Sebi scanner on Fortis case after Singh brothers 'take out' Rs 4.73 billion

Market regulator, the Securities and Exchange Board of India (Sebi) on Saturday said it was examining the issues surrounding Fortis Healthcare, which landed in a controversy over alleged regulatory lapses in transfer of funds to some promoter-linked firms.

"We are examining the Fortis issue," Sebi Chairman Ajay Tyagi told reporters after a board meeting of the regulatory body on Saturday.

Fortis Healthcare was issued notices by the stock exchanges on Friday following a media report claiming that the company's promoters, the Singh bothers, took at least $78 million (about Rs 5 billion at current exchange rate) out of the publicly-traded hospital company they control without board approval about a year ago.

Replying to the notices, Fortis Healthcare said its wholly-owned arm Fortis Hospitals had deployed funds to the tune of Rs 4.73 billion (Rs 473 crore) as secured short-term investments to group firms of its promoters.

The company, which earlier on Thursday announced that its promoters Malvinder Mohan Singh and Shivinder Mohan Singh have quit the board, also said the loans are adequately secured and repayment has since commenced as per agreed payment schedule.

Amid all these developments, the company's stock price zoomed by nearly 18 per cent on Friday following another unconfirmed media report about a possible merger of Fortis Healthcare with Malabar Hospital.

The media reports have also said that the company's auditor, Deloitte Haskins and Sells LLP had "refused to sign off on the companys second-quarter results until the funds were accounted for or returned".

However, the healthcare chain refuted these allegations.

"We categorically deny the allegations that 'Auditors have Refused to Sign the Accounts for Q2'. The results for the Q2 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 audit review process for results of both second and third quarters were in progress, the company said those would be presented before the board at their meeting scheduled on February 13, 2018.

Earlier on Thursday, the company had informed stock exchanges that the Singh brothers had resigned as directors from the company's board following a Delhi High Court order upholding the Rs 3,500 crore arbitral award in favour of Daiichi Sankyo.

Individually, Malvinder Mohan Singh and Shivinder Mohan Singh held 11,508 shares each in Fortis Healthcare Ltd as on December 31, 2017 out of total 51,86,17,631 shares of the company.

However, the total promoter group holding through different entities is 34.43 per cent.