New Delhi: Locked in a bitter battle with fellow co-founder Rahul Bhatia, IndiGo promoter Rakesh Gangwal has alleged serious governance lapses at the company, saying even a “paan ki dukaan” (betel shop) would have managed matters with more grace.
Gangwal, who along with his affiliates holds around 37% stake in InterGlobe Aviation, said that the company has “started veering off” from the core principles and values of governance that made the company what it is today.
The move appears to indicate that a boardroom dispute is escalating after a report in May that the co-founders and two largest shareholders of India’s largest airline were at odds over its expansion.
InterGlobe Aviation (or IndiGo) is also the parent of the country’s largest airline IndiGo.
Co-founder Rahul Bhatia and his affiliates (IGE Group) has around 38% stake. Both Bhatia and Gangwal have a major say in its strategy and plans because of their significant shareholding.
Gangwal has written a letter to markets regulator SEBI, flagging governance issues at the company and has accused Bhatia and his firms of indulging in questionable related-party transactions. SEBI, in its role as a stock market regulator, is empowered to protect the rights of investors in listed companies.
According to Gangwal, 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,” Gangwal said in the letter.
“I have vigorously attempted for almost a year to persuade the company to shore up its governance standards, and all my attempts have been thwarted by the IGE Group,” Gangwal said in his letter to SEBI, published on the Bombay Stock Exchange website.
Referring to various events at the company, Gangwal, in the proposed notice for extraordinary general meeting, said the events go “far beyond just poor governance and even a ‘paan ki dukaan‘ would have handled these matters with more grace”.
SEBI has sought a reply from Interglobe Aviation by July 19.
A copy of the letter has also been sent to Prime Minister Narendra Modi, finance minister Nirmala Sitharaman, civil aviation minister Hardeep Singh Puri and commerce minister Piyush Goyal among others.
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”.
Gangwal, an American and an aviation industry veteran who spent years in senior roles at United Airlines and US Airways, has been a big factor in driving IndiGo’s emergence as one of the fastest growing carriers in the world.
Bhatia, in turn, has been running things on the ground in India.
India’s aviation sector has been shaken by the collapse of Jet Airways, which has sent travel prices soaring. Jet, once India’s largest private carrier, was crippled by mounting losses.
IndiGo, SpiceJet and GoAir have been rushing to fill the vacuum left by Jet and gain control of its valuable slots.
IndiGo’s fleet consists of more than 200 Airbus SE A320 and A321 narrowbody aircraft, along with just over a dozen ATR turboprops.
The full letter has been reproduced below.
Rakesh Gangwal letter by on Scribd
(With agency inputs)