No shareholder represented on Religare board: Dabur

Mohit Burman, Chairman, Dabur Group, says “we are decent people. We are doing everything by the book. So, we will continue getting our approvals and then at the end of the day the shareholders can decide whether they want to tender their shares into the open offer or not. I mean, all the other options which can cause any sort of problems to the acquisition, we are not looking at those.”

What is your next plan of action?

We will continue getting our regulatory approvals. We have already applied to the CCI, that should come in the next few weeks. Then, we have SEBI, IRDA and RBI. As I said, we have already met the fit and proper test for most of these regulatory bodies. So, I do not see any problem; however, with all these allegations being thrown at us, we are tackling them.

The other point is that a lot of other chunky shareholders. Have you interacted with them? Are they okay with your strategy informally?

Informally, we believe all shareholders are okay and are fine with this.

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So, why don’t we see any shareholder representation?

There is no shareholder representation on the board, yes. You have to ask them.

I am surprised at that.

Yes, there is no shareholder representation. I think you should actually speak to the other shareholders. All shareholders have been promised seats on the board. No one has been put on the board. It is being run by a fiefdom.

But you can always move forward now and call for an AGM and appoint your shareholder representation on the board.

No, no absolutely.

Is that something?

No, we are decent people. We are doing everything by the book. So, we will continue getting our approvals and then at the end of the day the shareholders can decide whether they want to tender their shares into the open offer or not. I mean, all the other options which can cause any sort of problems to the acquisition, we are not looking at those.

Because you would not want value destruction of shareholders.

No, of course not.

The idea is to create value, not to destroy value.

No, no, of course. This is why I am surprised that after welcoming us, that behaviour has become like this.

But you are open for amicably sitting together, putting together and taking it forward?

Yes, of course. I mean, at the end of the day, it has to be a win-win situation for both parties.

So, the next line of action from you would be?

No, my next line of action is, as I said, I am waiting for the regulatory approvals and we will go with those. Once we get those, we will continue with the open offer and hopefully we will reach a settlement with the management and board sooner than later.

So, you are hopeful of reaching a settlement shortly when all the regulatory bodies also give you nods.


Let us talk about the bigger picture. How do you see the intrinsic value of Religare Enterprises after all it has gone through, the current management also has really pursued one-time settlement, that was a big positive, all of that, so legacy issues are behind it now. What are the potential of this company with the current businesses right now in your view which can be extracted in the right efficiency if they achieve over the next three to five years?

See, the businesses in their own way have their inherent strengths. They have a broking business, they have a lending business which still has a fraud tag and it needs a promoter to come in for that fraud tag to go away. So, there is something that we could add value to. It also has a housing finance business which is small.

So, all of these businesses, if they need to be scaled up, require capital. I mean the broking business, you see what is happening in the broking area today. Everything is going on the net. All these new-new companies are taking market share from the older ones. So, we have to transform that business as well. So, we will allocate capital, we will get the right management. If the management is there already, we will keep them. We do not change people if they are capable so that is what we have….

What about Care Health, that is seen as the biggest diamond in that entire haystack, if I can call it and people say that 60% to 70% of Religare Enterprises’ value actually is housed under Care Health. How do you see the growth over there? What kind of value unlocking potential does it hold?

See, health insurance will continue to grow. Obviously, all health insurance companies have had a good run due to Covid and because of Covid. I see growth there continuing and Care has a very capable management. So, I see that business will continue to be the mainstay of Religare. But the other businesses have potential to be scaled up. So, we will look at doing that as well.

So, we saw the template of acquisition of a stress asset and the attempt to turn it around, make it more efficient and scalable by you or the group earlier as well in the case of Eveready. So, are you aiming at replicating the same kind of template here as well?

