Business Medical Dialogues
    • facebook
    • twitter
    Login Register
    • facebook
    • twitter
    Login Register
    • Medical Dialogues
    • Speciality Dialogues
    • Education Dialogues
    • Medical Jobs
    • Medical Matrimony
    • MD Brand Connect
    Business Medical Dialogues
    • News
        • Financial Results
        • Hospitals & Diagnostics
        • IT / Health Venture
        • Implants / Devices
        • Insurance
        • Key Movement
        • Pharmaceuticals
        • Policy
        • Technology
        • pharma-news
    • blog
    LoginRegister
    Business Medical Dialogues
    LoginRegister
    • Home
    • News
      • Financial Results
      • Hospitals & Diagnostics
      • IT / Health Venture
      • Implants / Devices
      • Insurance
      • Key Movement
      • Pharmaceuticals
      • Policy
      • Technology
      • pharma-news
    • blog
    • Home
    • Editors Pick
    • Fortis moves to...

    Fortis moves to recover Rs 500 crore from Own Promoters

    Written by Ruby Khatun Khatun Published On 2018-06-30T11:48:41+05:30  |  Updated On 16 Aug 2021 4:38 PM IST

    New Delhi: Fortis Healthcare said it has initiated legal action to recover about Rs 500 crore of funds allegedly taken out of the company by its founders Malvinder and Shivinder Singh after an external investigation found "systemic lapses and override of controls" in the loan given.


    The loans were given to its founders without board approval and enough collaterals, it added.


    Denying that there was any mismanagement or misuse of funds and position, Malvinder, who had also served as executive chairman, said presently there is a "vindictive approach" from parties with vested interest towards the former promoters.


    The board of Fortis, which is embroiled in a takeover battle, also annulled September 2016 appointment of Malvinder Singh as 'Lead: Strategic Initiatives' and will seek to recover payments made to him in that role as well as any company asset in his possession.


    Singh brothers had resigned as directors from Fortis board in February this year following the Delhi High Court order upholding the Rs 3,500 crore arbitral award in favour of Daiichi Sankyo.


    Malvinder, who was appointed Lead Strategic Initiatives for five years with effect from October 1, 2016, at an annual remuneration of Rs 12 crore, had received Rs 6 crore in 2016-17 and a proportionate sum for 2017-18.


    Fortis, which had initiated an independent probe in February this year, following allegations of siphoning off cash by the founding family, said the probe report has been submitted to the Sebi and the Serious Fraud Investigation Office (SFIO).


    Fortis said it has made provisions totaling around Rs 580 crore in the fourth quarter of 2017-18 related to loans whose "recoverability is doubtful".


    Under the founders, Fortis had loaned about Rs 500 crore to certain corporate bodies, which subsequently became part of the Singhs' corporate group.


    These inter-corporate deposits (ICDs) "were not given under the normal treasury operations" and were not specifically authorised by the board of the company, as per the summary of the probe report that Fortis disclosed in a regulatory filing.


    "All ICDs from December 2011 were repaid until March 31, 2016. However, from the first quarter of the financial year 2016-17, it has been observed that a roll-over mechanism was devised whereby, ICDs were repaid by cheque by the borrower companies at the end of each quarter and fresh ICDs were released at the start of succeeding quarter under separately executed ICD agreements.


    "In respect of the roll-overs of ICDs placed on July 1, 2017, with the borrower companies, Fortis Healthcare Ltd utilised the funds received from the company for the purposes of effecting roll-over," it said.


    For these ICDs, "the investigation report revealed that there were certain systemic lapses and override of controls, including shortcomings in executing documents and creating a security charge," it said. "The charge was later on created in February 2018".


    While the investigation report did not conclude on utilisation of funds by the borrower companies, there are findings in the report to suggest that ICDs were utilised by the borrowers for granting/ repayment of loans to certain additional entities, including those whose current or past promoters or directors are known to or connected with Fortis promoters.


    "The company has initiated legal action for recovery of these outstanding ICDs and other advances," Fortis said.


