Once leading lights in India’s healthcare industry, the Singh brothers' spectacular fall from grace plumbed new depths this week due to a very public falling out between the two.
Shivinder and Malvinder Singh had been chairman and chief executive officer, respectively, of cash-strapped Fortis Healthcare, India's second-largest private hospital group, but stepped down in ignominy seven months ago.
Since then, IHH group of Malaysia have had a $1.29 billion takeover accepted by the Fortis board and accepted by shareholders after a bidding war with TPG-backed Manipal Helath Enterprises and KKR-backed Radiant Life, .
And now the younger Shivinder has announced that he is taking his elder brother Malvinder and Sunil Godhwani, former chief executive officer of Religare, a group holding company, to the National Company Law Tribunal.
In a three-page statement on Tuesday, Shivinder revealed he had a filed a case against his former business partners for the “oppression and mismanagement” of three companies founded by the Singh family – Fortis, Religare and RHC Holdings.
In 2008 the brothers sold Ranbaxy Laboratories, once regarded as the jewel in the crown of Fortis Healthcare, to Japan’s Daiichi Sankyo for $4.6 billion.
And this where the younger Shivinder claims the wheels began to come off.
According to his statement, red flags were raised during the sale of Ranbaxy, which “culminated in one of the most damaging arbitration cases in Indian history” when Daiichi was faced with a US Food and Drug Administration investigation into data manipulation.
That resulted in a $500 million fine after imports were banned from two of the company's Indian drug manufacturing plants, prompting Daiichi to sue Fortis for restitution for the fines and criminal liability.
Finally, in February this year, after eight years of litigation in the US, Singapore and India, a Delhi Court awarded Daiichi $386 million in damages, seizing assets from the Singh brothers to ensure Daiichi is paid.
And on February 8 both Shivinder and Malvinder resigned from the boards of Fortis and Religare, with accusations swirling that $70 million had been siphoned off Fortis – something the Securities and Exchange Board of India is still investigating.
In his statement, Shivinder says he has stayed silent for the sake of his family’s business reputation and that legal action “was long overdue but got delayed in the fond hope that better sense shall eventually prevail”.
A person familiar with the IHH acquisition said it was a personal matter between the brothers and that it would have no material impact on the proposed acquisition.
But for the Singh brothers, it looks like after 23 three years of working together to create an Indian healthcare titan with 83 hospitals, that each will have to go their separate ways.
“I am now disassociating from my brother as a business partner and will be pursuing an independent path going forward” Shivinder said in the final line of the statement.