Fortis purchases majority stake in Religare arm

Buys 51% shares for Rs 970 crore in Fortis Hospital

Fortis Healthcare has decided to buy 51 per cent shares for Rs 970 crore in the Fortis Hospital Ltd (FHTL), a subsidiary of the Religare Health Trust (RHT).

The group's consolidated loss has risen 150 per cent to Rs 55 crore in the December quarter, against Rs 22 crore in the year-ago period. FHTL houses two clinical establishments of the company - Fortis Hospital, Shalimar Bagh, and the Fortis Memorial Research Institute (FMRI), Gurgaon. Both Fortis and RHT (via its subsidiary Fortis Health Management Ltd) are currently shareholders in FHTL.

The company expects this transaction - where FHTL becomes a Fortis's subsidiary instead of Religare's subsidiary - to be completed in three months as it is subject to certain approvals. Fortis is also a sponsor in RHT - a business trust listed on the SGX (Singapore's stock exchange) - with a 28 per cent equity stake.

"As we move forward, we expect our operations to continue to show an upward trajectory. The current transaction, being earnings per share (EPS) accretive from the first year itself would also incrementally accelerate our objective of becoming profit after tax positive at the earliest," said Bhavdeep Singh, chief executive officer, Fortis Healthcare Ltd.

The company's standalone loss increased by 69 per cent to Rs 17 crore against Rs 10 crore during December quarter last year . On the other hand, it was less than the previous quarter's loss which stood at Rs 26 crore. The company's total standalone income also decreased from Rs 203 crore to Rs 183 crore for the December quarter for the current financial year.

"The economic impact to Fortis (from the purchase of Religare subsidiary) would be lower as Fortis owns 28 per cent equity stake in RHT. The transaction is the result of agreements entered into by the two shareholders in FHTL at the time of listing of RHT," said the company.

Meanwhile, the company's Indian hospital business revenues were at Rs 850 crore as compared to Rs 792 crore in the corresponding period previous quarter, showing a growth of 7 per cent. Moreover, the company's consolidated India business revenues have increased by 6 per cent to Rs 1029 crore in the third quarter of 2015-16.