    "The company having considered all necessary facts and taken into account legal advice that it has received, has decided to treat as 'non est' the Letter of Appointment dated September 27, 2016, as amended (LoA) issued to the erstwhile Executive Chairman in relation to his role as 'Lead: Strategic Initiatives' in Strategy Function.


    "The company is in the process of taking suitable legal measures to recover the payments made to him under the LoA as also to recover all company assets in his possession," it added.


    'Non est' is a legal phrase which is intended to mean 'does not exist'.


    Fortis Chairman Ravi Rajagopal said as a result of the investigation report issued by Luthra & Luthra, the company will appoint an external agency of repute to establish the highest level of governance and internal controls.


    The company's board discussed the investigation report during their two-day meeting, which ended early this morning.


    The development comes at a time when the company is in looking for a new investor for which four parties — Manipal-TPG, Munjals-Burmans combine, IHH Healthcare and KKR-backed Radiant Life Care — are in the fray.


    There was no direct relationship between borrower companies and Fortis or its subsidiaries during December 2011 to December 14, 2017, but the report noted that the "promoters were evaluating certain transactions concerning certain assets owned by them for the settlement of ICDs, thereby indirectly implying some sort of affiliation with the borrower companies."


    In a statement, Malvinder said that while "we await the Luthra & Luthra report from Fortis Healthcare, would like to mention that there has been no mismanagement or misuse of funds and position".


    Noting that Fortis' treasury operations have been profitable for the past many years, he said all decisions on ICDs, were collectively taken by the respective decision making bodies at Fortis after deliberations.


    "Presently, there is a vindictive approach from parties with vested interest towards the former Fortis promoters in these challenging times," he added.

    Delhi high courtexternal investigationFortisFortis HealthcareIHH Healthcareinter-corporate depositsKKRLead Strategic Initiativeslegal actionLuthra and LuthraMalvinder SinghManipal-TPGMunjals-Burmans combineRadiant Life CareRavi RajagopalSEBISerious Fraud Investigation OfficeSFIOShivinder Singhsystemic lapsesTakeover Battle
    Source : PTI

    Disclaimer: This site is primarily intended for healthcare professionals. Any content/information on this website does not replace the advice of medical and/or health professionals and should not be construed as medical/diagnostic advice/endorsement or prescription. Use of this site is subject to our terms of use, privacy policy, advertisement policy. © 2020 Minerva Medical Treatment Pvt Ltd

    Ruby Khatun Khatun
    Ruby Khatun Khatun
      Show Full Article
      Next Story
      Similar Posts
      NO DATA FOUND

      Popular Stories

      • Email: info@medicaldialogues.in
      • Phone: 011 - 4372 0751

      Website Last Updated On : 13 Oct 2022 5:14 AM GMT
      Company
      • About Us
      • Contact Us
      • Our Team
      • Reach our Editor
      • Feedback
      • Submit Article
      Ads & Legal
      • Advertise
      • Advertise Policy
      • Terms and Conditions
      • Privacy Policy
      • Editorial Policy
      • Comments Policy
      • Disclamier
      Medical Dialogues is health news portal designed to update medical and healthcare professionals but does not limit/block other interested parties from accessing our general health content. The health content on Medical Dialogues and its subdomains is created and/or edited by our expert team, that includes doctors, healthcare researchers and scientific writers, who review all medical information to keep them in line with the latest evidence-based medical information and accepted health guidelines by established medical organisations of the world.

      Any content/information on this website does not replace the advice of medical and/or health professionals and should not be construed as medical/diagnostic advice/endorsement or prescription.Use of this site is subject to our terms of use, privacy policy, advertisement policy. You can check out disclaimers here. © 2025 Minerva Medical Treatment Pvt Ltd

      © 2025 - Medical Dialogues. All Rights Reserved.
      Powered By: Hocalwire
      X
      We use cookies for analytics, advertising and to improve our site. You agree to our use of cookies by continuing to use our site. To know more, see our Cookie Policy and Cookie Settings.Ok