Mulling legal options to recover money from Malvinder Singh: Fortis CEO

Auditor states that more related party transactions cannot be ruled out

Fortis Healthcare is working out its legal options to initiate recovery from erstwhile executive chairman Malvinder Singh, who was paid more compensation than the law allows, said the CEO of the healthcare provider, Ashutosh Raghuvanshi. 

The auditors of the company have pointed out that for the financial year that ended 2018, Malvinder Singh was paid Rs 20 crore, which is more than what is allowed in the Companies Act.  
 

Singh had not responded to Business Standard's query till the time of publishing. 

The auditor also noted that there is "uncertainty" on this recovery despite taking actions to recover. The government has mandated that without the Centre's permission, a board member cannot draw more than 11 per cent of the net profits. 

The auditor also referred to the internal report that was submitted in June this year on inter corporate deposits (ICDs). The audit committee had said that there was a related party transaction on the issuance of Rs 414-crore ICDs. It also noted that the management was asked to sign the transaction. However, Malvinder Singh had denied asking the management to sign the ICD agreement. 

It has been pointed out that the asset value of many international investments had seen major fluctuations in the financial year ending 2018. In fact, one of the funds sold below par value was Global Dynamic Opportunity Fund. This fund was sold 10 per cent below the actual value of the asset. 

Former directors did not disclose compliances on related parties. The report says that more related party transactions cannot be ruled out.  

The Fortis group declared its quarterly finances for Q1FY20 on August 6, 2019. According to the hospital chain's numbers, revenues have increased in comparison with the first-quarter revenues of FY19. In Q1FY19, the revenue was Rs 1,042 crore, while in Q1FY20, it was Rs 1,138 crore. However, revenue has decreased from Q4 2019, which was Rs 1,184 crore. This comprises its hospital and diagnostic business. Occupancy in Fortis hospitals has increased marginally, by four per cent year-on-year. SRL conducted over 7.80 million tests during Q1FY20, compared to 7.36 million tests conducted in Q1FY19.