Rashmi Saluja VS Burmans, The Religare Battle

Corporate battles have always captivated observers, and India has witnessed its fair share of boardroom showdowns. One of the latest, and perhaps most intense, is the ongoing feud between the Burman family of Dabur and the board of Religare Enterprises, a financial services company valued at Rs 6,300 crore.

At the center of this conflict is Religare’s Executive Chairperson, Rashmi Saluja, who, alongside her colleagues on the board, is resisting the Burmans’ aggressive takeover attempt.

The Burmans are eager to acquire Religare, but the board’s staunch opposition has escalated the struggle into a complex and fierce confrontation.

Adding another layer of conspiracy to this already tense corporate battle is the involvement of SEBI and, more recently, ED.

The Legal Twist, Allegations and Counterclaims

The latest chapter in this power struggle grew when the ED filed a case of cheating and criminal conspiracy against Saluja and two other key management figures—CFO Nitin Aggarwal and Group General Counsel Nishant Singhal.

According to the ED, Saluja orchestrated a criminal conspiracy aimed at derailing the Burman family’s takeover of Religare and its subsidiaries.

The agency claims that Saluja and her colleagues made illegal gains amounting to ₹179.54 crore by acquiring Employee Stock Options (ESOPs) of Care Health Insurance (CHIL) at significantly undervalued prices, allegedly diverting company funds to subscribe to CHIL’s rights issues.

In a formal complaint filed with the Mumbai police, the ED accused Saluja of lodging a case against Dabur Group Chairman Mohit Burman and his family members, purportedly to stall the takeover and mask illegal activities.

The police have since booked Saluja, Aggarwal, and Singhal, though the officials have denied the allegations, stating that they are assessing the matter for potential legal action.

Religare Is A Case of Corporate Intrigue

Saluja and her legal team, however, have not remained idle. Last month, Saluja took the matter to the Delhi High Court in response to the ED’s decision to attach her ESOPs.

The situation has since then only intensified, with raids conducted by the ED on the homes of several senior Religare officials, including COO Chirag Jain.

These raids were part of an ongoing investigation into alleged fund siphoning from Religare Finvest, a subsidiary of Religare Enterprises.

The origins of the ED’s case can be traced back to an FIR filed by Vaibhav Gawli, an office assistant at a pet café in Mumbai.

Gawli’s complaint accuses several parties, including former Religare promoters Shivinder and Malvinder Singh and the Burman family, of siphoning funds from Religare Finvest.

The timing of the FIR and the Burmans’ open offer to acquire a 26% stake in Religare has raised questions about whether corporate strategy and legal maneuvering are being used to shift the balance of power.

According to the FIR, Vaibhav Gawli, the individual who initially lodged a complaint against the Burman family, was allegedly paid ₹2 lakh in cash. Out of this amount, ₹1.2 lakh was used to purchase 500 shares of Religare, while the remaining ₹80,000 was purportedly given to Gawli as compensation for filing the complaint at Matunga police station against the Burmans.

The FIR goes on to state that Gawli admitted he was unfamiliar with the allegations in his complaint and merely reproduced the contents of documents provided by Dr. Rashmi Saluja, the chairperson of Religare, to file charges against the Burman family.

The Story So far

This latest revelation is just one chapter in the ongoing saga between the Burman family and Religare’s board.

The Burmans have been targeting Religare since 2018 when they first acquired a stake in the company and gradually increased their shareholding, their stake exceeded 25% in September 2023, triggering a mandatory 26% open offer as per SEBI regulations.

However, Saluja and Religare’s management have staunchly opposed the Burmans’ takeover attempt, arguing that the Burmans do not meet the ‘fit and proper’ criteria required for ownership.

The resistance comes amidst accusations of corporate governance failures on Saluja’s part, including concerns over her high remuneration and stock option benefits, prompting SEBI to step in.

SEBI issued a show-cause notice in June, instructing Religare to submit the necessary applications to regulatory bodies, including the Reserve Bank of India and the Insurance Regulatory and Development Authority of India, for the Burmans’ open offer.

Though Religare appealed to the Securities Appellate Tribunal (SAT), which granted a temporary stay on the notice, SAT still required the company to file the open offer documents.

For the Burman family, the acquisition of Religare holds strategic importance.

The company has recovered from its turbulent past, following the downfall of its former promoters, Shivinder and Malvinder Singh, who faced legal troubles.

Religare’s turnaround aligns with the Burmans’ broader financial services portfolio, and the company’s growth potential, particularly in the booming health insurance sector, makes it an attractive target.

Despite this, Rashmi Saluja remains defiant, backed by the Religare board. She believes the company is on the brink of unlocking significant value and is determined to fend off the Burmans’ takeover efforts.

Many industry experts agree that this high-stakes corporate battle is far from over, with regulatory bodies such as the RBI expected to weigh in soon.

The question now is – will the Burmans finally succeed in taking control of Religare, or will Saluja hold her ground?

Let’s take a look at the timeline of this corporate battle 

February 2018: Malvinder and Shivinder Singh, the former promoters of Religare, stepped down from the company’s board amid allegations of misappropriating funds.

The new board and management, led by Executive Chairperson Rashmi Saluja, fought to take legal action against the Singh brothers and negotiate settlements with lenders.

It wasn’t until June 2023 that the Delhi High Court granted bail to the Singh brothers in the case concerning the alleged misappropriation of ₹2,397 crore from Religare’s subsidiary, Religare Finvest.