Yes, because at the end of the day what did we do in Eveready? We never changed the board. We never changed the management. It has the existing CEO and the same board. All we did was supplement the board and provide the management with a good second layer of people who might have not joined Eveready before but joined them because the Burman family are in control and now the results are showing. We got a strategic advisor to come and give us what to do next and you will see the results yourself.

One quick question on that as well. The market is patiently waiting. When would the big scale-up happen at Eveready, be it distribution or product line-up? You know, numbers start capturing all of that, so if you could give a roadmap.

The distribution set-up has already been taken care of. We had too many distributors, you know, having very little ticket sizes, we have rationalized that. We are the leader in zinc batteries, now we are putting up a plant to fight Duracell in the alkaline business. We are providing capital to put up a new plant and in our lighting business and in our rechargeable flashlight business, now we are advertising, we are putting more ad pro even in the battery business.

Even today, in Mumbai, Delhi, Kolkata, we have got hoardings, we are on television and Bain is advising us on what new categories to enter, maybe after a year or two.

Why I am asking you this is because of the major revolution happening in the reach of power, electricity across the country. The new category FMEG is bursting at the seams, right? And widening of category offerings is something Eveready lacked so far. Do you think in the next three to five years, it could be a Havells or a kind of a FMEG player could emerge?

So of course, that is the intention, but we have to be very careful in what categories we enter because I still want Eveready to be a B2C business, which we are good at running. All our businesses are B2C businesses. And plus we want to get into categories which now do not have very strong sort of players.

Early stage? So which are those categories?

No, so it is difficult for me to say because at this point of time, Bain is advising on all that. So, you know, maybe.

But category product expansion is on cards, that is something.

Absolutely. In the next financial year, you will see us entering into a new category.

What about the main cash cow of the group, which is Dabur. How is that doing because it has been kind of lagging because of feeble volumes on the rural side but early signs show that things are coming back?

Absolutely. The rural market is already showing that, historically over the last couple of years, as you mentioned, there was a lot of downgrading and a lot of people were moving to unbranded. There was, because of the inflation, now that is being taken care of and we are getting our market shares back. Also, the rural market will continue to now get back. So I see next few quarters of good growth.

So you expect volumes to come back to much higher levels than what they are currently in?

Yes, I mean, see, we have a very large product portfolio. So historically, our volumes of our healthcare division went up quite a lot because of Covid. You know, that has kind of tapered. But now our food and beverage as well as our personal care business is showing growth.

Personally, you also have an investor’s bent of mind. I mean, you scan the environment and look for opportunities where not only capital but management bandwidth can add value and create some value. How are you analyzing the investing landscape here in India right now?

Globally, India has the most growth potential. So there are lots of opportunities, more start-ups, the D2C businesses. But at this point of time, you can see my hands are full.

I am sure you would have done a SWOT analysis of the Religare Enterprises before doing the open offer. Once this matter is settled, then your team will get directly into it and help the company because the categories this company is operating in have a lot of tailwind and all businesses are cyclical. But this may not last very long and you may have a few quarters or years of a time window as well as NBFC, broking are cyclical in nature. So time is also a factor.

As I said, you have to adapt these businesses to change. As I mentioned, broking business is already undergoing change. Now, of course I have been there for a long time. They have been starved of capital and maybe they do not have that type of growth. So not only will we provide capital to grow it but you have to then adapt to change to make it more online. These are the things that we will have to look at what is possible.

What model will you adopt? Will you get a consultant to work on it?

Absolutely. Yes, so the intention will be to get an external consultant. We work with the existing management. We do not do anything and then we see what are the areas of growth and how we can supplement the management with more people.

So the idea is that the way some of the peer sets are growing, an average broking company is showing very high growth now. NBFCs are seeing 20-30% growth. They are raising guidance. Can this company get back to a 25-30% annual growth in next two, three years?

Well, I hope so. I hope so. As I said, here one will have to internally evaluate where these businesses are at this point of time but I do not see why they cannot in two or three years reach that growth given the right impetus.

Roy Walsh

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