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New Delhi: Fortis Healthcare today said its board has approved demerger of its diagnostics business into another group firm Fortis Malar Hospitals, a move aimed at ensuring independent growth of hospital as well as diagnostics business verticals.

Company's board approved a proposal to demerge its diagnostics business, including that housed in its subsidiary SRL Ltd into another majority-owned subsidiary, Fortis Malar Hospitals pursuant to a composite scheme of arrangement and amalgamation, Fortis Healthcare said in a regulatory filing.

As part of the process, Fortis Malar will sell its hospital business to Fortis Healthcare by way of a slump sale for a lump sum cash consideration of Rs 43 crore. "Upon the composite scheme becoming effective, and subject to receipt of requisite regulatory and statutory approvals, the diagnostics business of Fortis Healthcare, including that housed in SRL would be vested in Fortis Malar," it said.

The name of Fortis Malar will subsequently be changed to SRL, the company which is proposed to be listed on the National Stock Exchange in addition to its current listing on the BSE, it added. Fortis Malar operates a hospital in Chennai.

"We believe this will unlock immense value for all the shareholders. As a result of the new synergistic groupings, both the hospital and diagnostic businesses will benefit from greater clarity, a stronger focus and an independent growth  trajectory," Fortis Healthcare Executive Chairman Malvinder Singh said.

Equally, this will enable the accelerated pursuit of their respective business goals while empowering them to reach their fullest potential, he added. Upon the effectiveness of the composite scheme, Fortis Malar would issue and allot to the equity shareholders of Fortis Healthcare, as on record date, 0.98 fully paid up equity shares of Rs 10 each for every 1 equity share of Rs 10 each held by them in Fortis Healthcare.

The equity shareholders of SRL will be issued and allotted 10.8 equity shares of Rs 10 each of Fortis Malar for every 1 equity share of Rs 10 each held by them in SRL as on record date.

Appointed date for the slump sale, demerger and merger under the composite scheme is January 1, 2017. "Our hospitals and diagnostics businesses continue to perform equally well. However, in the longer term, they have a growth path of their own requiring distinctive strategies,"

Fortis Healthcare CEO Bhavdeep Singh said. The new arrangement resulting from the demerger will harness these unique capabilities and strengths, unlocking value by combining the flexibility with a focus on rapidly scaling up operations, he added.

Fortis Healthcare shares today ended at Rs 187.80 apiece on the BSE, down 3.27 per cent from previous close.