Companies
Rashmi Saluja may have won the battle, but the war is still on
Summary
- Rashmi Saluja secured enough votes to be reappointed as the chair of Care Health Insurance, which is owned by Religare Enterprises, also chaired by her. But Care Health’s two other promoter groups didn’t tag along.
Bengaluru: Rashmi Saluja secured her reappointment as the chair of Care Health Insurance Ltd last month with a majority vote, but the adverse decisions of two large promoter groups signal a significant setback in her battle with the Burman family.
While private equity firm Kedaara Capital, which owns a 15.9% stake in the Religare Enterprises Ltd-owned insurance firm, voted against Saluja’s reappointment, Union Bank, which owns a 5.3% stake, abstained from voting.
Kedaara also voted against the appointments of independent directors Harsha Jauhari and Nirmal Chand, while Union Bank voted in their favour.
Care Health Insurance, Religare’s crown jewel, disclosed the results of the 30 September voting earlier this week.
Saluja is also the chairperson of Religare Enterprises, which is resisting a takeover by the Burman family, the owner of consumer goods company Dabur India Ltd.
At least one proxy advisory firm said Kedaraa’s and Union Bank’s decisions reflected a lack of trust in Saluja’s leadership.
“This kind of voting outcome is a huge development that shows the lack of trust in Rashmi Saluja’s leadership at Care Health Insurance," said Shriram Subramanian, founder and managing director of proxy advisory firm InGovern Research. “This voting outcome by two other promoter group entities comes amid all the regulatory overhang at the company."
Subramanian was referring to an ongoing probe by the Enforcement Directorate against Saluja, and the Insurance Regulatory and Development Authority of India asking the board of Care Health Insurance to cancel the stock options that it had granted to Saluja.
In December 2021, Care Health had sought the regulator’s permission to grant 22.7 million stock options to Saluja. In May 2022, the regulator rejected the proposal. Still, Care Health issued stock options to Saluja in June 2022 after obtaining legal opinion from former Irdai chairman J. Hari Narayan and advocate Arvind P. Datar.
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A company spokesperson said Saluja had “the support of the board and the shareholders" and “continues on the board of (Care Health) as non-executive non-independent director and as non-executive chairperson".
The spokesperson added that Care Health’s directors, including Kedaara’s representative on the board, had reviewed a communication from the “proposed acquirers of Religare Enterprises" demanding Saluja’s removal from the insurance firm’s board, and following legal opinion agreed “that there existed no cause" for her removal.
On the voting, the spokesperson said Care Health “did not have any comments or interpretation in relation to the voting decision of any shareholder".
An email sent to Union Bank seeking comment went unanswered. Emails and text messages to Kedaara Capital and its managing director, Rishiraj Khajanchi, did not elicit a response.
The Burman family’s opposition
In the run-up to the voting on resolutions at Care Health, the Burman family, Religare Enterprises’ largest shareholder, had asked investors to reject Saluja’s candidature.
Citing the insurer’s Articles of Association, the Burman family, in a letter dated 27 September, wrote that the Enforcement Directorate’s investigation against Saluja made her unsuitable for the post of director. The ED on 6 September filed a first information report (FIR) against Saluja and others for allegedly filing false cases against the Burmans.
Religare, with a 63.06% ownership, Kedaara and Union Bank are the three promoters of Care Health Insurance. As of the end of March, they owned 84.23% of the company. Employees and alternate financial funds own the remaining 15.6% stake.
Care Health chief executive officer Anuj Gulati owns 4.78% of the company, and other employees about 8.2%, but they do not participate in the voting process.
“Historically, ever since the top management and CEO became shareholders of the company five years ago, they have not voted in the AGM," said a spokesperson of Care Health.
Mint could not independently ascertain how the remaining shareholders, including alternate financial firms, who own 2.7%, voted at the annual general meeting.
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On 30 September, Care Health Insurance sought shareholder approval on seven resolutions. In addition to reappointing Saluja as chairperson of Care Health and appointing Jauhari and Chanda as independent directors, shareholders voted on adopting financial account statements, appointing Kedaara nominee Rishiraj Khajanchi as director, and approving remuneration and variable pay for Gulati.
The resolution seeking Saluja’s reappointment received 74.87% overall approval.
Care Health is Religare’s main cash-generating subsidiary and India’s second-largest standalone health insurer. The company is worth at least ₹10,000 crore, according to its 2022 rights issue, in which its shares were valued at ₹110 apiece.
