Dear Shareholders,
I am honoured to present the Annual Report of your Company, for the
year ended March 31, 2024.
The year gone by has been a very eventful one in the history of this
great organisation. As we speak, and as you are all well aware, the business operations of
your Company have been transferred to MGM Healthcare Pvt Ltd with effect from February 01,
2024. Malar Hospital is now owned and managed by MGM Healthcare and neither Fortis Malar
Hospitals Limited, nor any entity of its Group or affiliated companies, has any ownership
or control over the management or operations of Malar Hospital.
Earlier during the financial year 2023-24, the Board of Directors,
along with the management, applied themselves to charting out the most optimal course for
the organisation. This was in the context of two compelling developments. The first was
the strategic decision taken by our principal shareholder, Fortis Healthcare Limited, to
exit Chennai, with the sale of its business operations at Fortis Hospital located at Arcot
Road, Vadapalani and the second development was related to the challenges confronting the
Fortis Malar Hospital from a regulatory compliance point of view. As shared with all of
you, in the annual reports of the Company in the past couple of years, this hospital had
been facing certain legacy issues, pertaining to fire non-compliances and building
completion NOC for a prolonged period of time. The Board was cognisant of the issues and,
under its directions, with support of several subject matter experts, the management made
all possible efforts to overcome the challenges to make the hospital fully compliant to
the fire safety and building completion norms. Whilst their efforts resolved most of the
compliance related issues highlighted by the regulatory authorities, a few issues
pertaining to the hospital infrastructure, critical for obtaining the fire NOC, could not
be addressed without a complete shutdown of the facility, for a long period of time, and
rebuilding large portions of the hospital. This situation had severely constrained further
investments in the much-needed upgradation of the old facility and consequent development
of new medical programs to serve the needs of our patients. Lack of such investments very
adversely impacted our ability to retain and hire senior level clinical talent, leading to
a steadily declining business performance reflected in the Company's revenue from
operations declining from ' 111.87 Crores in FY20 to ' 59 Crores (till February 01, 2024)
in FY24.
The management, under guidance of the Board of Directors, evaluated
several options to tide over the challenges, whilst keeping the hospital operational and
safe. However, after a detailed evaluation of all the options to tide over the significant
challenges, and keeping the interests of all our stakeholders at the forefront, especially
the safety of our patients in the unlikely event of a fire accident, the Board took the
difficult decision to divest the operations of Fortis Malar Hospital. Consequently, the
Board of Directors, in the discharge of their fiduciary duties, took due care and
appointed merchant bankers to explore the possibility of business divestment as part of a
comprehensive divestment plan, including the related land and building assets. Legal
advisors were also appointed to complete the transaction in accordance with due process
and in compliance with all applicable laws.
Eventually, the Board of Directors decided to sell the business
operations pertaining to Fortis Malar Hospital to MGM Healthcare Private Limited
("MGM"), a prominent healthcare delivery service provider, for a sale
consideration of ' 45.72 Crores (including Positive Net Current Asset adjustment of ' 0.22
Crores) The plan envisaged a seamless transition of the business operations and all staff,
including the hospital's medical fraternity, to MGM. This plan was subsequently approved
by our shareholders on January 03, 2024.
The sale proceeds, as per the terms and conditions of the agreement
entered with MGM, were realised and the transaction was consummated on February 01, 2024.
The transaction was in the form of a business transfer agreement in which the entire
business operations of Fortis Malar Hospital (including the manpower, assets and
liabilities related to the business) were transferred to MGM Healthcare Ltd. effective
February 01, 2024.
Post the divestment, the company continues to exist as a listed entity
but ceases to have any business operations. The Board, in discharge of its fiduciary duty
to distribute the available surplus funds of Fortis Malar Hospitals Limited, post the
divestment, in the most optimal and efficient manner, approved the distribution of an
interim dividend of ' 40 per share on April 12, 2024.
Furthermore, after the transaction closure and the distribution of the
interim dividend, there remained an additional surplus available for distribution as a
dividend. In its meeting held on May 17, 2024, the Board declared a final dividend of '
2.5 per share, subject to shareholder approval at the AGM on July 31, 2024. With this, the
total dividend distributed to our shareholders will touch ' 42.5 per share for the period.
Consequent to the distribution of the final dividend (subject to
shareholders approval), the remaining cash and cash equivalents would be used for the
purposes of meeting the company's ongoing expenses in relation to running of the company,
resolving pending medico legal case and managing any contingent liabilities associated
with the sale of the company's business operations.
It is also noteworthy that, as per applicable rules, the pending open
offer (MTO) by IHH Healthcare Berhad, the parent company of Northern TK Venture Pte.
Limited (NTK - promoter of Fortis Healthcare Limited), for Fortis Malar shareholders,
which was at ' 60.1 per share, now stands reduced to ' 20.1 per share. This was also duly
shared in the stock exchange disclosure dated April 18, 2024, by Fortis Malar Hospitals
Limited.
Further, the Board of Directors of the Company are continuously
monitoring the disposal of pending medico legal, tax and civil cases and the functioning
of the Company in due compliance with the applicable laws. The Board is also applying
itself to examining the various strategic alternatives for the Company's future; whilst
the future of the Company is all- important, no timeframe is presently foreseeable, given
the need to safeguard stakeholders' interests and also ensure adherence to prescribed
legal processes.
During the financial year under review, your Company achieved a
consolidated total income of ' 65.96 Crores as against ' 92.59 Crores in the corresponding
financial year ended March 31, 2023. EBITDA for the year stood at ' 5.75 Crores compared
to ' 11.21 Crores for the corresponding previous year. The Profit/(Loss), after
exceptional item and before tax, for the period stood at ' 50.01 Crores as against '
(7.01) Crores during the corresponding year. Profit/(Loss) for the year stood at ' 45.32
Crores in the current financial year compared to ' (15.48) Crores in the previous year.
Before I conclude, I would like to take this opportunity to thank all
our stakeholders for their continued support, guidance, and good wishes over the years. I
am also grateful to our erstwhile clinicians, nurses, and other staff, for their stellar
contribution over the years and, on behalf of the Board, wish them much success in coming
years.
Sincerely,
Daljit Singh
Chairman
Fortis Malar Hospitals Limited