Religare Enterprises (REL), a key player in the Indian financial service sector, is currently mired in a battle for control as Burman family, its largest shareholder, seeks to augment its stake in the company. Dabur Ltd has proposed to acquire an additional 5.27 per cent stake in Religare Enterprises, thereby setting in motion, an open offer to buy an extra 26 per cent stake from the public in adherence to Securities Exchange Board of India (SEBI) guidelines. The Burman family’s open offer for Religare Enterprises, is expected to amount to `2,116 crore upon full acceptance.
This comes close on the heels of a controversy around the issuance of ESOPs (Employment Stock Options Plans) to REL Executive Chairperson Rashmi Saluja for CARE Health Insurance, an entity in which REL owns about 63 per cent stake. Saluja is currently the Non-Executive Chairperson for CARE. The issue of CARE ESOPs granted to her has become contentious in the ongoing battle between the Burman family and the REL board led by Saluja, who has expressed reservations about the idea of the Burman family taking over REL.
REL presently operates as a promoter-free company governed by an independent board. Zero-promoter companies have zero stakes with no promoter and are owned or managed by professionals. A “zero-promoter company” implies a company structure without active promoters driving the growth of its subsidiary companies. The performance of a zero-promoter company, like any investment, depends on the performance of its subsidiaries and the overall market conditions. Although there are a number of successful companies in India that have zero percentage of promoter holding, Religare Enterprises cuts above the rest with the businesses in its basket showing an increasing profitability curve and a consistent increase in stock price. The net worth for all of them has been consistently improving with market capitalisation expansion going up from less than 100 million USD to 1 billion USD.
After the earlier promoters of REL stepped down in 2018, following gross misappropriation of funds, new management took charge to revive the company’s financial stability through operational restructuring.
Saluja, an accomplished professional, joined Religare Enterprises as the Executive Chairperson in 2020. She is a doctor and an entrepreneur with an impressive portfolio and more than 25 years of administrative experience. She has been instrumental in bailing the company out of challenging times. REL now has various subsidiary companies under its umbrella providing a range of financial services. The company’s growth and success under her leadership reflect in the consistent rise of REL’s market cap from a critical low to an impressively high market value. In the last three years, the company has grown to become one of the best RoE brands in India with its strong presence in the market.
However, Saluja is now under scrutiny after the Burman family filed a complaint with SEBI, questioning the sale of her shares. Allegations include non-compliance with insurance regulator IRDAI’s guidelines. The controversy intensified as the Burman family claimed that Saluja sold a portion of her personal holdings in Religare Enterprises a day after a meeting held with the Burmans where they discussed an open offer for a controlling stake in Religare Enterprises.
Allegations directed at Saluja not only question her competence but also cast doubt on the credibility of Religare’s management and board. Saluja vehemently denies these claims, labelling them as unfounded attempts to damage her reputation, and asserts that the share sales adhered to proper procedures. The Religare board stands by Saluja, insisting that the allocation of ESOPs for CARE Health Insurance was conducted transparently and in accordance with regulatory guidelines. The company also contends that the allegations challenging its management, particularly the sale of shares by her are baseless and unfounded.
Despite Saluja’s substantial contributions, her case reveals apparent gender bias, with accusations challenging her leadership and competence. Though her efforts in steering Religare toward financial
independence over the past three years are duly acknowledged by the company, the allegations underscore the broader challenges faced by other women entrepreneurs and corporate leaders, emphasising their ongoing struggle against discrimination and skepticism. The gender gap remains glaring in the upper echelons of the Indian corporate sector, reflecting a systemic challenge in achieving gender parity in top management.
The power struggle between the Burman family and REL management also sheds light on corporate complexities, particularly highlighting gender disparities. While government initiatives focus on women’s empowerment, the ongoing conflict at Religare Enterprises underscores the imperative for an inclusive corporate model to eliminate gender biases in leadership positions.
