MUMBAI: The Religare Enterprises takeover tussle between its largest shareholders, the Burmans of Dabur, and the company’s management took a fresh turn with the board of directors backing Rashmi Saluja, the firm’s executive chair.
Shares of the company rose nearly 6% to Rs 230 after the board stated that there are no irregularities in Saluja’s compensation structure or the gains she derived from Esops of both the company and its health insurance subsidiary, Care Health.The board attributed the Esop gains to the company’s turnaround brought about by the board led by Saluja.
“As a result of the remarkable growth of all businesses, the company’s market cap has increased to a billion dollars from a low of $100 million in March 2018,” the board said.
The Burmans of Dabur, who hold over 26%, have made an open offer for an additional 26%, a move which Religare management initially supported but later deemed underpriced. The Burmans accused Saluja of opposing the open offer out of fear of losing control. The Burmans had made an open offer at Rs 235 on September 25, much below the closing price of Rs 256 on that day. Since then, the tussle took its toll on the share price.
Mohit Burman, member of Burman family, accused Saluja of insider trading and said that governance issues were the reasons the management was opposing the open offer.
Religare, left with no identifiable promoter after the former promoters Malvinder and Shivinder Singh, were accused of fraud. Saluja, a doctor and newcomer to the finance world, was backed by some shareholder. After taking charge, she concluded a one-time settlement with banks for its lending arm Religare Finvest.
The Burmans originally held around 14% and gradually increased their stake to over 26%, triggering the open offer.
Earlier this month, proxy advisory firm InGovern reported allegations regarding remuneration, regulatory breaches, and non-disclosures at Religare Enterprises (REL). The firm said that over the past 3-4 years, Saluja received over Rs 480 crore in options valuation from REL and its subsidiary, Care Health Insurance. The allegations include the issuance of Care Health Esops to Saluja despite rejection by IRDAI, a lack of REL shareholder approval, and non-disclosure in REL’s annual report.
Responding to allegations about the timing of Saluja liquidating her Esops, the company clarified that the sale, occurring on the September 21-22, 2023, was part of a process initiated several days before a meeting with the Burmans on September 20, 2023. The shares were sold at the prevailing market price, and Saluja used the proceeds to reinvest in Esops of a Religare Group entity. Before the meeting, the company emphasised obtaining requisite approvals for financing, pledge, revocation, and sale. Rashmi Saluja denied being informed of the proposed open offer during the meeting.
Regarding Saluja receiving Esops of a subsidiary, Religare stated that the health insurer’s Esop had a portion carved out for employees of its parent, granted to her as an employee/executive director and chairperson of REL, not in her capacity as the non-executive chairperson of Care Health Insurance.