Religare Enterprises Ltd (REL) has appointed Grant Thornton and Trilegal to conduct a ‘governance review’ and ‘identify potential instances of misconduct’ including by ex-employees of REL and two of its subsidiaries, the company told the exchanges.
This comes more than a month after the Burman Group finally took over REL on 7 February, after an 18-month protracted battle with the former management led by Dr Rashmi Saluja. On 26 February, the REL board appointed four new directors—Abhay Kumar Agarwal, Arjun Lamba, Gurumurthy Ramanathan and Suresh Mahalingam—as non-executive and non-independent directors.
A person with knowledge of the development said this was akin to a forensic audit of the company’s finances over the last several years.
The board has “commissioned a governance review of REL and its subsidiaries, namely, Religare Finvest Ltd (“RFL”) and Religare Housing Development Finance Corp. Ltd (“RHDFCL”). The objective is to review the past operating practices, suggest improvements around systems & controls for future implementation, and identify any potential instances of misconduct by specific current and/or ex-employees of the aforementioned companies.
For conducting this review, the Board of Directors have resolved to engage a law firm Trilegal, who would be assisted by Grant Thornton Bharat LLP, according to an REL filing made to the exchanges. Companies typically hire Grant Thornton for forensic audits.
The reports on the governance review are expected over the next 2 months, the person cited above said.
Former chairperson Rashmi Saluja, who left the company after shareholders voted her out, did not respond to messages seeking comments on the governance review of past actions initiated by the new board.
The REL board has also applied for funds from the Burman family, now the promoter group, citing an urgent cash crunch within the company.
“The Board has reviewed the fund flow position of the Company and observed a cash flow gap over the next few months,” the filing said.
“To address the funding requirements, the Board has recommended a short term Inter Corporate Loan (“ICL”) from the Promoter Group or its Associate Entities in the interim shall be best suited given the tight timeline for the requirement,” the filing added.
The board has asked the Burman Group for a loan of ₹30-40 crore to meet short term needs, another person with knowledge of the development said.
