As far as I know, all Religare shareholders support us: Mohit Burman

In a lengthy interview conducted over two days, Burman stopped short of commending Religare chairperson Rashmi Saluja for the company’s recovery while giving “full marks” to the management team for the turnaround. Burman also said his group contributed to the recovery. “Hopefully, all shareholders will support our offer,” Burman said. 

He also said he was puzzled by a first information report (FIR) filed by the Mumbai Police, linking 32 people including him and Gaurav Burman, director of Dabur Ltd, to the Mahadev betting app scandal. Edited excerpts from the interview:

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What attracted the Burman family to Religare?

The family is focused on B2C businesses. Our flagship businesses are in the FMCG sector. We focus a lot on food and beverages. We have been in the financial services business but in joint ventures, but historically, we have been running FMCG and pharma businesses ourselves. In the insurance space, we partnered with ABN Amro, Aviva General Insurance Company and three other banks. So, therefore, our interest in Religare came about because it has a very strong franchise in the health insurance business. While we are already in life and general insurance businesses, we felt that this is a potential business we could add value to and therefore, we have made the open offer.

What was your role in Religare’s turnaround?

Our journey with Religare started in 2018 when the company was on its deathbed. We put money through a preferential offer – 176 crore in August of 2018. At that time, this company (Religare) did not have money to pay salaries. There was chaos. We stabilized the ship then. Then in 2021, we again put in money, and the current management welcomed us wholeheartedly. We put in another 175 odd crore. And, we funded them for the OTS (one-time settlement) which they did not have money for.

What triggered the open offer?

We have been with this company for the last five years, and we have been decent shareholders, we voted the management in, voted everybody in, and did what was right for the company and then there came a time when we realized that this company needs a promoter.

Why does Religare need a promoter?

Two reasons why a promoter is required for this entity: RFL (Religare Finvest Ltd) which is a subsidiary of Religare today, is still a fraud-tagged entity. It is still under the preventive tag from RBI. Change of promoter will do away with these things in time and this company RFL will become a very viable entity, which it is not today. So, that is No.1 from a business perspective, and two, from a banking and cost of capital and credit rating perspective — you see the credit rating of this company today, both at REL and RFL level, they could do much better. That is extremely important from a business perspective which is what is getting missed out in this whole flurry of news that is floating.

After making the open offer, are you surprised by the resistance from the Religare board?

When we made the open offer, they sent a letter to the stock exchanges welcoming us, and that we are the right people to lead this company. We would provide capital; we would provide professional management.

We (our move) were welcomed on the 25th itself. We don’t know what went wrong in the next two weeks or three weeks that they decided to turn around us and give us a different or indifferent welcome.

What could have transpired over these two weeks?

Maybe some people don’t want to let go, and you know, there is obviously no promoter in the company, and may be some people are doing whatever they wish, and they do not want someone coming in. I think the interesting part would be to look at the balance sheet of the company and look at the compensation in the form of CTC (cost to company), bonus, and stock options in REL and in the subsidiaries below. We were also surprised, and we thought we would be doing the right thing for the business as we have done in the last five years. As far as I know, all shareholders support our open offer.

Also, people say the value of Religare comes from CARE with a different set of shareholders; do you think that is why there is so much resistance?

So REL has two great businesses, CARE (healthcare insurance) and broking. They are run by great professional managements. They have good investors, and I think there is no conflict with any of the investors. All investors are well within their right to want a good exit and a good valuation. And for us as well, because CARE is our most valuable company or asset, I think, over time, there will be alignment with everybody in terms of value unlocking.

You say Religare shareholders are with you, at the same time their board has issues. Did you support the appointments of chairperson Rashmi Saluja and other board members?

Yes; we voted in their favour. They put out this letter. We told them that we were launching the offer as good corporate citizens, and we told her, four days before announcing the offer. And we are also surprised by what has happened and why it has happened.

What’s the next step for the open offer? Does the board place it before the shareholders?

The shareholders have to be OK, and nobody can force them, not us or the board.

So, even if the board doesn’t concur with the open offer price, you can go ahead?

Regulators have the power to approve. And then, shareholders have the right to tender or not to tender.

You said you stood with the company during difficult times. So, for the turnaround, will you give some credit to Dr Saluja for the way she has managed to recover money? Even the regulators, the RBI and PSU banks were surprised that the recovery happened.

Of course, I give full marks to the whole management. And the board to achieve what they have. But now, the business needs capital and direction to the next level, and that’s what we want to provide. Therefore, we were surprised that after welcoming us they turned hostile.

Did the Religare board approach you for the lending business?

No, they haven’t approached us for funds for any specific businesses. Every time they have approached us for preferential (fundraising) which we led, I still believe other shareholders put in money because we put in money first.

