Stay or not, Fortis revamps board

Fortis Healthcare, which has just acquired Escorts Heart Institute and Research Centre from Escorts Ltd, has reconstituted its board.

Ranbaxy family scions Malvinder and Shivinder Mohan Singh, who are also the promoters of Fortis, have joined the EHIRC board along with Fortis Chairman Harpal Singh, while Escorts Ltd's representatives have exited.

Besides, according to Fortis' senior counsel Rajiv Nayyar, the shares of EHIRC have been pledged to HDFC Bank.

The Delhi High Court, ruling on a petition filed by Anil Nanda, the estranged brother of Escort Chairman Rajan Nanda, to block the deal, has ordered status quo.

Fortis has just acquired 90 per cent of EHIRC's equity for Rs 650 crore (Rs 6.50 billion). "As much as Rs 585 crore (Rs 5.85 billion) have been transferred to Escorts, and Fortis has already pledged the shares to HDFC Bank," said Nayyar. But no one from either Fortis or Escorts confirmed the pledging of shares.

Malvinder Mohan Singh confirmed the reconstitution of the EHIRC board. Escorts Chief Financial Officer Shailendra Tandon said, "There will be no member of the Escorts group (on the board)." Harpal Singh refused to comment on the ground that the matter was sub-judice.

Anil Nanda's faction, however, is playing a different tune. "No sale of shares could legally have taken place. We are concerned also about the transfer of the land and property. The property continues to be in the name of EHIRC, Delhi, and till now, no document on the transfer has been filed with the Registrar of Companies," said VP Singh, senior counsel for Anil Nanda.

Simran Mehta, counsel for Escorts Ltd, said the transaction had entered the books of EHIRC and that the stock exchanges had been intimated before the court's order.

There also seems to be some confusion about whether Escorts can use the money that has come from the sale even as the court case is on.

"About Rs 585 crore have come through this deal, of which Rs 525 crore (Rs 5.25 billion) belong to Escorts for its 80 per cent stake. I have no idea whether this money can be used by Escorts or not," said Tandon.