Sentiments up as IHH obtains controlling stake in Fortis

Until a day ago, employees at Fortis Healthcare Limited were uncertain if they would get their next month's salary and banks were unsure if they would be able to recover loans lent to the beleaguered hospital chain. Ravi Rajagopal, Chairman of the Fortis Healthcare board, said that this has changed today as the IHH Healthcare Berhad group assumes operational control of the company. “It is a red letter day for the organization and months of uncertainty have ended,” Rajgopal said.

Despite the Fortis-IHH deal being mired in controversy, Dr Tan See Leng, the Managing Director and CEO of IHH, who has also assumed the post of an Additional Director of Fortis, said that IHH had been interested in investing in Fortis since 2016. “The intention of the Fortis acquisition is to expand the footprint of IHH in India, as it is the key market after Malaysia, Turkey and Singapore for us,” Dr Leng said. The company already has seven operating hospitals in India including those run in collaboration with the Apollo group and the Global Hospitals group.

It also has hospital operations in Greater China, Brunei, Macedonia, UAE and Bulgaria.

Dr Leng said that even as Fortis faces strong headwinds, he was confident that the ₹4000 crore capital injection will secure operations of the company. The revenue of IHH Healthcare Berhad stood at 11.14 billion dollars in 2017.

When asked if the impending recovery of ₹3,500 crore by Japanese drugmaker Daiichi Sankyo from the ex-promoters Shivinder and Malvinder Singh would affect the the operations of the Fortis Healthcare Limited, Rajgopal said, “We have severed all links with brothers, and as far as Daiichi is concerned, Fortis is on the same side as Daiichi and is seeking recovery of at least ₹494 crore, which had been allegedly taken out of the company by the brothers.”

The company recorded a net loss of ₹167 crore in Q2FY19 results as compared to a loss of ₹45.9 crore during the same period last year, which it attributed to impairment charges.

Dr Leng said that IHH had set aside money to buy Religare Health Trust. He said that IHH is well mitigated against risks of the company at the moment, though he said that they were very concerned about the ongoing litigation and possible link backs of the company to the erstwhile promoters.

He said that IHH was keen on improving bed occupancy rates which currently stood at 69 per centand had fallen from 75 percent in the last quarter. “We are focussing on improving bed occupancy, controlling borrowing costs and buying back hospital assets,”Dr Leng said.

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