Differences between promoters of India’s largest airline IndiGo came out in the open after Rakesh Gangwal alleged serious governance lapses on part of co-founder Rahul Bhatia. Gangwal has sought an intervention by market regulator Sebi to address the ongoing issues.
In a filing to the stock exchange, InterGlobe Aviation, the parent firm of IndiGo, said its board of directors had received a letter from Gangwal. Sebi has also sought a response to the letter.
“Sebi has in the meantime asked the company to give its response to this letter by July 19, 2019, with which the company will comply,” the filing said.
“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 added.
Saying that even “paan ki dukaan” (betel shop) would have managed matters with more grace, Gangwal maintained that the aviation giant has “started veering off” from the core principles and values of governance.
In a statement on Tuesday, Gangwal said his letter listed out certain serious concerns regarding governance matters at IndiGo. “We are big believers in the long-term potential of IndiGo and its business and operational model. However, we also firmly believe that IndiGo can only realise its true potential and be a world-class company if it has both – a world-class business and operational model as well as world-class governance standards,” the statement 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 Gangwal’s angst was his “hurt ego” and refusal of IGE Group to entertain his “unreasonable demands”.
IndiGo is the country’s largest airline with a market share of 49 per cent at the end of May.