The Burman family, well-known for their iconic company Dabur, is now trying to gain control of Religare Enterprises (REL), a financial services firm. However, Religare’s current management, led by Chairperson Rashmi Saluja, is resisting this takeover attempt. While the Burmans have steadily increased their stake in Religare, the conflict between them and the management has escalated. Let’s dive into the details of what’s causing this friction.
Burman Family’s Stake Crosses 25%, Triggers Open Offer
On September 25, 2023, the Burman family acquired an additional 5.27% stake in Religare, bringing their total holding to over 25%. According to SEBI’s regulations, this move triggered an obligation for them to make an open offer to buy more shares from the public.
The very next day, on September 26, Religare’s Chairperson Rashmi Saluja and several key executives sold some of their shares. This raised eyebrows and prompted the Burman family to call for an investigation. They alleged that the management was deliberately obstructing their efforts to gain control of the company.
Management Pushback: Lack of Financial Sector Experience?
One of the key reasons for the management’s opposition is their belief that the Burman family lacks the necessary experience to run a financial services company like Religare. While the Burmans have built Dabur into a household name, the management argues that this expertise may not translate well into the complex world of finance.
Despite these claims, the Burman family remains firm in its intentions. They have been continuously increasing their stake in Religare over time, and their latest acquisition has only intensified their desire to take control of the company.
ED Investigation Adds Fuel to the Fire
To complicate matters further, Rashmi Saluja is now under the scanner of the Enforcement Directorate (ED). In September 2023, the ED launched an investigation against Saluja and two Religare directors, accusing them of fraud and conspiracy. These allegations suggest that Saluja may have been involved in activities aimed at blocking the Burman family’s takeover of the company.
Adding to the controversy, it has been reported that a Religare shareholder, Vaibhav Gawali, filed a complaint against the Burmans, alleging their involvement in financial irregularities. However, Gawali later admitted that he did this under pressure from Saluja and others, according to the ED’s findings.
SEBI Issues Notice to Saluja, Supports Open Offer
SEBI has also taken note of the situation. In August 2023, the regulator issued a show cause notice to Rashmi Saluja, accusing her of insider trading. SEBI further instructed Religare’s board to cooperate with the Burman family’s open offer. Despite these directives, Saluja has sought the intervention of higher authorities, including the Prime Minister’s Office (PMO) and the Finance Ministry, to defend her position.
Religare’s Stock Performance: A Bright Spot Amid Controversy
While the battle for control rages on, Religare’s stock has been performing well. On September 26, 2023, its share price rose by 1%, reaching ₹277.75. Over the last six months, the stock has delivered impressive returns of more than 30%, making it a hot topic for investors.
This ongoing tussle between the Burman family and Religare’s management will be closely watched by the financial markets, as both sides continue to push for their desired outcome.
