Fortis Healthcare in poor light

After Reliance Industries, Fortis Healthcare is the second top loser on the BSE. Going down 3.25% to Rs.185 levels, the stock price does not seem to be in any mood to come out the color red today.

The Singh brothers, who had been trying to sell part of their 63% stake (of which 80% is pledged with lenders) are now facing a serious corporate governance issue, which puts their plan to exit in complete jeopardy. The Japanese company, Daiichi Sankyo, the company which took over Ranbaxy, has moved the Delhi High Court, seeking to block any sale of stake, stating that it would go on to dilute assets and prevent collecting the damages due to Daiichi from the brothers for the 2008 sale of Ranbaxy.

In May’16, the Court had ruled that the brothers need to to pay damages worth Rs 2,563 crore to Daiichi as fine for concealing and misrepresenting facts from the Japanese drug giant when it purchased about 35% stake in Ranbaxy in 2008. The court had ruled that the Singh brothers did not share information with Daiichi on investigations into Ranbaxy by the US Department of Justice and Food and Drug Administration (FDA). The brothers are currently contesting this ruling but in the process, making moves to sell stake.

So obviously, the Japanese company is worried that the brothers might sell stake and scoot, without paying up the damages.