Burman family pushes for removal of Religare Chairperson Rashmi Saluja
The Burman family, the largest shareholder in Religare Enterprises Ltd (REL), has called for the removal of Rashmi Saluja, chairperson of Religare Enterprises and its subsidiary, Care Health Insurance Ltd, according to a report by Mint. The demand comes just before the insurer’s annual shareholders’ meeting scheduled for Monday.
The family’s call for Saluja’s removal follows multiple legal actions. The Securities and Exchange Board of India (Sebi) issued notices to Saluja regarding alleged insider trading, and the Enforcement Directorate (ED) has initiated a probe into the chairperson’s activities. On September 6, the ED filed a first information report (FIR) against Saluja, accusing her of lodging false cases against the Burman family. The charges fall under Section 420 (cheating) and Section 120B (criminal conspiracy) of the Bharatiya Danda Samhita (formerly known as the Indian Penal Code).
Burman Family’s letter to care health
In a letter dated September 27, the Burman family urged Care Health’s board to remove Saluja from her role as non-executive chairperson, citing the insurer’s Articles of Association. These articles stipulate that any individual under investigation by government authorities or who has been charge-sheeted, with potential imprisonment of more than six months, is unsuitable to serve as a director.
The letter argued that Saluja’s ongoing legal issues, particularly the ED investigation, render her unfit for the position, the report said.
Burman family stake in Religare
Religare holds a 64 per cent stake in Care Health Insurance, with private equity firm Kedaara Capital owning around 16 per cent, Care employees holding about 10 per cent, and Union Bank of India controlling a 5 per cent stake.
Burman family holds a 21.5 per cent stake in REL, however, they are not represented on the REL board.
In September 2023, the family proposed an open offer to buy more than 90 million shares of face value of Rs 10 each. This would represent 26 per cent stake at Rs 235 apiece for a total consideration of Rs 2,115 crore.
Rashmi Saluja’s stance on Burman family
Rashmi Saluja has defended herself against the Burman family’s actions, particularly concerning their recent hostile stance. In an interview with Business Standard last week, she commented on the Burmans’ approach and the ongoing tensions.
“The open offer has been characterised as a hostile takeover,” Saluja said. “Typically, such offers drive up the company’s valuation, bringing in new capital and innovative ideas while strengthening the organisation’s leadership. This ultimately equips the company to better serve its shareholders, providing a positive boost. An open offer should not undervalue the company.”
Saluja further criticised the Burman family’s sudden change in attitude: “Initially, they praised and supported the management over the past six years, collaborating with the board. Now, however, they claim they want the company because of its potential and strengths. They simultaneously dismiss the very people who helped achieve that progress.”
As the AGM approaches, all eyes are on the outcome of the shareholders’ vote and whether the Burman family’s push to remove Saluja will gain traction. For now, Rashmi Saluja continues to maintain her position as chairperson.
First Published: Sep 30 2024 | 1:27 PM IST