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Feb 09, 2018 04:55 PM IST | Source: Moneycontrol.com

Fortis says Singh brothers agreed to repay Rs 473 crore diverted from the company

Fortis also categorically denied allegations that auditors have refused to sign the accounts of Q2FY18.

Viswanath Pilla @@viswanath_pilla

Moneycontrol News

Fortis Healthcare, India’s second largest healthcare provider on Friday said Rs 473 crore taken out by the promoters Malvinder Singh and Shivinder Singh in form of loans from the company will be paid back by June this year.

“These loans are adequately secured and the repayment has since commenced as per the agreed payment schedule,” Fortis said in a statement.

Fortis said the Rs 473 crore was deployed in secured short-term investments with companies as part of treasury operations.

“These entities as of the quarter ended December 31, 2017, have become part of the promoter group due to a shareholding change in those entities,” Fortis statement said.

“Subsequently, the same loans have been recognized as Related Party Transactions in compliance with necessary regulatory requirements,” the statement added.

Fortis also categorically denied allegations that auditors have refused to sign the accounts of second quarter of FY18.

“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,” Fortis said.

The healthcare provider said the audit review process for the results of both Q2 and Q3 are in progress.

“The financial results of the Company for quarter and period ended September 30, 2017 and December 31, 2017 will be presented before the Board of Directors at their meeting scheduled on February 13, 2018,” Fortis said.

Fortis auditor - Deloitte declined to comment.

“We are bound by confidentiality obligations and are unable to comment on client-specific matters," an email statement from Deloitte said.

Singh brothers have tendered their resignations late Thursday and said that they have taken the decision to insulate the company from the promoters' ongoing legal fight which was hurting the performance.

“In the light of the recent High Court judgment, upholding the plea of Daiichi Sankyo to enforce the arbitration award, we believe this is in the interest of propriety and good governance. It is intended to free the organization from any encumbrance whatsoever that may be linked to the promoters,” Singh brothers said in a letter to the Fortis’ Board of Directors.

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

A Singaporean tribunal had adjudged in favour of Daiichi saying that the Singh brothers made false claims in a self-assessment report and fraudulently misrepresented and concealed the genesis, nature and severity of the US regulatory investigations of Ranbaxy when Daiichi bought their 34.82 percent stake paying USD 2.4 billion in 2008. The total deal value was USD 4.6 billion.

The tribunal directed the Singh brothers to pay about Rs2,563 crore in damages, plus interest of 4.44 percent per year from November 7 2008 to the date of the award.

Sun Pharmaceutical Industries in 2014 agreed to buy Ranbaxy from Daiichi Sankyo for USD 3.2 billion in stock, in addition to assuming USD 800 million of debt.

The Fortis development comes weeks after - Bloomberg News reported about a lawsuit filed by a New York-based investor in Delhi high court alleging Singh brothers of “diversion, siphoning and digression of assets” worth at least USD 300 million

According to the report, the lending arm of Malvinder and Shivinder Singh’s publicly traded financial services firm, Religare Enterprises Ltd, made 21 loans to a number of seemingly independent companies that routed at least USD 300 million back to privately held Singh firms on the same day, according to a central bank investigation of the company’s fiscal 2016 books filed as part of the 700-page suit in November.

The lawsuit alleges that the Singhs diverted the lender’s funds to aid them with a personal debt load of about USD 1.6 billion.

Shares of Fortis Healthcare rose 17.17 percent and were trading at Rs 147.75 on BSE at 2.32 pm, while the benchmark Sensex dropped 1.04 percent to 34,054.68 points.
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