Devaki uses equity funds to settle dues with banks

Devaki Hospital on Friday announced that it had settled its dues with banks following the inflow of equity funds from strategic investors.

The hospital has arrived at a one time settlement (OTS) of dues with two of its creditors - Punjab National Bank (PNB) and Dhanalaxmi Bank. Devaki Hospitals is to pay PNB Rs 1.85 crore and Dhanalaxmi Bank Rs 1.43 crore towards OTS.

In the case of Dhanalaxmi Bank, part of the OTS will be in the form of equity. Once Devaki's shareholders approve the scheme, Rs 33 lakh of the OTS will be in the form of equity.

In addition to infusion of equity from strategic investors, Devaki's financial position has been strengthened through a Rs 2.5-crore loan from HSBC. The loan has been guaranteed by a corporate. Devaki's executive director K C Reddy declined to disclose the identity of the corporate.

Reddy said that both the equity infusion into Devaki and the guarantee for the loan were largely on account of the goodwill the hospital has.

The Rs 2.76 crore equity infusion has come from a few "unrelated" individuals in Mumbai. The equity infusion has given them a 28 per cent stake in the company, about 2 per cent more than the group, including K C Reddy, which manages the hospital.

The strategic investors are not represented on Devaki's board, a situation that is likely to change soon. Reddy said that after settlement of dues, Devaki's priority would be to consolidate its position.