Update: 3.30 p.m. IST — The Sensex closed at 26,397, a loss of 239 points, or 0.90 percent. Tata Steel was the biggest Sensex loser at 3.54 percent, followed by ICICI Bank (down 3.30 percent) and Tata Motors (down 2.89 percent). Dr Reddy's Labs was the biggest Sensex gainer and closed at Rs. 3,100, up 1.16 percent.
The Fortis Healthcare stock closed at Rs. 165.10, down 1.84 percent.
12.25 p.m. IST — The S&P BSE Sensex had plunged further from its early morning loss and was trading at 26,308, down 328 points, or 1.23 percent. Tata Motors, Tata Steel, ICICI Bank and BHEL were the top losers.
Original story —
Fortis Healthcare shares crashed on the Bombay Stock Exchange (BSE) in early morning trade on Monday in response to the Arvind Kejriwal government in Delhi imposing a penalty of Rs. 500 crore on its subsidiary for "non-compliance of land allotment lease terms".
The stock lost almost 5 percent to touch a low of Rs. 160, a loss of Rs. 8 from its Friday close of Rs. 168. It recovered later to trade at Rs. 163.15 at around 10.50 a.m., down 3 percent.
Apollo Hospitals shares were also trading with a loss of 1.08 percent at Rs. 1,345.50 apiece.
The Sensex was down 279 points, or 1.05 percent, at 26,357 on weak global cues and disappointing factory output data for April released last Friday.
On Friday, Fortis Healthcare's subsidiary, Escort Heart Institute & Research Centre Limited (EHIRCL), was issued a notice from the AAP government in connection with alleged violation of terms of land allotted almost 30 years ago.
"...EHIRCL has informed us that in a long disputed case pertaining to the period 1984-2007, it has today received an order from The Directorate General of Health Services (DHS) for the deposit of an amount of Rs. 503,36,52,824/- towards recovery of unwarranted profit made by it for alleged non-compliance of the conditions of allotment / lease of land since its allotment in 1982," it said in a regulatory filing to the BSE on Friday evening.
Fortis Healthcare said it plans to challenge the "legally flawed and untenable" order in Delhi High Court.
In all, the Delhi government asked five private hospitals, including Max Super Speciality Hospital (Saket), Shanti Mukand Hospital, Dharamshila Cancer Hospital and Pushpawati Singhania Research Institute, to deposit "unwarranted profits" of over Rs. 700 crore.
These hospitals, according to the AAP government, denied free treatment to the poor, a key condition for allotting land to the entities at concessional rates.
"The penalty has been imposed on the basis of a High Court order passed in 2007 on a PIL demanding implementation of the provision of free treatment to poor and action against the erring hospitals. And the fine amount has been calculated accordingly," Dr Hem Prakash, additional director (EWS) in the Health Department, said, according to NDTVProfit.
The Delhi government had given land at concessional rates to 43 private hospitals on the condition that they would provide free treatment to poor people.