The two promoters of IndiGo, Rahul Bhatia and Rakesh Gangwal, have declared a truce over the differences on corporate governance and related-party transactions and are now working in the direction of peace, chairman M. Damodaran told CNBC-TV18 in an exclusive interview.
On being asked whether the truce between the two promoters is long-lasting, Damodaran said, "Truce is certainly sustainable but the truce is not peace."
"I am looking forward to a day, not in the distant future, where we will have peace rather than truce. Truce is closer to ceasefire than peace is. Peace is when you put everything behind you and none of these issues survives. What we need to do is look ahead and take the airline to even higher growth," Damodaran, former head of SEBI, said.
Damodaran reiterated that while the two promoters, who have known each other for over 30 years, continue to be in dialogue, all residual issues have been addressed with the
new related-party transaction policy in place.
The former SEBI head said it is the manifestation of shareholders' confidence in the company that its share price is now close to its highest level since listing, adding that "much of what was notionally lost" due to the open dispute between the two promoters, has been regained.
At its 16th annual general meeting, the shareholders approved a special resolution to amend the articles of association in order to increase the board size to a maximum of 10 members, including four independent directors.
"Post the AGM, there is work to do in terms of taking advantage of the amended articles of association and ensuring that we have a bidder board, a more representative board in terms of four independent directors in a board size of 10, which is higher than what the law mandates or the regulations mandate," Damodaran said.
Talking about the new policy that has been put in place for related-party transactions, Damodaran said that it is the best among other companies and has additional safeguards. The most important such safeguard is that any amendment to this policy can only be approved if it has the support of all four independent directors.
CNBC-TV18 had exclusively reported this on Aug 28.
With regard to the letters sent by Rakesh Gangwal to SEBI and Ministry of corporate affairs on Jul 8 about his concerns about corporate governance and RPT policy, Damodaran said that the market regulator and MCA is not conducting any investigation but correspondence has taken place between the company and the two bodies.
"SEBI wanted additional documents, have made those available to them. Nothing is pending at company's level with regard to the concerns raised with MCA, SEBI," Damodaran clarified.
On being asked whether the differences were also related to a separate team being put in place for negotiations with original equipment manufacturers, Damodaran said that it was Rakesh Gangwal who excused himself from the process since October last year.
"Rakesh Gangwal opted out of negotiations with OEMs since October last year. Then the company put up a team for negotiations with OEMs after that," Damodaran said.
At the 16th AGM, CEO Ronojoy Dutta had also made it clear that it will be 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. Mohammed had recently led negotiations with CFM for engine deal to power 280 neo planes as well.
Today, the chairman of IndiGo board also reiterated that while there is turbulence in the board room of the airline, there is no turbulence in the airline as far as the business strategy is concerned.
"Last quarter was the best quarter for IndiGo even when all this (promoters dispute) was going on... No issue with strategy, we have a good management team. Some attention of senior management was diverted to attend to the matters of SEBI, MCA but now, there are no residual issues which will surface and distract management," Damodaran said.
Commenting on independent director Dr Anupam Khanna and Gangwal questioning his independence as chairman, Damodaran said that he would love to see evidence of his "non-independent functioning."
"10 was not the size Rakesh Gangwal wanted. 10 was not the size IGE (Rahul Bhatia's InterGlobe Enterprises) wanted. We looked at all numbers and reached the size of 10 for the board. We agonized over 2 days to reach to that number," Damodaran said.
Among the independent directors, the board will appoint an independent woman director before Sep 30. An executive director will also be appointed."We will bring independent woman director, executive whole-time director on board... We have a robust RPT policy in place. We will capture on the board the kind of diversity we want," Damodaran added.