IndiGo’s Board of Directors’ meeting, which is scheduled to begin shortly, is expected to not only consider and approve the airline’s results as officially declared to the stock exchanges but it is also likely to discuss the differences between promoters and co-founders Rahul Bhatia and Rakesh Gangwal that have come to the open as a result of the latter’s complaint to the Sebi alleging serious corporate governance lapses.
Gangwal has alleged that Bhatia’s entity Interglobe Enterprises, which has management control of the airline, has built an “ecosystem of other companies that would enter into dozens of related party transactions with the airline”. Bhatia claims the allegations were part of a plot to “dilute” and “diminish” the control of Interglobe Enterprises in the airline.
What is the composition of the airline’s Board?
The Board of InterGlobe Aviation, the parent company of IndiGo, is headed by former Sebi Chairman M Damodaran, who is also an independent director at IndiGo. It also comprises the two co-founders Rakesh Gangwal and Rahul Bhatia along with his wife Rohini Bhatia. In addition to this, long-time IndiGo Board member Anil Parashar and economist Anupam Khanna are also directors.
What is expected for the company’s earnings?
Analysts expect the airline — India’s largest in terms of domestic market share — to report an over 20-time jump in its net profit for the June-quarter. The period is seen as a strong one for the domestic aviation sector given the fall of Jet Airways and softened fuel prices in addition to it being a seasonally strong quarter.
How are the markets reacting to the episode?
Since the spat between the promoters became public on July 9, InterGlobe Aviation’s stock has declined about 7 per cent. While on Thursday, the share ended trading around 1 per cent lower from its previous close, it recovered in Friday’s early trade trading 1.1 per cent higher at Rs 1,475 on the BSE as of 11am IST. Analysts expect decisions from the Board meeting and clues from management’s post-earnings commentary later during the day to determine the airline’s and its stock’s course.