New Delhi: Stung by the controversies surrounding its founders, Singh brothers Malvinder and Shivinder, Religare Enterprises Ltd is looking to spruce up its financial services arm under a new brand and with an investment of ₹600 crore to “reorient" the business. The new management is in advanced talks with two marque domestic equity investors for growth capital for Religare Finvest Ltd.
“We have to essentially re-orient, rebuild ourselves as a different animal. Rejuvenated, rebranded, we have to reorient our whole strategy into a modern, nimble, market-savvy, synergistic animal, which is fast to move, has the right resistance, is cost-effective and customer-friendly. Since we have both the physical infrastructure, as well as the digital platform, we will be unique because there are not too many players in the market at that level," Milind Patel, group chief executive of Religare Enterprises, said in an interview.
Religare Finvest has initiated a brand survey to assess its strengths and how it would relate to the new business plan, after it comes out of the corrective action plan (CAP).
The boards of both Religare Enterprises and Religare Finvest were reconstituted after the Singh brothers exited the company in February 2018. Now, the new management has carved out a well-defined business strategy, which will help capitalize the existing ecosystem under a new brand.
“We are more focused on how we repair the shop and how we go to the next level. We have committed ourselves to put in ₹500-600 crore over the next 1-2 years to get this platform up and running. We are raising money that can be used for growth and the company’s new avatar," added Patel.
The new Religare Finvest board has alleged that ₹740 crore was siphoned off and misappropriated through loans to entities controlled by, connected to or known to, the Singh brothers and their associates.
On 17 December, the companies filed a complaint with the corporate affairs ministry and the Securities and Exchange Board of India (Sebi) against the Singh brothers, and former chairman and managing director Sunil Godhwani, seeking an investigation into suspicious transactions in Religare Enterprises and its subsidiaries. Subsequently, Sebi on 14 March, asked the two group companies to recall the loans of ₹2,315 crore given to the Singh brothers other entities.
“The entire corporate governance structure is now changed, most of the decisions are supervised by an independent board of people of great repute," Patel said, adding that the new board is working to turn the platform around across their four businesses, which include insurance, SME lending, housing finance and broking.
Religare Finvest chief executive Sanjay D. Palve said he was hopeful of the company’s future, given the changes done over the last few months at the micro and operating level.
“The board has been reconstituted, there is active dialogue with regulators now... shareholders have changed and we are seeing some results. Slowly, the counter parties are also recognizing that there are positive things happening in the group and that an attempt is being made by the new board and the management in restoring that confidence in reviving the NBFC. Till date we have repaid banks almost ₹4,500 crore (till 19 January), and in March another ₹300 crore will be paid without even generating one rupee of new incremental business. This has given a lot of confidence to the regulator and the banks that the business model and platform can be revived and brought back on track."
With 584 employees, offices across nine regions and 31 branches, Religare Finvest has ensured recovery from large borrowers and has entered into strategic tie ups with banks for sourcing deals for them. While the company cannot do additional business due to certain restrictions by the Reserve Bank of India, the sole focus of the new management has been on timely servicing its debt obligations by prudently managing its cash flows.
“We have been selling our non-core assets to create liquidity, emphasizing on recovery from large borrowers. We have had good success this quarter, and the money was used to pay banks and to keep the organization floating," Palve added.
The management hopes to get back on track in the next 2-3 months. “We have data of 27,000-odd customers that have banked with us over the last so many years, and we have their old payment track records. We have all those matrix which can help us to go back to them and basically restart the relationship," he said.