In the past few weeks, the Burman family and the board of Religare Enterprises have engaged in a public spat over the valuation of the open offer made by the former. However, Mohit Burman, Chairman, Dabur India, tells Piyush Shukla and Viveat Susan Pinto that the family is still open to an “amicable resolution” Excerpts:
How did things go wrong between the Religare management and the Burman family?
In the last five-six years, we have stood with the company. Every time, its businesses needed capital, we pumped in money. I can say that our role as lead investors gave a lot of confidence to other shareholders who followed because of their trust in us.
Even after the open offer, the Religare management sent a letter to stock exchanges expressing their gratitude and said that they will work with us to take this company to greater heights.
However, as soon as we voted the Chairperson back in, they did a “360-degree” turn. They said our share price of the open offer was low. After that, they made all kinds of allegations forcing us to bring out the truth through letters to exchanges.
What did you convey in the letter?
The genesis of the letter was that we had met the Chairperson on September 20 to inform her that we are going to launch an open offer. She asked what we wanted from the board. We said that we want the board to continue and we will only supplement it. The Chairperson, then, went ahead and sold shares on September 21 and 22. Accordingly, we thought that it is right time to send a letter to the Board of Religare Enterprises about our intention.
However, we did not hear back from anyone. Then, we decided that it was time to approach the regulator with facts. The management sold the shares at about Rs 265-Rs 270 a piece. Now, they are alleging that Rs 235 price is low.
The valuation was arrived at by following guidelines set by the Securities and Exchange Board of India (Sebi). In fact, the correct price was Rs 220.15, based on the pricing on the day we launched the open offer.
Religare says that saying it will appoint two independent consultants to ascertain fair value of shares.
Fair price is what the market decides. Shareholders have right to tender shares and not. It is best left to shareholders. Sebi has a formula for arriving at right valuation otherwise every valuer will arrive at different price.
You picked stakes in the company in tranches “7.6% in August and 5% in September” why?
At that time, we did not want to launch an open offer otherwise the price was even cheaper. This was all built up over months.
You had the opportunity to acquire Religare when the shares were at a lifetime low of Rs 17. Did you miss an opportunity?
We bought shares first when the share price was at Rs 52.30 during the time preferential shares were issued. From there, the shares went down to Rs 17. This was before the Executive Chairperson had joined the Board. In fact, we invested at a time when the company had no money to even pay salaries.
In July 2021, we again put in Rs 175 crore. The Board and management wanted us to anchor that issue and we did that. That money was used to complete settlement with lenders and paying salaries since this was a loss-making holding company with no operating cash flow. Thus, we and other shareholders took the burden.
How confident are you about receiving regulatory approvals for the open offer?
We are hopeful that we will get approvals from Irdai, CCI and Sebi in due course.
Your move to acquire 5% more in Religare Enterprise is not visible on exchanges. When will the transaction be complete?
5% has not been bought. It is a market purchase order that triggers the open offer. The intention to buy also triggers an open offer, as per Sebi guidelines. After we get the requisite permissions, we will execute the 5% stake purchase order. It should go through in a month’s time.
When do you expect to complete the open offer?
Within three-four months.
Will the current Religare Board and management continue after the takeover?
As we told the Executive Chairperson, we will only supplement the Board. When we acquired Eveready, we did not ask anyone to leave the Board. Historically, if you look at all our existing businesses, we have representative on the Boards. All businesses are looked after by capable professionals. We are not going to run the business even in Religare. If we are acquiring a company, we will put our Board nominees. Any normal person would do that.
Currently, the Religare share price is trading below open offer level. What would be your strategy to calm sentiments?
The share price will only go up eventually in due time when the company does well. Religare Finvest, the NBFC, is still under lending cap (due to being under RBI’s PCA list). One-time settlement is still not complete. ICICI Bank is still owed Rs 370 crore. The company’s counsel has stated in court that they are short on money and cannot pay.
With a strong promoter coming in, the fraud tag goes away, lending cap is removed and this entity becomes a going concern. Secondly, credit ratings will improve and borrowing cost will come down. In terms of debt too, the repayment outlook gets better. When all these things come into play and with our capability to put capital, things will change.
Are you willing to resolve the dispute with Religare leadership?
We do not want to engage in ego battles. Business must gain, not suffer. As and when there is a concrete proposal, we are here to sit and amicably resolve the matter.
“As soon as we voted the Chairperson back in, they did a ‘360-degree’ turn. They said our share price of the open offer was low.”