Religare Enterprises (REL) on Monday said it has commissioned a governance review of the company and subsidiaries, Religare Finvest and Religare Housing. It has also sought immediate funds from its promoters — the Burman family — to sustain operations.
“The objective is to review the past operating practices, suggest improvements around systems and controls for future implementation and to identify any potential instances of misconduct by certain current and/or ex-employees of the aforementioned companies,” the firm said in an exchange filing.
The company has engaged Trilegal, which would be assisted by Grant Thornton Bharat, for the review.
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The REL board also reviewed the fund flow position of the company and observed a cash flow gap over the next few months. “To address the funding requirements, the board has recommended a short-term inter-corporate loan (ICL) from the promoter group or its associate entities in the interim shall be best suited given the tight timeline for the requirement,” the notification said.
The board’s moves come less than a month after the Burmans were designated as promoters of the company on February 20.
After acquiring majority control, the company had said the Burman family will work with REL’s leadership and board to enforce its strategic direction and enhance long-term value creation. “We have always invested in businesses with strong fundamentals and high-growth potential, and we will apply the same disciplined approach to REL with the highest level of governance,” the group spokesperson had said.
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The Burman family’s takeover bid went through several hurdles, with the matter going to regulators as well as courts. However, executive chairperson Rashmi Saluja had to exit as director in mid-February after 97% of shareholders voted against her reappointment as per ‘liable by rotation’. The Reserve Bank of India (RBI) also gave its nod.
At the same time, Digvijay (Danny) Gaekwad was unable to deposit `600 crore earnest money, as ordered by the Supreme Court.
Earlier, three proxy firms had warned against Saluja’s reappointment while flagging several factors, including her excessive remuneration, disproportionate grant of ESOPs, and ongoing legal challenges.
REL shares closed 2.99% down at `235.20 per share on the NSE on Monday.
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