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Analysis: At IndiGo, there are signs of truce but not peace

Analysis: At IndiGo, there are signs of truce but not peace

Analysis: At IndiGo, there are signs of truce but not peace
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By Anu Sharma  Aug 28, 2019 8:34:39 AM IST (Updated)

The conspicuous absence of Rakesh Gangwal and Anupam Khanna from today’s annual general meeting and the comments made by the board and management has made this much clear that there will be a new normal at IndiGo.

It is not a done deal yet as far as the dispute between the two promoters of IndiGo is concerned. The conspicuous absence of Rakesh Gangwal and Anupam Khanna from today’s annual general meeting and the comments made by the board and management has made this much clear that there will be a new normal at IndiGo.

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Gangwal, who holds 36.7 percent in IndiGo, has traditionally not attended the annual general meetings, but several shareholders attended the AGM today in the hope that they would seek answers from him regarding his concerns about lack of corporate governance at IndiGo and questionable related-party transactions between the airline and Rahul Bhatia-run InterGlobe Enterprises.
To add to shareholders’ disappointment, Dr Anupam Khanna, an independent director at IndiGo board, was also absent at the AGM. Dr Khanna, a college senior of Gangwal at IIT Kanpur, had supported the co-founder in his concerns and had also questioned the independence of Damodaran as chairman of the board.
A senior executive also added that while Dr Khanna, who also heads the nomination and remuneration committee, informed the board of his absence prior to the AGM, Rakesh Gangwal did not inform about his decision to not attend the annual general meeting which was taking place less than two months after the differences between the two promoters came to the fore.
Nonetheless, some shareholders asked other board members and the management that who will lead the negotiations with engine makers and aircraft makers now? CEO Ronojoy Dutta had a pointed answer to this query. He made it clear that it will be Mr. Riyaz Peer Mohammed, Chief Aircraft Acquisition and Financing Officer, not Gangwal, who will lead the negotiations with original equipment manufacturers going ahead, including the segments of narrow-body and wide-body aircraft.
“We buy aircraft, engine at good price and that is something we should not weaken. Riyaz Mohammed-led aircraft finance group conducted the negotiations for 280 aircraft. CFM told us that you taught us more about engine procurement than we ever knew about. CFM told us that to send our 3 people there to give a seminar… We are getting weaker and better,” Dutta told the shareholders.
While the bitter dispute was brewing between the two promoters since nearly a year over disagreements on corporate governance and related-party transactions, it came to light when Gangwal wrote a letter on July 8 to market regulator SEBI, Ministry of corporate affairs and BSE on the same. However, Friday, Gangwal issued a statement and sent signals of truce.
“The Board has now approved a new related party transaction policy and to also close an open issue if the Articles of Association are amended at the upcoming August 27 AGM to increase the Board size to 10 Directors. While much work lies ahead, including mending some fences and the regulators completing their investigations on the governance issues raised with them, it is gratifying to see progress towards better governance,” Gangwal said on Friday.
Acknowledging that the above statement indicated signs of truce, Bhatia, who along with his associates owns 38.3 percent stake in IndiGo, said that he hoped that “his actions will speak louder than his website.” Bhatia was referring to governanceindia.com, the website that Gangwal uses to disseminate his statements. It is important to recall here that in an exchange filing, IndiGo has already called this website of its promoter as unreliable.
While on a lighter note, Bhatia smiled at the suggestion of a shareholder to go for a trip with Gangwal and even added that he will consider it, he also made a dig at the “paan ki dukaan” comment of Gangwal, where by the latter had said that IndiGo is becoming worse than a paan ki dukaan due to falling standards of corporate governance.
“Wanted to serve ‘paan’ to all shareholders but over the last few days the company seems to have improved miraculously its governance standards so we disbanded the idea,” Bhatia told the shareholders towards the end of the AGM.
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