Rashmi Saluja's Fate Hangs in Balance as Religare's Board Takes a U-Turn

After years of tussle, the independent directors of the financial services firm Religare Enterprises have shifted their stance over the open offer by the Burman family. It was revealed after Religare's Group Compliance Head, Mallikarjun Goda, resigned on January 13.

In his resignation letter, Goda mentioned "the recent and inexplicable change in the stance of some of the Independent Directors." He claimed that the move had made his "continuance in the Company untenable."

On the same day, another key senior personnel member of Religare Enterprises, President & Group General Counsel Nishant Singhal, also stepped down, citing "personal reasons."

Meanwhile, Religare Enterprises' independent director, Malay Kumar Sinha, told Mint, "Once the RBI has given its approval, we must follow its directions. There is no one among the (independent) directors who is against the directions of RBI and the Sebi Order, on AGM or open offer."

Also Read: ED Probe in Religare Case Intensifies as Agency Calls Chairperson Rashmi Saluja for Questioning

The Burman Family Open Offer

The Burman family, which controls Indian FMCG conglomerate Dabur, first launched its open offer for Rashmi Saluja-led Religare in 2023. They have obtained necessary approvals from the Reserve Bank of India (RBI), the Competition Commission of India (CCI), the Insurance Regulatory and Development Authority of India (IRDAI), stock exchanges, and SEBI for the open offer.

However, the management of Religare Enterprises has raised objections over the offer, claiming it's too low and that the Burman family is not fit to run a financial services firm. The Burman family plans to acquire 26% additional stakes of Religare, offering Rs 2,116 crore for the deal, which pegs its shares at Rs 235.

They are already the largest single shareholder of the firm with a 25% share since September 2023. Indian securities law requires them to make an open offer to acquire further stakes, which would make them a majority shareholder with of 50% shares in the group and provide them the right to replace the current management of the firm.

AGM and Saluja's Fate

The Burman family first acquired stakes in Religare Enterprises back in 2018, at the same time it was going through a management change. Its original promoters, Malvinder and Shivinder Singh, were accused of diverting funds from one of the firm's subsidiaries. The financial services firm brought in Rashmi Saluja as a non-executive independent director and later made her executive chairperson.

Once the Burman family made its open offer, Saluja-led board moved to various Indian regulators, raising objections over it. This is because Religare Enterprises' business spans affordable housing finance, health insurance, retail broking, as well as loans for SMEs. Some analysts have pointed out that the board of Religare Enterprises has just been stalling.

Earlier, the Madhya Pradesh High Court dismissed a petition, clearing the path for the financial services firm to conduct its Annual General Meeting (AGM) on February 7. It had blocked the meeting after a writ petition was filed claiming that a takeover by the Burman family would adversely affect the small shareholders of Religare Enterprises.

Since Rashmi Saluja is the non-executive independent director, she requires shareholders' approval every year to continue on the board and as the chairperson. And as the other independent directors shift their stance, this AGM could be key in deciding her and Religare's fate.