The battle between the two promoters of India’s airline company Indigo continues to hog the headlines. The latest information emerging is that the company’s Board of Directors has summoned Rakesh Gangwal who started it all, to attend a meeting on July 19. The Board, with the independent Chairman M. Damodaran presiding, would want to know what prompted Gangwal to write that letter to the SEBI Chairman. Presumably, the Board members would also like to question why Gangwal went public with his grievances instead of having it sorted out within the Board.
To recall, Rakesh Gangwal, one of the two co-founders of Indigo airline, had written a long 14-page letter addressed to Ajay Tyagi, the Chairman of Securities and Exchange Board of India (SEBI). In that letter, he had raised issues of corporate governance. He had accused his co-founder Rahul Bhatia of appropriating all powers within the Board and acting unilaterally. More seriously, he has accused of certain related party transactions which were not of a regular nature.
This issue coming out of Indigo just weeks after another airline Jet Airways shutting down, pulled the shares of Indigo down in the markets. Meanwhile, Indigo’s CEO tried to calm the nerves among the employees. Addressing a mail to all of them, he assured them that the feud between the promoters won’t have any impact on the day to day operations of the airline.
Rahul Bhatia, on the other hand, gave his side of the story with his holding company InterGlobe Enterprises issuing a statement that it was IGE that took all the investment risk in the airline, betting on as much as Rs 1,100 crore, whereas Rakesh Gangwal’s exposure was not more than Rs 15 crore.
The issue now will have one set of enquiries being conducted by the team deputed by the SEBI Chairman. The regulator has already summoned the compliance officer from the company to question him on the related party transactions. The Board wants to question one of its Directors and a co-founder.