Dabur Chairman Mohit Burman assures continuity in board structure following Religare acquisition
10 Nov 2023
In the wake of the Burman family office's acquisition of a majority stake in Religare Enterprises (REL), Dabur India Chairman Mohit Burman clarified in a video call on Thursday, 9 November 2023, that there are no plans to alter the existing board of the financial services company. Burman asserted that the family office intends to inject additional capital into Religare's ongoing business lines to facilitate its growth.
Addressing allegations made by some independent directors of REL, accusing certain Burman family members of involvement in financial scams disclosed in the Pandora Papers and HSBC offshore account leaks, Burman firmly denied the accusations. He emphasized that none of the family members have faced charges in these cases, pointing out the family's longstanding business history spanning 140 years with 18 multinational startups in joint ventures.
Burman questioned whether they had two insurance firms, 10 different businesses, and had been in the industry for 140 years. He mentioned having had 18 multinational startups in joint ventures and stated that their businesses were under the supervision of the insurance regulator and the Reserve Bank of India (RBI), meeting all criteria. He further inquired if the REL board was conducting a fit and proper test on them.
While the management, led by REL Executive Chairperson Rashmi Saluja, had been planning an initial public offering (IPO) for Care Health Insurance, Burman indicated that the IPO would be delayed until the current issues surrounding the open offer were resolved.
Burman highlighted the family office's history as a shareholder in REL since 2018, having participated in preferential issues in 2018 and 2021. He mentioned investments totaling approximately Rs 380 crore to support the company during challenging times, including bailing it out when there was no promoter.
The Burman family currently holds a 21.24% stake in REL and made an open offer on 25 September 2023, to acquire an additional 26% from other shareholders, with an estimated cost of Rs 2,116 crore assuming full acceptance by minority shareholders. However, the REL board, after initially welcoming the open offer, changed its stance and appealed to the Securities and Exchange Board of India (SEBI), stating that the offer undervalued the company. The board also appointed independent valuers to assess the company's value.
Rashmi Saluja, who took over as chairperson in 2018, played a key role in turning around REL's fortunes after the Singh brothers (Malvinder and Shivinder Singh), the former promoters, faced allegations of diverting funds from the company.
Despite the controversies surrounding the open offer, Burman remains confident in the family's ability to contribute positively to REL, emphasizing that the change in promoter ownership would enhance the company's viability and improve its credit rating. Executives from the Burman family urged regulatory bodies to consider their track record and dismissed allegations of vested interests seeking to undermine the open offer.