The war of words between IndiGo co-promoters Rahul Bhatia and Rakesh Gangwal continued on Friday, with both firing fresh salvos at each other.
Speaking to FE, Gangwal dismissed allegations of harming shareholders' interests by going public on his differences with partner Bhatia, and called it as a character assassination attempt by the Bhatia-controlled InterGlobe Enterprises (IGE) group.
"IndiGo is bigger than me or Rahul Bhatia, and bigger than the IGE group. It's a national asset," Gangwal told FE over phone
"I tried to stop it (violations) for more than a year but nothing happened. I kept trying to bring it to the board. I wanted to call an EGM but they killed it. Now they are trying to deflect the issue by going after character assassination, which I knew would come and that is the price I am willing to pay," Gangwal said.
Gangwal said he wants to fix corporate governance norms at IndiGo and is seeking a new policy to carry out related party transactions (RPT) which includes competitive bidding for treaties above a certain threshold.
"The board then reviews the process and gives an opinion to the audit committee. Finally, the audit committee has the final say in the matter," he added.
Gangwal, an aviation industry veteran of 30 years, said he had disassociated himself from the day-to-day functioning of the company in August 2018 after several of his complaints regarding corporate governance violations were not taken up.
Meanwhile, the Directorate General of Civil Aviation (DGCA) on Friday issued show-cause notices to in-flight operations and safety departments amid the full-blown war between the two promoters.
On its part, the IGE group termed Gangwal’s statements "fact free" and called the corporate governance violations as baseless charges. IGE alleged Gangwal harmed shareholders’ interest by making the feud public, apart from giving no concrete instances of RPT violations.
"Gangwal talks about unusual rights of IGE as a shareholder and promoter, but he fails to give even one instance where there has been any misuse of any such right," IGE said in a statement on Friday.
As reported on July 9, Sebi has sought response of Interglobe Aviation, which runs the IndiGo airline, on Gangwal’s letter by July 19.
Gangwal has accused his partner Rahul Bhatia of multiple corporate governance violations like carrying out related party transactions (RPT) without the approval of the audit committee and breaching the code of conduct for appointment of directors and senior management. These charges have been refuted by Bhatia.
In his letter, Gangwal has urged Sebi to amend the Article of Association (AoA) with Bhatia to ensure that he gets equal rights in the management of the company. While the shareholders’ agreement between Gangwal and Bhatia, who hold 36.69% and 37.9%, respectively, expires in October, the AoA extends beyond that.
Any amendments to the AoA requires nod from at least 75% of the shareholders since it is a special resolution - a situation that appears unlikely given the current shareholding pattern.
Gangwal has also demanded investigations into violations of corporate governance regulations and laws by Bhatia and the IGE group. He has been seeking board expansion by increasing the number of independent directors and an extraordinary general meeting to address his concerns.
Bhatia has termed the allegations as an agenda to dilute and diminish the controlling rights of the IGE group. In a statement on July 10, he said all RPTs have been executed at arm's length basis. These transactions are in the areas of real estate, simulator training facility, general sales agents agreement and crew accommodations, and accounted for Rs 150 crore or 0.53% of the consolidated turnover in FY19, he said.
IndiGo commanded 49% market share of the domestic market at May end and has been expanding its overseas capacities by 25% year-on-year.