Fortis Healthcare – Repeat of Satyam?

We are seeing a repeat of what happened at Satyam and UB Group, at Fortis. Fortis recently admitted having ‘deployed’ funds of Rs. 473 Crore with companies (that became promoter owned companies) by terming them as ‘secured short-term investments in normal course of treasury operations”. This involved,

  • no notification to stock exchanges either at the time of deploying these funds or when the entities became promoter entities,
  • not seeking mandatory shareholder approval by routing the funds through a subsidiary, and
  • possible violation of Indian Accounting Standards by classifying loans and advances to related parties (these promoter entities) as cash and equivalents.

Fortis even hasn’t yet published its Q2 and Q3 results giving an absurd rationale of the Board being busy with other issues at hand. This has also triggered SEBI to institute an investigation for which it has asked Fortis to furnish information by 26th February 2018.

This article discusses this in detail and also studies Fortis’ past actions to find that its frequent restructurings and frequent directors’ resignations has eroded investors’ trust as well as wealth. Fortis doesn’t seem to be a stranger to utilizing company funds to fund promoters’ own business interests.

Read the full article here: Fortis Healthcare – Repeat of Satyam