IndiGo co-founder Rakesh Gangwal is likely to seek procedural changes in executing related party transactions (RPT) at the budget carrier besides calling for an extraordinary general meeting (EGM) at the board meeting scheduled for July 19. Gangwal is seeking more powers for the audit committee in clearing related party transactions (RPTs), which he claims are currently in violation of corporate governance norms.
“Procedures for RPTs need to fixed urgently. Things can't carry on like this. Also, rejecting the EGM requisition was not in accordance with law. Gangwal will raise these issues again at the board meeting,” a person close to Gangwal told FE.
Gangwal could be questioned by the IndiGo board on his allegations of corporate governance lapses by his partner Rahul Bhatia and his controlled Interglobe Enterprises. He is yet to receive any communication from the board on it, the person cited above said. An e-mail to an Indigo spokesperson seeking comments on the story remained unanswered till the time of going to the press.
The board of IndiGo is set to meet on July 19 to approve the financial results of April-June quarter. On its part, the IGE group has termed Gangwal's statements as baseless charges and accused him of harming shareholders' interest by making the feud public.
Both promoters are locked in a bitter dispute over control at India's largest domestic carrier. Gangwal has accused Bhatia of multiple corporate governance violations like carrying out RPTs without the approval of the audit committee and breaching the code of conduct for appointment of directors and senior management.
In his letter, Gangwal has urged the Securities and Exchange Board of India (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 extend beyond that.
Gangwal has also demanded investigations into violations of corporate governance regulations and laws by Bhatia and the IGE group. 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 arms 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.
Sebi has sought response of Interglobe Aviation, which runs the IndiGo airline, on Gangwal's letter by July 19. IndiGo commanded 49% of the domestic market in May end and has been expanding its overseas capacities by 25% year-on-year.