Rashmi Saluja, executive chairperson, Religare Enterprises, said she is confident of her performance and won’t retreat under ‘false’ allegations made by the Burman family, the leading shareholder seeking majority control of the financial company, as she has the full support of the board and is proud of her turnaround credentials evidenced through what she described as a tough phase for non-bank lenders.
“I may have agreed that five years ago, I didn’t have the experience, but after five years, three successful businesses, a company turnaround and a great team and board to support me, I will not back down,” Saluja told ET in an interview. “Any allegations of corporate governance against the board and the management are directly reflected toward the regulators. Our naysayers need to understand that.”
The board of Religare Enterprises are in a tussle with members of the Burman family, the promoters of Dabur, who have accused Saluja of insider trading by selling shares of the company immediately before the announcement of an open offer on September 25, 2023.
The Burman family has gradually been raising its stake in Religare Enterprises over the past five years – from 9.9% in 2018 to 14% in 2021, with another 7.5% and 5.27% in 2023. The stakes automatically triggered an open offer to the minority shareholders. Full subscription to the offer would automatically give majority control of the company to the Burmans.
The Burman family has accused Religare’s existing management, including Saluja, and the board of lapses in corporate governance. It has alleged that Saluja violated insider trading laws by selling shares of the financial services company immediately before the announcement of the open offer. The Burmans have also sought an investigation into the allotment of 8% shares of Religare Finvest Ltd to Religare Enterprises Chairman Saluja through Employee Stock Ownership Plans (ESOPs), arguing the process “raises a question mark on the management and the independence of the independent directors” of Religare.The independent directors of Religare, meanwhile, have levelled allegations of fraud and other breaches against the Burmans with different economic regulators – the Securities and Exchange Board of India (Sebi), the Insurance Regulatory and Development Authority of India (IRDAI), and the Reserve Bank of India (RBI) – on the takeover process.
Saluja denied all allegations of insider trading and manipulation in stock awards and compensation.
Transparency Claims
“As an industry, we are strictly governed and monitored by the regulators. All transactions, either ESOPs or otherwise, must be approved by the regulators,” she said. “Not once during the five years was any complaint raised to Sebi or any regulator. The moot question to ask is, why now?”
Rashmi Saluja joined as an additional non-executive independent director on December 20, 2018. Later, she was appointed the non-executive independent chairperson. The board, on December 10, 2019, designated her as the executive chairperson. The appointment proposal was subsequently approved by the RBI.
“We have denied the allegations of insider trading…Exercising listed stock options by employees requires prior approvals. The process involves financing from external lenders as well as approvals for pledging financing or revocation and eventual sale,” she said. “The process for ESOP exercise… was set in motion several weeks before the information on the open offer we received formally through newspapers. Moreover, the share sale proceeds were utilised to invest in additional ESOPs of Religare Group entities only. We wish to remain invested in the company and continue to push for growth.”
She brushed aside allegations by the Burman family that Religare had applauded the takeover bid before rejecting it.
“The board initially considered the Burmans’ takeover bid as per Sebi’s directive. However, as per the responsibility of a well-governed board, subsequent assessments were made, wherein many aberrations were found in the submission. We shared our comments with regulators,” Saluja added. “We cited concerns for investigation on matters concerning market manipulation, funding sources, and inconsistencies in statements made to the BSE.”
Religare Enterprises is expanding fast with a firm focus on delivering value to stakeholders, she said.
“We have a robust growth plan for the company. The board and the current management, having turned around the company, have worked on credible long-term growth plans, which have been vetted by marquee third-party experts,” Saluja said. “Our vision is to develop a comprehensive risk management framework.
Overcoming the Odds
She lauded the efforts made by her colleagues to turn around the company when several other lenders and financiers, such as Dewan Housing Finance, Yes Bank, IL&FS and Anil Ambani-promoted Reliance Capital, needed either special dispensations, bailouts or administrative buyouts for survival.
“We have a positive net worth, which has given confidence in our investors such as Kedaara Capital and Union Bank, to continue to be invested and supportive of the management and the team behind this success,” Saluja said. “Three out of four businesses – health insurance, broking, and housing finance – have been consistently profitable and growing.”
Religare Finvest, the MSME financing arm, has completed an industry-first settlement with all its lenders and the fraud tag has been removed, she added. It is now business-ready with a net worth of more than Rs 700 crore.
“The board and the current management have been at the helm for more than five years and are in the best position to guide the company to catapult to the next growth phase,” she added.
