The Hindu Business Line : Escorts sells equity in heart institute to Fortis for Rs 585 cr

ESCORTS Ltd on Wednesday said that it has sold its equity in Escorts Heart Institute and Research Centre (EHIRC) to Ranbaxy-controlled Fortis Healthcare for Rs 585 crore.

Mr Rajan Nanda, Chairman, Escorts Ltd, told Business Line, "We have sold 90 per cent equity in EHIRC to Fortis on a total valuation of Rs 650 crore. We are getting Rs 585 crore in the all-cash deal." The remaining 10 per cent would continue to be held by Dr Naresh Trehan.

The transaction would help the debt-ridden Escorts group, which was in the process of business restructuring, to overcome its liquidity crunch and debt repayment problem. "The deal would allow Escorts to restructure debt and provide the requisite liquidity to turn around the business," Mr Nanda said. At present, Escorts Ltd has debt of around Rs 1,000 crore.

Restructuring: Reeling under a financial crisis, Escorts had recently undertaken a major business and organisational restructuring, as part of which his son Mr Nikhil Nanda took over as COO of the company after resigning from the Escorts board.

The acquisition would strengthen Fortis' presence in the field of cardiology and consolidate its position in the healthcare sector. Mr Harpal Singh, Chairman, Fortis Healthcare Ltd said, "By bringing EHIRC under our fold the company has a combined competency for ensuring that India becomes a healthcare hub."

Opposition to deal: The deal, however, comes amid stiff resistance from Mr Rajan Nanda's younger brother Mr Anil Nanda, CMD of Goetze India, who moved the Delhi High Court on Wednesday to prevent the deal.

"I will do whatever I can in my capacity to stop this deal and take EHIRC back to its original status as a charitable society. I am even more astonished that Escorts plans to use funds derived from the sale of a charitable society to revive a commercial entity," Mr Anil Nanda told Business Line.

However, apprehending litigation on the issue, Escorts Ltd earlier filed a caveat to pre-empt an ex-parte hearing.

Mr Anil Nanda's petition seeks to revert EHIRC to its original status as a charitable society, and block any move to sell the heart institute. The petition is set to come up for hearing on Friday morning. Mr Rajan Nanda, however, pointed out that EHIRC is registered as a company since the year 2000, and has been paying taxes.

Meanwhile, Dr Trehan maintained that he is a professional in the company and has nothing to do with litigation between the Nanda brothers.

The Escorts' scrip rose 8.35 per cent on Wednesday amid speculation about the sell-off and closed at Rs 107.70 on the Bombay Stock Exchange (BSE) today.

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