Burman Family-Religare Fiasco: Another Corporate Battle In The Making

Religare Enterprises Ltd. is once again tangled with controversies, just a few years after it came out of one.

This time, it’s a corporate battle between the company and the owners of Dabur India Ltd.—the Burman family.

The Burmans have alleged violations of insider trading rules by Religare’s Executive Chairperson, Rashmi Saluja.

According to a letter dated Nov. 7 that was submitted to the Securities and Exchange Board of India, the Burmans said that Saluja sold shares of the company worth Rs 34.71 crore, following communication of the Burman family’s intention to make an open offer to Religare’s shareholders.

The information was communicated to Saluja on Sept. 20, on a confidential basis, in her “professional capacity as executive chairperson of the company”.

The shares were sold on Sept. 21 and Sept. 22, after a meeting was held between Saluja and the Burman family’s representative, Arjun Lamba.

The process for the sale of Saluja’s ESOPs was “undertaken before the said meeting on Sept. 20, 2023,” according to Religare’s spokesperson.

The Burman family, through its associate entities—M.B. Finmart Pvt., Puran Associates Pvt., VIC Enterprises Pvt., and Milky Investment and Trading Co.—announced an open offer to buy a stake representing 26% of the expanded voting share capital.

The four companies acquired 5.27% of the issued and outstanding equity share capital and 5% of the expanded voting share, triggering the open offer. That took the Burman family's holding in the financial services firm above 25% of the expanded voting share threshold.

Prior to the transaction, the four companies held 21.25% of the equity capital and 20.15% of the expanded voting share.

The letter to the market regulator highlighted that the board of Religare didn’t respond after the issue was flagged to them in a letter dated Oct. 6.

“We have not received any response from the company. Neither have we been informed of any specific action the company intends to take. Given the serious nature of the issues, we request you to examine the trades in detail and take necessary action," the letter said.

The saga doesn’t end here.

On Nov. 9, the Burmans flagged the “high compensation” of Saluja, which is in excess of Rs 150 crore. The amount is “not in line with compensation norms by any reasonable parameters”, according to a Burman family spokesperson.

However, Religare rejected the issue, stating that it is “completely false and erroneous”. The compensation was decided by the remuneration committee and duly approved by the board, according to the Religare spokesperson. The compensation was also approved by a special resolution passed by the shareholders.

“As per the annual report for FY23 of REL, the remuneration for the Executive Chairperson was Rs 8.12 crore. Even after including the perquisite value of the ESOPs, it reached a figure of Rs 42.06 crore.”

The independent directors of Religare Enterprises have also written to regulators, including SEBI, RBI and IRDAI, alleging fraud and other breaches against the Burmans, according to an Economic Times report.

“We are surprised and disappointed at these allegations. These allegations are false, frivolous and defamatory,” according to a Burman family spokesperson. This is an attempt by the company to deflect the “attention of regulatory authorities/Board/public shareholders", it said.

All this comes only years after Religare's founders, Malvinder Singh and Shivinder Singh, served jail time for allegedly syphoning funds from their companies.