1. What motivated Mohit Burman to attempt the acquisition of REL?
Mohit Burman’s interest in acquiring Religare Enterprises Ltd (REL) came from his ambition to
grow in financial services, the timing of the opportunity, and his past experience with successful
acquisitions.
Strengthening presence in financial services: The Burman family already had ventures
in insurance and finance but in small parts. REL offered them a chance to bring
everything together under one strong platform.
Synergies with existing businesses: REL’s operations could be combined with
Burmans’ existing ventures to expand faster and reduce costs.
Experience in reviving struggling companies: The Burmans had earlier bought
companies like Fem Care Pharma and Badshah Masala, which they successfully grew.
REL, which was struggling after governance issues, seemed like another such
opportunity.
Right timing: In 2018, REL’s original promoters, the Singh brothers, had to step down
due to legal troubles. This created a power vacuum and lowered entry barriers, which
Burmans used as an opportunity.
Belief in REL’s potential: Analysts and the Burmans believed that REL had a strong
customer base and a promising future in India’s fast-growing financial services market.
2. What were the charges Religare had against Mohit Burman? Were these justified?
REL’s board, led by Rashmi Saluja, raised several allegations against the Burmans to block the
takeover:
That they were colluding with the old promoters (the Singh brothers).
That Mohit Burman had a pending fraud case.
That their funding sources were doubtful.
That they had done market manipulation.
And finally, that they were not “fit and proper” to run a financial services company.
Were these fair?
No. Most of these claims had little backing:
REL could not give solid evidence even after months.
SEBI reviewed the case and rejected the charges, saying the board acted unfairly.
Regulators also pointed out that the management seemed more interested in protecting
their own positions rather than shareholders’ rights.
Market experts saw these allegations as delay tactics by REL’s management to stop the
Burmans.
3. Where did Burman go wrong in the takeover of REL?
While their overall strategy made sense, the Burmans made some mistakes in execution:
Underestimating resistance: They thought the existing management would cooperate.
Instead, management fought hard to block the takeover since they didn’t want to lose
control.
Offer price problem: Their open offer price was ₹235 per share, but the market price
was higher, and REL’s board claimed the fair value was at least ₹300. This made the
offer look unfair and gave the board a strong argument against them.
Too much reliance on regulations: They believed simply following the rulebook would
be enough. But REL’s board used the same regulatory channels to stall the process by
filing complaints.
Not building management alignment first: They launched the open offer before finding
a way to settle or negotiate with the current leadership, which led to direct conflict from
the start.
4. How should Burman overcome the hurdles to the acquisition of REL?
To succeed, the Burmans need a clear roadmap:
1. Work with regulators: Stay transparent with SEBI, RBI, and IRDAI. Since SEBI
already gave a favorable order, use that momentum to push ahead.
2. Highlight shareholder interest: Position themselves as fighting for shareholder value,
while showing how the current management is blocking returns.
3. Expose management issues: Keep pointing out governance lapses by Rashmi Saluja,
like the insider trading allegations and penalties, to reduce her credibility.
4. Be ready legally but don’t rush to court: Let REL’s board escalate legal battles. This
way, the Burmans look patient and law-abiding while the board appears defensive.
5. Revisit the offer price: If needed, slightly increase the price to attract more shareholders
and weaken the board’s main criticism.
6. Stay patient: Regulators and courts are slowly moving in their favor. Instead of rushing,
they should wait for official approvals and use time to their advantage.
