Economy

IndiGo CEO reassures employees of airline’s functioning after founders’ spat goes public

IndiGo CEO reassures employees of airline’s functioning after founders’ spat goes public

Shares of Interglobe Aviation Ltd fell as much as 19% on Wednesday after one of the co-founders of India's largest airline IndiGo alleged violation of corporate governance rules at the parent group.

SEBI, in its role as a stock market regulator, is empowered to protect the rights of investors in listed companies.

"I have vigorously attempted for nearly a year to persuade the company to shore up its governance standards, and all my attempts have been thwarted by the IGE Group", Gangwal said in Tuesday's letter to the Securities and Exchange Board of India, referring to Bhatia's affiliate group.

In his letter, Dutta, CEO of InterGlobe Aviation, refers to the media reports about differences between promoters and adds, "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".

Under Gangwal and Bhatia, IndiGo has grown rapidly since it launched flights in 2006 and now controls a near 50% share of the Indian domestic aviation market.

He raised serious objections to related party transactions in the company, stating that various fundamental governance norms and laws were not being adhered to. He, along with his affiliates, hold 37 per cent stake in IndiGo while the other co-promoter, Rahul Bhatia, has 38 per cent equity stake.

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Bhatia wrote to the board alleging that the genesis of Gangwals' angst was his "hurt ego" and refusal of IGE Group to entertain his "unreasonable demands".

Gangwal has made these allegations while he is engaged in a bitter tussle with co-founder Rahul Bhatia.

Already, the aviation industry is grappling with multiple headwinds, including the shuttering of once-storied Jet Airways due to cash crunch.

Gangwal has alleged that the controlling rights of Inter Globe Enterprise Group (IGE), a minority shareholder, have not been "judiciously and prudently" used in the best interests of the company, and this has been countered by Bhatia. Gangwal is questioning the very voting arrangement within the board which requires him to vote along with IGE and not oppose any appointment.

"However, we also firmly believe that IndiGo can only realise its true potential and be a world class company if it has both - a world class business and operational model as well as world class governance standards", the statement said.

IGE added that it ensures no entity of the group should take any "advantage" under the related party transactions and that IndiGo has received "more favourable treatment" from IGE compared to other customers.


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