Fortis Healthcare announced a court-ordered forensic audit following a Delhi High Court ruling. The audit will examine transactions including the erstwhile promoter entity’s share dealings and IHH’s investment into Fortis. While the company states this order does not change strategic plans, it could incur legal expenses and is expected to conclude within six months, with a report due within 9 months.
Court Mandates Forensic Audit on Key Transactions
Fortis Healthcare Limited has disclosed that the Delhi High Court has ordered a forensic audit concerning various transactions, including the dealings of the erstwhile promoter entity and the investment made by IHH Healthcare. This directive stems from a recent court order, which has also set the scope and timeline for the audit.
Audit Scope and Timeline
The forensic audit is comprehensive, aiming to reconstruct the evolution of the promoter entity and examine IHH’s acquisition of a controlling stake in Fortis. It will also review the subsequent utilization of investment funds for acquiring healthcare assets from RHT Health Trust. Additionally, the audit will scrutinize the role of Fortis and its officers in the unencumbered share dissipation transaction of the erstwhile promoters, and the involvement of 17 banks and financial institutions in the dissipation of assets.
As per the court’s order, the forensic auditor is required to send out questionnaires within 4 weeks, with a 2-week response period. The final report is expected within 6 months from the initial requisition, meaning the entire process is slated to conclude around 9 months from the order date.
Company’s Stance and Future Outlook
Fortis Healthcare has reiterated its commitment to cooperating fully with the forensic exercise. The company’s management has stated that the current order does not change, limit, or impede any of its strategic or operational plans, including investments, capex, bed expansion, and M&A initiatives. While acknowledging that the audit findings will be presented to the court, Fortis expressed confidence that it has been in complete compliance with the law and does not foresee any significant adverse results from the audit.
IHH Healthcare also emphasized its confidence, noting that its investment was through a fair and transparent primary offering and that they are fully committed to Fortis as its growth engine in India. They confirmed that this audit does not alter their long-term plans, including potential future capital infusions and the integration of Gleneagles and Fortis at an appropriate time.
Legal Expenditure and Operational Continuity
Regarding financial implications, the company indicated that there is currently no need for provisioning, as no liability has been fixed. However, it anticipates some increase in legal expenditure due to this battle, which is expected to be similar to the ₹25 crore incurred last year when the case was more intense. Fortis also assured that its operations, including expansion plans and M&A activities, remain insulated from these legal proceedings and will continue as planned, driven by internal accruals.
Source: BSE
