Fortis bares Singh loan logic
Mumbai: Fortis Healthcare Ltd on Friday said its wholly owned arm Fortis Hospitals had "deployed" funds to the tune of Rs 473 crore as secured short-term investments to group firms of its promoters, the Singh brothers.
The disclosure came in response to a Bloomberg report which said that the Fortis promoters allegedly took funds out of the company. The report stated that the Singh brothers took at least Rs 500 crore out of the company without board approval about a year ago.
Fortis Healthcare said the loans are adequately secured and repayment has since commenced according to the agreed payment schedule.
The company said with the investee entities becoming part of the promoter group led by Malvinder Mohan Singh and Shivinder Mohan Singh, as of quarter ended December 31, 2017, the same loans have been recognised as related party transactions expected to be repaid to it by end of first quarter of 2018-19.
"Fortis Hospitals Ltd (FHsL), a wholly-owned subsidiary of Fortis Healthcare Ltd, has deployed funds in secured short-term investments with companies in normal course of treasury operations," the company said in a statement.
These entities as of the quarter ended December 31, 2017, have become part of the promoter group because of a shareholding change in those entities, it added. Subsequently, the same loans have been recognised as related party transactions in compliance with necessary regulatory requirements.
Fortis Healthcare further said, "These loans are adequately secured and the repayment has since commenced as per the agreed payment schedule. The entire amount is expected to be repaid to the company by the end of the first quarter of 2018-19. The total value of the loans amounts to approximately Rs 473 crore."
The report, citing unnamed sources, had stated the company's auditor, Deloitte Haskins & Sells LLP, had "refused to sign off on the company's second-quarter results until the funds were accounted for or returned".
However, the healthcare chain refuted the allegations.
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.
On Thursday, the company informed stock exchanges that the Singh brothers had resigned as directors from the company's board following the Delhi high court order upholding the Rs 3,500-crore arbitral award in favour of Daiichi Sankyo.
Meanwhile, shares of Fortis Healthcare rose nearly 18 per cent on Friday on reports that Manipal Hospital, backed by TPG, is in talks to merge the company with itself. On the BSE, the Fortis Healthcare scrip rose 17.61 per cent or Rs 22.20 to end at Rs 148.30 after rising almost 25 per cent during intra-day trades. The company's market valuation rose by Rs 1,152.54 crore to Rs 7,691.54 crore.