The Fortis Scam and the Fall of the Ranbaxy Moguls

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Fortis Healthcare is a chain of hospitals in India which is currently owned by Malaysia’s IHH Healthcare Bld as it’s biggest shareholder in the company. They have 4 members on the Fortis’s board as of Feb 2019.

Fortis Healthcare announced a demerger of its chain of hospitals, which has been acquired by Manipal Hospitals. It has also sold off its majority stake in SRL diagnostics to the same group. Here are some of the details of this transaction:

Fortis Ownership. Pic Courtesy: Economic Times

Ranjan Pai who is the principal investor in Manipal Hospitals will become the largest stakeholder post-merger at 58.8%. TPG Capital which owns 21% of Manipal Hospitals will get a stake of 20% post-merger.

Fortis’s erstwhile promoters Mr. Shivinder and Malvinder Singh will have a 0.3% stake down from 0.8% in the company.

In the other part of the transaction, Manipal Hospital will acquire a 50.9% stake in SRL Diagnostics from Fortis Healthcare and other private equity investors at a total equity valuation of Rs. 3,600 crore. This includes Manipal Hospitals buying a 20% stake from Fortis Healthcare and an additional 30.9% stake from private equity investors.

What transpired over the decade?

To understand what went wrong with Fortis, we need to take a look at their promoters, the Singh Brothers, Malvinder Mohan Singh, and Shivinder Mohan Singh.

The Singh Brothers

Mr. Parvinder Singh, their father, was the controller of Ranbaxy Laboratories Ltd. an Indian pharmaceutical company. After the death of their father, the brothers inherited a 33.5% stake in the hugely successful company. With the company at its peak, they were soon able to cash in on the company by selling it to Japanese drugmaker Daiichi Sankyo in 2008 for an estimated 4.6 billion$ out of which 2.4 billion$ went to them.

They then went on to invest this money in Fortis Healthcare and Religare Enterprises, transforming them into one of the biggest companies in the Indian Healthcare and NBFC sectors respectively.

These businesses were running smoothly, and the businesses were generating profits until the year 2013-14 when the companies started to report large losses in their financial reports. This led to a number of reports of financial wrongdoings coming out mentioning that a substantial part of the proceeds from the Ranbaxy sale was transferred to family-owned businesses.

Chain of Events at Fortis

Unravelling of Bad Debts

It has been revealed that Singhs loaned as high as Rs. 2,700 crores to firms owned by the family of Baba Gurinder Singh Dhillon who is the spiritual head of the popular Radha Saomi Satsang Sect. The community has a following of around 2 million people in 9 countries.

Baba is the maternal uncle and the spiritual master of the Singh brothers and owns a large portfolio of assets in the real-estate business. It has been widely reported that the Rs. 2,700 crores lent by the Singhs to Baba were never repaid after a slowdown ravaged their real-estate business starting 2012.

An initial investigation by law firm Luthra and Luthra found a lot of irregularities leading to serious probes by government agencies including Serious Fraud Investigation Office (SFIO) for their wrongdoings in Fortis and Religare, after which they had to relinquish control of both companies.

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The Daiichi Case

As if the problems with the bad debts and illegal transactions weren’t enough, the sale of Ranbaxy to Daiichi Sankyo raised quite a few eyebrows. The most important of which is the probe by the US Food and Drug Administration Department (FDA) and the Department of Justice accusing the Singh brothers of falsifying data and test results on their drugs.

Later, the USFDA banned a dozen of the drugs produced by Ranbaxy from entering the US. There were several charges levied against the company and they had to pay around $500 million in fines levied by the FDA as part of a settlement process.

Daiichi also sued the Singh brothers for concealing information from FDA probes in a court in Singapore and won the case and an award of $550 million. This award was later upheld by the Delhi High Court.

The Daichi case and the wrongdoings at Fortis and Religare dealt a crushing blow to the Singh brothers and has scarred their reputation for a lifetime.

Fortis to move to Court

Fortis Healthcare Ltd. is planning to to High Court over concerns that the Singh Brothers have allegedly siphoned off Rs. 403 crores from Fortis to their offshore accounts.

This move comes after SEBI had directed Fortis to take the necessary action to recover the money with due interest from its promoters, the Singh Brothers and their various other companies.

Fortis has approached the court in an ongoing case by drugmaker Daiichi Sankyo Inc. who is seeking to recover $550 million in arbitration award. Fortis may urge the court that if any payment is made in relation to the award, Fortis funds should be kept in mind.

Apart from the brothers Malvinder Singh and Shivinder Singh, the SEBI order named RHC holdings, Shivi Holdings Pvt. Ltd, Malav Holdings Pvt Ltd, Religare Finvest Ltd, Best Healthcare Pvt. Ltd, Fern healthcare Pvt. Ltd and Modland Wears Pvt. Ltd.

Family Feud

The relationship between the brothers has since deteriorated with the elder brother. Malvinder Singh filed a complaint with the Economic Offences Wing against his brother Shivinder Singh, the Dhillon family, Sunil and Sanjay Godhwani for misappropriation of company funds and sought Rs. 8,742 crore in compensation.

Shivinder Singh in his defence has claimed that for over a year between 2015 and 2016 he had devoted himself to serve full time at the spiritual sect Radha Saomi Satsang Beas.

He also claims that during this time there were many decisions taken by the Board which were not in the best interests of the company or its shareholders. According to him these decisions were taken without his approval and he was not aware about them.

The Singh Brothers have also gone on to blame another follower of the religious sect, Mr. Sunil Godhwani, who was appointed to lead Religare at Baba Gurinder Dhillon’s recommendation.

They say Godhwani was also in charge of their holding company, RHC Holding Pvt., and often took decisions without informing them and accused him to be the architect of the financial structures, including the loans to the Dhillon family and companies, that led to their financial troubles.

Some interesting facts have emerged from the complaint filed with the Economic Offences Wing in Delhi and investigations conducted by SFIO. They have brought into light a series of transactions by RHC Holdings Pvt. Ltd., the holding company of brothers Malvinder and Shivinder Singh. RHC extended loans worth Rs. 5,482 crore to Dhillon family members, their associates or entities controlled by them.

Here is a detailed description of how this money was extended to family members and associates as loans through a combination of six companies held under the Fortis group:

Allocations of Loans via Fortis’s Subsidiaries

Malvinder Singh has claimed that this money belonged to the shareholders of the Fortis group and that his brother had diverted these funds to his close associates and family members without taking the approval of the companies board members.

However, the petition was withdrawn at the request of mediation through their ailing mother.

There have also been reports of physical assault with Malvinder posting a video accusing his brother of hurting, threatening and bruising him. The video was ample evidence to show that the mediation had failed and the brothers have again resorted to a never-ending stream of accusations, allegations and formal charges. It seems unlikely that this conflict will end anytime soon.


In the end, the collapse of the Singh empire offers us a window into the mysterious ways in which these organizations function, but this is definitely not the last time that we will be hearing about the financial woes of the Singh brothers.

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