The sounds of silence

PT Jyothi Datta | Updated on July 12, 2018 Published on July 12, 2018

The new board has not cleared the ‘Fortis fog’

In a business-as-usual covering letter to the stock exchanges after its last board meeting, Fortis Healthcare informed that its meeting commenced at “23 hours” and ended at “6 hours”.

Wait a minute, 23 hours? That’s way too nocturnal even by Fortis’ standards of close-to-midnight and beyond press communiqués. And with an opening like that, the rest of Fortis’ filing to the stock exchanges was bound to be no less intriguing.

But that was not the expectation from Fortis’ last board meet. The recast board of directors was to give greater clarity on the investigations into alleged questionable financial transactions with former promoters, besides revealing details on possible suitors for Fortis. Instead what we got a deafening silence.

For those not tuned into the Fortis story, the cash-strapped hospitals group is on the look out for a suitor to bail out of its present situation and infuse fresh energy and direction into its operations. And its storyline has all the ingredients of a corporate potboiler from allegations of financial fraud to resigning directors, court cases being fought in different geographies to late night board meetings.

But after a very public round of players throwing their hats into the ring for the Fortis hospitals network and the jubilant announcement of a winner, the entire process fell through as shareholder confidence dipped in the then board. A new board was instituted and a fresh round of bidding commenced.

More questions

Disappointingly though, there’s been no official communication from the company’s board this time on potential suitors who continue to be interested in Fortis. Not a word on whether the much-publicised winner from the last round, the Hero-Burman combine, is still in the race. And if it is not, as is the word in investment banking circles, why has it stayed away this time around?

Was it because of uncomfortable details coming out of investigation reports, in which case don’t the shareholders also have the right to know? Or was it the auditor’s “qualified opinion” that summed up the layers around the Fortis story without quite taking a call?

Industry veterans who understand the slippery pathways of corporate goings-on agree that it is odd for a board meeting to start at 23 hours. Marathon meetings yes, but starting close to midnight? Surely the company must have an explanation, one veteran said.

Well if they did, surely it was not forthcoming when last checked with the hospitals group.

As for the auditors’ report, it’s been much discussed in the media with some industry observers questioning its non-committal tone. But then again it gets tricky, as calling out a corporate loan given allegedly without the said internal approvals could raise questions on possible similar transactions in the past as well. For Fortis, after the many suitors who elbowed each other in the bidding race, now it seems there are just two. The TPG-Manipal Group combine was the first mover which had made a formal “strategic”proposal for Fortis. And then there’s Malaysia’s IHH Healthcare that seems to combine intent with the stomach to take on all that could unravel from the maze that is Fortis. Fortis needs a quick clean up and hopefully Friday’s board meeting delivers a meaningful direction. But why is this of any importance to us? The country can ill afford to let a network of hospitals waste away in the face of long-term uncertainty.

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Published on July 12, 2018
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