February 2018 onwards: With the departure of the Singh brothers, Religare has been led by its board, with Rashmi Saluja at the helm as Executive Chairperson.

June 2021: In an interview with CNBC-TV18, Mohit Burman, Vice-Chairman of Dabur India, stated that his family had been investors in Religare since 2018, when a new board and set of investors took over.

At that time, the Burmans held an 11% stake in Religare, prior to participating in a preferential issue in June 2021, when the company raised ₹570 crore. This investment increased the Burman family’s stake to 14.5%.

August 16, 2023: The Burman family further strengthened their position by acquiring an additional 7% stake in Religare through block deals worth ₹534 crore, taking their total stake to approximately 21%.

Mohit Burman described the family’s investment as purely financial, but the move positioned the Burmans as the single largest shareholders of Religare Enterprises.

September 20, 2023: During a board meeting, the Burman family disclosed their plan to make an open offer for a controlling stake in Religare, signaling a more assertive strategy.

September 23, 2023: The Burman family acquired an additional 5.27% stake in Religare for ₹407 crore, triggering the mandatory open offer. According to SEBI’s takeover regulations, an entity acquiring more than a 25% stake in a listed firm must make an open offer to purchase an additional 26% from existing shareholders.

September 25, 2023: The Burman family officially announced their open offer to acquire up to 26% of Religare Enterprises, as part of a diversification strategy. The offer price was set at ₹235 per share, and if fully subscribed, the total consideration would amount to ₹2,116 crore.

October 11, 2023: The board of Religare Enterprises sought an independent valuation report, as they believed the company was worth more than what the Burmans had offered. The deal, pending regulatory approval, was not finalized at this stage.

November 9, 2023: Independent directors of Religare submitted a letter to regulators, including SEBI, the Reserve Bank of India (RBI), and the Insurance Regulatory and Development Authority of India (IRDAI), raising serious allegations against the Burmans.

These included accusations of collusion with the Singh brothers, a pending fraud case against Dabur India Chairman Mohit Burman, concerns over the source of funds for the acquisition, and allegations of market manipulation.

November 9, 2023: The Burmans swiftly responded, refuting the claims as baseless and meritless in a statement to CNBC-TV18. They emphasized that all members of the Burman family met the ‘fit and proper’ criteria set by financial regulators, expressing their disappointment at the allegations made by Religare’s board.

“We have acquired all our shareholdings in Religare Enterprises (REL) through transparent market purchases and preferential allotments, which were part of prior fund-raising exercises approved by the board of REL. There has been no market manipulation,” the Burman family clarified in a statement.

November 9, 2023: A Burman family spokesperson further explained that shareholders had raised concerns about governance at Religare, specifically regarding the high compensation of a particular individual.

The spokesperson stated that this individual’s remuneration exceeded ₹150 crore, which they claimed was far beyond industry norms.

On the same day, the Burmans alleged that Religare Chairperson Rashmi Saluja sold shares shortly after their open offer announcement on September 20. They called for SEBI to investigate the timing and circumstances of Saluja’s share sale.

November 14, 2023: Religare responded, clarifying that Saluja’s sale of shares stemmed from the exercise of Employee Stock Options (ESOPs), which had been approved well before the transaction.

According to a company spokesperson, “The process involves financing from external lenders and approvals for pledging, financing, or revocation, and eventual sale. The entire process had commenced months prior to the sale of the ESOPs on September 21, 2023.”

Religare also addressed the issue of Saluja’s compensation. The company stated that her total remuneration, including salary and ESOPs, amounted to ₹42.06 crore for the financial year ending in March 2023, not the ₹150 crore as alleged. The compensation had been approved by a special resolution passed by shareholders, Religare noted.

Adding to the escalating tension, it was revealed that the Mumbai Police had filed an FIR on November 7 against Dabur Group Chairman Mohit Burman and Director Gaurav Burman in connection with the Mahadev betting app scam.

The Burmans stated they had not received any official communication regarding the FIR but called the allegations a “mischievous act driven by malicious intent.”

The Burman family responded on November 14, stating, “This FIR is clearly a tactic by vested interests to block our acquisition of Religare Enterprises. We are shocked by these ‘arm twisting’ moves, which we believe are grossly illegal.”

November 15, 2023: In an interview Mohit Burman, Chairman of Dabur India, shared insights on the deteriorating relationship with Religare’s current management and addressed speculation over a potential revision of their open offer price.

He reaffirmed the Burmans’ commitment to the acquisition, stating, “We are focused on the open offer. We believe everything has been done transparently, and we are confident that the regulators will eventually give us the green light to proceed and complete the acquisition.”

Religare Enterprises serves as the holding company for four major businesses: SME Finance via Religare Finvest (RFL), Health Insurance via Care Health Insurance (CHIL), Retail Broking via Religare Broking (RBL), and Affordable Housing via Religare Housing Development Finance Corporation (RHDFCL).

The Last Bit, the Religare battle marked by legal actions, boardroom confrontations, and regulatory interventions, continues to attract significant attention as both sides fight for control of Religare Enterprises.

For now, the boardroom drama at Religare shows no signs of slowing down while the Burman family continues to press forward with its takeover bid, Saluja and her team are mounting a determined defense.

The involvement of the ED and the accusations of financial mismanagement have added a new dimension to what was already a controversial battle for control.

As the story continues to evolve, the outcome of this corporate confrontation could have significant implications for Religare’s future.

One thing is clear—this is a corporate potboiler that has all the elements of a high-stakes thriller, and business circles will be watching closely to see who emerges victorious in the battle for Religare.