to file a Draft Letter of Offer with SEBI.” This presentation is not and should not be construed as an offer for sale within the United States of any rights, warrants, equity shares or any other security of Fortis Healthcare Limited or as a solicitation of an offer to buy any of such rights, warrants, equity shares or other securities. Securities of Fortis Healthcare Limited, including any offering of its rights, warrants, equity shares or any other security, may not be offered, sold, resold or otherwise transferred within the United States absent registration under U.S securities laws or unless exempt from registration under such laws. The offering of the securities of Fortis Healthcare Limited described in this advertisement has not been and will not be registered under U.S securities laws, and accordingly, any offer or sale of these securities may be made only in a transaction exempt from registration.

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THANK YOU…
46

Fortis Healthcare Limited
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