Fortis Healthcare Q4 loss widens to Rs 9.3 bn, firm starts recovery process

The company has started the process of recovering payments made to Malvinder Singh as per his letter of appointment as lead for strategic initiatives

Fortis Healthcare Ltd (FHL) declared its financial results for the fourth quarter and financial year 2017-18 in the wee hours of Wednesday after deferring it thrice since May. The hospital chain, which is in the process of finding a buyer or investor, posted a net loss of Rs 9.32 billion in Q4FY18, as against a loss of Rs 680 million in the corresponding quarter last financial year.  

The losses were primarily on the back of an exceptional loss of Rs 8.33 billion. The company said in its statement to the exchanges that the results were impacted by continuing business challenges, impairments, and provisions.  

The revenues, too, fell by 3 per cent year-on-year for the fourth quarter to Rs 10.8 billion, while the earnings before interest, tax, depreciation, and amortisation (Ebitda) fell 11 per cent to Rs 750 million. The FY18 consolidated revenues stood at Rs 45.61 billion, similar to the previous year, while the losses for the full year stood at Rs 10.09 billion. The consolidated Ebitda for the full year increased by 7.4 per cent to Rs 3.89 billion. 

The provisions in Q4FY18 are around Rs 5.8 billion, the recoverability of which is doubtful. These include certain inter-corporate deposits (ICDs) of Rs 4.45 billion, loans given to body corporates and interest thereon of Rs 255 million. 

Meanwhile, Independent Director Rohit Bhasin, who was appointed to the Fortis board in May, tendered his resignation effective June 26. 

The board of directors has said that the company has initiated legal action for recovery of these outstanding ICDs and other advances. It made provisions in the un-audited financial results in relation to the ICDs and other matters identified in the Luthra and Luthra investigation report, FHL said. 

The company would now appoint an external agency to undertake scrutiny of the internal controls and compliance framework, and would also evaluate the internal organisational structure and reporting lines, delegation of powers of the board, among other things.   

Fortis Healthcare Chairman (board of directors) Ravi Rajagopal said, "As a result of the Investigation Report issued by Luthra & Luthra, the company will appoint an external agency of repute to establish the highest level of governance and internal controls. In addition, our key priority is to ensure that the current bidding process is fair and transparent and maximises value for shareholders." 

Fortis has also treated as non est the letter of appointment (dated September 27, 2016) as amended LoA issued to erstwhile executive chairman Malvinder Singh in relation to his role as lead, strategic initiatives. "The Company is in the process of taking suitable legal measures to recover the payments made to him under the LoA as also to recover all company assets in his possession," the statement said.  

In another significant development, Fortis has mentioned that 'third parties' related to promoter group have filed a civil suit before the district court, Delhi, in February this year claiming implied ownership of brands Fortis, SRL and La Femme, in addition to financial claims. The company stated that it has not signed the alleged binding term sheet with certain parties.