operate monthly evaluations of all statutory licenses required to be maintained by vendors and in the event that any vendor is
not in compliance with the statutory requirements, all pending payments to such vendor are put on hold until such statutory
requirements are complied with by the vendor.

Over the last four years, we have stepped up our efforts to directly source products from manufacturers and their carry forward
agents, and are sourcing directly from more than 150 manufacturers. This enables us to establish control over the supply chain
and earn higher margins on our sales by eliminating middlemen. This also helps us ensure the authenticity of the products
supplied and reduces the likelihood of tampering or any similar practices. In the financial year 2021 and the six months ended
September 30, 2021, approximately 77% and 77% of our third-party branded pharmaceutical and FMCG products were sourced
directly from manufacturers and their carry forward agents, with the remaining 23% and 23% sourced from third-party
distributors, respectively.

Almost all private label products sold by us are manufactured by third-party manufacturers on a contract basis. All
pharmaceutical private label products sold by us are manufactured by domestic manufacturers whereas a portion of the FMCG
private label products sold by us are manufactured by and imported from overseas manufacturers.

Quality control and quality assurance

As part of our quality-control measures, every product received by us from our vendors is checked for price, quantity, physical
damages and shelf life at the time of collection of inventory, and our systems are programmed in such a manner that the stocking,
transfer or sale of expired products is not permitted. In the event that any product received by us at our warehouse is damaged
or unfit for delivery to our customers, we ensure that such product is not registered into our systems and is returned to the
manufacturer. Multiple levels of verification and validation of stock conducted at the sourcing, warehousing and distribution
stages enables us to eliminate any discrepancies in transfer of the products from our warehouse and onward resale at our stores.

Almost all private label products sold by us are manufactured by third-party manufacturers on a contract basis. We ensure that
these products meet the adequate quality and safety standards by ensuring that the manufacturer provides a ‘certificate of
analysis’ for every private label product manufactured and delivered to us, confirming compliance with quality and safety
standards required under the law. In addition, we engage the services of third-parties to carry out testing and certification on all
product batches of pharmaceutical and cosmetic private label products sold by us.

Technology and Data Science

Our business operations are supported by our robust service-oriented, event-driven technology systems and infrastructure. We
host data centres in two locations, Bangalore and Chennai, and host in-house testing, training and staging centres at our premises
in Hyderabad, that develop and manage our systems and processes. Our team of over 90 software professionals helps us develop,
operate and manage a technology system customized to our business needs, while remaining flexible to future changes in market
dynamics. We utilise proprietary software developed by us across our offline and online channels. These software are based on
open-source frameworks with reusable software modules and as a result, we do not incur any third-party software licensing
costs, save for our enterprise resource planning software. Our team has developed a large number of mobile software
applications that streamline our back-end and front-end operations, which include our ‘Shutter App’ for managing the new store
opening process, ‘Vendor App’ for facilitating orders from our vendors, and ‘Delivery App’ for managing last mile deliveries.
The three key pillars to our technology systems are:

e Front-end customer facing systems & Omnichannel Platform: We utilise technology to engage with our customers
and ensure a seamless consumer experience. We have developed various e-commerce portals such as ‘MedPlus Mart’,
‘MedPlus Lens’, and ‘Medplus Labs’, which enable our customers to view and purchase our products online via our
website and app. To attract new customers and retain existing customers, we also utilise search-engine optimisation
technologies, referral programs and promotions and facilitate online customer support through the use of bots. We aim
to maximise the value offered to our customers by optimizing recommendations for our customers through predictive
algorithms, enabling integration through various payment gateways and achieving interoperability between online and
offline sales channels through our omni-channel platform.

¢ Point of sale systems: Our in-house developed point-of-sale system has been customized to our requirements. In
addition to supporting billing, pricing and payment systems integrations, it helps our store staff in catering to the needs
of the customers in an effective way for example, by providing prompts on alternate medication or private label
products that may be relevant for a particular customer.

e Back-end technology and data-science infrastructure for inventory management: Our technology infrastructure and
systems constitute a critical component of every stage of our operations and enable us to track our key performance
indicators on a real-time basis, both centrally and on-site at our stores. In connection with our back-end warehousing
operations, we utilise a series of optimized algorithms that track every product stocked by us in our warehouses and
stores on a real-time basis. and help us achieve the right balance between availability of products and inventory

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