Fortis gets board nod to raise up to $750 mn
Photo Credit: Shah Junaid/VCCircle

Fortis Healthcare Ltd has received board approval for enabling a fundraising option worth up to Rs 5,000 crore ($751.56 million), as the company continues with its efforts to divest its international business, it said in a filing to the stock exchanges.

The fundraising could be through a qualified institutional placement (QIP), foreign currency convertible bond (FCCB), convertible securities or any other method, it said. It will require the shareholders' approval.

The company, however, did not explain the reason for enabling the resolution to raise the funds.

A spokesperson at Fortis said the resolution was passed some years back but it had expired. This is, therefore, just a renewal of the enabling resolution. There is no requirement for funds for the company as of now, he said.

Meanwhile, the company reported a net profit of Rs 25.26 crore for the first quarter ended June 30, 2016 against Rs 97.40 crore for the corresponding period in the last fiscal. The results are not comparable because of the divestments of the company's international businesses.

Its total income from operations was at Rs 1,121.16 crore during the quarter against Rs 1,034.27 crore in the year-ago period, it said. 

Fortis, the second-largest hospital chain in the country, reported a 9% year-on-year jump in its revenues at Rs 910 crore during the quarter for its India hospital business. The contribution of international sales to overall revenues of the hospital business was at 11% or Rs 101 crore.

"We are on the right track with the hospital business up 9% and the highest ever EBITDAC at Rs 139 crore. In the coming quarters, we will drive further substantive gains as we further accelerate our efforts across all focus areas," said Bhavdeep Singh, CEO, Fortis Healthcare.

Fortis also said its board has given an in-principle approval to demerge the company's diagnostic business SRL Ltd, the country's largest diagnostics chain by revenues.

The board has formed a restructuring committee to detail the nuances of the demerger structure, including valuation, share entitlement ratio and other incidental matters and to present the same before it on August 19, 2016 for final approval, it added.

Fortis had said in May that it will look at demerger of SRL as an option before taking the subsidiary public.

Expectations were high on SRL reviving its IPO plans after sector rival Dr Lal PathLabs' IPO was oversubscribed 32 times and made a spectacular stock market debut in December. Recently, another diagnostic chain Thyrocare Technologies Ltd's IPO was oversubscribed 72.26 times and its shares too surged giving on debut--a thumbs up to the diagnostics sector as a whole. 

Fortis' diagnostics business recorded revenues of Rs 192 crore during the quarter, up 7% from the year-ago quarter. As on June 30, SRL had a network of 325 labs and about 7,300 collection points.

With the demerger of SRL, Fortis would effectively complete the geographic and business diversification it started during 2011-12, buying diagnostics and international hospital firms owned privately by the Singh brothers. The firm has already completed the exit from the Asia-Pac healthcare service business as it focuses on its core Indian hospital business.

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