Fortis Healthcare (FORTIS) Investor update summary

Overview of the Delhi High Court order and forensic audit

• The Delhi High Court has ordered a forensic audit covering the evolution of the erstwhile promoter entity, acquisition of controlling stake by IHH, and the role of banks and key personnel from 2006 to 2018.

• The audit will examine the acquisition process, approvals, and use of investment funds, including the purchase of healthcare assets from RHT Health Trust in Singapore.

• The audit also includes the examination of share dissipation by former promoters and the involvement of 17 banks and financial institutions.

• The timeline set by the court is four weeks for information requisition, two weeks for response, and six months for the final report.

• The cost of the forensic audit is to be borne by Daiichi, as per the court order.

Impact on operations, strategy, and financials

• The order does not impede ongoing or planned investments, CapEx, bed expansion, or M&A initiatives.

• No financial provisioning is required for the audit, as it is a fact-finding exercise with no liability fixed; legal expenses are expected to be similar to last year (around INR 25 crore).

• Operations, patient care, and growth plans remain insulated from legal proceedings, with continued focus on expansion and M&A.

• Communication with employees and stakeholders is ongoing to maintain transparency and confidence.

IHH’s position and future plans

• IHH’s investment was through a primary share issuance, not secondary market purchases, and followed a transparent, competitive process.

• IHH remains committed to supporting growth, including potential capital infusion and a future merger with Gleneagles, with no change in plans due to the order.

• IHH aims to increase its stake to over 50% in the next three to five years, subject to legal and regulatory limits.