There seems to be no end to troubles for the Fortis promoters, Malvinder Singh and Shivinder Singh. First the accusation of siphoning off of $300 million by a US-investor, then the Delhi High Court verdict in favour of Japanese drug maker Daiichi Sankyo, and now the allegations that they took Rs 473 crore from their publically listed company, Fortis Healthcare without the board approval. The duo quit as directors from the company's board on Thursday. The company issued a release saying the resignation is "intended to free the organisation from any encumbrances that may be linked to the promoters in light of the recent HC judgement."
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 siblings faced a setback last month after a Delhi court ruled that $550 million awarded against them in Singapore is enforceable in India. A Singapore tribunal has said the Singhs must pay damages and interest to drugmaker Daiichi Sankyo Co. for concealing critical information during the sale of their generic drug firm, Ranbaxy Laboratories Ltd., to the Japanese company in 2008. The Singhs have denied any wrongdoing and are appealing the tribunal's ruling. They have said they are reviewing the recent Delhi court decision.
The Supreme Court has ordered the Singh brothers not to sell or dilute their shareholding in Fortis until it decides on Daiichi's petition to place a longer-term halt on asset sales by the Singhs. The siblings are contesting that ruling.