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aviation | IST

Exclusive: IndiGo promoters call truce, contentious issues being resolved by board

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The warring promoters of IndiGo are headed for a truce and the finer details of an agreement resolving all contentious issues are being drawn up by the board, people familiar with the matter said.

The warring promoters of IndiGo are headed for a truce and the finer details of an agreement resolving all contentious issues are being drawn up by the board, people familiar with the matter said.
The promoters —Rakesh Gangwal and Rahul Bhatia — have “unanimously”  agreed to expand the board of InterGlobe Aviation, IndiGo’s parent company, and rework the process for carrying out related party transactions (RPTs), said the persons quoted above, requesting anonymity.
“All outstanding issues are being resolved,” one of the persons said, adding both sides were keen to put the past behind them and move forward.
When contacted, Gangwal said, "I do not wish to comment on ongoing board discussions. However, I hope that we are able to resolve these issues.”
The dispute between the promoters figured prominently at a board meeting held on July 19 and 20 to consider the April-June earnings of the company. In the meeting, the board decided to amend the Articles of Association (AoA) of IndiGo to add up to 10 members, including four independent directors.
"The said amendment of the Articles will be subject to the approval of the shareholders at the forthcoming annual general meeting of the company," IndiGo said in an exchange filing on July 21.
More independent directors, including the addition of an independent woman director, on the board and straightening out questionable related party transactions (RPTS) were the principal demands of Gangwal.
On July 2, Gangwal asked market regulator Sebi to examine the two issues, escalating his simmering differences with co-founder Rahul Bhatia into a bitter public quarrel. Bhatia's InterGlobe Enterprises had denied the allegations made by Gangwal and had called them baseless.
IndiGo has responded to Sebi regarding the complaints filed by Gangwal, said the persons quoted above. The airline will also explain the matter to the corporate affairs ministry by the end of this week and officials have met the corporate affairs secretary in this regard, they said.
IndiGo has submitted to Sebi a report by consultancy firm EY that was commissioned by InterGlobe chairman M Damodaran. Bhatia’s IGE Group had said the report flagged only procedural lapses, refuting Gangwal’s claims of dubious transactions.
The dispute sparked a steep fall in InterGlobe’s shares as investors worried that the running of IndiGo, India’s largest and most successful airline, will be severely affected.
There are no differences between the promoters on operational issues and strategy, said the person quoted above.
The reconstituted board will now have five IGE nominee directors, with Gangwal retaining his seat. Gangwal, an aviation veteran, had joined the IndiGo board in June 2015 before the airline was listed.
IndiGo CEO Ronojoy Dutta will be given a board seat.
CNBC-TV18 had previously reported that though the board meet did lead to some progress in resolving the dispute between two promoters, RPTs remained a sore point. At the recently concluded board meeting, an agreement was reached on dealing with RPTs, which currently account for 0.53 percent of IndiGo’s consolidated revenues in 2018-19, according to the people familiar with the matter.
Gangwal had sought a meeting with Prime Minister Narendra Modi to request him to intervene and straighten out the corporate governance issues at InterGlobe.
Bhatia and his group companies control about 38 percent of InterGlobe while Gangwal and affiliates own around 37 percent. A little above 25 percent is held by public shareholders, including global investors and funds.