The reports of a spat between IndiGo's major promoters Rakesh Gangwal and Rahul Bhatia threw the employees of the country's largest airline by market share into disarray. The bickering between the two major shareholders of IndiGo is reportedly moving towards the National Company Law Tribunal (NCLT) while minority shareholders questioned certain deals of the carrier, said media reports.
As per various reports, the Articles of Association hand over more rights to the Rahul Bhatia faction as compared to Rakesh Gangwal. All the key management positions and most of the directors can be appointed by InterGlobe Enterprises, which is Rahul Bhatia’s holding company.
While Gangwal owns around 37 percent share in IndiGo's parent firm InterGlobe Aviation, Bhatia has around 38 percent share in the company that is listed on the Bombay Stock Exchange (BSE), reported PTI.
The reports on the differences between Gangwal and Bhatia created wide-range of concerns among IndiGo employees though the dispute did not surprise insiders, said a report on India Today.
According to Mint, Gangwal and Bhatia reportedly hired law firms JSA Law and Khaitan & Co respectively in an apparent bid to resolve the dispute arose between them indicating the matter is heading towards the NCLT.
"Hiring of law firms implies that there is a possible dispute which may end up in NCLT," the report said quoting Pavan Kumar Vijay, founder of advisory firm Corporate Professionals.
Employees' of IndiGo are worried about the significance of these differences that have cropped up between the promoters especially in the backdrop of the developments that led to the temporary grounding of Jet Airways last month.
"We know there are murmurs going on at the highest level for some change. We hope there is nothing to worry about. Many employees did exchange concerns on the Whatsapp group but we hope it will be sorted at the highest level. It's all about who wants greater control," the India Today report said quoting an IndiGo employee.
On Thursday, Ronojoy Dutta, CEO of InterGlobe Aviation, in an email to his employees said that the growth strategy of IndiGo remained unchanged and the airline's management has the full backing of the company's board of directors to implement it.
In another development, minority shareholders of IndiGo reportedly approached the airline's board of directors questioning the nature of certain deals and contracts signed by it, reported CNBC-TV18 quoting sources aware of the matter.
One of the major issues that the minority stakeholders raised was IndiGo's deal to purchase A320 Neo aircraft, the report said. The carrier had signed an order for 180 A320 Neos in 2011 followed by 250 more orders in 2015.
Soon after the report was out, shares of InterGlobe Aviation dropped nearly 9 percent on Thursday.
The scrip was up 0.80 percent to close at Rs 1,478.35 on the BSE on Friday.
The scrip tumbled 8.82 percent to close at Rs 1,466.60 on BSE. On the National Stock Exchange (NSE), shares plummeted 8.40 percent to close at Rs 1,475 apiece.
— With PTI inputs
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Updated Date: May 17, 2019 15:50:17 IST