Religare Enterprises starts governance review, seeks funds from new promoters

The Board of Religare Enterprises (REL) has appointed Trilegal and Grant Thornton Bharat LLP, a law firm, to conduct a review of potential misconduct by employees including its two subsidiaries.

The board will also approach the new promoters, the Burman Group, for immediate funding support to sustain the company’s operations, it said in an exchange filing.

“The Board has reviewed the fund flow position of the company and observed a cash flow gap over the next few months. After examining the various options, the Board has unanimously decided to approach the new promoters, the Burman Group, for immediate funding support to sustain the operations,” it said.

REL said that for addressing its funding requirements, it has recommended a short-term inter corporate loan from the promoter group or its associate entities.

Governance review

The company’s board has also commissioned a governance review of the company and its subsidiaries – Religare Finvest and Religare Housing Development Finance Corporation. The exercise is to review the past operating practices, suggest improvements around systems and controls for future implementation along with identifying any potential instances of misconduct by employees.

The Burman Group acquired control of REL and was designated its promoter in February. The Group said that its immediate priority would be to instil stability, strengthen governance and drive sustainable growth at the company and that it will work with the company’s leadership and board to reinforce strategic direction and enhance long-term value creation. The Group had also emphasised that it would apply a disciplined approach to REL with the highest levels of governance.

On February 26, REL’s board directed its subsidiaries to remove Rashmi Saluja and Rakesh Asthana from their respective positions. Some of these subsidiaries included Religare Finvest, Care Health Insurance and Religare Broking.