IndiGo feud: Amid truce claims, boardroom differences fester

Explained | Why IndiGo co-founders Bhatia and Gangwal are at loggerheads

On the reports of a truce between the founders, shares of InterGlobe Aviation surged as much as 6 per cent. On Wednesday, the scrip ended trading 4.69 per cent higher than its previous close at Rs 1,594.45 on the BSE.

During the two-day long meeting, it was decided that the company will seek shareholders’ approval to amend the articles of association to expand the size of the board up to a maximum of 10 directors, including four independent directors. Regulations stipulated by the Securities and Exchange Board of India (Sebi) require at least one woman independent director in the top 500 listed entities by market capitalisation by April 1, 2019 and in the top 1,000 listed entities by April 1, 2020.

READ | IndiGo set to expand board; will have four independent directors

While some of these measures undertaken by IndiGo’s board have addressed some of the concerns raised by Gangwal, the issues pertaining to related party transactions are still undecided, a source said on condition of anonymity.

Earlier this month, Gangwal wrote to the Sebi alleging serious governance lapses by co-founder Rahul Bhatia who had earlier termed his demands as unreasonable, and has sought regulatory intervention in the matter. Flagging concerns about certain questionable Related Party Transactions (RPTs), Gangwal said the shareholders’ agreement provides his long-time friend Bhatia unusual controlling rights over IndiGo. “Beyond just questionable Related Party Transactions, various fundamental governance norms and laws are not being adhered to and this is inevitably going to lead to unfortunate outcomes, unless effective measures are taken today,” the letter said. Gangwal and his affiliates have around 37 per cent stake in InterGlobe Aviation while Bhatia and his affiliates (IGE Group) have about 38 per cent.

After Gangwal wrote to the board seeking an extraordinary general meeting, Bhatia, on June 12, opposed the proposal. Bhatia wrote to the board alleging that the genesis of Gangwals’ angst was his “hurt ego” and refusal of IGE Group to entertain his “unreasonable demands”. In the June 12 letter, Bhatia alleged that Gangwal had a hidden agenda and had made a package proposal and was not willing to discuss the RPT issue in isolation.

Gangwal had also said he entered into a shareholders’ agreement that provides Bhatia unusual controlling rights over IndiGo. The rights of InterGlobe Enterprises — which is Bhatia’s group — include those to appoint three out of six directors, nominate and appoint Chairman, CEO, President as well as a voting arrangement that requires Gangwal and his affiliates to vote alongside the Group on appointment of directors.

The company is chaired by former Sebi chief M Damodaran. Apart from Gangwal, Bhatia and his wife Rohini Bhatia, former World Bank executive Anupam Khanna and chartered accountant Anil Parashar are board members.