The board members of InterGlobe Aviation Ltd (IGAL), which operates IndiGo may seek answers from co-promoter Rakesh Gangwal in connection with his allegations against the independent directors, said a media report. The company's board meeting has been scheduled for 19 July to take into account the June quarter results.
The InterGlobe Aviation board at its 19 July meeting is expected to seek clarification from Gangwal on his allegations that the independent directors of the country's biggest airline by market share, failed to take ‘independent’ decisions on corporate governance lapses, said a report in Business Standard.
The IndiGo board, which is led by independent director M Damodaran—former Securities and Exchange Board of India (SEBI) chief—may also seek answers from Gangawal for taking issues to public forums instead of trying to settle disputes at the board level itself, the report said.
Some IndiGo board members may also question Gangwal next week on the nature of the “exclusive parleys” with engine maker Pratt & Whitney (PW) ahead of the airline’s latest engine order, said a report in The Economic Times.
Media reports said that InterGlobe Aviation's $20 billion agreement signed with CFM International may be the crux of the spat between the co-promoters.
Last month, IndiGo had placed a $20-billion order for LEAP-1A engines with US-based CFM International to power its future fleet of 280 narrow body aircraft.
The decision to go with CFM engines for its future fleet came as IndiGo had been facing problems for the last three years in its current A320neo aircraft fleet, which are powered by Pratt & Whitney engines.
“The board is examining whether Gangwal complied with his fiduciary duties, as director, to keep it informed of developments related to aircraft, spares, and OEM (original equipment manufacturer) purchases,” the report said quoting a person in the know of the development.
Last week, Gangwal alleged serious governance lapses by co-founder Rahul Bhatia, co-founder of IndiGo and Group Managing Director of InterGlobe Enterprises (IGE), who had earlier termed his demands as unreasonable.
With the issues brewing for nearly a year, Gangwal sought markets regulator SEBI's intervention to address the problems.
Asserting that the arrangement between the promoter groups has been transparent from inception at IndiGo, the Bhatia group on Sunday claimed that Gangwal always limited his financial risks and was making insidious efforts to create an unseemly controversy about corporate governance.
In a reflection of the deep differences between the two promoter groups, InterGlobe Enterprises (IGE) Group has now issued three statements in less than a week seeking to clarify issues and reject the allegations by Gangwal.
In a serious turn of events, Gangwal alleged that the company has "started veering off" from the core principles and values of governance, and said even a paan ki dukaan (betel shop) would have managed matters with more grace.
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. In a detailed statement, Bhatia's IGE)Group said it has nurtured and supported IGAL through its formative and expansion years by making available certain services through related party transactions.
The group emphasised that it has ensured that none of its entities should take any advantage under related party transactions.
"... without exception, IGAL has received more favourable treatment from the IGE Group entities as compared to their other customers," it noted.
InterGlobe Aviation is witnessing a spat between co-founders and promoters—Gangwal and Bhatia—which also took its toll on the company's stock price.
On 10 July, the shares of IGAL plummeted over 11 percent wiping out Rs 6,423 crore from its market valuation following a spat between co-promoters over governance issues.
A day after the tussle between the promoters of IndiGo broke out, the airline's CEO Ronjoy Dutta, in a letter to the employees, had said that the issues between promoters had nothing to do with IndiGo and its functioning.
"The issues between them will eventually get sorted out but I want to stress that these issues have nothing to do with the airline and its functioning," Ronjoy Dutta said.
— With PTI inputs
Updated Date: Jul 15, 2019 14:51:54 IST