The big story from the Indian aviation sector in 2019 was the corporate battle at IndiGo between its two promoters, Rakesh Gangwal and Rahul Bhatia. While Gangwal claimed that the disagreement is about shareholder agreement and questionable related party transactions, Bhatia said it was over an attempt to dilute controlling rights of his Interglobe Enterprises over IndiGo.
IndiGo CEO Ronojoy Dutta, on June 25 this year, told CNBC-TV18 that Gangwal and Bhatia had only one unresolved issue - that of shareholder agreement. However, soon after the interview, an unprecedented corporate war broke out between the two promoters of India’s largest airline.
The spat was supposed to be about $30 million worth of related party transactions, but the developments in the past six months have indicated anything but that. The first salvo was fired on July 9 when indigo informed the stock exchanges that Gangwal who owns 36.7 percent of the airline has sought Sebi's intervention to resolve his concerns about the alleged violation of corporate governance norms and related party transactions between IndiGo and Bhatia's Interglobe Enterprises.
Gangwal alleged that the shareholder agreement was skewed towards Bhatia as it gives him the power to choose and appoint the chairman, most board directors, and top management. He went on to say that a 'paan ki dukaan' would fare better than IndiGo in matters of governance.
Bhatia, on the other hand, alleged that Gangwal wants to dilute Interglobe Group's controlling rights and claimed the matter is about his ego which was hurt as the airline has made alternative arrangements for negotiations with OEMs.
As the war raged on, the board structure was expanded from 6 to 10, including four independent directors, one of whom has to be a woman. As of now, both parties continue to fight a legal battle overseas. The war which started with a mere disagreement has already led to nearly 20 percent fall in stock price since June and it remains to be seen whether there is still some possibility of a peaceful settlement between friends turned foes or will it end with the exit of one of the two.