The decision of PTL Enterprises Ltd. (formerly Premier Tyres Ltd.), owned by the Kanwar family of Apollo Tyres, to disinvest its entire holding in two hospital entities, namely, Artemis Medicare Services and Artemis Health Sciences for Rs.181 crore as compared to the market value of Rs.700-1,000 crore to unidentified buyers has come under questioning from minority shareholders and those who empower them.
The company, on July 25, intimated its decision to stock exchanges.
Proxy advisory firm Institutional Investor Advisory Services (IiAS), in a report, has questioned the rationale behind this decision, and has asked shareholders to seek explanation from the board.
The company has been asked to clarify its business model going forward as 80 per cent of the revenue came from the healthcare business while the balance from renting out land to Apollo Tyres. It has also been asked to clarify whether the proceeds would be deployed elsewhere or returned to shareholders. Kerala State Industrial Development Corporation holds 2.27 percent stake in PTL.
PTL’s healthcare business comprised a 300-bed hospital in Gurgaon and a 47-bed multi-speciality hospital in Dwarka, New Delhi. For the financial year, the healthcare business reported a profit before tax of Rs.6.7 crore on a turnover of Rs.261 crore.
Valuation Raising serious doubt on the valuation, IiAS said: “By any measure, the valuation of Rs.181 crore appears low. The valuation, based on transactions that have occurred in the recent past, could range between Rs.2 crore and Rs.3 crore per bed. For PTL, this works out to Rs.52 lakh per bed.
Given that the business appears to have turned around in 2013-14, such a low valuation is not justified.”
“What was the process followed and who were engaged in the sale of this business?’’ IiAS asked. There had been no information about the purchaser, it pointed out. “Promoters must clarify that they do not have any economic interest linked to the new buyer and independent directors must make their stance clear,” said IiAS.
Responding to a detailed questionnaire from The Hindu , PTL Enterprises said the disinvestment, subject to the approval of shareholders, was an outcome of a strategic re-structuring decision taken to focus on the company’s core competency in the auto component sector.
“The promoters are not moving away from the healthcare business. As per the compliance process, PTL had engaged Grant Thornton and SBI Capital Markets to conduct a valuation exercise for the healthcare business. PTL’s board has approved the disinvestment at an equity value of Rs.181 crore,” a PTL Enterprises spokesperson said.
“PTL has followed all norms and compliances in accordance with the Indian corporate laws and governance practices, and adequate disclosures in respect of the related party transaction are made in order to safeguard the interests of the stakeholders,” the spokesperson added. But the company did not disclose the name of the buyer.
