Fortis bidders wary as company’s woes mount
TAKEOVER BLUES Worsening financial situation among top investor concerns MUMBAI:
Prospective bidders of Fortis Hospitals are wary of the worsening financial situation at the beleaguered hospital chain and may not participate aggressively in the bidding process that ends on July 3.
Mint spoke to at least two prospective bidders and one of them said they were still debating if they should place a bid at all.
“Our investors are worried about the present financial conditions,” the person said referring to the deteriorating financials of the firm and a move by the Delhi government, which is likely to come out with a policy to cap profit margins of city hospitals on drugs and devices.
The Delhi government move will impact Fortis Ebitda to the tune of ₹50 crore every year, this person claimed.
“This is on top of an already declining Ebitda at the firm,” the person said. Fortis’s ebitda has been rapidly declining, down from ₹41 crore per month in January to ₹23 crore in March.
This coupled with ₹500 crore fine on Fortis-Escorts and landrelated issues at some of its hospitals, as reported earlier, will affect the bids, the person said.
“You start delaying it and then all the bad things come out,” the person said.
“We are still going through some numbers... We are yet arrive upon a valuation,” the person said. A questionnaire sent to Fortos seeking comments remained unanswered till press time.
Mint on June 8 reported that the due diligence of Fortis Healthcare Ltd has unearthed unpaid vendors’ bills of ₹450 crore, a ₹503 crore penalty on its subsidiary Fortis Escorts Heart Institute and undisclosed landrelated issues at three of its hospitals, which are also a matter of concern for the bidders, which include family offices of Sunil Munjal and Anand Burman, TPG-backed Manipal Hospitals, KKR-backed Radiant Healthcare and Malayasia’s IHH Healthcare.
A second bidder that Mint spoke with was not particularly concerned about the ongoing issue of alleged money laundering at the firm.
“That’s a one time hit. We are not bothered by that. But, we do care about what the government agencies have to say about this,” the person said.
Mint on Monday reported that serious differences have emerged between brothers Malvinder and Shivinder Singh, two former promoters of Fortis , with younger sibling Shivinder at pains to distance himself from the alleged irregularities and decisions taken in the past two years at the hospital chain. Malvinder Singh, who stepped down as executive vice chairman in February, countered by saying that all decisions were taken collectively with Shivinder being informed about it.
The allegations and counterallegations have surfaced once government agencies opened a probe against the brothers after an internal investigation by law firm Luthra and Luthra found mismanagement of funds of about ₹445 crore.