Former Ranbaxy promoters Malvinder and Shivinder Singh on Tuesday assured the Delhi High Court that they will not pursue any stake sale in Indian hospitals chain Fortis Healthcare, a plea sought by Japanese drugmaker Daiichi Sankyo to secure its penalty amount of R2,562-crore awarded to it by the Singapore arbitral tribunal last year.
A Singapore tribunal had last year ordered the Singh brothers to pay the Japanese drugmaker R2,562-crore damages for concealing information regarding wrongdoing at Ranbaxy while selling it for $4.6 billion in 2008. The Singh brothers are contesting this arbitration award in Delhi HC. Along with interest and legal fees, the total liability was last pegged at R3,500 crore.
Justice S Muralidhar directed the Singh brothers to abide by their earlier undertaking-to not sell any assets. On May 24, Daiichi had sought an interim order from the HC to secure assets of the Singh brothers, expressing concerns over possible alienation or disposal of assets, which could frustrate the enforcement of the Singapore award.
Assuring the bench that there was no alienation of assets, Singh brothers contended that they are not parting with their assets, but are merely looking to infuse capital which is necessary for functioning of the company. However, they undertook that they will not divest any stake in the hospital chain till January 23, the next date of hearing.
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Daiichi Sankyo had moved the HC to restrain Singh brothers, the promoters, and their group companies from selling or diluting their assets in various companies like Religare, Fortis Healthcare, RHC Holdings. Despite the assurance, the brothers have “entered into definitive agreements for transferrng their indirect interest in Ceretra Advisors as per the stock exchange filing made by Religare on January 6,” it said.
In its application, Daiichi has sought a direction to Singh brother to secure the award amount by depositing it in the HC or attachment of the movable and immovable assets and properties in which Singh brothers have any beneficial interests until the disposal of the petition.
It claimed that the Singh brothers were looking to rope in an investor in Fortis Healthcare and any divestment would dilute assets and hamper recovery of damages from the Singh brothers. Daiichi’s senior counsel CA Sundaram told the court about the Singh brothers planning to sell their controlling stake in Fortis Healthcare to global private firm TPG Capital for R3,000 crore. The Singh brothers currently own 63% stake in Fortis Healthcare. However, 80% of this is already pledged with lenders.
Quoting various newspaper reports, Daiichi said that the respondents have approached financial and strategic investors to sell Religare Finvest, a wholly-owned subsidiary of Religare, for around R6,000 crore. “It is pertinent to note that Religare Finvest is one of the most profitable subsidiaries of Religare contributing to almost 55% of Religare’s total revenue… Further, as per the newspaper reports, the book value of Religare Finvest is approximately R2,700 to R2,900 crore…” the application stated.