Religare Enterprises shares in focus amid report of fraud allegations against Burmans

Religare Enterprises Ltd, whose shareholders received an open offer by the Burmans in September for stake purchase, has reportedly seen its independent directors levelling fraud allegations against the promoters of Dabur India. These independent directors have written to regulators such Sebi, the insurance watchdog and the RBI, setting up the stage for a long-drawn takeover battle, an ET report suggested. A spokesperson for Burmans in a statement rejected the accusations.

The allegations, as per the report, included charges of collusion with the Singh brothers, the erstwhile owners. As per the ET, independent directors cited a pending case of fraud against Dabur India chairman Mohit Burman and raised questions over the source of funds to be used for the acquisition.

Besides, Religare's independent directors, as per the ET, also alleged that the Burmans are in material breach of regulatory obligations that may harm the firm.

In a media statement, a Burman family spokesperson said the family is surprised and disappointed at the allegations, as s/he called the allegations are false, frivolous and defamatory.

"We remain hopeful that independent directors will not be misled or instigated into such false conclusions by certain senior executives and would refrain from doing so without first having examined facts or going through a due process. At this stage, we are concerned that some of these statements are being orchestrated as falsehoods by interested persons at REL. We would urge the independent directors to review the issues with proper facts and records in perspective as per well established procedures that Boards of listed companies ought to follow," S/he said.

Besides, the spokesperson said the Religare board had on September 25, 2023 welcomed Burman's investment in Religare Enterprises and "it now surprises us that such baseless aspersions are being cast by certain individuals."

To recall, Burman group entities namely Milky Investment & Trading Company, Puran Associates, MB Finmart and VIC Enterprises in September announced an open offer for acquisition of up to 90,042,541 fully paid-up equity shares of Religare from public shareholders, representing 26 per cent of the expanded voting share capital. The offer price was set at Rs 235 a piece, which was at a discount of 13.74 per cent to then prevailing price.

The Burman family is the single largest shareholder in Religare Enterprises. The billionaire family had via a couple of group entities accumulated a 21.5 per cent stake in Religare Enterprise by August and had bought another 5.27 per cent stake in September that triggered of a mandatory open offer to buy an additional 26 per cent stake from the public. As per the ET report, the independent directors in an October 18 letter said the party seeking to acquire the business "ought to be scrutinised for the fit and proper criteria that apply to licence holders in these segments."

The spokesperson from Burmans said some of the allegations are being made because the Burman family drew the attention of the company by its letter dated October 26, to the board of Religare Enterprises, regarding certain share trades by a certain senior executive at the company immediately prior to the launch of our open offer.

"We are concerned that instead of dealing with the legitimate queries raised in our letter of October 26, 2023, the attention of regulatory authorities / Board / public shareholders is being deflected to such falsehoods," the spokesperson said.

The religare The shareholders had also sought some improved governance in REL primarily relating to limiting the high compensation of a specific individual which isin excess of approx. INR 150 crores, an amount which is not in line with compensation norms by any reasonable parameters.

For now, keeping overall shareholder interest in mind, we will move towards closing the transaction expeditiously working with all the regulators as has always been our approach. Given our credentials, an overwhelming majority of the institutional investors / public shareholders are supportive of the proposed transaction and we remain confident that under our guidance, REL’s performance would see significant uptrends.

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