FOR­TIS TO HIRE EX­TER­NAL LE­GAL FIRM TO PROBE PRO­MOT­ERS' FUND MIS­AP­PRO­PRI­A­TION

Business Sphere - - IN THE NEWS -

For­tis Health­care to­day will hire an ex­ter­nal le­gal firm to carry out in­ves­ti­ga­tion into al­leged si­phon­ing of cash by the firm's pro­mot­ers, Malvin­der Singh and Shivin­der Singh. The duo, who last month re­signed from the board of the com­pany, are al­leged to have taken Rs 473 crore out of the hos­pi­tal com­pany they con­trol with­out board ap­proval. The al­leged fi­nan­cial im­pro­pri­ety hap­pened about a year ago. In its sec­ond and third quar­ter earn­ings state­ment, For­tis said its Au­dit and Risk Man­age­ment Com­mit­tee "de­cided to carry out an in­de­pen­dent in­ves­ti­ga­tion through an ex­ter­nal le­gal firm." "The scope of the in­ves­ti­ga­tion, in­ter alia, cov­ers (a) in­ter cor­po­rate de­posits (ICDs) given by a wholly owned sub­sidiary of the com­pany; (b) in­tra-group and re­lated party trans­ac­tions, in­clud­ing com­pli­ance with ap­pli­ca­ble laws and reg­u­la­tions," it said. For­tis had pre­vi­ously stated that the com­pany had loaned Rs 473 crore in the nor­mal course of trea­sury op­er­a­tions to some en­ti­ties, which later be­came part of the founders' group due to a change in share­hold­ing. The loans have since been rec­og­nized as re­lated-party trans­ac­tions and re­pay­ment has com­menced. The com­pany on March 1 said it had on Fe­bru­ary 16 re­ceived a let­ter from SEBI con­firm­ing that an in­ves­ti­ga­tion had been in­sti­tuted by the mar­ket reg­u­la­tor in the mat­ter. SEBI had asked the com­pany to fur­nish in­for­ma­tion and doc­u­ments re­lat­ing to the fund trans­fer. "The com­pany has fur­nished some of the in­for­ma­tion and doc­u­ments re­quested and has sought ad­di­tional time for sub­mit­ting the bal­ance in­for­ma­tion as re­quested," For­tis said. For­tis said it has also re­ceived a no­tice from the Regis­trar of Com­pa­nies seek­ing in­for­ma­tion on the same mat­ter. Com­pany's au­di­tor, Deloitte Hask­ins & Sells LLP, which re­port­edly had re­fused to sign off on the re­sults of July-Septem­ber quar­ter un­til the money that Singh brothers had taken out from the com­pany was ac­counted for or re­turned, in its notes on the earn­ings said it can­not com­ment on the firm's fi­nan­cials pend­ing out­come of the in­ves­ti­ga­tion. "Pend­ing com­ple­tion of the afore­said in­ves­ti­ga­tions, we are un­able to con­clude on the ef­fects, if any, of the out­come of the same on the fi­nan­cial re­sults, state of af­fairs, cash flows and op­er­a­tions of the com­pany," it said. The gov­ern­ment has asked the Se­ri­ous Fraud In­ves­ti­ga­tion Of­fice (SFIO) to sub­mit its probe re­port in three months. The in­ves­ti­ga­tion will also look to iden­tify ben­e­fi­cia­ries if funds were di­verted. For­tis had paid a fine of Rs 65.98 lakh to stock ex­changes for "non­sub­mis­sion of un-audited fi­nan­cial re­sults for the quar­ter ended Septem­ber 30, 2017" within the stip­u­lated time. Even for declar­ing re­sults of Oc­to­ber-De­cem­ber quar­ter, it had sought an ex­ten­sion. The com­pany on March 1 de­clared re­sults for both the quar­ters to­gether. It re­ported net losses for both the quar­ters - Rs 23.61 crore for July-Septem­ber com­pared to Rs 38.24 crore in the year ago pe­riod, and Rs 19.10 crore for Oc­to­ber-De­cem­ber as op­posed to a profit of Rs 453 crore on a one-off gain by an as­so­ciate com­pany in the year-ago pe­riod. For­tis had on Fe­bru­ary 9 stated: "For­tis Hos­pi­tals Ltd, a whol­ly­owned sub­sidiary of For­tis Health­care Ltd, has de­ployed funds in secured short-term in­vest­ments with com­pa­nies in the nor­mal course of trea­sury op­er­a­tions. "These en­ti­ties have be­come part of the pro­moter group due to a share­hold­ing change in those en­ti­ties. Sub­se­quently, the same loans have been recog­nised as re­lated party trans­ac­tions." The loans amount­ing to Rs 473 crore are ad­e­quately secured and re­pay­ment has since com­menced, it had added.

Malvin­der Singh (R) and Shivin­der Singh (L)

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