Fortis Healthcare said it has cancelled its plan to demerge and list its diagnostics arm, SRL Ltd, and will withdraw the concerned application before the authorities.
“The Scheme is currently pending for approval with the National Company Law Tribunal, Chandigarh Bench. Further, the entire process was expected to take 6-8 months, however, due to reasons beyond the Company’s control, the process has taken over 19 months and is still not complete,” it said.
“During this period of 19 months (a) healthcare sector has witnessed strong headwinds and (b) performance of diagnostics business has not been optimum. Given the challenges and headwinds in the sector and less than optimum performance of the diagnostics business during the period of delay, the demerger and a subsequent listing may result in value unlocking that may not be optimum for Fortis shareholders at this point of time,” it added.
SRL is one of the big players in the fast-growing diagnostic lab chain business in India. At present, the sector is dominated by local players.
Chains such as SRL promise reliable and uniform quality of services at all their test centers, and have seen decent momentum as awareness of healthcare increases in India.
The scheme was announced in August 2016 and was supposed to unlock value for investors.
However, it ran into rough weather after reports of financial irregularities at the hospital chain came out, inviting judicial scrutiny and the intervention of the Supreme Court.
The company is currently in the process of selecting a new promoter and is going through various investment proposals by major business groups interested in taking a stake in the hospital chain.
It said it has “decided to initiate a fresh, time-bound process to optimize the company’s and shareholders’ short and long-term interests,” it noted.