Religare Issues Clarification On InGovern Reports

Religare Enterprises (REL) has dismissed the allegations made in a recent report by InGovern Research Services titled “Navigating Turbulent Waters Amidst Governance Challenges.” 

The company said that the report as misleading, inaccurate, and a deliberate attempt to undermine the credibility of its current management. 

In its response, REL clarified that many of the issues raised by InGovern are ‘sub-judice,’ while also highlighting the company's achievements and progress in recent years.

Points of Clarification:

Sebi Show Cause Notice
In response to InGovern's mention of a Securities and Exchange Board of India (Sebi) show cause notice issued to REL’s independent directors and the company itself, REL clarified that this matter is currently sub-judice before the Securities Appellate Tribunal (SAT). The interim order cum show cause notice dated 19 June 2024, and related letters issued by Sebi, have been challenged by REL. Importantly, the directions under paragraph 35 of Sebi's order have been stayed by SAT, which means the matter remains under judicial review.

IRDAI Order And ESOPs
The report referred to an Insurance Regulatory and Development Authority of India (IRDAI) order dated 23 July 2024 regarding Care Health Insurance. REL responded that Care Health has challenged this IRDAI order before SAT, which subsequently stayed the impugned order for 12 weeks starting from 9 August 2024. As this matter is also sub-judice, REL maintains that InGovern's report lacks accuracy in this context.

AGM Postponement And Governance Concerns
Addressing concerns about the postponement of REL’s 40th Annual General Meeting (AGM), REL clarified that it had applied for an extension of time to hold the AGM by three months, under Section 96 of the Companies Act, 2013, citing pending regulatory approvals and the impact of an Open Offer on the company's shareholding structure. The Registrar of Companies (RoC) granted this extension on 22nd August 2024. The extension order was challenged by M.B. Finmart Pvt. and others, but their petition was dismissed by the Hon’ble High Court of Delhi on 30 August 2024. The dismissal is currently under appeal, with the next hearing scheduled for 21 October 2024. REL criticised InGovern for concealing this dismissal in its report.

Insider Trading Allegations
The report also mentioned a show cause notice issued to Dr. Rashmi Saluja, Executive Chairperson of REL, concerning insider trading allegations. REL clarified that this notice is being contested, and no final verdict has been passed.

Auditor Nangia And Co LLP Withdrawal
REL addressed the report's claim about the soon-to-be-appointed auditor Nangia & Co LLP withdrawing their consent for the statutory auditor role. The company stated that Nangia and Co LLP, which currently serves as the auditor for Care Health Insurance (a direct subsidiary of REL), withdrew their consent without citing any specific reason. As REL was yet to appoint them officially, this action does not reflect any governance lapse on REL’s part. REL is actively consulting with other reputable audit firms to fill the position.

REL's Response To InGovern’s Report
Dr Rashmi Saluja, Executive Chairperson of REL, condemned the report as "manipulative in nature and a malicious attempt to hurt the credibility of the company and its leadership." She emphasised that REL is fully compliant with all laws and regulations and continues to respect the sanctity of legal processes, particularly in matters that are sub-judice. Dr. Saluja also pointed out that the trend of short selling to undermine the potential of Indian companies could be a motive behind InGovern’s misleading report.

Dr Saluja further criticised the report for presenting her as "navigating a treacherous path amid allegations threatening to undermine her authority." She highlighted her journey since joining REL's board in 2018 as an independent director and her subsequent appointment as executive chairperson in February 2020. Under her leadership, REL has improved its credibility through strong governance, repaid Rs. 9,000 crore to banks, and recently became an external debt-free entity by repaying Rs. 163.75 crore to JM Financial Products and JM Financial Credit Solutions.