ALSO READMalvinder & Shivinder Singh took Rs 5 bn out of Fortis without board nod Malvinder Singh and Shivinder Singh quit Fortis Healthcare board HC allows Daiichi plea seeking Rs 35.6-bn arbitral award against Singh Bros Health care industry needs self-regulation: Fortis Healthcare CEO Fortis-RHT deal: Early for investors to rejoice
Delhi-based Fortis Healthcare on Friday said its wholly-owned arm Fortis Hospitals had put in Rs 4.73 billion as secured short-term investments in group firms of its promoters, the billionaire Singh brothers. Responding to a Bloomberg report that said “(the) Singh brothers took at least Rs 5 billion ($78 million) out of the publicly-traded hospital company they control without board approval about a year ago”, Fortis said the loans were secured and repayment had started as scheduled. It said with the investee entities becoming part of the promoter group, led by Malvinder Mohan Singh and Shivinder Mohan Singh, as of the quarter ended December 2017, the same loans had been recognised as related-party transactions, expected to be repaid by the end of the first quarter of 2018-19. Meanwhile, shares of Fortis soared 17.6 per cent on Friday amid reports that the Manipal Hospital, backed by TPG, was in advanced talks to merge itself with the company. The BSE has sought clarification from Fortis on this. “Fortis Hospitals Ltd (FHsL), a wholly-owned subsidiary of Fortis Healthcare, has deployed funds in secured short-term investments with companies in the normal course of treasury operations,” the company said in a statement, adding, these entities had become part of the promoter group (in the quarter under review) due to changes in shareholding in them. Subsequently, the same loans have been recognised as related-party transactions in compliance with the regulatory requirements. Citing unnamed sources, the Bloomberg report said the company’s auditor, Deloitte Haskins & Sells LLP, had “refused to sign off on the company’s second-quarter results until the funds were accounted for or returned”. Fortis refuted this. “We categorically deny the allegations that ‘auditors have refused to sign the accounts for Q2’. The Q2 results could not be tabled before the board for approval and the same was communicated to the stock exchanges on November 14, 2017,” it said.
Stating that the audit review process for the results of both the second and third quarters was in progress, the company said those would be presented before the board at its meeting scheduled for February 13.The company on Thursday informed the stock exchanges that the Singh brothers had resigned as directors following the Delhi High Court order upholding the Rs 35 billion arbitral award in favour of Daiichi Sankyo, the Japanese company that had acquired control of Ranbaxy in 2008. In a separate communication to the BSE, Fortis said, “The company is still evaluating the best possible way to raise the fund and no firm decision in this regard has been approved by the board to date. We will keep the stock exchanges updated/informed.” The filing further added that the company in the past had informed the stock exchanges about fund-raising options of up to Rs 50 billion. Individually the Singh brothers held 11,508 shares each in Fortis as of December 31, 2017, of the 51,86,17,631 shares of the company. However, the promoter group holding, through different entities, is 34.43 per cent.