The Supreme Court’s order preventing IHH Bhd from completing its acquisition of Fortis Healthcare has impacted its ability to cut the Indian hospital chain’s dependence on loans to continue operations, the Malaysian healthcare group’s CEO Tan See Leng said Friday. He added that the Securities and Exchange Board of India (Sebi) is yet to respond to Fortis’ requests that the regulator take action against the group’s ex-promoters for non-payment of crores of rupees withdrawn from the company through inter-corporate deposits (ICDs).
Following an infusion of over Rs 4,000 crore to pick up 31.1 per cent stake in Fortis, the hospital group on December 11 announced that IHH was initiating an open offer for an additional 26 per cent stake in the firm. However, the SC on December 14 stalled the process by ordering IHH and Fortis to maintain status quo with regard to the acquisition following a plea by Daiichi Sankyo, blocking around Rs 3,400 crore that IHH had deposited in escrow towards this transaction. “Because of the status quo, the ability to leverage out the company from local Indian banks remains a challenge. But, of course, we have other means of making sure that the cash flow continues to improve,” said Tan See Leng during a briefing.
Fortis’ debt stood at Rs 1,567 crore as on December 31, 2018, according to the company.
Sebi is yet to respond to Fortis’ request for action against former promoters Malvinder and Shivinder Singh and companies controlled by them for failing to pay back money withdrawn through ICDs that the regulator in October 2018 found to be “fraudulent” transactions. While Malvinder alleged his brother siphoned the monies to settle debts of Radha Soami Satsang Beas spiritual head Gurinder Singh Dhillon, Tan and Fortis vice chairman Shirish Moreshwar Apte said the firm would not pursue the Dhillon family’s link to the money trail. “Our claim is against the companies who took the money from Fortis. Whatever the brothers may have elsewhere, that’s entirely up to them. That’s got nothing to do with us. We will pursue the claims with the companies that took the money from us,” Apte said.
“We’re exploring all options but the key thing is that we are focussed on those companies of the erstwhile promoters who have taken money out of the company,” added Tan. As on February 13, the dues to Fortis, including interest, stood at around Rs 495 crore, according to a source. While moving the SC, Daiichi had alleged IHH’s deal would prevent its enforcement of a Rs 3,500 crore arbitration award against Fortis’ erstwhile promoters. “We completely respect and understand the position that the Indian courts have taken in trying to protect the interests of a global investor like Daiichi … IHH is also today a very large investor,” said Apte.