Singh brothers took USD 78 million out of Fortis without board approval

New Delhi: Fortis Healthcare Ltd 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, billionaire Singh brothers.
Responding to a report by Bloomberg, which said “Singh brothers took at least 5 billion rupees ($78 million) out of the publicly-traded hospital company they control without board approval about a year ago”, Fortis Healthcare said the loans are adequately secured and repayment has since commenced as per agreed payment schedule.
The company said with the investee entities becoming a 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 FY2018-19.
“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 due to 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 end of Q1, FY18-19. 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 companys second-quarter results until the funds were accounted for or returned”. However, the healthcare chain refuted the 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.
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.
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.