New Delhi, Sept. 28: Rajan Nanda today sold Escorts Heart Institute to Ranbaxy’s Fortis Healthcare in a Rs 585-crore deal that will help him shore up shaky group finances.
As he made the announcement, younger brother, Anil, moved Delhi High Court to stall the sale and restore the hospital’s status to that of a charitable entity.
The transaction, for a 90 per cent stake, values the renowned hospital at Rs 650 crore. Fortis can pick up the 10 per cent stake that Rajan will be left with after today.
Rajan had said last week that he was talking to three to four prospective buyers and the deal could be reached within the next few days. Although he did not name the parties involved, Rajan said Apollo was not involved.
Anil, on the other hand, said his two sisters were with him in opposing the sale of the hospital. “I have moved court because the institute was supposed to be a charitable trust. And even after converting it into a limited liability company, a sale is illegal since it is misuse of public funds. I call it misuse because they will be using the money to clean the financial mess,” Anil added.
The younger Nanda sibling had opposed attempts, without success, to turn Escorts Hospital into a corporation. “I will continue my fight. There is no question of withdrawing my case,” said Anil, who heads Goetz India.
Reacting to the announcement, share prices of Escorts leapt Rs 8.30, or 8.35 per cent, to Rs 107.70, on the BSE. Investors hope the deal will help Escorts, reeling under debt burden, get back into shape. The Escorts scrip attracted 28 block deals on the BSE and 67 on the NSE. In all, 61.17 lakh shares changed hands during the day.
At the other end of the transaction, the Ranbaxy stock gained Rs 2.05 at Rs 508.95 after rising to a high Rs 514. The BSE healthcare index inched up 0.39 points to 3,079.21.
The Nanda flagship last made profits in 2002-03, when it reported a bottomline of Rs 2.4 crore on an income of Rs 1,124 crore. In the quarter ended June 2005, it suffered a net loss of over Rs 57 crore, largely due to a heavy interest burden.
Early this month, many Escorts directors resigned after fears that failure to repay loans would hurt their standing. Former UTI chairman S. A.Dave, ex-Union ministers M.G.K. Menon and P.S. Pritam, were among the ones who left but they returned within a short period of time. Rajan’s son, Nikhil, was then appointed chief operating officer to whip the finances back into shape.
After the restructuring, Rajan had said: “We have constituted an advisory committee under my chairmanship and it will meet every quarter to help the company.”