Fortis’ Loss Widens On Write-Offs Related To Singh Brothers

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The quarterly loss of Fortis Healthcare Ltd. was extended by canceling, among other things, the loans and deposits related to the Singh brothers, their former promoters.

India’s second largest hospital chain, which is evaluating takeover bids, reported a net loss of 932 million rupees for the quarter ending in March, compared with a loss of 68 million rupees in the same period from last year. This was largely due to an exceptional loss of Rp 833.5 million (Chinese Rp) that the company attributed to the cancellation of goodwill, deposits and inter-company advances.

The deposits were used by the borrowing companies to “grant or pay loans to entities related to the promoters”. Malvinder Singh and Shivinder Singh, who have lost control of the hospital’s company after lenders invoked pledges, are being investigated for diverting funds from Fortis Healthcare and Religare Enterprises Ltd. to pay off their personal debts.

Profits were announced after the newly formed board meeting lasted two days. The board has postponed the approval of quarterly and annual financial results, saying that more time is needed to consider aspects of the outcome of an internal investigation into alleged financial irregularities, cable agency PTI reported.

Revenue in January-March fell 3 percent to Rs. 1,086 crore, while earnings before interest, taxes, depreciation and amortization fell by 85 percent to Rs 12 crore. The company’s operating margin shrank to 1.1 percent from 6.9 percent.

These are the highlights of the research report.

This comes at a time when the health chain is in the process of finding a buyer. At its last meeting, Fortis invited the combine Munjal-Burman, Manipal Health and IHH Healthcare supported by TPG, which had submitted binding offers in the previous round to submit new offers for the company. The company also decided to include Radiant Life Care Pvt. Ltd. in the new tender process despite the lack of a binding offer.