HomeHealthcare NewsFortis looks to ramp up board, but old issues remain

Fortis looks to ramp up board, but old issues remain

Two FIIs had on April 18 asked for an extraordinary general meeting to appoint their three new nominees to the board.

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By Ekta Batra  April 27, 2018, 6:12:03 PM IST (Updated)

Fortis looks to ramp up board, but old issues remain
The board of hospital operator Fortis Healthcare assembled on April 26 for a two-day meeting to decide on the four binding bids it received. But there was little action on that front because Renuka Ramnath who was a part

of the expert panel committee stepped down a day earlier.

However, the board did decide one matter. It invited the three individuals nominated or recommended by Jupiter India Fund and East Bridge to come on board. The two FIIs, which hold 12% stake in Fortis, had on April 18 asked for an extraordinary general meeting to appoint their three new nominees to the board and ask for the removal of current board members.

Here are the three new inductees recommended by Jupiter and East Bridge:

Suvalaxmi Chakraborty:

Held positions in ICICI and ICICI Bank.

Director of Magma HDI General Insurance, Caspian Impact, Espandere Advisors and RGVN Microfin.

Advisor to Fullerton India Credit Company, a subsidiary of Singapore’s Temasek Holding.

 Ravi Rajagopal:

Chairman of JM Financial, Singapore.

Independent director of audit committee of Vedanta.

Previous positions include head of finance and commercial at Ranbaxy in 1995-96.

Indrajit Banerjee:

Senior roles in Ranbaxy, Cairn India, Lupin and Indal.

President, CFO, member of executive committee at Ranbaxy between 2011 and 2015.

The move to induct new board members is welcome. With these inductees, the board strength has increased to eight. This to an extent addresses criticism of the lack of board strength and strong links with the former promoters of Fortis.

Yet, one can’t help notice the links the new inductees have with some bidders, which begs the question: is there a conflict of interest?

The most prominent link is with Ravi Rajagopal. He is the current Chairman of JM Financial Singapore. The JM Financial website says Rajagopal helps identify opportunities for the company in the UK and Europe.  Why is this relevant? JM Financial, according to people familiar with the matter, is advising the Munjal-Burmans, one of the four binding bidders for Fortis.

The other connection: Suvalaxmi Chakraborty. She is an advisor to Fullerton India Credit Company, which is a subsidiary of Temasek Holdings. Why is this relevant? The investment company holds a stake in Manipal Health Enterprises, which has also made a binding offer for Fortis.

Lastly, Indrajit Banerjee has a strong connection with Ranbaxy, which was owned by the Singh brothers, the erstwhile promoters of Fortis. Ranbaxy was sold to Japan’s Daiichi in 2008 for $4.6 billion, which in turn sold the company to Sun Pharma in 2014 for $4 billion.

Fortis did not comment for this article.

Governance experts say these connections could be random and disconnected. More so, advisory positions are one step further from direct involvement hence not as much a concern. But having said that, there are questions that must be asked.

Given the interest in Fortis and number of parties involved, should members with even the slightest connection to related parties even in advisory positions be nominated? Does this qualify as a conflict of interest? And should there have been more transparency on how East Bridge and Jupiter even arrived on these names?

And while these questions remain, experts will wait to see if the nominees accept to be a part of the board and whether there will be any further restructuring. ​

Ekta Batra is an anchor and associate editor, research at CNBCTV18. She has been tracking pharma and healthcare for almost a decade.