Fortis healthcare: Board unable to determine if fraud has occurred, say Auditors

“With the release of the audited financial statements, we have addressed an important objective that we had set for ourselves, as a reconstituted board comprising independent directors, in the backdrop of recent developments,” Fortis Healthcare Board of Directors Chairman Ravi Rajagopal said.

'Systemic lapses' found in inter-corporate borrowings: Fortis Healthcare

The company, on June 27, had said that it had initiated legal action to recover the inter-corporate deposits (ICDs) given to the three firms after an external investigation found “systemic lapses and override of controls” in the loan given.

Deloitte Haskins & Sells LLP, which is the independent auditor of the Fortis Healthcare, on Saturday stated that Fortis’ board of directors is unable to determine at present whether a fraud has occurred in the company or not. “At this juncture, the Board of Directors of the company are unable to make a determination on whether a fraud has occurred on the company in respect of the matters covered in the investigation by the external legal firm…,” the auditor said in its report.

This is considering the limitations on the information available to the external legal firm and their qualifications and disclaimers as described in the investigation report, Deloitte added. Fortis Healthcare had earlier said that markets regulator Sebi has ordered a forensic audit in the matter of the company, which has admitted to systemic lapses in giving Rs 494.14 crore loans to firms controlled by erstwhile promoters — Malvinder and Shivinder Singh.

Meanwhile, Fortis Healthcare on Saturday said there has been no change in its audited financial results compared to the unaudited numbers reported on June 27, 2018. The unaudited results reported on June 27 the widening of consolidated net loss to Rs 914.32 crore for the March quarter, as it was hit by continuing business challenges, provisions and impairments. It had posted a net loss of Rs 37.52 crore in the March quarter of 2016-17.

“The audited financial statements have been released on the completion of the additional review of certain internal processes which were being undertaken at the request of the Board of Directors”, Fortis said in a filing to BSE. As expected, there has been no change in the figures reported in the audited financial statements compared to the unaudited results announced on June 27, it added.

“With the release of the audited financial statements, we have addressed an important objective that we had set for ourselves, as a reconstituted board comprising independent directors, in the backdrop of recent developments,” Fortis Healthcare Board of Directors Chairman Ravi Rajagopal said. Our focus in the future will be on strengthening governance and transparency and restoring the health of the business, he added.

“We are also in the process of evaluating the bids received on July 3, 2018 and will present our recommendation to the shareholders in the coming days,” he said. Fortis has received two fresh binding bids on July 3, from Malaysia’s IHH Healthcare and Manipal-TPG combine. Two suitors, KKR-backed Radiant Life Care and Munjal-Burman combine, have backed out from the race for the cash-strapped healthcare chain.

Story continues below this ad

Consolidated income from operations stood at Rs 1,086.38 crore for the reported quarter. It was Rs 1,123.43 crore for the same period a year ago, Fortis had said. For entire 2017-18, the company posted a net loss of Rs 934.42 crore. It reported a profit of Rs 479.29 crore in 2016-17, it added. Consolidated income from operations stood at Rs 4,560.81 crore during 2017-18 as compared to Rs 4,573.71 crore in the preceding year.