The twists and turns in the takeover battle for Fortis Healthcare are now fast beginning to resemble the manoeuvrings of a B-grade Bollywood thriller. Just when you think it is finally over and blessed relief is near, comes a fresh assault on the senses.

On 27 March, the board of the stricken company announced the sale of its hospital assets to Manipal Health Enterprises Pvt. Ltd and buyout firm TPG Capital. But there was no closure to the mess. Instead it just triggered off a series of counter-offers from rival contenders, leading up to a bruising bidding war which has so far done little to alleviate the fortunes of the company. Finally, on 11 May, a special advisory committee appointed by the board to pick the best options among the four bidders, recommended the one submitted by the combine of Sunil Kant Munjal of Hero Enterprise, and Anand Burman and Mohit Burman of the Dabur family. It didn’t take long for that one to be challenged as well. Within days, TPG-backed Manipal Health submitted a revised bid for the hospital chain, even as the Munjal-Burman-led group announced it was planning an open offer to give small investors an option to exit.

Two months into the saga, while there’s no clarity on what’s going to happen, what’s clear is that none of the protagonists involved have come out smelling like a rose.

The less said of Fortis Healthcare’s original owners, Malvinder and Shivinder Singh, the better. In rapid succession, they managed to lose Ranbaxy, once the jewel in India’s generics pharma crown, and then Fortis. In the process, they have destroyed a once-proud business family, besides setting themselves up for a slew of legal cases.

If they are culpable, the professionals who had been running the hospital chain for all these years are equally to blame. Operationally, the company has been run aground, posting losses in each of the last four years. With some of the best doctors on its rolls and among the most coveted properties in its bag, it could so easily have been a well-run business. Given its level of pricing and the burgeoning demand for specialized healthcare in the country, they had an intrinsically profitable business on their hands. After all, that is what explains the raging battle for its ownership.

It would be unfair to blame the bidders for they are doing what any potential buyer in such a situation would, which is try and leave as little on the table as possible. Yet, here too, you have to question the current bid leaders, the Munjal-Burman combine. In a press statement earlier, they had said, “Being long term and thoughtful investors, we are well positioned to help sharpen the focus on patient care while building value for all Fortis shareholders and all stakeholders." The same concern seems to have been missing all these years as the company they were investors in, slid rapidly into the morass it finds itself in.

But by far the largest share of blame has to be copped by the members of the Fortis board for failing to discharge their duty towards the shareholders on whose behalf they were expected to act and whose interests they were expected to safeguard. The falling stock price, the absence of corporate governance standards, besides the overall decline in performance under their watch are clear signs of a board that didn’t do its job.

Four of the eight members of this board—Harpal Singh, Brian Tempest (a former CEO of Ranbaxy), Sabina Vaisoha and Tejinder Singh Shergill—were the choice of Malvinder and Shivinder Singh, the company’s former promoters who are now under a judicial cloud.

This same set of people first bumbled by accepting the original Manipal offer and then hastily cobbling together an expert advisory committee, comprising Renuka Ramnath (founder of Multiples Alternate Asset Management Pvt. Ltd), who quit within days. In the meantime, under pressure from some shareholders, the board has also approved an extraordinary general meeting on 22 May, to restructure the board.

Under such turbulent conditions, are the rights of all the stakeholders including shareholders, employees and even patients, secure in the hands of these worthies?

Sundeep Khanna is a consulting editor at Mint and oversees the newsroom’s corporate coverage. The Corporate Outsider will look at current issues and trends in the corporate sector every week.

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