We put in money at a very difficult time. The shareholders’ commitment to the company is bringing it to where it is today is the story. The shareholders also have stood with the company through very difficult times.

There were two PEs – Bay Capital and Ares SSG – and we gather that the family offices of the Burmans bought Bay Capital’s stake. Is that correct?

We put money through two preferential (offers) in 2018 and 2021. The last stake buys we did was from Ares SSG which was 7%.

Your offer price is low compared to the 52-week high.

No; so, we have given this offer taking into account Sebi’s formula which was lower than what we offered. So, if someone wishes to offer more, I’m happy to welcome them.

How far would you go to protect the family name when there are people making allegations?

At this point, I want to stay on a different path and maintain focus. At this point, our focus is on getting the approvals, getting the shareholders on board, and getting this company to do the right thing. I do not want to sling mud. Whatever is being thrown at a personal level, we will deal with it later.

It is very difficult to control a company when the board is hostile to you. How do you plan to address this?

One should ask the board. We would also like to hear from them. They are good people. This question goes to the board in the interest of board members. All aspersions are being made by putting in inverted commas “Independent board” — please give me the names of some members – which board members are against this. They are only saying together, we do not know which board member is saying this.

This is a unique board, one executive and five independent directors, no shareholder nominee, no other executives from the company. I mean that it is a very unique situation.

Have you sought a seat on the board, would you look to protect your interest by seeking a board presence?

Currently, the offer is on, we would like to conclude the offer before we do something. We are focused on the offer, we have to get done with this before onboarding, as things stand today.

There are reports which say that you are not fit and proper for being in the company and REL, around police complaints about connections with the Shivender and Malvinder families and Radha Soami Satsang Beas (RSSB).

This is all noise. If we were not fit and proper, we wouldn’t have been running a business for the last 100 years, had 20 MNCs doing JVs with us, and recently completed the acquisition of one of the oldest brands in India – Eveready. First, they said the offer price was too low, and then, when we proved that they sold shares above the offer price, and suddenly they went into a new narrative – we are not fit and proper. We liked to keep our heads down, but now we are talking, and I think everyone should do their homework and come up with their assessment

In 2017-18, some of the entities under the Burman family had bought shares from entities which were connected earlier to RSSB. The allegations are that you might be working as a front there… If there is a police complaint against the Burman family, isn’t that a risk to fulfilling the fit-and-proper clause?

We have put money into the company in 2018 and then in 2021. We have bought shares only from Ares SSG in 2023 on the 16th of August. The aspersion that you are trying to cast that the selling institution was holding on their behalf, is completely false, they are the largest credit market fund – $400 billion those guys run – and you can do the math, you can check it out. The regulator is well within their right to ask questions, we will answer the questions. We are focused on getting our open offer done. And through whatever facts and figures we sent the company, a letter about their being some share sales. And we are focused on getting the open offer through.

Either you get into mudslinging and do all this or you get your open offer through and control the company, and I think that is the agenda.

Have you lost confidence in Dr. Rashmi Saluja?

I have never been privy to her decision-making and as I said (never) been on the board of this company; so, therefore, my role has been of a financial investor. So as far as I am concerned, if the existing leadership is something that cannot take the company to the next level, then we need to make some changes.

As an investor, how do you look at CARE? You know there is some talk about a listing that is going to happen. Are you in step with that thought process?

Currently, whatever happens in CARE, it’s a great asset run by a great team, great professionals, good set of investors. The outcome of CARE can only be decided once the offer process is over. We have no role in it, and the whole idea about the IPO, demerger, whatever will be decided post that. Actually, it will be a win-win for everybody. And it should be good and of value for REL for CARE and their shareholders. So, be rest assured this is a silver asterisk, and we will take care of it. And we want to turn the other assets also into great assets by bringing in funding, manpower..

There is one more thing about the RSSB (Radha Soami Satsang Beas)… there are certain views that that they have to pay or they are obliged to pay back. Will you pursue that?

Once (we’re) in control, whoever has to pay us money, we will pursue it. The company has to pursue all legal remedies.

Indian corporations have rarely made hostile offers or hostile takeovers. Would you look at mediation as someone willing to sort differences amicably? Or is this a point of no return?

We believe we are doing everything as per the government norms. If a situation arises… if individual people are aggrieved, I am happy to sit across the table and work out a solution. As far as we are concerned, we are doing this for the growth of the company and all the shareholders. We are here for the growth of the company. This is not an ego battle for us. We are here for the growth of the company.

In this entire episode we see a resistance coming from a powerful chairperson of the group. If the open offer goes through, do you think in the coming days, there will be a major restructuring of the board of the REL in this scenario?

We can’t comment on this – it wouldn’t be fair.

How many shareholders are with you now in terms of stake?

We have a 21.25% stake. Hopefully, all shareholders will support our offer.

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