Moneycontrol
Feb 12, 2018 06:33 PM IST | Source: Moneycontrol.com

Fortis seeks 15 days extension to declare results, gets rating downgrade on loans

The rating agency said that the repayment of the said instruments by these entities has already commenced but considerable amount is still outstanding, and the timing and quantum of recovery of the same cannot be “ascertained”.

Viswanath Pilla @viswanath_pilla
 
 
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Fortis Healthcare, India's second largest healthcare provider on Monday sought 15 days’ extension to declare second and third quarter results of FY18 as the statutory auditors informed company that the audit process may not be complete before the stipulated date of the board meeting.

Fortis’ board of directors were scheduled to meet and approve results for Q2 and Q3 on Tuesday.

Fortis said the reports about recent developments at the company has led statutory auditors to enhance scope of audit resulting in a delay.

“While the normal audit process was going on smoothly, after the aforesaid news items, our interaction with Auditors indicate that the audit process may not complete before the stipulated date of Board meeting,” Fortis said.

Fortis said it acknowledges a thorough review, considering “just and equitable in the interest of governance and investors at large.”

Reports have emerged that Deloitte - the statutory auditor of Fortis refused to sign Q2 accounts of the company.

Deloitte told Moneycontrol that it's unable to comment on client-specific matters, as it is "bound by confidentiality obligations".

The healthcare provider said the resignation of Singh brothers from the board has created an impact on completion of audit process.

“The said resignations will reduce the strength of the Board from 7 to 5 and a discussion on this will also happen at the aforesaid meeting,” Fortis added.

Fortis said the board meeting tomorrow will go on as scheduled.

The company also said it has received communication from BSE on February 8 directing the company to pay the fines levied for non-submission of un-audited financial results for the Quarter ended September 30 amounting to Rs 65,98,890.

The company said it has paid the amount to both the stock exchanges today.

Fortis added that  it is in final stage of closure of definitive agreements with regard to its proposed transaction of acquisition assets of Business Trust at Singapore and involvement of team in the same is equal.

Fortis in November agreed to buy back the real estate assets that house its 14 existing hospitals and four upcoming projects from Religare Healthcare Trust (RHT) for Rs 4,650 crore, including Rs 1,152 crore of debt.

The transaction involves Fortis Healthcare acquiring the 49 percent stake it currently doesn’t own in Fortis Hospotel from the Singapore Exchange-listed business trust. Fortis Hospotel runs two hospitals: Fortis Hospital Shalimar Bagh, New Delhi and Fortis Memorial Research Institute, Gurgaon.

ICRA downgrades Fortis loans worth Rs 1170 crore

In another development - the rating agency ICRA has downgraded company's loans worth Rs 1170 crore.

The agency cited the disclosures about the advances extended by the company to promoters Malvinder Singh and Shivinder Singh, referred as Singh brothers.

“The rating action takes into account the disclosure about the advances extended by FHL to related parties which in ICRA's views has a significant impact on FHL's credit and liquidity profile,” ICRA said in a statement.

“ICRA had been deriving comfort from FHL's strong liquidity position; with the above mentioned development, the company's financial flexibility is expected to be constrained,” ICRA added.

The rating agency said that the repayment of the said instruments by these entities has already commenced but considerable amount is still outstanding, and the timing and quantum of recovery of the same cannot be “ascertained”.

The long term rating for Rs 250 crore non-convertible debenture programme, Rs 105 crore fund-based limits, and Rs 195 crore term loans has been revised from ICRA A plus to ICRA A minus.

Further, the short-term rating for Rs 600 crore commercial paper programme and Rs 20 crore non-fund-based facilities has been revised from ICRA A one plus to ICRA A two plus.

ICRA said the ratings continue to be on watch with negative implications.

“ICRA will continue to closely monitor the developments and take rating action, as and when more clarity emerges,” the rating firm said.

Fortis is one of India’s largest healthcare services provider in the country, with 4600 beds spread across 45 healthcare facilities including projects under development and over 346 diagnostic centres.

Troubles surfaced at Fortis after the company indicated that considerable funds were transferred to third parties, which were later classified as promoter entities and the current outstanding amount towards such entities is Rs 473 crore.

Fortis said the same loans are adequately secured and added that the promoters have agreed to repay the loan by the end of June this year.

Last week Fortis two promoter directors Malvinder Singh and Shivinder Singh tendered resignations to the board citing insulating the company from the promoters' ongoing legal fight which was hurting the performance.

Last month, the Delhi High Court had allowed Japanese pharma firm Daiichi Sankyo to collect Rs 3,500 crore (USD 500 million) award money from the Singh brothers.

A Singaporean tribunal had adjudged in favour of Daiichi that the Singh brothers had concealed information about Ranbaxy regulatory problems with US FDA, while selling its shares.

Moneycontrol has earlier reported that Securities and Exchange Board of India (SEBI) and stock exchanges may soon issue notices to the company to find out if there is any digression with respect to related party transactions.

Shares of Fortis Healthcare declined 6.07 percent on Monday to close at Rs 139.30, while the benchmark Sensex rose 0.87 percent to end 34,300.47 points.

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