CSE writes to Apollo on BOI’s ownership stance
By Duruthu Edirimuni
The Colombo Stock Exchange (CSE) has written to
Lanka Hospital Ltd, owners of Apollo Hospitals, seeking clarification
whether the incentive package offered by the Board of Investment
(BOI) was granted to a ‘particular set of investors’
or to the company itself.
An industry source told The Sunday Times FT that
the CSE is considering this as material information. “What
the CSE wants to know is whether the BOI incentives were given to
Dr. Reddy and family or to the Apollo Hospitals. None of this has
been stated in the initial public offering (IPO) prospects,”
the source said.
He said this surfaced with the recent media attention
when the takeovers and merges code was triggered by Sri Lanka Insurance
Corporation General Fund (SLIC) when it purchased a 16 percent stake
of the company, thus increasing its combined holding to 36 percent
(SLIC Life fund holds 20 percent), and triggering a mandatory offer
for the latter at Rs.28 per share.
“When it was reported in the media that
the BOI was planning to slash the incentives given to Apollo, the
CSE picked it up as material information,” he added. He said
if the BOI concessions were granted only to the Reddy family, when
the ownership changes hands, then other investors are not benefited.
“This should have been included in the IPO prospects when
the company decided to go public,” he stressed. Nihal Fonseka,
Chairman Colombo Stock Exchange (CSE) confirmed that the Director-General
of the CSE has written to Lanka Hospitals but declined to disclose
details “We are only concerned about the procedures,”
he said. Apollo reported an increased net loss of Rs.14 million
for the first quarter (2006-07) compared to a net loss of Rs.1 million
in the same period last year.
The company’s revenue only increased by
a modest six percent to Rs 460 million with an 18 percent increase
in staff costs which resulted in operational profits falling 20
percent to Rs.33 million. SLIC is currently the largest shareholder
of the company, while Apollo Hospitals Enterprises of India owns
33 percent.
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