Religare Enterprises Ltd — the holding company for Religare group subsidiaries — set up an independent board for supervision and governance of the group and its businesses, following the exit of Malvinder Singh and Shivinder Singh. Mayur Dwivedi – Head of Strategy, M&A and Investor Relations at Religare Enterprises Ltd, in an interaction with Shaleen Agrawal of Financial Express Online, said that Religare Health Insurance, now rebranded as Care Health Insurance, is planning to soon launch a public issue to raise funds. On the other hand, Religare Broking Ltd is planning to add around 1 lakh new accounts in the current fiscal. Mayur said that the company is following the ‘Closer to Customer’ strategy to have better outreach to the customer. Here are edited excerpts from the interview.
After the exit of Singh Brothers from Religare board, what are the key actions taken under new management?
After the exit of ‘Singh Brothers’ from Religare Enterprises board in February 2018 and significant reduction of their shareholding in the company (3.0% by March 2018) by way of invocation/sale of their pledged stakes by lenders, the shareholders (existing institutional shareholders and new shareholders) established an Independent Board towards Supervision/Governance of the Group (REL & subsidiaries). The other key actions taken under the new board and management include management strengthening, investigation of past wrongdoing and legal action for recovery, Correcting Asset Liability Mismatch in the lending business, raising capital for growth and revival, and closely working with regulators.
What steps have been taken by Religare Enterprises and Religare Finvest management to revive Religare Finvest?
Religare Enterprises Ltd (REL) and Religare Finvest Ltd (RFL) board and management took a number of steps in the last 1.5-2 years towards the revival of RFL. These are improved corporate governance, improved recovery and recovery efforts for Corporate Linked Book (CLB). The company hired new management and CEO, CRO, CFO, COO, etc, all are in place. Religare Enterprises engages with regulators such as Securities and Exchange Board of India (SEBI), Reserve Bank of India (RBI), and National Bank for Agriculture and Rural Development (NABARD), etc. Along with the implementation of DRP and Capital structure improvement (new investor or REL), RFL will apply to RBI for exit from CAP.
What does Religare Broking Ltd look to achieve in FY21?
Religare Broking Ltd has already turned profitable in Q4 FY20 and Q1 FY21 and targets double-digit volume /turnover growth in FY21 and remains consistently profitable with increasing trends.
How is RBL planning to increase its digital footprints?
The company is investing heavily in its technology and product platforms and it plans to add 75k to 100k new accounts in FY21. Company has a mix of Brick & Mortar vs digital model and has an asset-light future strategy with bulk of new business targeted from digital platforms (mobile app and web-based). Religare Broking Ltd plans to continue with current physical infrastructure (branches/locations etc) but heavily increase its digital footprints.
After all the legal and financial challenges, how much money RFL has repaid to its lenders in FY20?
The misappropriation of funds by erstwhile promoters through the corporate linked book of Rs 2,037 crore (CLB matter) and Lakshmi Vilas Bank misappropriating RFL fixed deposits of Rs 791 crore (LVB case) and other Non-Core Asset/Investment, contributed towards RBI putting RFL under Corrective Action Plan (CAP) in January 2018 and also severe Asset Liability Mismatch (ALM) in its books. Despite all the financial, business and legal challenges, including being under RBI CAP which restricted the firm from doing new business, RFL has repaid more than Rs 6,450 crore to its lenders since January 2018 and Rs 1517 crores in FY20 itself.
How is Religare group planning to simplify the corporate structure?
Company is planning a simplification of the corporate structure by merging non-operating subsidiaries which will help reduce cost. REL had entered into a Share Purchase Agreement (SPA) in October 2019 with TCG Advisory Services Private Limited (TCG) for 100% sale of RFL and RHDFCL, as part of its Debt Restructuring effort. However, in March 2020, RBI did not accede to TCG acquiring RFL. RFL is in the process of restructuring of debt and improving its capital structure.
What is the capital situation of Religare Enterprises now?
In FY20, REL raised Rs 161.5 crore through conversion of warrants. Its insurance subsidiary, Care Health Insurance Company raised Rs 58.5 crore via preferential allotment/rights issue. In June 2020, Kedaara Capital invested Rs 567 crore in Care Health. The Rs 300 crore was the primary capital infusion in Care Health and Rs 200 crore worth of secondary shares were sold by REL. REL now holds 71.8 per cent in Care Health. REL invested some of this capital in other subsidiaries. The company settled a legal dispute with Axis Bank, in regard to a credit facility of its subsidiary, which was restricting it from sale of assets/ equity stakes, due to unfavourable interim order by the court. REL paid off all external debt obligations and became external debt-free. The company amicably settled the dispute and claim (around Rs 650 crore) filed in Delhi High Court by PE investors of its subsidiary RFL. REL bought back PE investors 14.36% stake in RFL against consideration of Rs 47 crore.
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