Singh brothers surprise again

Relinquish Religare board positions.

Malvinder Mohan Singh today stepped down as chairman of financial services company Religare Enterprises and appointed Sunil Godhwani as its chairman and managing director. Shivinder Mohan Singh, Malvinder’s younger brother and director on the board, also decided to relinquish his position to focus on Fortis Healthcare, where he is the managing director.

This is the second time the two brothers have surprised the markets by distancing themselves from their family business. In 2008, the Singh family had sold its stake in Ranbaxy Laboratories for about $2 billion to Japan’s Daiichi Sankyo.

“As we continue to build global businesses, we will need to keep revisiting our structures and models to maximise and best deliver shareholder value. This decision is a step in that direction and has been well thought through to have better focus, realignment and in turn drive growth for the organisation,” Malvinder told a press conference after the board meeting on Tuesday.

He would now focus on global healthcare opportunities and associate more closely with the recently acquired Singapore-based Parkway Holdings, in his capacity as its chairman. Last month, in the largest acquisition by an Indian healthcare services company, Fortis Healthcare had acquired 23.9 per cent stake in Parkway for $685 million.

The stepping down of the brothers is being seen as an indication of the company’s entry into banking services, a move which requires the promoters to reduce their holding. When asked whether the company would apply for a banking licence, Godhwani said, “We will evaluate the opportunities as and when they arise... A decision will be taken by the family (Singh) and the board, subject to regulations.” Godhwani has been associated with the company for nine years.

The government had recently announced its plans to give banking licences to non-banking finance companies and private players. The new norms could be based on the existing guidelines for private banks which discourage ownership of banks by business houses.

Malvinder, however, denied that the exit from the board indicated their plans to sell off the company. “We are open to the idea of increasing our shareholding in Religare,” he asserted.

The company also decided to induct group chief operating officer Shachindra Nath and group chief financial officer Anil Saxena on the board and designated Nath as the chief executive officer of Religare Enterprises, the post earlier held by Godhwani.

The board will also induct three new non-executive members with global experience in financial services.

The members, with global expertise in the areas of asset management, investment banking and commercial banking, are expected to support Religare’s ongoing expansion globally.

Despite their stepping off the board, both the promoters will continue to work cohesively and provide support to Godhwani and the management team to help seize opportunities, overcome challenges and provide growth to all group businesses by  cross leveraging capabilities across the group, the company said in a statement issued to mediapersons.

The shares of Fortis Healthcare dropped 1.42 per cent to Rs 174 at the Bombay Stock Exchange on Tuesday. Scrip of Religare Enterprises, on the other hand, moved up 1.66 per cent to Rs 395.80.